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Show Summary
In this conversation, Ben Nelson, co-founder of Wild Oak Capital, shares his journey from the action sports industry to real estate syndication. He discusses the importance of building relationships, understanding the underwriting process, and focusing on value-add investments in the multifamily housing sector. Ben emphasizes the significance of investor relations and the unique approach his team takes in raising capital and managing assets. He also outlines their geographic focus and the types of investors they attract, highlighting the long-term vision of their investment strategy.
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Investor Fuel Show Transcript:
Ben Nelson (00:00)
Yeah, I I would ask you a couple of questions. I would say, what is your goal and what is the 401k? So are you investing only in your 401k and what does that structure look like? Is it that you’ve been at one company for 20 years and it’s the same one? Have you bounced around a bunch? Because you may be able to unlock some of that money that you already have in the market. And depending on who your advisor is or how you’re structuring it, you may have access to a lot more than you think you do. So you may not have to come out of your savings, you may not have to come out of your quote unquote pocket to start investing in somewhat they call alternative investments or real estate. It could be interesting for you, I guess the question would be liquidity, bringing it back to that. So the one thing that we say about syndications is you are going to tie your money up for probably five to seven years. There is a return on the back end of that. If we do our job well, we think we can make you around 1.8 to 2X on your money is usually what we shoot for
Dylan Silver (02:23)
Hey folks, welcome back to the show. Today’s guest is based out of Golden, Colorado. And along with his brother is the founder of Wild Oak Capital, where they focus on multi-family syndications. Please welcome Ben Nelson. Ben, welcome to the show.Ben Nelson (02:40)
Great to be here, thank you.Dylan Silver (02:41)
I always like to start off at the top, Ben, by asking folks how they got into real estate.Ben Nelson (02:47)
Yeah, so I came through Action Sports. I produced Action Sports for about 15, 20 years somewhere in there around the country and around the world. What that means is Red Bull was a main client, Nitro Circus. We became well known for producing some things that were harder to build. So we raced off-road short course trucks in Maine in the wintertime and a couple of world records, things like that. was a lot of fun. But ultimately, realized that I was trading time for money in a pretty big way.wasn’t going to get better. The future didn’t hold me being on the road less if I kept in the direction. I had a lot of conversation with my brother Eric who’s the founder ⁓ and he said, we both were trying to figure out the next move. He was an engineer by trade and felt the same way. We were doing the calculus of how many years is it going to take with the 401k and dumping in that to actually have a quality of lifestyle as a retiree. ⁓ The math just didn’t work for either us.
Dylan Silver (03:39)
Yeah.Ben Nelson (03:42)
He had a couple of small single families and so we started looking at some stuff and he and I ended up buying two quads together in Lubbock, Texas to get our start along with a JV partner that we put in, kind of the classic story, like we’ll do all the work, they bring a little bit of money, you we didn’t have a substantial amount of time. And so that’s how we got started and just kind of got our hands dirty. And then from there realized, you know, the volume of energy we’re putting into eight units is probably very similar to the volume of energy you put into a much larger complex.started looking at syndications and things like that and know, credit again to Eric, he’s like, hey, I think we should go for this. He had a mentor, name is Jens, that we got to know really well out of Durango, Colorado, who was really interested in the syndication game and kind of gave us that leg up and KP’d for us on the first couple of deals. So yeah, then we kind of hit the ground running. We partnered with some other really smart folks, Shane and Bonnie are also on our team, ⁓ and just have been able to work well together. We try to be really conservative. I know that’s…
sort of a buzzword when it comes to the syndication game. A lot of people claim to be conservative, knock on what we’ve been really fortunate in the sense that we secure fixed rate debt for the most part. We’re really conservative in our own writing and we try to do right by our investors. And we’ve been successful so far. We’re just over thousand doors and a hundred million under management, which I know, again, those are sort of buzzwords, but it’s nice to be able to see some growth and do it in such a way that we can look each other in the face and say, we think we’re doing something good for the communities,
good for our investors.
have a really solid trajectory for them.
