Affordable Housing: $36K/Door Properties at 98% Occupancy

The Real Estate Investing Club

Join an active community of RE investors here:  https://linktr.ee/gabepetersen  0:00 Introduction and Guest Background 3:30 Starting as an LP Investor and Building an Investment Club 8:15 Critical Communication Lessons from Bad Operators 11:10 Understanding Affordable Housing and LIHTC Properties 14:55 Buying Properties for $36,000 Per Door in Prime Markets 17:20 Managing Affordable Housing: Achieving 98% Occupancy 22:00 Finding and Acquiring LIHTC Properties 23:50 Jersey Shore Hospitality Investment Strategy 26:45 Quick Questions: Education and Networking Advice 30:50 Learning from Three Ponzi Scheme Investments 💰 33:00 Highlight Reel: Doubling Rent Roll in 11 Months 36:00 How to Connect with Denis Shapiro  CRACKING THE CODE ON AFFORDABLE HOUSING INVESTING 🏘️ Want to know how to buy apartment buildings for a fraction of what everyone else pays? Denis Shapiro from SIH Capital Group reveals the insider strategy that lets him acquire properties at $36,000 per door while competitors pay $100,000+ for the same rent levels. This isn't theoretical, this is exactly how he's building a portfolio of 300+ units with 98% occupancy rates that would make any operator jealous.  THE LIHTC ADVANTAGE EXPLAINED 📊  Denis breaks down the Low Income Housing Tax Credit program in plain English, showing how government subsidies create massive pricing disconnects in the market. He walks through real examples, including a property with a $3.2 million loan at 0% interest with only $12,000 annual debt service. The secret is targeting properties in their second 15-year compliance period when original developers are ready to exit but affordability restrictions still apply. This creates the perfect storm for investors willing to hold long-term and meet specific experience requirements.  FROM LP TO OPERATOR: THE UNCONVENTIONAL PATH 🚀  Most operators never experience the investor side of syndications, but Denis spent years as a limited partner before making the leap. He invested in 12 different deals, experienced three Ponzi schemes, and learned invaluable lessons about communication, transparency, and what investors really want. His investment club with just two other high-level executives became the training ground for analyzing deals and building the discipline that now defines his operating philosophy.  Want to learn more about our guest? Connect here: sihcapitalgroup.com  Want to learn more about the REI Club Podcast, how to invest with Gabe at Kaizen, or join our community of active real estate investors on Skool?  Visit the podcast website at https://www.therealestateinvestingclub.com or click here: https://linktr.ee/gabepetersen

Transcript

00:00we are back with another episode of the real estate investing club i hope you guys are having

00:08a great day great week wherever you are and whatever day it is for you as always on the

00:13podcast it is friday so we're bringing that good friday energy to you this is going to be a good

00:18episode because we got two topics to discuss we got affordable housing and hospitality so if those

00:23are either topics that you guys are interested or if either of those topics are topics you're

00:28interested in this is the episode to jump into we got dennis shapiro with us from sih capital group

00:33to talk about it dennis i'm excited to jump into this thanks for hopping on okay thank you so much

00:39for having uh having me back on i know the first time was a great conversation so looking forward

00:43to this one yeah i should say thanks for hopping back on yeah i always forget to call out when we

00:48have repeat guests so you guys maybe you remember dennis from about a year ago he came on the show

00:53to talk a little bit about affordable housing at the time we might jump back into that or maybe

00:57we'll stick into hospitality wherever the conversation goes that's what we'll do but dennis

01:02i told you before we got on here we're sticking with the same format we like to start with people's

01:06stories so why don't you take us to the beginning of your story in real estate and just tell us how

01:10you got started and then how it's been going since then yeah i'll try to keep it quick in case that

01:15i said a lot of this stuff last time so i started investing in 2012 literally got out of college

01:22got recruited by the government was starting to work started to realize hey i need some

01:27some tax efficient investment strategies here so i kind of got into the world of lps kind of stumbled

01:34into it um it was definitely a unique experience because i came from the more of the traditional

01:40background i was investing in stock since i was about 14 15 years old so i started seeing the benefits

