What's happening, YouTube? It's Matt Faircloth. Welcome. Welcome. Welcome to the Mentorship
Monday program. My partner in crime on Mentorship Monday, Justin Fraser. Come on,
Justin. how are you today? Hey, what's happening man?
What's up, man? What's up, everybody? [crosstalk 00:00:13].
Good to see you. Good to be here. Matt said to bring you in. That was my cue.
That was my cue. [crosstalk 00:00:22]. Herve, then, listen.
You and I have been talking about this concept for a while. There's a lot of markets across the US,
and we are a focused company. We only invest where we're disciplined. We only invest in a few
markets, but as you and I have already discussed, that's not because there's only two or three
good markets in the US that are worth investing in. That's so that we can scale,
build out a asset portfolio in certain markets, because it makes Justin's life more effective,
not just easier, but also makes it more effective for him to be able to manage a small group,
a group of assets in a certain city. That doesn't mean that there's not great cities
out there for other folks to invest in, and we want to highlight those markets.
Tell us a little bit more about the show you've got coming up here. Justin, can you
pop the light? It's probably going to squash me out, but you can pop the logo up here. Herve,
tell him briefly about [crosstalk 00:01:16]- Hold on a second. I'm popping up the logo. We're
going to do something fun when our guest comes on. Let's just get into it here real quick.
Okay. All right. Herve, tell them real quick. The guest we have today,
we teed up for you because it's right in line with the market hunter conversation. Tell us
briefly what the show's going to be all about. Oh, perfect. I appreciate it, guys, and thanks
for having me on today. No, absolutely, real pumped up, excited to have this show.
It is basically Market Hunter Thursdays with Herve, and we're going to be just bringing on
random guests. We're going to have commercial brokers. We're going to have property managers.
We're going to have investors that really know the market of investing, particularly for
multifamily investing. We're going to drill into the cities. They're not going to just be cities
that the Derosa Group itself focuses on, or it's all multi-family. We're going to be going
east coast, west coast, midwest, north. We're going all over the place. You'll see my logo.
When we go ahead specifically, and we target markets, we don't use a broad fishing net. We
use a bow and arrow, right? We're very, very specific into the markets that we target,
but we know that not everyone is like that. We know everyone doesn't target the same markets
that we do, so we want to open this up. I can't wait to show you the cities that we're going to
be bringing. We're going to be kicking off this Thursday. I'll give you a little insight. The
first city we're going to be discussing is Lexington, Kentucky, but we got some
nice cities lined up for you every Thursday at 12:00 PM after that. Again, drilling down to
what's going on in that market. Why is it so interesting or maybe not so interesting
for multifamily investing? What are the growth drivers? What do you see really taking place?
What are some of the inflection points occurring over the next couple of years? What do you like
to eat and drink? What are the restaurants you like to go to? Come on, let's get a
mushroom mellow and all this other stuff. That's food. What's the best food you've got
in town? That's great. I hadn't thought of that. What's the best food in Orlando?
Listen, what we're going to do, Matt and I, we're going to bring out our guests. Matt and
I are going to jump on out of here. We're going to give you guys a quick preview of Herve's first
show. Herve is going to do this live as part of Mentorship Monday, because Jevon's got a question,
but hey, Jevon, welcome to the show, man. What's up, Jevon?
Thank you. What's going on, guys? Pleasure to be here on this Mentorship Monday with you all.
Jevon, I'm going to let you ask your question. Matt and I are going to jump. Everyone,
stay tuned. The branding is going to change real quick as a little preview
for what you're going to see on Thursday. Hey, Herve. Pleasure to meet you, brother.
Hey, Jevon. Likewise, my man. Glad that you're on the show today. Let's get into it, man.
Cool, man. This is perfect. I wanted to ask you, how do you establish a relationship
with brokers in your target market? Hey, Jevon, listen. That is a good, good
question. It's something that I had to learn the hard way, because there's no real easy way for it,
but I'm more than happy to share with you my experience that I found really, really effective.