Dylan Silver (05:58)
So syndication deals are tricky for lot of reasons. You’ve gotta raise the capital, you’ve gotta find the deals, you’ve gotta keep everyone happy. Did either of y’all have a background in raising capital prior to getting involved with real estate syndication?Ben Nelson (06:14)
Raising capital specifically no, ⁓ but I don’t think that it’s a lot different once you get past that sort of initial I mean I’ll say it like I had imposter syndrome to start with right like I was Very good at producing but real estate was a new game But I think once we once I I’ll speak for myself once I got over that initial the differentiation People are people and at the end of the day having the ability to have a really strong conversation about what we’re trying to do Why we’re trying to do it. We’ve found that there’s a lot more capital out therethan people realize, in my opinion. So I also had a lot of help. I met Hunter Thompson early on, who’s really involved in capital raising. some really incredible people through his network and his program. And just truly, it wasn’t about figuring out necessarily how to raise capital. was how to change the conversation to where we still want to raise money from people that we want to be around. That’s our biggest differentiator, I think, is how we speak about our investing and our investors. ⁓
there’s a lot of crowd sourcing, a lot of crowdfunding. Syndication at the end of the day is just pooling people’s money together to buy larger assets, right? Like at a very basic level, that’s all it is. So finding people that you get along with, that you want to spend a little bit of time with, that’s our goal. So we limit our pool a little bit in that sense that we’re not going out just like anybody who has an internet connection and a little bit of risk tolerances like investing in our deal. We’re not necessarily looking for that. We want to work with people that…
Dylan Silver (07:20)
Right.Ben Nelson (07:39)
want to do life with us. We are adventurous by nature. We grew up in southern Colorado. We grew up in the mountains. I’ve met a ton of investors on a ski lift, for example. Eric’s involved in a couple of different organizations. I know he’s been on surf trips and picked up investors. So that’s really where we’re focused. And to lead back to your question, we had to learn it. But at the end of the day, as long as you can have an open and honest conversation with people about what you’re trying to do, people are incredibly receptive to it.Dylan Silver (08:05)
I want to ask you about getting into the underwriting of these deals and how you’re looking for deals and how it started. You mentioned two quadplexes, but going from another industry entirely into that, and you mentioned your brother’s got the engineering background, it does take a shift in both ⁓ mentality but also identity, right?Ben Nelson (08:26)
Yeah, yes and no. mean, at the end of the day, budgets are budgets, right? So underwriting is essentially a giant budget, right? So, and I won’t lie, I’m a producer by trade, so I’m like an action taker. I’m one that’s like, we’re gonna do the boots on the ground. So a lot of that asset management program. Bonnie is an excellent asset manager. Fortunately, Shane is also an engineer. So Shane and Eric have this mentality and this brain power when it comes to math and underwriting. They see things that are awesome. I’ll give credit to them. I can underwrite, but they can underwrite way faster than I can, right? So it’s more aboutHow do we ask the right questions in my opinion? Underwriting is also really easy to manipulate. If you’re looking for a certain IRR you can bump, oh I think we can get X rents or I think we can do this or I read it on the pro forma or a cruxie thinks that this market’s gonna bump up by X, Y, and Z or the cap rate’s gonna compress two points. And I’ve seen that lately in underwriting. When people send me something, we’ll see a pro forma and it’s like, there’s no way that this is reality. So at the end of the day, it’s more about
Dylan Silver (09:17)
Yeah.Ben Nelson (09:24)
Can you ask the right questions of people? It all comes back to people again. The spreadsheet ultimately is about what people are willing to pay for the rent, right? What people are willing to pay if you fix that property up a little bit. And what does the people on the ground who actually have to execute this business plan, so in our case, our property managers, what do they feel about it? So we bring people in early. We’ve built some really strong relationships with our property managers and the markets that we work in.When we start looking at properties, we start underwriting properties, we do it alongside our property managers. So we write in the rate independently, we ask them to do the same. We ask them to poke holes, go see properties, things like that. And at the end of the day,
we understand that we have our number, they have theirs, and we’re starting to put a lot of these budgets together. But ultimately, it’s about the people and the reality of like, they manage in that way? Will people actually pay that dollar amount for that space?
