Co-Hosts: Ronn Ruiz and Martin Canchola, Co-Founder of ApartmentSEO.com 

Guest: Wayne Courreges III, Founder of CREI Partners From Marine to Millions:

Martin: Welcome to The Multifamily Podcast with Ronn and Martin, powered by ApartmentSEO.com. Now today’s guest is definitely someone very special, and someone we’re definitely very interested to learn more from. His name is Wayne Courreges III, the founder of CREI partners. Wayne is a Marine Corps veteran and multifamily syndicator, helping busy professional generational wealth through passive investing. With over 60 million in assets under management, his company focuses on apartments and business stores like Flex pays, also for your RV boat and other commercial storage needs across Texas, Louisiana and Alabama. Wayne’s true mission is to protect capital, deliver returns and give back to the communities he invests in. Wayne, welcome to the Multifamily Podcast. 

Wayne: I’m excited to have the conversation Martin and Ronn. I’m not used to on podcasts having two hosts.

Martin: Two Host?

Wayne: This is going to be fun. 

Ronn: We try to mix it up and, you know, have some Q and A for you. But first thing first, we want to say ooorah to the Marines.

Wayne: Yes, it’s another what I say, not as lean, not as mean, but still a marine.

Ronn: There you go.

Wayne: So many years, 2003 to 2007, so it’s been a while.

Ronn: We appreciate your service. Thank you. Yeah, and hopefully we can’t wait to hear more about this today. But I wanted to start by asking you how, when you began your real estate journey in the Marine Corps, how did your military background shape the way you lead and invest today? Obviously, there’s some good discipline in the military.

Wayne: Yeah, so I actually started my real estate investment journey in the Marine Corps. I was 19 when I bought my first single family home, right outside 29 stumps, I mean, palms, and I loved it. Actually, I was there, like a year and a half. It was a great duty station. I was with first tank battalion. But, yeah, I bought the, you know, two bed, one bath home, you know, right off, right off the main road there. And so, I got the real estate bug early. Actually, got more so in high school, knowing, you know, particular family that was big in real estate development and such. So cut the bug early and started that process. But I would say, like the Marine Corps man, because I’ve gone, haven’t gone through many years of cycles of real estate, but grit, you know, just pushing forward one foot at a time, it’s, you know, a lot is good, but a lot of this tough and, you know, just part of, you know, real estate site, really, any investment. I always also, like in the Marine Corps police for me, you know, when things seem to be tough, like learning it could always be worse. I mean, it just, it’s a mentality fix, of like, when you think things are rough, like it could always be worse. So, it’s a good shift of mindset. So yeah, there’s a lot. And then leadership leading by example and from the front and all that good stuff.

Martin: Yeah. And after you were done with that, after your corporate CREI career, what gave you the confidence to jump into full time investing and start CREI partners?

Wayne: Yeah, so I left the Marine Corps in 2007, went right into a company called CBRE, a large commercial real estate company. I was with them for actually 16 years, and it was a great journey there, which great people, learned a lot had really great leadership opportunities and positions with the company. By 2019, I started CREI partners. We focused in heavily on Multifamily, which didn’t compete with the day job, because, you know, mostly office and retail at that time, CBRE focused on. So, I was tailing down on Multifamily. And really, you know, I was doing a lot of the asset management, a lot of, you know, for me, it was an easy transition into what I’m doing now, because I was doing it, you know, day to day, since 2007, right? It wasn’t like I was coming from a tech industry or aviation or something, and going into real estate, all that can happen outside of that. It’s just my journey was real estate day one.

Ronn: That’s amazing. Yeah, we’ve definitely heard of that acronym CBRE.

Wayne: Yeah, it was great. I mean, 16 years, you know, the values and the things that you know, I would not have learned, but I just related to a lot. So, when I started my company, and I started bringing on people, you know, thinking through culture and you know, what I wanted to have in my company. A lot of that was coming from the Marine Corps and CBRE.

Ronn: That’s definitely amazing. One of the questions I want to ask you also, because I’m an investor as well, but a big part of your mission is helping professionals invest passively. Why is that model so powerful for people who don’t have time to manage properties like we don’t?