01:44of the of the private investments because i got great appreciation on the stock side but i never

01:51got good cash flow so i started seeing the private stuff stuff and i think the first fund i ever invested

01:56in was like a nice debt fund that paid double digits i was like all right this is great i can't get one

02:00week or one dividend stock that pays like this and there's no volatility in the price this is awesome

02:06so i started seeing the the pros of it uh but at that time i was i was a happy government employee

02:12uh as forward i worked for the government for 12 years uh in that time period i went from doing

02:19one investments to doing a handful investments to starting an investment club where i did

02:2412 to 15 lp investments and then from there we kind of branched out and went into more of the operational

02:32side so i'm i don't know if you want to call old school operator or not but i started from the

02:38investment side i truly when i connect with our investors i truly understand where they're coming

02:43from because i was them uh and then i've made the shift over to the operational side and now we're

02:50full-time i left the government in 2022 basically working working at sih capital group and now we have

02:58two management companies 300 apartments and um we're gonna have about 60 hotel rooms going forward so

03:05we've we've grown a lot we've gotten some really great people on board which has been a real big difference

03:13maker but in general it's been a very very it's been a 13-year pathway from one lp investment to a bunch

03:19of lp investments to gps and to like a full-blown real estate company nice yeah you don't often hear

03:26people taking that trajectory coming from the the passive quote-unquote investor the lp side

03:32where you're investing in other people's deals and then getting into you know turning into an

03:36operator a gp but i mean i'm sure it gave you a great perspective because raising capital is one

03:41of the most important parts of real estate when you're really trying to scale and so you have you

03:45got into it with that perspective you understood what they're looking for and you understood what

03:49keywords that would kind of peak their or peak their attention and get them interested so yeah i think

03:55that's a great a great start and i like that you said you started an investment club so was this

03:59this club i'm sure it was like a meetup kind of thing and you guys got together to talk about what

04:04type of limited you know lp deals that you're going to be investing in yeah that's exactly what it was

04:09and club i used the word club very very loosely it was literally meeting two other guys that that

04:13yeah you know it was it was hard because you know i was going to barbecues i was going talking to

04:20friends and family and i was so excited i was like look i could buy one percent of an apartment building

04:23like this is amazing blah blah you know i was in my late 20s at that time and they didn't care

04:28like hey you know i just got a brand new ben's they didn't care about this so i found two guys

04:33that i could really really it was an awesome experience and then we leveraged the technology

04:37that was available like we had a slack channel where we really got to dive in and really analyze

04:43these and these two guys were very very high level executives and we really had a really interesting

04:49dynamic where one was super analytical the other one was super tech based and then the and i was kind

04:55of putting every everybody together with deals and finding deals ironically that's kind of how

05:00my company grew later on but the that investment club was very much early in and because it was it

05:07was the ability to actually analyze a deal and even if i think it's a great deal we needed three people

05:13to sign off on it otherwise you could end up creating a security if you do it the other way around so we

05:20always had to get that buy-in we always had to really talk through the deals it was funny because

05:24one of one of the people was a really hard no and one of the people was always a really easy

05:28yes so when i found the deal i kind of knew if if i could if i can mend the gap or whatever it is

05:34and uh we learned a ton to do that investment club i wouldn't change a thing well yeah and you know

05:40starting off investing in other people's deals it it's you you know it makes it refines your ability

05:46to understand what actually is a deal and so if you guys you know you have three minds that you have

05:51to get together to come to an agreement and you guys are each coming at it from a different

05:54perspective you're looking at these deals you're you're hashing them you know making sure that it

05:58fits the criteria and you know having gone through so many deals and refining what you know to be a

06:04deal and then bringing it over to the gp side i'm sure was a huge boon once you decided to you know go

06:10active and become an operator it was and you know it's it's weird it's the simplest thing

06:15that i remember that played like the most significant difference for sih like talking

06:22to an investor so the good thing is you know when we did the 12 deals we probably were not refined

06:27enough and we were like all right we were excited and if they were on a podcast if they had a big

