[00:00:00] Seyla/Aileen: [00:00:00] Thank you, everyone for joining today’s episode of the, “How Did They Do It” Real Estate podcast.  We are your hosts Seyla and Aileen. Today our guest is William Walker. William serves as a managing partner at 4M Capital Real Estate Investment. He’s a CPA in the state of Tennessee and registered appraiser in Georgia.

[00:00:17] He has a diverse experience in portfolio and single asset valuation, transaction due diligence, valuation review, quality of earnings, analysis, construction, and property management. So, we have a lot to talk to him about today. So, we’d like to get started. Welcome to the show, William.

[00:00:33] William: [00:00:33] Thank you very much for having me.  I am excited to be here.

[00:00:36] Seyla/Aileen: [00:00:36] Can we start off by telling the listeners a little bit more about your background and just a little bit how you got started in real estate?

[00:00:42] William: [00:00:42] Yes, absolutely. I started working when I was younger, about 12 years old for a family business, washing cars and cutting grass. So learned the value of hard labor early on and later on, as I was going through school and college, I was looking for a path that could provide more flexibility and kind of escape the nine to five that I had been used to punching the clock as a one man landscaping team back in the day, and also had done some internships through college that gave me a good experience of the corporate world. I studied accounting and finance and logistics in school, but eventually made my way into real estate by listening to podcasts, self-educating

[00:01:25] I was exposed early on to some family friends that were in real estate. Didn’t really ever get a lot of detail, but at least planted the bug in my ear. But I remember reading a book by Warren Buffet and basically, he broke it down into, you know, passive income and wealth is built through owning a company or owning real estate.

[00:01:44] So that just really made sense to me, the real estate aspect. And I ended up buying two single family rentals. I had set out with a goal of buying a hundred rentals and made it to two before I’m like, okay, this is not going to work. You got to kind of find a [00:02:00] different strategy here. And I began looking more into the commercial space and about that time, I had graduated college with an accounting degree and got my CPA license and was going to work for a company called Ernst and young.

[00:02:12] And I started out as an IT auditor and wasn’t the path for me. And I ended up cold calling and really kind of pursuing a group internally with our senior on call transaction real estate. And that was a transactions consulting role. And we were really a value portfolio for large companies like post properties, AMCO, Courtland, a lot of major multifamily reads.

[00:02:39] So it gave me a really fast education on kind of the corporate and institutional side of the business. At the same time, I had joined a coaching program and an education program that gave me insight to more of an entrepreneurial focus and kind of, from the ground up, as I say, boots on the ground.

[00:02:58] And so it gave me perspective on not only the institutional side, also on the entrepreneur and kind of the small business startup side. And I saw things that were similar, and I saw things that were certainly different, but those two things really, was a huge catalyst for my career in real estate.

[00:03:17] About a year later, I had enough of the corporate world, and I had a great job or two with a great team, but I had just always been inspired and motivated to start my own company. In 2017, I left that job to go into business for myself and syndicate multi-family and bounced around and hustling for a long time in order to get where I am today.

[00:03:43] But it’s a little background in fast paced story of kind of where I started and where I am now. But full time in the business, we are vertically integrated and not only purchase the real estate, but also manage and do the construction on most of the real estate. And I have a lot of fun with it. I love the business; get to meet great people and I’ve really enjoyed it. My journey Hasn’t always been easy though.

[00:04:09] Seyla/Aileen: [00:04:09] Thank you. And then you mentioned that you started off with the two single family homes. Do you still hold those family homes still, single family homes or did you?

[00:04:16] William: [00:04:16] I sure do. Yes. And I still self-manage those, things as well. One, I just rehabbed last year or so.

[00:04:23] I moved out of college. I financed the house, moved couple of friends into the house to help pay. And that was my first forte into the rental business. I leveraged, HELOC loan on that house about a year later with some equity that I had created through fixing it up and just the national market increasing and appreciating was able to buy my second rental.

[00:04:45] And I still hold those to this day. They are doing well, except Airbnb’ed on one, get to stay their part time. And then the other one’s pretty much automated and just kind of like a little savings account. But it was good experience, good learning on, you know, getting my feet dirty or my hands dirty and get in experience on the ground, managing property, dealing with residents.