Wayne: This is where I get really, like excited, pumped up. So, when I find most of our investors, they’re, you know, they are not wanting to leave their day job. They want to diversify. And so, a lot of times people pitch like, oh, get out your day job. Like go pass, invest, and you can live in Montana. And there are people, like my wife is from Montana, like we have gone there. And there are definitely people that are like, how do they live up here? And, you know, passive income has worked for them. But most of our investors, they want to diversify. They want to get off completely, off Wall Street and go to more Main Street. And what I love about it is that I don’t have to worry about a tweet or a geopolitical issue or foreign war, you know, it doesn’t impact my investment. And so, we are heavily invested in real estate into, you know, as an investor myself, because I don’t have to see the ups and downs with what’s going on outside that neighborhood, that market. And so, you know, when I help, you know, busy professionals. They’re focused on, you know, what they do best, whether that’s being a doctor or an attorney. I mean, these are typically high net worth individuals who, you know, don’t have the time to deal with tenant’s toilets or termites. And so they are, you know, working with us as experts. You know, I would say experts, but like, you know, people who do this for a living, and, you know, partner with us on that. So, you know, it’s a form of syndication, and I’m sure you’ll talk about a lot on your show. But syndication is simply as pulling money and resources to buy a property that you couldn’t buy, potentially on your own, or didn’t wouldn’t want to, because it, you know, would be maybe a higher risk on your own. I would also say syndication is not just like Multifamily, but people syndicate, you know, buying a baseball club or whatever it is. Like you can, it’s not typically just one big wealthy investor or one institutional owner. It’s, you know, something we can do to diversify a little bit off Wall Street and make great returns for the investors. 

Martin: And usually, if you can make a bigger deal, usually get bigger profits versus, like, you know, one little Four Plex, compared to a whole portfolio of, you know, major compounds and versus, you know, a little building.

Wayne: 100%. Like the economy is a scale of not only just operating and managing it, but, you know, just the little bit of work from an income or reducing expenses. I mean, for those listening, I mean, every property is a business. And if you think of it simply as a business, revenue minus expenses, net operating income. The higher net operating income, the higher the value of the property, right? And so we don’t over complicate what we’re actually doing, and it makes it, you know, a little bit more fun, fun to talk about so and you can do drive revenue and you can reduce expenses a lot easier when you have a little more scale. So, for us, it’s 100 to 250 units that we’re focusing on right now.

Martin: So, Wayne, what do you tell first time investors who are nervous about trusting their money to a deal that you know they don’t have full control over?

Wayne: I would say, do not invest unless you are sophisticated enough to make the right decision. Now, sophisticated doesn’t mean like you’ve graduated at a great college, and you have great career, like you’re obviously sophisticated. You wouldn’t even be thinking about real estate investing or listening to your podcast if you weren’t sophisticated, right? Because you’re growing, you’re wanting to learn and grow. So that, my definition is a sophisticated person. But I would say, like learning about Multifamily as an investment. And so, this is not a plug or pitch. I’m just sharing a resource that I personally have, you know, provided, you know, people. It’s passiveinvestorcoaching.com and that platform, it’s free, and it’s just content of, it’s like over five hours of videos that I’ve done, broken up in small pieces about how to evaluate a deal, how to evaluate a sponsor, how to know if it’s a good area. What are the return structures typically like? What are the fees that typical sponsors charge? What’s a private placement memorandum? Like there’s all these different things, that’s really not rocket science, like it’s easy to comprehend, like get. And so, I try to, like make it easy for people just to, like you know, if you want to have a data dump, like just learn it all on a weekend, not all of it. What I’m saying is, like you’re not gonna learn everything in a weekend, but you’re going to get a lot of information quickly, that’s what I would say. So, the other thing too is, you know, if you are, if this is the first time investing in a deal, you know, I already mentioned, like this is a business, right? Revenue minus expenses is NOI. So, understanding and hearing what the business plan is, and are there any red flags. So, things seemed a little over, you know, overly, you know, projected, meaning like 8%, 10% rent bumps, you know, expenses, you look at taxes, insurance. So those type things. I mean, it’s hard to fit it all in on podcasts, but that’s where, you know, provide that extra resource for people to do. At the end of the day, guys, like you’re trusting your money with a jockey on the horse. I happen to be a jockey on the horse of CREI partners, right? So, but part of that is like Martin and Ronn, like you have to like me as a person and feel like we have we share good values, because our investment is, and I say our investment, because I’m investing too, is typically a five year term. So when I say, like new investors, if you’re not vibing or feeling like you can communicate or have good dialog, good conversation with this jockey sponsor, then you know, there’s other people out there, you know, to build that relationship and do the first investment with.

Ronn: That’s amazing. That’s great. Great feedback. So, what was that website again? Passive investment?

Wayne: Yeah, passiveinvestorcoaching.com. 

Ronn: Investor coaching.com. Okay, so can you share some of the top tips you have for passive investors to get a deal, even if they don’t have that background. You’re talking about, like the high net worth of individuals?

