Subscribe via:
Show Summary
In this conversation, Adam Rudman shares his journey into multifamily investing, detailing his first challenging deal in Memphis and the lessons learned along the way. He discusses the importance of risk tolerance, problem-solving, and mentorship in real estate. Adam emphasizes the significance of long-term investment strategies and the need for owner-operated management in the current market. He also touches on the dynamics of scaling operations and building a reliable team.
Resources and Links from this show:
Listen to the Audio Version of this Episode
Investor Fuel Show Transcript:
Adam Rudman (00:00)
when you start your first business, when start your first deal, you need to have the mentality that you’re gonna make things happen, no matter what.
She’s gonna hit the fence, it’s gonna be hard, it’s gonna be tough, and you just need to make it happen. Because the moment you give up, you lost. That’s it.
Dylan Silver (00:16)
That’s it.
folks, welcome back to the show. Today’s guest is a multifamily investor based in Northeast Tennessee with a focus on affordable housing. And he’s also got a background actually in industrial engineering. Please welcome Adam Rudman. Adam, welcome to the show.
Adam Rudman (02:07)
Thank you. Thank you for having me.
Dylan Silver (02:08)
It’s great to have you on here and I always like to start off at the top by asking folks how they got into real estate.
Adam Rudman (02:15)
So it kind of was like an accident. I actually went to travel just, you know, doing a vacation and then I met a girl. So I just decided to stay. So I just decided to stay in the Memphis area and you need to find a job. So I just searched for a job and I partnered with some people that they had a problem and I was able to help them to solve it.
Dylan Silver (02:24)
As you do.
Adam Rudman (02:38)
Seven years in, I’m still with the same group of people and we’re all partners and we continue doing deals.
Dylan Silver (02:44)
Do you remember vividly that first deal?
Adam Rudman (02:46)
Oh yeah, oh yeah, I still have that one. That was Windbrunch complex, more than 400 apartments. It was in the rough area of Memphis. Just for you to understand my welcome to the location, I was outside of the office drinking my coffee and people was running after each other, shooting each other and I’m just drinking coffee and that was my morning, like one of the first weeks in the place.
Dylan Silver (02:49)
Walk me through it.
Welcome.
Adam Rudman (03:12)
And this is how it started. The complex was 50 % occupied. Everything was vacant, broke down. There was so many safety issues and criminal activities and nothing was working over there. And my job was to make it happen, to make the deal make happen.
Dylan Silver (03:29)
But I was mentioning, ⁓ it sounded like it was difficult deal to walk into as a first deal, 50 % occupancy, and then you had not the safest area. So then when you came into that deal, what was your first couple of steps and what did you do to rehab the place or to make improvements?
Adam Rudman (03:46)
So firstly, what I needed to do is actually to team up with the construction team. And my job actually was to help them to set up all the inspection process because they were not very good in bureaucracy. And I needed to help to streamline all that process. When we got this process situated and on track to move, I moved to the management side to start basically market department advertising and create the funnel of renting the apartments while still taking care of the tickets.
When I arrived to the office, we had 97 unresolved maintenance tickets. So it’s about one ticket for every two apartments. every day you have new ones. And I had a broken team of maintenance that none of them knew how to operate. I didn’t know much about maintenance, didn’t know much about anything.
Dylan Silver (04:18)
90s Yeah.
Adam Rudman (05:20)
So I remember that in the first three months,
mind you that also you had no idea which vacant units you have so like you know roughly that those are occupied those are vacant but none of the records were aligned none of that was correct this the ERP system was not correct not updated correctly like it was a whole mess it’s talking about three months three good months of sometimes sleeping in the office just to get everything situated there was no kids
Think about it, you’re running a property 400 and something units, you have no keys to every unit. Myself, I needed to rekey the system, to build a code system for that, to build the ERP system, to build the Excel system, to build every operating system to run that property. But we were able to do it three months in. And then a year and a half later, the complex was fully occupied. And we moved to the next DIN.
Dylan Silver (05:50)
my gosh.
Adam Rudman (06:08)
We’re still operating that property today. We still have it in our portfolio.
Dylan Silver (06:09)
Incredible.
So did you have a background at all in real estate prior to this deal? And it’s a big deal, 400 units as your first deal. Why did you take such a big deal? Obviously it worked out, but big risk, right?
Adam Rudman (06:24)
I guess it’s top of the man I am. So like I didn’t finish high school, but I decided to go to the university just to give it a try to see if I like it. And I did it, but I didn’t want to have like the student debt. So was working my whole time in university and while I was working, so I have to do like everything at home because I don’t have time to go to university and working at the same time.
Dylan Silver (06:34)
Yeah.