[00:05:08] I realized soon that the scalability of single family, the scalability I wanted wasn’t  possible with single family, but it was a good learning experience for me on those two single families that got me started.

[00:05:22] Seyla/Aileen: [00:05:22] That’s great background. Thank you for sharing that. One of the things I want to ask is when you first started with your first syndication for the first multifamily deal, how did you find that deal and how did you acquire that deal? Can you walk us through your story?

[00:05:37] William: Yeah, absolutely. I was at a ULI meeting at Atlanta, Georgia networking, just trying to get my name out there and meet anybody in the business hustle. And I ended up meeting a lady who introduced me to a loan broker with Arcadia mortgage out of Atlanta.

[00:05:55] And at the time, didn’t think much about it, but ended up becoming pretty good friends with this [00:06:00] guy. And we stayed in touch and we’re communicating regularly on deals that I was underwriting. And he would give me financing guidance on the debt side for those deals. But ultimately, maybe three or four months after I met him and maybe a year and a half to two years after I’d really.

[00:06:16] William: [00:06:16] I started focusing on multifamily full time. He called me one day and just said, Hey, I’ve got a deal that my borrower backed out of. He can’t perform, he’s given up the deal, you know, are you interested? And I said, heck yes, send it over and ended up getting plugged in through a relationship. We got put in contact with the broker on the listing broker on the deal, my contacts got the debt on the deal. So it worked out for kind of everybody involved and was pretty seamless. That was 160 units built in 1986.  Paid about 62 a door for that property in South Georgia.

[00:06:55] Seyla/Aileen: [00:06:55] So what gave you the courage to find, like, to start up? You know, like a lot of people when they first started out as a first day, you know, like they probably were looking for something below a hundred and you started out as 160 units.

[00:07:07] How, did you get a courage to when you know, to talk and do a networking and say, Oh, I can do this.

[00:07:16] William: [00:07:16] Seems like it happened overnight, but really, you know, that. The two years kind of leading up to that acquisition was really where the blood, sweat and the experience was, built before through single family rentals, I worked with an investment group that was buying packs of single-family homes in Chattanooga.

[00:07:33] I was walking these deals, doing the analysis for them. I also was involved in the development of eight single family homes in Nashville where I served as project manager on one. I was raising capital for those deals, working with group of three guys that I had gone to school with. One of them had lived with me right out of school in that house I told you about.

[00:07:53] So I’m just really getting experience kind of the organic way I was in the rain meetings. I was talking to [00:08:00] anybody that would listen to me in the beginning and building my education online and building my experience and building my relationships. All of that really started coming together for me in 2018.

[00:08:13] I know to give you some time perspective, I’d quit my corporate real estate job in 2017 and, went out on my own. And then February of 18, I partnered with my now partner. Who’d been in the business three, four, five years ahead of me and really rounded out some of my skills and complimented some of my disadvantages in the business.

[00:08:38] All of that work leading up to the year 2018 is really where the confidence came from. And when the opportunity was presented to us, all of that legwork and relationships and betting properties and talking to brokers and everything that you hear about that you can’t really fast forward through in my opinion, had already been done.

[00:08:59] But you know that first property hits and it seems like it happened overnight really quickly. Well, really, you know, it was a culmination of blood, sweat, and tears leading up to that acquisition.

[00:09:11] Seyla/Aileen: [00:09:11] Awesome. So, after that first multifamily apartment syndications and can you walk us through what happened after then, how you build or scale up your business after

[00:09:23] William: [00:09:23] Yes If you’ve heard of the law of the first deal.  I mean, if you’ve listened to enough, Podcasts you’ll hear that term. That was true for me and our team really after the, that day. And we had another broker reach out to us in the same market within two months, I believe. And we had locked up and put under contract our second deal. That was 165 units built in the early seventies, long-term, Fannie and Freddie eligible.