06:33brand we wanted to talk to them we did all the wrong wrong things when we first started uh but what

06:40ended up happening is we got into a lot of deals with a lot of different operators so we got a lot of

06:44different communication so we we got the monthly ones we got the quarterly ones we got the detailed

06:49ones we got the no communication at all um and then we started seeing like the data which deals

06:54and to be frank you know that 2018 is a tough time to lose money

07:00so there was this honeymoon you lose money you're doing something wrong where we thought we were we

07:07were like oh my god we're on to something big here and then just reality it was you're investing in

07:13lower interest rate moving market but at that time we learned so much and i remember it was even things

07:19like i had follow-up questions on on a webinar and these guys were raising money so quickly and i'm

07:26just gonna generalize i'm not saying any names out there but this was a decently big name and they

07:32were i sent this like really in detailed email about like hey you know i really looked into this deal

07:38and i had these 12 bullet points i really wanted to touch base no response and i told myself like

07:44if i ever became an operator and as as you know cumbersome that may be that isn't the correct way

07:52of doing things so there were there was this like real like hey they did on their website they're all

07:57about investor first and then in reality when when you deal with you know sending them an email or

08:02something like that and i remember i had one investor on one of our first projects and she

08:08heard me on a podcast and she ended up asking me for my personal financial statements before she was

08:14willing to commit to the deal and i never did as an lp so i had to think about it for a second

08:20and then when i talked to her about it she just very simply said she goes i just want to know if the deal

08:26goes bad you have the means of really doing whatever is required and you're not like not

08:33limping in on a network capability where that deal will overwhelm you if it goes bad and i said okay

08:38that's a great that's very reasonable and i actually kind of felt like an idiot because i never did that

08:45as an lp and i was like that's just that's that's gold i was like why wouldn't you do that you know the

08:50banks will ask for it now you're not asking for their private information but like a general overview of

08:56who that person is financially is a very reasonable request and i remember sending that back to her

09:02and i think if i didn't go through the lp side i might have turned around and said you know that

09:07that's not reasonable whatever it is but then like really having that lp like foundation i just thought

09:14it was actually really smart and i actually commended her and i actually tell my other investors like

09:18when you have doubts just ask for like a bfs you'll learn a lot of stuff yeah no that that's

09:25completely understandable and really smart on her part but i really like you know you going through

09:31the lp side you realize how important open and honest communication consistent communication is

09:36from the gps to the lps just so they understand even if something's going wrong at least you're

09:41communicating with them with them if they're and you're presenting the solution that you're coming

09:45up you know if pipes break whatever the issue is if something happens that is has a negative

09:50impact and not keeping that to your chest and being communicative with the investors

09:55is so important i remind me i saw a video earlier a youtube video about that one guy

10:00the internet influencer i guess he raised a bunch of money to buy some um radio shack and whatever other

10:07yeah okay yeah but he wasn't telling investors anything he kept saying that everything was great

10:12but it just makes you realize how important being open and honest in your communication is and being

10:17consistent in your communication so awesome so we've uh we've really touched on the raising capital

10:22being you know communicating with your investors let's talk about what you guys are actually doing

10:26out there in the field affordable housing hospitality two pretty unique niches um i i'm most interested in

10:33hospitality because we did talk about affordable housing before so let's actually start with affordable

10:37housing just give us an overview and then we'll dip into uh into hospitality yeah so affordable housing is

10:44our like bread and butter on sih okay and what we what we learned is when we started as lps there's

10:52that like traditional like value add deal on quotation marks where you're paying like a good good size

10:58premium you're going in there you're renovating a few units you know you hope to catch interest rates

11:03somewhat kind of declining and then you're flipping the prop like that's what 2018 to 2022 was really

11:09about right there was very rare that you see the refis you see all that stuff so when we got into the

11:16space we started looking at those kind of deals and then very very quickly gravitated to affordable

11:22housing and the reason why we we gravitate to affordable housing is that there's a huge price

11:27disconnect between affordable housing and then value add and i'll just give a quick synapse of what i mean

11:33by affordable housing because there's a lot of different misconceptions about it so the affordable housing