Wayne: Yeah. So, the better deal, you know, typically, the syndicator, sponsor, is going to have a webinar, and they’re going to present who their team is? What the business plan? why they like the deal? What’s the value add? And so, you know, ideally, you would have already a relationship or have had a conversation with that company or that team or that person. But say this email or someone on Facebook came up and you’re like, oh, you know, 20% average annual returns to x multiple. You see this ad, you’re like, okay, I’m gonna click it. I’m gonna click that. Okay, well, that’s good. Well, now let’s do the webinar, right? And does it make sense? Is it professionally done? What’s the overall feel? I mean, ultimately, you know, again, most people has the senses of like red flags or anything like that. If everything’s feeling like, okay, well, I’m interested in learning more, then definitely schedule a call and go through, hopefully they’ll show their underwriting. To me, it’s a red flag if they don’t show their underwriting and show their assumptions, if they’re not willing to take on a conversation, because, I mean, it’s crazy, but sometimes, you know, they’ll do a webinar and they don’t want to ask or answer questions. Well, you know, it just to me, it’s mind blowing, like definitely have those questions. The other thing too is, for first time people, you know, and it’s hard, because, like, there are certain markets I would not invest in personally. So, if you live in a market that maybe is not landlord friendly, or, you know, a lot of job growth, that there’s, like, actually negative migration of people, like there’s, you know, that’s not a market to invest in, right? So, some common sense of, you know, is this area going to perform well with the investment? But if you’re in an area that are opposite of those things, that there’s jobs coming, there’s growth, there’s landlord friendly states, or, you know, cities, then really invest in those cities. Ultimately, you know that, say Northwest Houston, I’m just throwing that city out there, is a good market within, you know, market, within that Northwest, like let’s dive further into the submarket. And what better investment in a city that you already are bought into and already feel like, okay, this area is growing, and you have more market knowledge, if that makes sense. So, it’s hard to do if you’re in different areas you’re investing in an area you don’t but sometimes just partnering and investing on a deal in your backyard, you know, makes sense.

Ronn: So, you emphasize solid underwriting, which is great point. What’s one mistake you see often that could kill a deal before it even begins?

Wayne: So, from a solid underwriting, this is more from the active investor. Which the active investor are the guys and ladies who source the deal, underwrite, you know, putting the deal together. Passive investors are passive, right? So, but sometimes I see, when I look at deals, you know, one, they’re in a flood zone. I mean, I know it’s not underwriting. Technically, they’re, you know, real estate, but it’s a form of doing due diligence. And for me, I’m like, real estate is already a risk. Why like add risk by putting your property or buying a property right in a flood zone, touching it. So, we don’t, you know, that’s one thing we look out for, but everybody’s risk tolerance is going to be different. The other thing too, is on the due diligence or for underwriting. You know, understanding what a rent roll and a T 12, passive investors should understand the terminology of this. So, you know, the rent roll, T 12, if you, income statement. So those are the type things that go through that coaching program, but understanding that, and then when they look at the underwriting, which hopefully the sponsor has provided, they can go in and just like, hey, does the rent roll sort of tie out? So, it makes sense on the expenses, is that sort of tying out to where the, you know, prior, you know, owner was, what’s the business plan? And, you know, I see a lot of mistakes with taxes or insurance. Sometimes sponsors, especially the newer syndicators, they don’t get an insurance quote, or they’re not assuming that you’ll get, you know, in Texas, at least, our big driver of revenue is taxes for the state, so they’re going to assess you at the highest possible value. And so, we do, we underwrite at 100% of our purchase price, right? Because we can actually show a sell agreement say this is our purchase price. You can’t tax us more for what we paid. So, you know, sometimes people do like 80% of purchase price or 90%. And so, it’s just being a little more conservative, seeing the rent bumps, there’s cap rates. And, you know, a lot of this jargon is probably like, oh, gives people a headache listening to it. But these are the type things, if you don’t understand some of these things, like don’t invest. Like learn through books, your podcasts, my coaching program and I don’t sell. There’s a lot of people out there that are selling a coaching program, like, oh, join my, like I do not want to be a coach. I did not make money. I make money off real estate, right? So this is truly, like I keep pushing it, but it’s like, it’s more just from an educational standpoint, like learn, learn all the, you know, the things that you know, people who are investing, you know, can ask questions and feel like they’re, you know, feeling more confident about where the money’s going.

Martin: Yeah, 100%. Invest in that education, and especially if there’s some good resources out there. I mean, you got your, you know, your platform. I mean, I know they probably heard of bigger pockets. There’s all kinds of information and podcast, YouTube, you know, out there. So much information now. There’s no reason why you can’t, you know, get your game up a little bit more and feel a little more confident. And if you don’t know, just, you know, ChatGPT, study modem, and there’s so much stuff you can do now. So, keeping, you know, maximizing, you know, really the investment, what assumptions are most important in today’s market? Is it rent growth, exit cap rate, debt terms, what’s the best things to kind of look for in evaluating a deal?