[00:09:50] It was a long-term owner who would own the property for 10 plus years, maybe 15 plus years and was just ready to retire and sell the [00:10:00] property. It was a broker that wasn’t a big national player. So off market in a way, but that got us rolling on our second deal. It’s crazy to look back, but that was a mid-18, and then in 19 ended up going on to close 13, more transactions or 12 more transactions.

[00:10:23] For 13 of total, since that July 2018 date, and really just leveraging relationships. And once you, get the name as a buyer in the market, and lenders know you’ve closed, the brokers know you’ve closed, you know, kind of reaching , getting over a plateau in a way, because there’s a lot of people that are trying to get into the business and brokers are smart and the lenders are smart and they know that there’s things that have to happen in order to qualify you to get one of these loans.

[00:10:50] So it’s kind a like a little bit of checkpoint that you had, and I think opportunities start opening up when you get that momentum.

[00:11:01] Seyla/Aileen: [00:11:01] So for the deals, were they mostly competitive or were you and your team, the primary bidders?

[00:11:08] William: [00:11:08] Most of the deals that we did were off market. I spent a lot of time assessing multifamily property with Ernst and young and kind of understanding where to look for property and how to look for property.

[00:11:21] And, and then coupled with the relationships that we’ve built through my partner and I. We really just attacked the market we had sold 1100 doors in 2019, early 19, and we were buying about at the same pace. So, we were very motivated to put that equity to work. We had investors that were happy with their returns and wanting to roll that money into future deals.

[00:11:44] We had money that we needed to put to work. So the focus was there, the relationships were there, you know, a momentum was there, none of it happened overnight or, It seems like it it’s quick and it’s lucky, but it’s really a culmination, of [00:12:00] effort and work and relationship over time. In 2019 though, we had some good success and were able to get some deals done.

[00:12:08] Seyla/Aileen: [00:12:08] So you mentioned that in 2019, your team, you and your team were able to close 13 deals during that year.

[00:12:15] One of the things that I think the most difficult part was raising capitals and building the investor list. Will you be able to share of how you were able to scale up and build that pretty quickly and be able to be able to close those 13 deals?

[00:12:29] William: [00:12:29] A lot of it comes down to relationships and partnerships  and as you know, in this business we’re using investor dollars that are trusting you at their source of capital, who don’t necessarily want to be the boots on the ground and ultimately managing assets day to day.

[00:12:46] So meeting those people, getting in the right rooms with those people and building trust over time, we do a lot of conferences. I met my business partner now through a real estate conference in 2016.  We started working together two years later. A lot of those relationships are formed in those small circles.

[00:13:05] Unfortunately, now we’re a little restricted with what we’re available to do, but there’s alternatives online and smaller meetups and your local markets, but the relationships I think are key in the business and building that trust and confidence in investors that you know what you’re doing, you’re able to be a good steward of their capital and you can ultimately execute your plan and take care of their investment.

[00:13:29] Seyla/Aileen: [00:13:29] Got it. And if I’m looking at your background, you basically touch a big part of the syndication process. And so which part of the actual syndication itself, that is your favorite?

[00:13:40] William: [00:13:40] I love the hunt. The hunt and, the deal is I’m definitely, that gets me excited. I love looking at property and assessing new deals, building those relationships.

[00:13:50] That’s definitely my favorite part, but I enjoy the process and I love being able to take a property that’s run down and has deferred maintenance and [00:14:00] fixing it up and bringing it all the way through that life cycle and seeing the other result on the other end.

[00:14:05] Seyla/Aileen: [00:14:05] So when you are doing the hunt, do you have any suggestions of how we can find these off-market deals?

[00:14:13] William: [00:14:13] Yes. I think networking with brokers is certainly something you hear. I think a lot of people go after more of the national players and the national shops that everybody hears about. Maybe getting in contact with some more of the local brokers who don’t necessarily market on a national basis. So, it’s almost like a hybrid off market scenario where, you know, the broker might be listing the property, but it’s not going out to the Cushman and Wakefield’s national database, you know, everybody that’s subscribed.