11:37segment that my company focuses on is the light tech properties and light tech properties stand for low

11:43income housing tax credits and what ends up happening is if you have a raw piece of land the cost to build

11:48that raw piece of land up to a beautiful class a building and like a brand new affordable housing building

11:54is surprisingly very very similar what's different is the finishing touches right because you still need roofs

11:59you still need the utilities built out you still need windows you still need all of that stuff but you're

12:04going to go with the grand countertops versus the laminate all of that stuff so no builder in their

12:09right mind would take a piece of property that can support class a and turn around and just make it

12:14affordable because of the goodness of their heart so the government realized that and what they do is

12:18they subsidize a lot of the cost through these credits to make it way more affordable and cheaper

12:25to incentivize these builders to actually build and sometimes these builders they have their portfolio

12:31like they have class a stuff and they have affordable stuff and depends on location they'll figure out

12:37which way they're going to go with it but these are these are the builders they do both actually so it's

12:42actually really really interesting so what ends up happening is the government gives and real quick

12:46what what are like give us an example of the type of subsidies that are provided is it like a

12:51i mean it's finance credit is it like an actual amount that you get for development or what is that subsidy

12:58it's usually in terms of very very favorable financing sometimes the financing is zero percent

13:04interest for extended period we're looking at the deal right now at the acquisition period in a pipeline

13:10right now there's an active deal where the current loan is 3.2 million dollars and it's a zero percent

13:16interest assumable loan and the annual debt service is 12 000 annual that's great so you get some crazy

13:25deals sometimes and this is it is it variable or is it a fixed rate well it's zero rate i mean does it

13:32but will it change over time or do you have a balloon payment it has a maturity period of but but most of

13:37the time these municipalities are actually will keep extending it as long as you're willing to keep

13:42it affordable interesting so it's a very interesting market but what ends up happening is the first 15

13:48year period a lot of developers will keep that property that second 15 year period that's where the magic

13:52happens because a lot of their incentives are burnt off at that point they still have to comply with

13:58the affordability of restrictions and then so they look to sell at that point that's where a company

14:04like like ours we come in we buy in that second 15 year period so for example um we bought 103 unit

14:12portfolio in virginia at the end of 2024 we paid 36 000 a unit for it yeah 36 so the replacement cost

14:22doesn't really matter what what metro that's in that's cheap yeah and it's actually it was in

14:27it was in the richmond msa for one of the properties yeah the second property was in lynchburg

14:32virginia which are pretty big ones yeah so there are actually two really good size ones so 30 something

14:38a door and the reason why it's 30 something a door because the compliance period is extended into

14:42like it's an 18 year extended period so what ends up happening is we are long-term guys

14:48we're not trying to go for a quick flip so we're getting we go in with a business plan of 10 plus

14:55years usually all my partners are in our 40s so we have that that window yeah 10 years we got 10 years

15:02and we're getting a significant discount because we're willing to so it matches our business plan

15:09but they're going to give us a discount for it so we really really love this model because

15:13not everybody gets you have to have affordable housing experience that's why we built out our

15:19affordable housing property management company you have to usually get approved by the the state

15:23financing so if it's virginia housing it would be virginia housing finance authority or uh phfa for

15:28pennsylvania pennsylvania housing finance authority you have to get during the closing process you have

15:34to get an approval letter because the state does not want to take back 50 60 they don't want the pr of

15:4180 affordable housing units going bust because that's a big big pr issue so it's it's not like

15:49any syndicator can actually go out and buy these and you need the prior experience and you're willing

15:55and you're going to get a discount if you're willing to hold long term so those are the three things that

15:59we absolutely love about them and depending on certain msa's have been a little trickier some msa's

16:04we go in there uh i'm sorry i'm using msa is a code word that everybody should i you know it's the

16:11it's basically the that market right that market sometimes we go into a market and there's a waiting

16:16list that's a mile deep for these apartments and sometimes you mean for tenants to rent them or for

16:22yes for tenants to rent them so we don't have to do any advertising nothing it's literally like

16:27we go to the housing authority we work with them and we fill these units quick sometimes we like in