Wayne: It’s going to be market by market, and even within that a submarket, we spend a lot of money on costar and other resources that we’re able to get a little bit more analytics and see, you know, what’s going on behind that the city. I’ll give an example. I grew up in Austin. I love Austin, special place my heart. I want to eventually, one day buy in the Austin area. I don’t know if I’ll buy in Austin, but around Austin. Austin’s not a landlord friendly city, so there’s areas around it that are more my pace of investing. However, you think about all the supply that the development that’s happened over the last few years, well, a lot of supply, so new development, which is part of the real estate cycles there, you know, development happens, but typically development happens late in the stage. There’s this timing of supply. Rents are increasing dramatically because, you know, there’s high demand. So, developers go in and they start developing, but development takes two to three years. So, by the time that happens, you know, the market can shift, and so there can be an oversupply in the market. So those, one of the things you know, definitely look out for is like, and this is where those analytics, and you know, these, and this would be what the sponsor when they’re talking about risk, right? They should be telling you about the good stuff, right, obviously, but they want, you should also know about the risk. And part of that risk is, what is the supply look in the next, you know, two, three years? Is there a huge 500- unit property being developed, you know, a mile away, half mile away from the property you’re potentially buying. So, you know, that’s something to definitely look for as far as today’s market. Now, in a few years, that there’s no new supply coming on, those permits have dropped dramatically. So that’s a different conversation in a few years. So, but in today’s environment, I think looking at supply, especially within the mile, one mile radius of the property, is important. You know, cap rates. Who knows where Cap rates are going to be in the next five years? You know, they, you know, for me, I base our cap rate projections off costar. You know, there are people that are like, you know, they’ll do, you know, 50 basis points, or five basis points per year up or I just, you know, I based off costar. But what I do, as I do a sensitivity analysis. So when we present an opportunity, I’d look at my base case, which my base case, exit cap rate. And for those people that are like owners of businesses, the cap rates sort of like a business multiplier. It’s, you know, if you take that divide by your NOI, your net operating income, that’s value the property so. But your cap rate, if you show, like a sensitivity analysis of like, say it’s six and a half percent, or six and a half caps, or 6.25. You can sort of see, the investor can see like different return metrics based on where that cap rate ends up being. And so, I say that because like a project, you know, we can come out with an opportunity and say, okay, we’re at a 20% IOR, but that’s based on the capitalization rate that I feel like it’s going to be in that year. But if I show a sensitivity analysis, instead of a 20% maybe it’s a 13 or 14%. Are you still okay with it? I would still be okay with it, but everyone’s going to be a little different. So that would be another thing I would look at for sure in today’s market.

Ronn: That’s amazing. Beyond Multifamily, obviously, I wanted to see the youth expanded into RV, Boat flex-based storage mark mentioned earlier. What sparked that strategy to do that alongside apartments?

Wayne: Yeah, so like 80, not 80% of our portfolio is traditional multifamily. 20% is more speculative. We’ve done build the rent communities. We’ve done this storage that we’ll talk about here in a second. We’re doing a Multifamily, a retail and an office, or office retail, a hotel and a multifamily development. So, 20% of that, I sort of sit that in the non, you know, Multifamily space, right? And so, the storage came about. I had a partner in Huntsville, Alabama, who I’ve known, you know, a long time and trust, and he told me about this RV Boat Storage Facility he was looking to, you know, buy, and we wanted to partner. And so, you know, as an RV or myself, I was like, I totally get it. Like if you’ve got a half million dollar plus RV, like you need a store and an enclosed storage spot, you know, I had a travel trailer. Was no half million, it was a $25,000 travel trailer. I do not need that space. I would need a car Porter, you know, like, but, you know, if you’re putting in, I mean, some of these are like million plus, or they’re really nice, you know, so they’re gonna be park. So, I was like, sure, partner, I get it. We looked at the deal, I underwrote and all that. Well, I went out there one day, change out locks, change out leases, help them out. And it wasn’t just RV, like you got that was part of it, but it was a lot of these businesses. These businesses, generator, disaster recovery, HVAC, anybody that had inventory, they use this type of storage. And this is large storage, 20 by 50. So, 1000 square feet, 14 by 14 foot roll up door, you know, power, there’s LED lighting. This is not your typical Mini Storage, right? And so, as I’m talking to these people, like they’re a lot of more businesses, like as I mentioned, you know, the list goes on, but of the type of companies. And so, I just got really excited. So, I’m like, this is an extension of people’s business. And you know, the expense to, you know, when you look at the expense ratio, like it’s in the 30%, like 32% expense ratio. Compared to multifamily, which could be 50% to 55%. So, more cash flow is what that means. So, I came back to Brian Kelly station, on my way back from the airport to home. I’m looking for land on the side of the highway, like I’m going to develop this, right? And I found this sign. It was a build to suit sign. So, I went over, it was Mueller steel building next door. I went over to them, like I know who owns this land. They’re like, yeah, it’s. They were able to connect me with the owner. I bought the land, and we opened up last July on it. And we’re, you know, about 56%, 53% to 56% occupied, which is outstanding in a year. In many stores, it typically takes three years. So, the demand is there. We charge 750 a month in rent. I mean, so, you know, it’s not cheap. So, businesses, high end RVs, boats, you know, Texas Parks and Wildlife is a tenant. Like, there’s just, it’s a lot of different uses. So, I love, I don’t know if I love it enough where I’m like, okay, I’m gonna make the portfolio bigger. You know, I may do another one here or there, but Multifamily is my bread and butter. Is what I really have a passion on. But I think it is definitely worth looking into, and it’s been working for us, so.