To be honest with you, there's no secret sauce. There's no premium subscription
to this at the end of the day. It's really, really, old-fashioned in regards to getting
out there and having a face to face meeting with your broker. I know it might be a little
bit more difficult during these COVID times, so you might have to rely a little bit more on phone
calls and Zoom calls and so on and so forth. To the extent that you can go out there, this is
what I would recommend. Once you've identified the market that you would like to go ahead and invest
in, go ahead and identify not one, but a few properties in that particular market that
you would be interested in purchasing, whatever you're interested in. It could be single family.
It could be obviously small multifamily. It could be midsize or large multi-family,
whatever your cup of tea is. Once you've gone ahead and narrowed down,
let's say two or three properties that you would like, that you'd be real interested in purchasing,
go ahead and put together almost like a little packet for them. Get a picture of that property.
Get the numbers down. Show that broker that you have done your homework, that you're not just
picking up the phone and saying, "Hey, do you have any interesting off market deals?" They're
never going to call you back. These brokers are absolutely overwhelmed, not only with individual
investors, but more so with small, mid-size, large real estate investment groups and even
institutional buyers, when you start talking about Warren Buffett's team and things like that.
I would put together a little packet of the three or four properties in a particular area
that you're interested in buying. Put the numbers together. Know that you understand the cap rate
in that particular area, whatever numbers were available for that property. If you found it
online, whether you found it on Zillow, you found it on any of these other websites, LoopNet and
so on and so forth, you know that at least you have an ideal of what that particular property
can go for. Put, bracket a price range in which you would be interested in at least beginning
to have a negotiation with that buyer. At least if you bring your broker that level
of information, then he or she is going to have an easier conversation when they pick up the phone
and they call the owner of that property, right? They're going to know that, "Hey,
listen, you know what? This dude, Jevon, he's not just some rookie investor that just wants
the list of all of my off-market deals. This guy did his homework. He knows the area. He's taken
pictures of the area. He went to Google Maps. He took a look at some of the cops. He has an
idea of how much he wants to spend on renovation in each of the units and so on and so forth."
As you probably know, there's a lot of public information out there on real estate.
Get as much as you can. Get a good idea of the numbers. They don't need to be exact,
right? You don't have to come and tell them, "I'm willing to pay $1 million for this." You don't
need to tell them that, but you can bracket a range, show them that you've done the homework. If
they are willing to meet face to face, if you are willing to do that flight, or if not that flight,
that long road trip that Justin and I had similarly did last week down in North Carolina,
then go ahead and do so. Then you meet up with them. Then once you meet up with them,
show them that information that you put together. They're going to take you that
much more seriously. Right? It's doing something different than the majority of
investors are currently doing, which for the most of them is picking up the phone
and just calling the broker. They're wondering why they're getting so many voicemails and they're
not getting return calls from those brokers. No, that was awesome. Thank you for that. Yeah,
that was deep. I like that. Yeah. I have follow up questions, but I know
you're going to get into it. I'm interested in watching your Market Hunter Thursday site.
Yeah, man, absolutely. How do I put this offering packet together,
all these other things? There's a lot to cover in there. You gave a lot of juice.
Yeah, yeah, absolutely. Listen, man. I just want folks to succeed and do the best that they can.
I'm going to go ahead and offer a lot of the best practices that I've incorporated in going
out there and targeting properties. Like Matt said, I was in North Carolina last Tuesday,
drove around, visited 14 properties on my own. Only one of them was listed. 13 were off market.