16:32virginia we did not have the most amicable housing authorities so we really mastered we really got

16:38into more of the google marketing there and we filled up the units but our average accuracy is 98

16:44percent for these these units yeah we really like we treat like a vacancy like cancer like we we go at it

16:51so it's a really cool model it's really interesting like that's why i look at some of these value ads and

16:56they're paying 100 a door for these things and it's the same rents that we're getting for 36 a

17:02door i was like yeah i'll stick to our model oh hold on yeah they could stick to theirs we'll stick to

17:07ours let's see how let's see in 10 years how things work out so um a question that kind of pops into my

17:14mind so i i own mobile home parks and which is kind of fits into the same category in the affordable

17:19space and a lot of issues that you know you run into with that that uh class of tenant is you get

17:26a lot of delinquencies um and i'm sure in the apartment space you probably have a little bit

17:30more wear and tear on the unit itself um what is what is management like for this type of asset

17:35so we have a we have a high standard so one thing i wanted to clarify is a lot of people think that

17:41like we're section eight we're not we're not section eight what affordable basically means is that

17:45when we rent out that unit they have to be in a certain area area medium income so for for example

17:52let's say that area family making 60 000 has to be a blue exactly so some people do come with vouchers

17:59now that's the section eight now when they come with vouchers they can lose those vouchers if we report

18:05them so if they're a bad tenant there is a real and those vouchers are very very it's like gold for

18:10them they don't want to give them up so we have a high high standard uh we don't play

18:15those games like we uh in ohio or affordable house then they have a three-day notice to quit

18:21basically so if they don't pay their rent they're getting the three-day notice on the seventh or the

18:25eighth so our delinquency across the board is extremely low it's just about setting the culture

18:33setting the the right expectations really getting because tenants tenants talk to each other so if you

18:40got a tenant and that he hasn't paid rent for two to three months and he's allowed to communicate that

18:46to all the other tenants your delinquency is gonna skyrocket it doesn't matter what ends up happening

18:51but if you treat that one person as an example that that's gonna get around as well that like hey

18:56especially like the most critical time with these buildings is the first takeover it's once you take

19:03over you have 45 days to you really have like 15 days to set the culture that like and and you want

19:11to be fair you want to be reasonable but like we had one part you just you make sure that people are

19:15following the rules we we did the same thing with a park that we bought recently and there was just so

19:20many so much delinquency people would pay months after you know they'd pay in every three months they'd pay

19:25and we we completely we stopped that by when someone was vacant or when someone was delinquent we would

19:30send them the appropriate notices and then we actually moved into the eviction process and once

19:34we did that once everybody else figured it out and delinquencies have been down and so it's uh you

19:39just got to make sure and set the rules and then adhere to the rules and everybody else will um kind of

19:45follow suit yeah you know gabe a lot of it is just it really comes down to cost of capital right the

19:51seller who you you bought from his cost of capital was so low that if he makes four or five grand a month

19:59done rent roll he's like okay you know that's that's a decent like i'm okay he was in his 80s

20:03and he had no debt on this thing and so he didn't care that's the common that's the common story it's

20:08their debt debt rolls so thanks so whoever pays who pays whatever it is a lot of them become friends

20:12with the people whatever it is but like when you come in and you share of town and we get this a lot

20:17like you hear all the different stories whatever it is that's why we created the management company

20:22even though the owners are involved in the management company they never ever respond to a tenant

20:27with their name nothing it is the management company and then we have a legal division that

20:32handles the evictions and it's if someone is delinquent and then go at that point it's out of

20:37the manager's hands it's in legal's hands and all of that stuff is is there to basically protect the

20:43company and create these these rules and standards that that it's actually good for the community that's

20:48how the community gets better because it gets the people out that don't want to follow those rules

20:52let them go somewhere else but it's okay to be the bad guy yeah um so how you're looking for a very

20:59specific type of asset it has to have it has to have had this this tax credit or this credit or

21:06government i guess government um stipulation whatever it is that you guys are getting how do

21:10you go about finding these specific type of properties they're brokers that specialize this and