Martin: Now, what do you think of making these particular asset type, so attractive to investors? Because there has definitely been a boom, and, you know, self-storage, you have the flex space, iOS, industrial outdoor storage for the truckers. I mean, it’s just taken off right now, and it’s like, that is the hot thing right now, the hot thing in real estate.

Wayne: Yeah, so from a cash flow investor. I mean, so on my, I would say there’s two types of, well, maybe three types of investors. You got your cash flow investor; you have your equity upside. Who doesn’t really care about cash flow. They just care about the exit. They want to double their money in a short period of time. And then you’ve got the people who have the mixture. And so, for storage, there is a lot for that my type of storage. I don’t like mini storage guys, because there’s a lot of competition. There could be, and they’re easy to build. So, the barrier to entry, entry is easy for storage. So, you know, but this type of storage, is harder barrier to entry. And as I mentioned, like the expense ratio, if you’re at a 32% expense ratio, you’ve got a lot of cash flow, you know, coming your way. Now, some of the negatives of it is depreciation. So real estate investors, for passive investors, they like those paper losses, like it’s steel and concrete, there’s not a lot to depreciate. Whereas Multifamily, you’ve got your cabinets, your flooring, you know, all that, you know, it all adds up. So, depreciation is a lot more in Multifamily. But I do like the cash flow aspect. I mean, our last, we’ve been doing about 10% cash on cash, not accrued, like actually paying out that for, you know, our, one of our storage properties, that’s a 20 by 50 storage. So, I would say, you know, what’s attractive is cash flow, and then outside of cash flows, the depreciation. So, investors can get both.

Martin: Now, in regard to like off market deals, obviously, those are kind of gold mines, right? Because when you’re finding something on the market, it’s already going to be kind of listed at whatever price they think the value is. So, if you’re able to find off market deals, usually you can get them for a better deal, and usually the only one bidding on at that point. How do you consistently find and close these type of opportunities?

Wayne: Well, I’ll give you a playbook, you know, it’s been really good for us. So, we focus in on a market, within that market, you know, you got to know, like particular submarket. We do 150 units property. So, we’ll look at, like class B, 1980 newer property. And you know, we’ll find out who, you know, we’ve got the praise, appraisal website, find out who the recorded owner is. Go to Secretary of State’s website, find the true owner. It’s a lot of work. This is not; it’s a lot easier just go to a broker. There’s a lot of work. So, you go to that, go to the Secretary of State, find the true owner. We use been verified. But there’s other platforms out there where I’ll give you five or six different potential phone numbers of the seller or the owner. And then we, you know, we reach out through text messaging and calls, sometimes letters. And so it, you know, when you’re going finding on market deals. So, there’s an offering memorandum have been written, or, you know, there’s a sign out front, if it’s a single family, whatever it is, you know, you’re really just competing to be the highest bidder, you’re buying it. And so, you know, the broker relationships we have known that we don’t buy on market, and so we get a lot of opportunities off market. That doesn’t happen when you first start. It happens when you close several deals, and you’re good to work with, and you get the deals closed. So, you know, going away. I always say, like, you know, most real estate is in that red ocean, bunch of sharks going after the same meat. And what I’m trying to do is do more blue ocean, where a lot of people aren’t going, and where they’re not going is doing all this actual heavy work that sometimes sucks, because it’s a lot of just data. I go then going after it. And, you know, one deal could really change anybody’s life, honestly.

Ronn: Totally. So, what are your core essentials when you’re selecting your investment team? Like from brokers, property managers, like I can’t really imagine your team sizes.