[00:14:43] So that’s one way. And you know, also, the good old fashion way of start researching properties that you’re interested in. Some of the people that are trying to get into the there’s a good size property that’s not really, it’s overlooked by a lot of the more established players and it’s too big for, you know, the beginners.

[00:15:04] And I would say that’s anywhere from 50 to a 100 units kind of range. And if you’re willing to you know, be a little more involved on the management side. You know, a lot of times owners of those properties are more mom and pop and there’s, more opportunity to speak with them and make them offers versus deals that are locked out by, you know, the Titans of the broker industry who have the relationships dating back decades kind of transaction.

[00:15:31] Seyla/Aileen: [00:15:31] So can you talk a little bit about how you build and maintain the relationships?

[00:15:36] William: [00:15:36] It’s the follow-up, the Fortune’s in the follow-up. You know, I think if you read any sales strategy, you know, a lot of sales is really based on emotion and people get to a different emotional state at different times. And you know, sometimes that can be triggered by your wife, throwing something at you saying we’ve got to sell this property.

[00:15:56] so, you know, you just never know when, when people are going to get to that sale point and you want to be in front of them when that happens,

[00:16:04] Seyla/Aileen: [00:16:04] When you  find a new deal so especially off market deal and some of the off market deals, you do not have all this financial data for you to analyze and do the underwriting properly. Based on your experience, what are the metrics that you actually look at in order to be confident that you actually give a valuation to this property.

[00:16:25] William: [00:16:25] Yes that’s definitely my background and you can get lost in a model really quickly and spend a lot of time on assessing a property and when you, when you get something that really makes sense, you want to go through all of those levels of assessment, but as you know, this business is  numbers game as well.

[00:16:44] And you’ve got to get through it a lot of property and be able to assess that quickly without wasting too much time, for obvious reasons in the same time, review more properties. So a couple of things that I look at to help me quickly assess things based on underwriting, so many deals that I just know where our model is and know what our cost of capital is, and ultimately what I need in order to get close and really do that next level and detailed review.

[00:17:11] But I’m following rent per door and sale price per door and that ratio, and depending on what it’s costing to raise money, the year of the building, the location, you know, I want that rent per door ratio to be higher over 1% of my sale price per door. And there’s exceptions to that. But that’s a quick rule of thumb that I look at just to say, okay, you know, this is a definite no-go or maybe this is worth looking into closer.

[00:17:40] Seyla/Aileen: [00:17:40] That makes sense and you mentioned that you worked at Ernst and Young before and you working on acquiring the institutional properties out there. Can you elaborate what’s the difference for our listeners, what’s the different between institutional and what they’re looking for?

[00:17:56] William: [00:17:56] Yeah, it’s a huge learning opportunity for me and [00:18:00] walking into that position, you know, to give you an example, post properties was a big developer in Atlanta. In 2016, they sold about 25,000 doors to mid-America who is now the largest publicly traded REIT and multifamily unit count holder in the country. So, we were hired to consult on that transaction.

[00:18:24] Basically when post-primary, excuse me, when Mid-America turns around purchases that portfolio and values that portfolio on their balance sheet, our job was to provide an opinion of reasonableness and say, okay, we put our name on this. This is good value. And ultimately that affects stockholders and share price.

[00:18:44] So it was a big deal, but that taught me so much about the valuation. Of these properties, how they’re being assessed by the larger companies, but the syndication process and the fundamental is pretty similar. You know, ultimately there’s groups of people that are raising money from various sources, whether that’s private individuals or, the pension fund of New York.

[00:19:09] Using those funds to purchase a cashflow and asset and ultimately run that through an investment cycle. So the fundamentals are the same, but the major differences that I witnessed going through that program in the group with Ernst and young, the tree group, as we call it, it was, they were much, institution is much more forecast, focus, much more five-year , ten year focused and really drilling down on every assumption.

[00:19:37] And I would say getting in the business for yourself in private. And starting from a small ground up type of company versus you know, being able to raise a hundred million dollars and kind of roll into the game with a large source of equity. Not many people can do that. Maybe very stern of Starwood capital, or somebody can pull that off, but most of us are starting at a smaller level.