Adam Rudman (06:47)
Basically, I started myself and then I found a job in marketing, more in the commercial side, in the shipping industry. Again, no experience in that whatsoever. I lied on my resume. I just want to do something that I don’t know how to do. That’s what I believe. Do something that you don’t know how to do, then you’re gonna know how to do it. And if you’re getting paid doing so, better. I did the same thing with financing. I worked in financing afterwards.
Dylan Silver (06:47)
Right.
As you do. Yeah. As you do.
Adam Rudman (07:12)
did the same thing, got accepted, started working, learned how to go. And then I did the same thing with real estate, but I didn’t lie. They knew exactly what they’re getting for.
Dylan Silver (07:19)
I
want to ask you about starting something new, maybe something totally foreign to you, which hearing you talk about these two stories, you’re clearly good at in real estate. think a lot of people specifically people who maybe have a very solid like W-2 job and they’re thinking I need stability, but I want to make some extra money. They sometimes try to have like everything planned out before getting into their first deal, where it is you have a very much high tolerance for risk and for
problem solving and getting into something new. Do you think that’s like genetic or do think it’s a skill set that people can develop to learn on the fly to problem solve to be able to overcome kind of these complex learning curves relatively quickly?
Adam Rudman (08:02)
Well, maybe something that my mother put in me when I was young. I remember when I was sick and I didn’t want to go to school because I was sick, she told me, get up from your bed and start walking. Nobody dies while he walks. So the idea is that
Dylan Silver (08:13)
Ha ha
Adam Rudman (08:19)
when you start your first business, when start your first deal, you need to have the mentality that you’re gonna make things happen, no matter what.
She’s gonna hit the fence, it’s gonna be hard, it’s gonna be tough, and you just need to make it happen. Because the moment you give up, you lost. That’s it.
Dylan Silver (08:35)
That’s it.
Adam Rudman (08:37)
So in my opinion, when you analyze a deal, any deal that you come to the table, you need to have a big margin for errors if you don’t know what you’re doing and if you hit first, and to say, I’m gonna do whatever possible thing that I can to make it happen. And it’s not gonna be comfortable, and it’s gonna be hard.
But after that, you’re going to be tougher, stronger, and smarter.
Dylan Silver (09:31)
I want to ask you Adam about the people that you had around you at that time when you were going through that first deal and then later on as well but specifically that first deal. Did you have mentors in the real estate space? Did you have friends or family who were giving you guidance or was this a lot of a lot of you doing kind of your own trial and error and figuring it out on the fly?
Adam Rudman (09:51)
No, I had a mentor, one of the partners that I worked closely with him and we were talking on the phone all day long. All day long. Think about it from the moment I wake up, he was in my ear and we basically every problem we analyze together. And it’s not only like, okay, I have a problem with AC, what do I do? No, it’s about analyzing, okay, what does it mean? How to look at stuff? Like really analyze the base of it. So you’re gonna understand how to operate that next time.
And that’s really helped me.
Dylan Silver (10:19)
I want to ask you about ⁓ scaling. I’m a real estate guy and I tell people this money is great in real estate but I’m more I’m really more passionate about the ability to solve problems and also the fact that it appreciates so it’s not so much I mean it is transactional especially as a realtor as a wholesaler but the idea is is that you’re helping facilitate the appreciation of a market of someone’s portfolio and so on and so forth versus other things which
will depreciate, right? And so that really attracts me to real estate in general. You’ve been in real estate now for some time. You’ve seen COVID and now post-COVID and Tennessee in general. I’m a big fan of Tennessee. I don’t know too much about Memphis, but I love Nashville. I love Nashville. You’ve seen it grow as well. What specifically has attracted you to the real estate space and kept you in the real estate space for this time?
Adam Rudman (11:11)
Well, Memphis market is very special because all the outside investors that come and look at the cap rates and think about, Memphis is so cool and now in every table that you’re going to look in on the internet and Google, it’s going to be, Memphis is the place to invest because you’re going to make X amount of money. Well, people, a lot of people ignoring the risks of doing real estate. know, if the deal is too good, there is underlying risk that you’re not accounting for.
So a lot of people bought in 2019, 2020, 21. I see them now selling at a loss. Like all, most of the apartment complexes around me are at around 80%, 75 % occupancy. I’m unable to operate correctly. hear left and right people losing them to the bank. It just happens. So in my belief, it’s, you need to buy to hold for the longterm.
Dylan Silver (11:41)
Yeah.