Wayne: Well, I mean, from our team member. We have a full-time investor relations person. Now we also have a full-time asset manager. So, as the portfolio has grown, it was really important for me to add team members to provide, you know, hospitality experience on the investor relations side, but also be very involved with day-to-day management. Now, we do, you know, boots on the ground property manage. We’re on the asset management side. But like today, I was on a call with the property manager, because my team member, he’s on vacation right now, so I filled in. And, you know, we’re going over collections, we’re going over the occupancy and the plan and, you know, just every week that has to happen. And then I get daily emails from about KPIs, about, you know, where we are on all these different metrics. So, when I’m selecting my team, you know, internally, it’s people that you know are capable and day one can fit right in. We’re a small company, so the training ground, it’s hard to train in a small company, if you’re trained from a big company. And that’s what, you know, one of our team members did. We’re for a massive company that came over, obviously on our third-party management, we’ve had changes with third party management. It’s hard to find a good management company, but once you do find that team, and they think like an owner, and you’re on, you know, it, then it’s a rinse and repeat, because then you can truly scale, you know. We, you know, I travel quite a bit, and, you know, I’m plugged in. I’m always working, you know, because that just who I am. But I’m enjoying where I’m at with my family, and I’m able to do that because I’m not in the weeds of third party. I’m not managing the day to day, right? So, to me, that’s important, that you got to trust that team and build, they got to perform, you know, and follow, you know, at least meet or exceed that business plan, which is the budget. Other core essential, I mean, broker relationships are key. You know, that is just for those that are trying to get on the active side and looking at broker relationships, it’s just taking them out to lunch or coffee and they’re not going to take you serious, unless you have somebody who is going to partner with you, who has an experience, because that’s going to be a lender requirement. You can’t just go get a Multifamily property with no experience. So, you know, a broker, you know worth their salt, like they’re going to be wondering who your team is, right? And if you think about yourself as a quarterback, you know you can’t just throw to yourself, right? So, you need your tight end, you need your wide receiver, maybe pass off your running back. You need your line, so you’re not sacked every time. So, it’s a similar thing where, what is it going to take to close the deal? The lender is going to want somebody with net worth and liquidity. If you don’t have that, you need to go find it. It’s got a key principle. Someone’s going to want to, the lender is going to want to know who the person is, that’s the jockey on the horse. Like who has the experience to actually execute on the business plan. You’re going to have, you know, capital raisers and people who are going to join in on a little bit on asset management. So, you just got to figure out, like what can you bring to the table? What can you not bring to the table and then fill in those people with relationships? It’s a lot of work, and that’s why people just want to, you know, a lot of people just want to passively invest, you know, there’s just, you got to build a team and, you know, you got to be, you know, I mean, guys, you know, we’re, how do I say this. Like on the active side, people don’t realize how much risk it is to put a property under contract. A lot of times, I’m putting up 100,000 plus on, you know, just getting the deal under contract, that’s hard money, meaning, if I don’t close, I’m out that money, right? It’s, you can still be in real estate and enjoy your day job and stuff and passively invest and let people like us on that risk, or really want to do it that okay? You just got to find partners who are willing to do it. 

Martin: Now, are you able to be obviously, you probably got to be an accredited investor. But also, are there ways you can use your Roth IRA to invest in your funds as well? 

Wayne: That’s good question. So, because we’re selling a security, it’s governed by the Security Exchange Commission. We follow, we typically do Regulation D, 506 B and 506 C offerings. So, 506 B, we are able to take 35 non accredited investors. An accredited investor is what is termed by the SEC as being, you know, salary, 200,000 plus, if they’re an individual, 300,000 if they’re married, or a million in net worth, excluding their home. And there’s also some other exams you could take to be accredited. So, if you’re not accredited in the sense of the way SEC defines it, then you need to reach out to sponsors who you can build a pre-existing relationship with. And a pre-existing relationship on a 506 B offering, you can invest in real estate syndications. But that sponsor can only take 35 of those people. Now 506 C offerings, it’s only accredited investors. Meaning, the benefit for me is I can publicly advertise, I can do social media. I can publicly advertise, but there’s a third-party verification step where say you say you’re accredited. It has to go through a CPA or an outside third party to verify your accreditation. So, we do accept both non accredited and accredited, but we have to make sure we’re doing it legally within the type of security agreement where we’re selling. So, either the 506 B or 506 C. Yeah, a lot of info.

Ronn: And that’s amazing. So, shifting gears a little bit, this really resonated with me as well when I was writing your profile about giving back. So, one thing that sounds out for me is your commitment of giving back. Can you share an example of how you’ve made a difference in a community, for example, that you’ve invested in?