And are we doing right by the tenants, right? Like if I come in and just replace countertops and all of a sudden bump rents by 200 bucks, probably not doing right by the tenants. Yeah. So reality and bringing like the real actual functioning ability into that underwriting, think is the hand in hand. Anybody can make a spreadsheet, man, but it’s a lot more, there’s a lot more behind it to actually make that work.
Dylan Silver (10:56)
YeahI want to ask you about what asset class or asset classes your team is looking at when you’re looking at deals. Is there a specific asset class or asset classes of real estate that you’re looking at investing in?
Ben Nelson (11:25)
Yeah, so we’re pretty firmly in the value add space. So, you know, B minus C, C plus zone, ⁓ mostly because for two reasons. One, we still think there’s meat on the bone there. Yes, it’s harder. Yes, again, it’s like this buzzword. There’s this ebb and flow in the cycle. And I think that we’re in a really interesting space right now for that. We’ve seen a lot of the political competition move to different spaces, whether it be energy or whether it be, you know, suddenly everyone wants to buy a business and flip a business, right? Like that’s the thing.We’re firmly in that value at Space and we’re going to be there for a long time for a couple of reasons. think the size of those assets that we’re looking at, we’re probably maxing in around 200, 250 units and anywhere down to like 80 to 100 that makes sense. And usually it’s in that sort of workforce housing, family housing, people that can, it’s an affordable place to live and people are going to work on a daily basis. So we can lift up those communities. We can do a lot of good. We can put a lot of meat on the bone for the investors.
Dylan Silver (11:58)
youYeah.
Ben Nelson (12:20)
and have those honest conversations we were talking about like, I know you guys have been here and say you’ve been paying 50 bucks a month for rent. Would you be willing to pay 75 if we fix all the problems, if all the roofs suddenly get fixed, if the staircases get fixed and maybe you get a dog park or a playground or something like that. It improves how they live their lives, right? So that’s the biggest thing that we do. We go in and we fix a lot of these things that are deferred maintenance or maybe they’ve made some promises early on.Lately we’re going in and picking up some things from some folks that maybe got overextended ⁓ and we can solve some problems. So we feel really good about that. We’re helping people with their problems as we go along as well.
Dylan Silver (12:57)
You’re nicer than a lot of folks. I’ve lived in places in Texas. You mentioned Lubbock. I was in San Antonio, right? South Texas. And they would just raise your rent by like 75 to $100 a year or more than that, like clockwork. And I never even thought about questioning. And I said, well, I guess this is what I’m gonna pay now. But looking back, of course it was a good deal for them. I wanna ask you about some of the areas that you’re investing in. I know you’re in Colorado, but you looked at that.Ben Nelson (12:59)
HahahaDylan Silver (13:24)
those first two, I believe it was quadplex as you mentioned in Lubbock. Are you keeping an eye ⁓ on sort of the middle and midwest United States or on the coasts or is it really anywhere there’s a deal?Ben Nelson (13:37)
No, no, we were pretty focused. I mean, we talk about this a lot. Eric and I talk a bunch and we were just on another podcast and kind of the thesis behind where we invest is twofold. Number one, we’ve built some really strong relationships in the sort of North Little Rock and Northwest Arkansas space and Oklahoma, specifically Tulsa, outlying Tulsa ending up into Oklahoma City. We are as close to vertically integrated as we can be with our PMs there. They’re excellent people. They’re super, super smart. They’ve got amazing teams.So like I said, we underwrite and be with those guys. I think the other part of that is that it’s also affordability for the ability for us to make some dollars for our investors. The cost of living is less. The ability of the basis to get in is less. The delta there just makes more sense. We’re interested in looking at some deals, but we’re really focused on the middle part of the country. So not necessarily the Midwest, but a little bit south of the intense freeze thaw situation that you have. We’re staying away from the East Coast and Southeast just for
The reason like hurricanes, unfortunately, like insurance is ridiculous. There’s a lot of those type of things. California is interesting for people who live there, who can invest there. I know there people making money, but just the tenant and landlord laws there, plus the cost of doing business. It’s almost like being in Colorado as well. We invest very little in Colorado, mostly just because it’s not affordable to do so without a serious capital stack and a long-term, long, long-term vision for that money.