Adam Rudman (12:00)
If you’re doing it that way and you really invest on the day by day operating, you’re going to succeed. If you’re going to say, okay, the numbers look great, the Excel looks good, I’m going to buy the complex, I’m going to hire a management company. Remember, the management company don’t have the same target function as you as an investor. They only want your money from the gross and it doesn’t matter to them how occupied that or less occupied that. doesn’t matter as long as you’re still hiring them. It’s very hard to change a management company.
Dylan Silver (12:23)
the
Adam Rudman (12:26)
So usually once you’re getting one, you’re going to stick with it for two, three, four years until you’re like, I cannot take it anymore. I have to find somebody else, but it’s the same ship. No matter which company you’re going to take it, the same one, they’re to do the same thing. But if it’s owner operated like us, then you’re going to have those benefits because you care. It’s yours. Right? On the other hand, if you are in somebody that it’s not you boots on the ground, they can sink it down as well. So it’s very tricky on how what you do.
Dylan Silver (12:36)
Yeah.
It’s true.
I want to ask you maybe a granular question. Maybe give away some gold but not all of the gold. People right now are looking at new builds, I’d say more so than previously because in many cases I’m talking specifically about single family and then units up to four units. One of four units. The cost
to flip a project and then the difficulties that you’ll encounter and then the days on market, the holding costs and then selling. A lot of the times it doesn’t end up making sense. You might as well do a new build and then people who are buying on the buy side are thinking, well, if I can spend an additional $50,000 or $75,000 and I’m talking in my market in Texas, right? It makes sense to go with the new build. And so you’re seeing a lot of pivoting away from, I would say fixing and flipping specifically in Texas to more
Although it still does happen to more new builds. I’m curious in the multifamily space out in Memphis. If you see a similar trend or because you’re looking at units at scale that you see more of a preference maybe towards existing builds and maybe rehabbing what is currently there.
Adam Rudman (14:36)
I think in the market there is a business model for everything from wholesaler to flippers to buying single families, fix them up and rent them and keep the equity over time as they appreciate. Taking a multifamily and refit every X amount of years. I think there is a place in the model for every type of system. Something that I’ve seen in my opinion that works the best is like if you’re buying something to hold it, first of all, you’re going to fix it correctly.
For the long run, you’re going to maintain it correctly for the long run. And over time, you’re going to create such a big portfolio that you’re not going to have all the time to run after the next deal. And you’re going to be able to just relax, hire people to do the work, and scale your operation as you go.
Dylan Silver (15:17)
I think the ability to scale is something that’s been tricky for a lot of people. Clearly you’ve done it, but you also mentioned owner operating. How has your approach been to scaling as far as finding the right people, as far as making sure that people are in the right jobs that fit them, and keeping your team together? Because it can be very tricky navigating, and it seems like people, I hate to say it, but maybe sometimes people are less loyal than you would like. What’s been your approach to scaling?
Adam Rudman (15:43)
I’m reading a lot of books all the time. So I’m always trying to be a better manager as I go and to see the things better. Regarding hiring and firing, it’s just part of being a business owner. Sometimes you’re going to have a person with you who’s to say, me and him are to run for the long haul. No, you guys don’t have the same target function. No matter how you’re going to look at it, it’s not the same function. So they’re going to decide that they’re going to pursue a different dream, different areas after two, three, four, seven years. It is what it is.
Eventually, you’re the DNA of the company and you’re going to try to replicate that DNA to your people. Some of them are to leave you, some of them going to stay, some of them are going to stay for a while, some of them less. And you just want to surround yourself by people, but you’re going to have a smile, see them in the morning. If you come into the office and you’re not enjoying the people that with you in the office, you don’t have the right people with you.
Dylan Silver (16:31)
That’s great advice. That is great advice. I think that’s overlooked. Sometimes people look at skill and experience and background, but I mean, you’re a great example. If you have someone who can learn and you have someone who’s going to come all the time with a problem solving mentality and the idea of, I can figure out this solution, although I don’t necessarily have the answer right now, I’m going to grind and get it done. That’s infectious. And that ultimately is what I believe is the key to a successful team.
Adam, we are coming up on time here though. Where can folks go if maybe they’ve got a deal in the Memphis area they’d like you to look at or if they’d like to reach out to you, get in contact with you?
Adam Rudman (17:09)
They can send an email to info @ apartments near me dot B I Z. This is our corporate email. It’s going to get to me directly if it’s referred to attention Adam. And basically we have the website same thing apartments near me dot B I Z. And yeah, I’m willing to help to anybody that wants me to look at stuff. And by the way, if you already have something and you get stuck, if you want a second opinion, I’m okay with that. Mostly again in the multifamily apartment complexes.
That’s my specialty in less single family.
Dylan Silver (17:36)
Adam, thank you so much for coming on the show here today.
Adam Rudman (17:38)
Thank you very much, I appreciate it.