Wayne: Yeah. So, I mean, one of the big things we do is active in is the Rotary Club. And so, we’ve actively, you know, we air them at, I’m in, I’m chair, leading the biggest fundraiser, which is what we call field of valor. And it’s for Veterans Day week. Company is an individual sponsor a flag, and that flag is typically in honor of a veteran, you know, past or present, right? And so that, all that money, and this is what I love about it, because most charity organizations, they take, they keep a slice of the pie for their administrative, like 100% of that money, and it’s close to 50,000 that we raise every year, goes to grants, scholarships, things that the rotary club gets behind, which is a lot of education and projects throughout the world to help. So that’s one big thing. I’m also a scout master with our troop. So, you know, we, you know, do a lot of service that way. Now on our properties, we’re really big at like, community events and building, you know, a community that people can feel safe and feel comfortable going home to, and, you know, providing opportunities for relationship building. So, we just do a lot of events and opportunities that way. So, during covid, I mean, our team was very hands on with helping people find resources and assistance to get through rough times. And so, you know, just depending on what the scenario, what’s going on? You know, we do try to help the community, both it truly insider, you know, apartment community and, you know, definitely surrounding it.

Martin: So, thinking ahead, what’s your long-term vision for CREI partners and for the investors who grow with you?

Wayne: So, we will continue, probably that 80/20 split of buying Multifamily and then on the doing more of the development. I see us growing into a position where, you know we are, you know, growing to like that 200, 300 unit, you know, that would probably be the next phase. I mean, right now we feel confident and the 100, 150 units, but there’s even bigger scale and bigger growth upside, sometimes on these larger ones. But then you start competing with institutions like Mel life or Invesco, JP Morgan, you start competing with the big dogs. So, it’s one of those things you got to look at. But I for us, if you were to ask me a few years ago if you would have thought I would have employees at this stage, I don’t know. I mean, for me, if I can do two, three deals a year and do an amazing job for our investors, like we are all blessed, like we’re doing good, I don’t see myself being the guy every month we’ve got a deal going on. Like we’ve closed the transaction in July or mid-June of this year. Prior to that, we closed the project in November of last year. And so, it’s and we have a deal under contract now will close next month. And so, you know, there’s probably two or three deals a year, that may go up to five or six over time. But it’s really not about the number of investment opportunities. It’s about the quality of investments and the stories. So, I just, I want to grow it sustainably, and, you know, and be conservative, right, protect investor capital, and if we can do several base hits, we’re going to do extremely well. It’s when people go after the home runs every single time. That’s when people get in trouble. Yeah, I’m very blessed a lot and obviously blessed, but, like, it took a lot of discipline, because 2020, to 2022, like I wanted to buy so many properties, but the numbers just didn’t work. People were coming in, like a million dollars more, and now they’re losing their portfolio. And, I mean, it’s like it’s sad, but, you know, I rather, you know, do really good deals, take care of investors, have good relationships with them, and we just continue all growing together that way. 

Ronn: And when you said, if you had asked a couple years ago, like do you think, because the game has changed for now?

Wayne: So, my mindset, so as we’ve grown, I just haven’t, you know, it’s funny, because it’s a good question you asked. So, when I started the company in 2019, I grew it to probably about 20, 25 million assets, which was like three properties. And so, I was asset managing, doing investor relations. I was doing it all, right? The entrepreneur, doing it all. And then, as you saw, we started scaling 30, 40 million estimates, which means, like, another two properties. It’s like, okay, well, we’re collecting asset management fees. We get acquisition fees, like those fees are, you know, growing my income to invest and do other bigger things, but my time is getting caught up where I’m not doing, I’m not being as effective, right, on my investments, right? So, then I hired, I invested into, you know, people to join my team and doing so, it then allowed me to step back and do more, like, you know. And so over time, you know, the team will grow because we’re doing more and more, and it’s the right thing to do. If you’re not expanding your team and growing but yet you’re growing your portfolio, you’re going to be worn thin, and you’re not going to really do the business plan as effectively as it should. So, I would say I just didn’t think about that a few years ago. But as we scaled, I’m like ok, man, I would really love to have a pool in my backyard? Well, I technically could, but no, like even, like tonight, like for dinner, I’m going to meet, you know, potential team member, you know, over dinner. So, it’s investing in the company and the and the resources to support our investors.

Ronn: I think that’s beautiful. That’s a great answer. So, for those aspiring investors that are listening, who want to get into their first passive deal, what would you say is the best first step? 