21:15then we we do have like direct to like one or two big big developers that we do reach out every couple

21:22of months like our first property was on my first property but my partner's second or third he actually

21:28he got so he got me into the affordable housing space i wanted to do the value add he actually bought

21:33something in 2018 and absolutely crushed it and the more we talked about it the more it just made sense

21:40for us to go that doubt and he originally purchased from this developer so we ended up really talking

21:45to the developer developer said hey this is a 50 unit it's too small for us at this point

21:49like they are like the fourth or fifth high biggest affordable housing developer in the country

21:54so they're like we're we're getting rid of this asset this is kind of what we we had in mind we had

21:59this negotiation and we took it down so a lot of it is just having that access to some of those

22:04these affordable developers otherwise there are a couple brokers that just really specialize

22:09and even a lot of the bigger broker and a lot of the nationwide brokerages will have an affordable

22:15housing division like the cbre's the marcus millocheps they will have affordable housing division that only

22:21deals with live tech properties and there's a couple different versions of affordable housing there's also

22:25usda properties there's also pure like project based voucher so there's different segments as well of

22:31affordable housing but it's very very similar to regular value add thing the same brokers just

22:38different deal yeah that makes sense all right man well we have crushed the time here so we we are

22:44definitely into where we need to get into the the quick question round but um i did want to hear

22:49about uh about hospitality you guys have a kind of unique model just tell me i mean we don't really have

22:55too much time to go into it but uh tell me a little bit about it you guys are i mean i'll let you

22:59you go ahead and give the gist but it sounded interesting yeah so we the affordable stuff is cool

23:04because it's all out of state and genuinely speaking i do like the idea of driving to my own properties

23:10and seeing them so when we did network with a couple people locally we live about 25 minutes from the

23:15jersey shore so we started getting opportunities right in the jersey shore and jersey shore is a very

23:20unique market it is very very expensive average home price in some of the areas that we look at

23:25or a million to two million but you get these grandfather properties that are are just outdated

23:33and tired same thing that you have with your your outdated um which are landlord that's owned it for 50

23:40years and has no cost of capital you see the exact same thing over here so we're we're right now we're

23:45purchasing a 45 room motel with with a four-bedroom house on it it is on the beach but yeah original

23:52owners 50 years they've owned it they live and breed this property they love it and we're coming in and

24:00we're getting to kind of give it new life uh so this is the second property that we we've done we have

24:05our own hospitality now management company similar to how we did it with affordable the partners that

24:10are involved in the hospitality side are not involved on the affordable housing because it's just such a

24:15different skill set it's all about marketing and creating an experience it's it's funny sometimes

24:19like i i look at my team and i say you know i on on the left side you know the the price per the

24:26month is what we get on my right side's price for the night so sometimes it's like it's such a different

24:33clientele but we honestly i i love working the two and i think there's just world of potential there's so

24:39much of these properties that you see it it's they're too small like the acquisition we're doing is

24:46eight and a half million it's too small for the big guys like you're not going to get a big

24:51motel hotel company coming in and taking it and then it's too big for the guys who just started has a

24:57duplex triplex because it's it's a legitimate business operating on that real estate side of it

25:02so it's it's this beautiful little niche that we really really love and the locations are sometimes

25:09like just amazing nice man well we're gonna have to wait we're gonna have to talk about that the next

25:15time you hop on the show um we're definitely it's a unique model you know buying older uh hotel motels

25:21and turning them into kind of a boutique something that you'd see on airbnb um it's a unique model i

25:26love to i love to love the idea um but next time we'll go into it this time we have run it down so

25:32it's time to jump into the quick question round are you ready yeah let's do it all right starts with

25:37education it could be any form could be a mentorship program you've been a part of conference you've gone

25:41to book you've read anything i need two recommendations one for general life wisdom and

25:45then one for real estate general life wisdom let's start with that one is just surround yourself with

25:52the people that you could envision spending your like the people you want to model your life out

25:56like for for example my youngest kid my oldest kid plays travel soccer and you get these conversations

26:02with with these dads all the time and there's the various of the dads of like the cliche