To the extent that I was able to go ahead and tour a unit for those off-market listings, I went ahead
and did so. I pretended to be a future tenant, straight up. To the extent that I was not able
to go ahead and tour a unit, then I just went ahead and drove the property. I would go to the
leasing office. They would give me the brochure. "Here's the square footage of our two bedrooms and
three bedrooms. This is what the monthly rent. Here's the concessions that we're running right
now for future tenants and so on and so forth." Then I took a lot of pictures, obviously, right? I
went ahead and I sent them to our underwriter and we just got to work on it. Well, guess what I did
today? I went ahead and I called up a broker down there in North Carolina who knows of us because
we just completed the huge acquisition Matt was talking about, the residences at Diamond Ridge.
What I did with the brokers, because I put together a bunch of notes on all of
these 14 properties that I visited, and I had a call with them. Because he knows us,
it was easier for him to pick up the phone. I told him, "Hey, listen. I visited these 14
properties and we're real interested in, let's say, five or six of them. I'd love to
get your feedback on all of them, but I think we're real interested in five or six of them.
Can I establish a relationship with you in which you go ahead and reach out to those brokers?"
I'm thinking of, this is a successful commercial broker I'm speaking with, right? These guys,
they just don't sit at their desk, waiting for calls to come in, and then someone calls and says,
"Hey, I want to list my 200-unit property with you." They don't do that. If they get that call,
great, but they don't do that. What they do, they're more proactive. They get to know who are
the owners of all the multi-families in the region that they cover. They put them in their Rolodex
and they go after them on a weekly basis, bi-weekly basis, monthly basis. "Do you want
to sell? You ready to sell? What are you willing to do? I got some interested buyers." That is in
the manner that I approached him. I emailed him my list. He responds to me, "Hey, Herve, this is
outstanding. This is great. I'm going to call you tomorrow morning with feedback on all of these.
I'll let you know which owners I can reach out to, to let them know that they may have a
potential buyer interested in your property." Nice, nice. How did you find these off market
deals? How did you find them prior to reaching out to the broker?
Well, that was just work that we did on our side, man. You have to have your investment criteria of
what kind of properties that you really want to pursue, whether it type A, type B, type C, number
of units, what part of town. Again, you have to do a lot of your market knowledge, understanding what
side of the tracks of a particular city that you want to be in. It's a lot of different actions.
We all know that. Right? [crosstalk 00:11:16].
Right, right, right. Once you get that down, then we just filtered. From there, we filtered. Okay,
this isn't a part of town that we're interested in investing.
We get the sense that this is a C type property based on maybe the age, some of the pictures that
we're able to see online, just doing a Google Maps search and going to, let's say, in apartments.com,
and putting in the address of that property. They'll show you pictures of the units inside and
outside. Take a look at some of those comps. Just based on some of those filters, they say,
"Okay, we were able to go ahead and narrow it down. These are the 13 that we really to go ahead
and pursue," kind of a thing. Now, these are the 13 that we wanted to drive. Once I drove those 13,
I was able to go ahead and narrow that list even further to about four or five properties.
The thing is, I will never know a market as good as a commercial broker that works that market,
potentially even from that market, for the past four or five, 10 years.
Right. Interestingly, I have broken down my list into,
"These are properties that we really want to pursue. These are properties 50-50.
These are property not worth pursuing at all." Well, guess what? Once I sent him my list,
he emailed me back right away. He goes, "You know what? You do want to consider a couple
of properties on your list that you had put under the category of not worth pursuing,
because there's some interesting developments going on in this particular city." I said, "Okay,
you're the expert." I said, "I'll rely on you." I said, "Let's go ahead and take that off that
category, those two properties, and let's move them up the list." I would not have known that,
had I not had that conversation with him. Right. Yeah. That's exactly the type of knowledge
I needed because, I know the broker is very important, but I'm just like,
"How the heck do you do establish a relationship with the brokers, right?" Choose maybe the top
five or whatever brokers, blah, blah, blah. You never hear, how the heck did you establish that
relationship? Right.
Thanks you guys for [crosstalk 00:13:22]. I had to come back in on that point, because wow.