Wayne: Passive investor coaching.com. Educate. Do podcasts, listen, you know, binge, listen to all your podcasts. And, you know, go out there and just learn as much as you can. And it doesn’t take years to learn this stuff. This is not rocket science. This couple months of just like digging in, learning and reading, you know, listening. But I do think there’s very it’s interesting. There’s a lot of books about active investing, about raising money and buying deals and asset managing. There’s tons of books. There’s not a lot of books and time and resources on passive investing, and so, which is a shame. And I think even with like groups, like a bigger pocket, stuff like, provided so much value, but heavily focused on single family, you know, fix and flips, PR or, you know, yeah, notifications side. So, yeah, I would, that would be my first step is, you know, passiveinvestorcoaching.com. Learn as much as you can, ask questions, go to some meetups, network. And then, as you do that, you’re going to get opportunities. And I would say, I’m speaking to the world out here. Don’t feel like you’re missing out an opportunity if you say no, there’s going to be another one. Right timing, feeling confident. Now you don’t want to be like, decision paralysis, where you’re never going to invest, you’re just on the sideline. But there’s this balance of like, okay, well, now you’re ready to get the education. The first deal comes in, you get excited, like, oh, they want me. Of course, they want you. Like, they’re, you know, they want to partner with you. It’s raising capital. But, yeah, I would just say, continue listening to this podcast, getting a lot of that information. And, you know, don’t feel like you’re going to miss out on a deal when that first one comes.

Martin: Yeah, there’s always another deal coming down the line. That’s for sure. 

Wayne: There is, there is, and I do see it. I do mean this, like if it’s a year and you’re like, I’m still have it. I mean, come on, at some point you’ve got to trust process and even, and maybe say their minimum investments 50,000. Well, if the sponsor really thinks long term, like they’ll accept $a 30,000 or $25,000 investment. You just got to ask. I did it for my stuff. Like, yeah, I’ll do a minimum 30. Like it’s not going to be published out there. But yeah, those listing you want to get in and taste what it’s like to get k1 and see the communication style and all that. So, you know, it’s, I would say, get in the game, but do it in a form of not being risky.

Ronn: I would say it’s like Vegas. It’s like, gamble with what you can, right? Don’t go to the ATM if you don’t have money.

Wayne: And don’t invest in syndication to real estate if this is your last $50,000, $30,000 because it is not liquid, that’s a great point. Ronn. Like it’s, this is when you’re, you know that Maslow Hierarchy of Needs, like you’re sort of up there in the pointy area of alternative investments, yeah. 

Martin: And the point is, they keep rolling it over pretty much, right?

Wayne: Yeah, there’s different. I mean, that’s a great point, Martin, because then you get 1031 exchange. I mean, we deal with those investors in ourselves, like we’re, yeah. I mean, there’s so many different ways you could take that conversation with…

Martin: Yeah, that’s like a whole another episode, right?

Wayne: I’ll do it.

Martin: All right. Well, you know, keeping that in mind, I want to see investor potential investors. They get the education, they feel a little more confident. What are some ways to keep tabs on the opportunities that you have up and coming? Is there a way, like sign up for email list, anything like that? 

Wayne: So, if you decide like, okay, we’re not doing the pass investor coaching, that’s cool. Just CREIpartners.com, you can join our investor list, email list, schedule a call. But you know, I just, if you can’t tell, I’m just passionate about helping people, just provide as much information. So, you know, my website is, there’s a lot of info with podcast and eBooks and a lot of the stuff. But you know, for those that are just like, man, you’re thirsty and you just want to learn as much as possible, as quickly as possible, you know, definitely check out PassiveInvestorCoaching.com. Once you are in that system, my team member, Shelby, you know, she’ll reach out and we’ll start building a relationship that will then allow for opportunities to invest, so.

Martin: Beautiful. 

Wayne: That’s what we’ve been doing.

Martin: Sweet. Ronn, any final thoughts? 

Ronn: No, I mean, this was action packed. I definitely think that we, there’s so much more that we could unpack here, right, as far as, like, deeper dive into strategies and returns and, you know, success stories that you’ve had, and clearly, you’re a success. I’m so grateful to have had this opportunity, and I really would hope that we can maybe do a round two and dig a little deeper.

Wayne: That would be great. Thank you all so much. 

Ronn: Yeah.

Martin: Well, Wayne, thank you for your service and for your leadership in Multifamily and flex space investing. I mean, that’s so exciting just to be a part of, you know, multiple different niches to kind of learn and kind of learn and kind of grow both of them. I mean, this episode was packed with a lot of goodies, so audience, I hope you enjoyed it. To our listeners, if you enjoyed today’s show, don’t forget to subscribe. Leave us a review and visit ApartmentSEO.com for your Free Marketing Analysis. Thanks for tuning in to The Multifamily Podcast. Until next time bye all, bye Wayne, bye Ronn.

Ronn: Cheers.