26:07guys who are like you know still looking at you know other you know opposite sex and they're making

26:14comments and then you get the guys that are just the family guys who it's all about the family and

26:19they they do the right things and those are the guys you want to emulate so just surround yourself

26:24sometimes your childhood friends they age out for a reason you want to surround yourself with people

26:28that really really want to be almost your role models so that's that's general life real estate almost

26:34similar but i will do one piece of education is go to your local events that you know they have the

26:41reas and stuff and then you get invited to other events but i just from education perspective you just

26:46want to actually take action from these events like i can't stress enough like there's this local meetup

26:53and i go there uh and there's very few people who are probably at my level at this point but there's

26:59also you know the two or three really nice guys that i talk to and sometimes like i cringe when i talk to

27:06them because they've been in the exact same place for like three years and they've done nothing like

27:11absolutely nothing like to them the act of buying like one rental property is just so overwhelming that

27:19they can't get out of their own way and every time i talk to them and they're the nicest guys they show up

27:24every single time but that's not that's not action that's that's just the start of the action that you

27:29need to take yeah yeah and uh i mean you that same sentiment has been echoed across many many episodes

27:36and whenever anybody says it i always like to point it back to the listener you guys if you have been

27:41on the sidelines you've been you know consuming educational content you know figuring out what you're

27:47going to do just take this as a kick in the pants and just go out and get a deal done it doesn't

27:51matter what the deal is it could be a small you know one bed one bath apartment could be anything

27:56you just need to get it done and then that'll get the ball rolling 10 years down the line you're

28:01going to be happy that you did because all it takes is action action is what will inform the next step

28:06with that i'm going to move us on to the next question this is about the u.s it's a big place there

28:10is a lot of opportunity out there give me the single metro you're most excited about investing in today

28:16at the midwest we are really big in ohio northeast ohio we just closed on a deal last week on it 45

28:23units we love the we love to think it from a price point we can get things between 60 to 80 thousand

28:29dollars a door for rents that are over a thousand it works works really really well and then the rest

28:34of the markets we really look at the affordable stuff but yeah midwest ohio i stay away from the hot

28:39areas the texas the floridas the carolinas the great gray areas but you know it's andy

28:46yeah i like to be in areas where my property taxes are not going to triple overnight yeah that's

28:50fair and those are the areas ohio is there a specific area like dayton cleveland yeah so we're

28:56outside of uh we're outside of cleveland so we're outside of like the north canton stark portage county

29:02those are the counties we really like kent because we love the kent state university we like these

29:07markets that are not really talked about and you know they don't have the double digit population

29:12growth but it's it's nice and steady and the income works for those areas perfect all right

29:17next question is about lessons learned not every deal we get into goes the way we expect it in fact

29:22pretty much every time something goes wrong and that's when we get to learn a lesson so take me back

29:27to a deal that went a little bit sideways for you guys and then what was the lesson you pulled from it

29:32uh so i've i've invested in three ponzi schemes which is awesome yeah yeah as an lp i have i've

29:40cut my thing and that's i think the lesson is you really have to know the person you're partnering

29:45with and even if you're an lp you're still the word partners in it just really know who you're

29:51partnering with if if the returns are too good to be true if they're guaranteed and they're fixed and

29:57there's just so many red flags if you see them on social media and they never say anything negative

30:01and it's just all positive positive positive there's just a lot of things to look out for uh

30:06but don't get into investment and think you're gonna have a perfect record it just doesn't happen

30:12you're gonna have your misses but i will tell you especially when you're getting into like a new

30:17asset class every asset class you have to learn and like for self-storage i i invested in this one

30:23area i didn't realize how important i mean location is important across every asset but for

30:28specifically for self-storage if you invest in an area that is a little bit higher in property crime

30:33you are going to be crushed by uh so many break-ins and it's just something you don't really know until

30:38you've gone in you've done a deal and so you're gonna you're gonna get hit in the face and you just

30:43gotta you know you gotta take it as part of the part of the yeah and i'll say look the highest roi