Herve, what you just described, I hope everyone goes back and watches that again, because that is
next level. I've never heard that on Bigger Pockets. I've never read that in a book. What you
just said, and that conversation with the broker, as far as ... You did a lot of the heavy lift for
him and you made his job easy, which guess what? Means he's going to want to make your job easy and
he's going to go to bat for you. Right? Absolutely. Yeah.
Instead of Jevon going to a broker and saying, "Hey, what do you have?" No,
"This is what I want. Go get it for me." A broker will respond directly to that information.
Absolutely. So good.
We always see scripts like, "Hey, do this script. Call the broker with this script."
Well, that script's not going to work if you didn't give them any information.
Like you said, he's busy. That's useless. It's the worst. I hear brokers complain. They get
multiple calls a week. Thanks to Bigger Pockets and all the other organizations that are out there
that are pumping real estate investing in also apartment building investing
and some of the books and gurus that are out there, whatever, everybody and their mama thinks
that they can buy apartment buildings right now. These brokers are getting multiple calls a week,
but they can sniff out. They can tell the Herve Francois versus somebody that just took a course
over the weekend. Right? Herve Francois is not going to just call them up and say, "Hey,
I want to buy an apartment building, anywhere, anyhow, in the whole state of Texas, or in the
state of Kentucky or whatever. It doesn't matter where it is, no matter how big it is, 10 units,
300 unit. That doesn't matter. I want it." They see through that, man. Don't call these
people. Don't call these brokers up without some criteria. They're not
going to take you serious. They'll say, "Okay. I'll put you on my mailing list.
You'll just get the email that the other 3000 people get, when I get a deal." If Herve calls him
up, he's like, "Hey man, I want to buy this size, this, not that neighborhood, this neighborhood.
Right? I want to be this many units and I want to be around this price point or whatever,"
they might not call Herve when they have a listing, but they might call Herve with a
lot of off the market stuff. He did his homework. Here's what he wants. You know? It's next level if
you show up with a list. I've done my homework and here are the properties that meet my criteria.
Not even that, done your homework and looked online, but, "I've driven these,
and here's what I like about these, what I don't like about those."
Forget about it. Yeah. Yeah. Again, if you're going out of market,
Jevon, to look for that particular property and a broker says, "Sure, Jevon, I'd love to meet
up with you." Obviously, if you can get down there the day before, travel the properties,
and then meet up with that broker, boom. Right? Now, you can say, "You know what? This is my
cherry pick list. I went to visit them. Here are the pictures of them. I'm interested in purchasing
properties, A, B and C." You did your homework. Wow.
You made his job that much more easier, or her job that much easier.
Also underscore, traveling to the market is key. I've met people, back when you could get out and
about and stuff like that. I was at a conference and I talked to this guy like, "I've really been
trying to find a deal." Where do you want to be? Columbia, South Carolina. Right? He's like,
"I want to be in Columbia, South Carolina. I've heard good things. I want to invest there."
I was like, "All right, man. Well, how many times have you been there?" He was like,
"I've actually never been there." You know? I was like, "All right, man, listen. We all got LoopNet.
All right? Now, you can get on LoopNet all you want and look for properties and wait for brokers
to send you deals, but unless you go down." We didn't get really involved in Winston-Salem
until you went down there, Herve, and put boots on the ground, started walking it,
met the Property Manager we use today, met all the brokers that are active in that market.
Brokers see you're willing to make the investment, put yourself on an airplane, or drive down,
whatever it is. Just go out for a cup of coffee with them, lunch, whatever. Just sit and have a
face to face. You can still make this work with COVID. You know? You can't write it off because
of COVID. "Oh, no. No, no, I can't travel." You can figure it out. If you want a deal that bad,
I would figure it out, if I were you. we figured it out. Other people can figure it out, too.
Right. This is why Derosa Insiders are so important.
Just drill down, you know? [crosstalk 00:17:43].
We try and give real life tools, man. Ready to go. Justin, here we go. Thanks for watching, guys,
and have a great and profitable week. Have a great and profitable week.