[00:20:00] [00:19:59] So I think the difference on the institutional side and more of the forecast projection focus to what I’m describing with the, more entrepreneurial route is you’re really focused on day one operations. And then what that property is going to cost me day one to operate and run. And you’re really focused on the operating expenses of the asset and making sure that you’re covering your debt service, you’re able to pay your investors versus these $3 billion transactions, which is what mid America paid for posts roughly.

[00:20:32] And, you know, it’s such a large number that you’re not looking at, it’s such a minor, a micro detail. So that was, there was another other things to note, but you know, the construction costs and really understanding the construction costs were another thing that were really estimated and assumed at the institutional level, versus we’re going out, getting bids, talking to GCs, really trying to figure out how we can lower those costs on a rehab by rehab basis per unit for our investors.

[00:21:02] Seyla/Aileen: [00:21:02] So, right now your companies, what is the size of units and what type of properties are you focusing on right now?

[00:21:11] William: [00:21:11] We have a portfolio of about 1700 doors, across the Southeast right now that we’re owning and managing and primary sponsor and general partner on. In our focus so to give you a little perspective, the last year we purchased in November was a 208-unit property.

[00:21:29] We purchased that deal with a bridge loan and we’re putting about three and a half million dollars into that property to renovate it. Increase the occupancy and we’ll either refi that or sell that property in the next year to two years. We also purchased the property in 2019 that was 50 units and it was a great deal.

[00:21:47] We owned a property across the street. That was 172 units. So, we had some resources in an operational support and the market and were able to take on the smaller deal. So [00:22:00] we’re opportunistic, we’re not such a big firm that we’re in a scoff at, you know, a smaller property, but we’re also not going to move into a new market for a smaller property.

[00:22:09] So I think it depends. We like deals that make money.

[00:22:12] Seyla/Aileen: [00:22:12] That make sense. So, what has been the most difficult challenge that you have faced so far throughout your real estate journey?

[00:22:19] William: [00:22:19] Sticking with it. It didn’t come for me fast. I don’t, I try not to have to measure how long it’s taken me to do something, but I think it’s human nature to, measure ourselves and the speed at which we’re able to accomplish our goals, but just sticking, you know, there’s a point in time where I left corporate career.

[00:22:38] I was doubting my decision and I had a great spot and it could have led to more opportunities and private equity or more corporate opportunities. And I kind of gave up on that to pursue my own company and build it from the ground up. And there’s definitely times of doubt when, you know, walking through a night crappy house and chatter, the new guy, you know, and it’s raining outside.

[00:23:01] And then I think like, what am I doing? Why am I here? I think during those moments, you know, it’s character building and. Kind of cut your teeth and earn your stripes a little bit in this business because not many people are taught this or, you know, not many schools can replicate a program. You really got to kind of get in and learn from mentors and just get out and get experience.

[00:23:22] So I think going through that process, a lot of people probably give up easier or give up too easy or, you know, before they get that first assurance. But. Yeah, the first, deal really gave me confidence. And you know, you build your confidence over time. And I think people can realize that your confidence is growing.

[00:23:41] And if you’re in the business for over a year, then the brokers are understanding like, okay, this guy’s not just a fly by night. He’s, you know, I’ve seen him he’s been around or her she’s been around. So. Yeah, I think just sticking with it was probably the toughest thing, but it’s not rocket science. The fundamentals can be learned and you know, you can do this, this business.  It’s a lot of hard work, but it can be done.

[00:24:06] Seyla/Aileen: [00:24:06] I want to ask you a personal questions regarding when you moved from your W2 job to do your real estate full time. You know, you have a CPA, you’re working for a very big company and you’re in a really good position.  How do you prepare yourself, knowing that I’m ready.  I’m ready to jump into, to do jump into real estate full time.

[00:24:28] William: [00:24:28] Yeah, good question. I joined that in the mastermind program and at the time I had put money on a credit card that I didn’t have to be a part of that program. I don’t recommend, everybody doing that, but its kind of put myself in a position where my back was against the wall and I had to make something happen.