30:48you're gonna have is from those complete mistakes and they at the time they are absolutely devastating

30:56but later on you are gonna make so many different decisions because of what you went through

31:02you know like you like you're never gonna lose so i am confident i could say this i don't have

31:08many lp deals left and i'm not gonna ponzi ski myself i am pretty sure i will never get hit by

31:13out of ponzi ski again uh but at the same time it's really like the learning lesson and i've

31:19always talked to two different type of investors one person who you know has shared my experience

31:25with ponzi schemes and bad deals and they're out of they're out of it they're like i'm never doing

31:30this i'm going back to the thing and then i talked to an investor who really understood his lessons

31:35really understood owned it and then the roi going forward is infinite at that point yeah yeah yeah it

31:42should never stop you um they are lessons and and they're they're valuable because you can take that

31:47and going forward you won't make that mistake again like for me for self-storage i will not buy

31:52anything under 20 000 square feet because uh you can't well even really under under 30 or 40 000 square

31:58feet because you can't hire on-site management and that is the lesson that i put took from these smaller

32:03deals that i've done so just because you made a mistake and you learned a hard lesson doesn't mean you

32:08should stop you know going forward in that particular direction it's just a lesson you just

32:13you know take the hit and then you apply it to the to the next deals that you do all right um i'm gonna

32:18take that opportunity and move us on to the obverse of or the opposite of that so we talked about lessons

32:23learned let's talk about highlight reels sometimes you get into a deal everything goes right or almost

32:28everything goes right and it kind of sticks in your brain as that that special deal so take us back to

32:33that one tell us what it was and how it went yeah so we recently purchased uh november 2024 we bought

32:40in ravenna which is portage county ohio 26 units 1.45 we went in there and um we were able to basically

32:50in less than 11 months basically turn over 15 out of the 26 units rent roll from 15 000 to 23 000

32:59um basically it's a full refi we're just waiting for the prepayment penalty to go down it's three

33:05two one so we're we're ready so basically it's a fully executed business plan in less than 11 months

33:11they usually don't go that well sometimes you catch it you know it was one of those where we put a camera

33:17system early on we got rid of we were really really aggressive so sometimes also a piece of advice for

33:24your listeners pay attention to when a deal closes especially if you're in you know a four season

33:30environment if you're if you're looking at underwriting and you're looking at projections

33:34and that deal is closing in november and december realistically speaking the operators shouldn't be

33:40doing too much shouldn't be evicting a lot of people in december january february it's hard to lease

33:46up in those months this deal specifically what's amazing about is basically in november we started

33:53you know we started slowly kind of doing one or two evictions a month but then we ramped up in

33:58march and then basically from march to like may and like a three-month period it went completely

34:05completely done and it usually never works out that way but as a piece of advice pay attention to the

34:11winter month closings date and if you see a super aggressive year one and they're closing in the

34:16winter good luck yep absolutely all right uh that leads us to the last question this is for the

34:22listeners you've given us a lot to think about i'm sure people want to reach out get in contact

34:25with you um this is a two-parter where can they find you and then what can they expect when they

34:29reach out yeah the best way is sihcapitalgroup.com uh click learn more or just contact me directly

34:37my first name d-e-n-i-s at sihcapitalgroup.com uh we don't have an investor relations person all the

34:45partners are in there so you're going to talk to one of the partners that are involved on the deal

34:49so just reach out and i like establishing relationships i don't think investors should

34:55invest day one they should invest after they could really check off a lot of boxes that they feel

35:00like they know the person who they're investing with there you go all right i will put that link

35:06in the show notes so if you guys want to reach out to dennis all you got to do is click the little

35:09more in the description it's going to pull down that full description and in there you can find his

35:13links all right man that wraps it up thank you very much for hopping on the show okay thanks for

35:19having me man that was awesome absolutely for everybody who's with us today thank you guys for

35:23showing up you are the reason we do this so if you guys have any questions reach out to me gabe

35:27at the real estate investing club.com if you guys want to support the show just leave us a review

35:31other than that i hope you guys have a great week keep rocking real estate and i look forward to

35:35seeing you on the next episode

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