[00:24:47] Otherwise it’s going to be carrying credit card debt that I couldn’t pay for it for a while.  Just in the office one day and I felt like my education was there. I felt confident. I remember one of my senior managers had dumped a lot of work on me, you know, a week or two prior.

[00:25:02] And then I found out kind of that day, that none of it was really useful or needed and we had to redo it. I was just feeling down. I remember thinking that I’ve got to try this. If I fail, at least I’ll have tried, and I can live with that. But it was a leap of faith and I didn’t have a lot of resources.

[00:25:21] I didn’t have any support from, you know, any financier. I really had a very small amount of savings and credit card debt, student loan debt, two mortgages that I needed to support I had some rental income coming in. But I, I just decided that I was going to make it work no matter what or whatever I had to do. And that was kind of the attitude that, carried me through.

[00:25:42] And, I spent a lot of, a lot of nights eating peanut butter and honey sandwiches and not going out and not doing some of the fun things that my friends were doing at the time. And, I’m really just sacrificing, but that gave me the time and the flexibility I needed. [00:26:00] I didn’t have, you know, responsibilities of taking care of someone else.

[00:26:03] And I was in a position where, I could make that decision just for myself. It was a tough decision to make, and I’m glad I made it now, but it was not easy. And you know, it just kind of got to a point where I felt like it was right for me.

[00:26:19] Seyla/Aileen: [00:26:19] So how has real estate investing impacted your life?

[00:26:22] William: [00:26:22] Oh, it’s changed my life in so many ways and has been a very rewarding, I love what I do. And we’re still you know, a small company in the grand scheme of things. I there’s days where I’m doing things that I wish I could delegate or that I don’t always love, but I love the overall business in the process and having something that I can grow and develop over time. And the hunts of the deal is something that I is exciting to me and being a good steward to investors and being able to offer people investments that they’re able to earn money and be successful with as well.

[00:27:01] I think all of it’s rewarding. It’s exciting for me, it’s fulfilling, and I love the business.

[00:27:07] Seyla/Aileen: [00:27:07] What is one thing that you know now about real estate that you wish you knew when you first started?

[00:27:13] William: [00:27:13] Oh, that’s a good question. I remember thinking, I wish I had started behind single family in 2008, when you can pick them up for nothing at the foreclosure lot, but everything happens for a reason.

[00:27:26] And if I hadn’t done that, I might not have ever gotten into multifamily, but you know, maybe just, start. I think a lot of people maybe underestimate what it takes to do everything and get it done. partnering is important relationships, educating yourself, all those things, you know, just, I guess I wish I had known what I didn’t know earlier, but, you know, everybody has a different path and we all figure out on our own journey in life.

[00:27:53] So I would say something along those lines,

[00:27:57] Seyla/Aileen: [00:27:57] What tool or techniques have you used to improve the [00:28:00] efficiency of your business or personal life?

[00:28:02] William: [00:28:02] Blocking on the calendar and  trying to be scheduled, even if you don’t always stick to that leveraging virtual assistants and people that can help you delegate work and try and focus on revenue, generating activities or building relationships.

[00:28:20] And yeah, and networking and, some of the podcasts, I think this is a great tool to learn and grow your network.

[00:28:28] Seyla/Aileen: [00:28:28] Thank you so much. We really enjoyed learning about you today and really commend you taking that leap of faith and investing in yourself. And, you know, a lot of people think that it’s just by luck that you fall into the multifamily space, you know, getting to deals, but they don’t realize how much hard work it is to get into it.

[00:28:44] So definitely commend you for all the hard work that you do.

[00:28:48] William: [00:28:48] Thank you very much. I appreciate that. Thank you.

[00:28:51] Seyla/Aileen: [00:28:51] And so if our listeners wanted to find out more about you and your company, where can they go?

[00:28:55] William: [00:28:55] Our website is www.4MREI.com and then I’m on Instagram @ WillWalker_3, either one of those social media platforms and web platforms, you can get connected and get in touch with me.

[00:29:10] Seyla/Aileen: [00:29:10] Thank you so much.

[00:29:11] William: [00:29:11] Thank you very much. I enjoyed speaking with you.