Dylan Silver (14:40)
Yeah.Ben Nelson (15:36)
most people were working with, we’re looking at five to seven years probably on the exit, which is still a long term. this allows us investing in that sort of middle space. like Arkansas, Oklahoma, that zone allows us to provide a really solid return, do a decent amount of good with the dollars that we have. Like if the dollar goes farther to do a lot of good on that property. And we know that we can work with people we already know and trust.Dylan Silver (15:43)
Brain is music.I want to ask you about finding investors and then also the avatar of the investors. You mentioned that you’ve bundled the people on ski lifts, right? ⁓ Are these people seasoned real estate investors? Are they people from all different walks of life, maybe outside of real estate? Is there a central avatar of someone that invests with you? Are they involved in like outdoors ⁓ life as well?
Ben Nelson (16:26)
Yeah, I mean, think it’s interesting in the sense that we are a little bit different because we have like Shane, for example, is an oil engineer, right? He lives in Houston, Texas. His avatar, the people that he’s around all the time is a little bit different than say mine living in Golden, Colorado. ⁓ Or my brother Eric recently moved to Spain. Like he lives in Spain full time with his kids. He’s got two young kids and his wife, they live south of Barcelona. So a lot of the folks that he’s talking to are a little bit different. So there’s not necessarily one wild oak avatar.I’d say the people that I talk to the most are a mix of this entrepreneurial business misfit ⁓ mentality. A lot of people really like what they’re doing. A lot of creatives, lot of entrepreneurs, a lot of first time investors. There’s also a lot of seasoned investors. What we’re trying to do is basically find a place where people say, this makes a lot of sense for your life. Take a look at this from a tax benefits perspective, from a liquidity perspective, over the long term, things like that that you want to build in for who you want to be.
Come invest with us a couple of times, figure out if this makes sense for you, but we can show you why we love investing in this space. you know, it’s all over the map is the short answer.
Dylan Silver (17:37)
I have a granular question, maybe give away some of the gold, Ben, but not all of it. But let’s say I’m bumping into you on a ski lift and we get to talking about ⁓ syndications and I may be familiar with the term, but I’m not involved in real estate. And I’m thinking, yeah, I’m interested in getting in, but I really know nothing about the space and I’ve got a 401k and I do some very much passive investing in that, but it’s really… ⁓managed by a third party, I don’t really handle any of it. But I am interested in learning about, you know, potentially getting involved in real estate. Do you think it would be a fit for
Ben Nelson (18:15)
Yeah, I I would ask you a couple of questions. I would say, what is your goal and what is the 401k? So are you investing only in your 401k and what does that structure look like? Is it that you’ve been at one company for 20 years and it’s the same one? Have you bounced around a bunch? Because you may be able to unlock some of that money that you already have in the market. And depending on who your advisor is or how you’re structuring it, you may have access to a lot more than you think you do. So you may not have to come out of your savings, you may not have to come out of your quote unquote pocket to start investing in somewhat they call alternative investments or real estate. It could be interesting for you, I guess the question would be liquidity, bringing it back to that. So the one thing that we say about syndications is you are going to tie your money up for probably five to seven years. There is a return on the back end of that. If we do our job well, we think we can make you around 1.8 to 2X on your money is usually what we shoot
There’s a different return metric for everybody. But if that makes sense, then let’s have a conversation.
You know, a lot of this is also passive. So when we syndicate real estate, you’re talking about passive, you’re not an active investor for the most part unless you want to go to the GP side. Somebody I meet on the chair looks and you know, do you like what you’re doing? You know, you have kids, you don’t have kids, are you traveling a bunch? This is a passive investment as well. Basically, we’ll take this over and the lion’s share of the risk as far as legal is concerned is shielded to only us. You know, you’re shielded as a passive investor, aside from you don’t have to worry about the
people falling and slipping on concrete or whatever else that might be. it’s not a hard conversation if people understand that A, it’s an investment, but B, hey, we’ll walk you through this. Everybody’s smart enough that we’ve talked to to understand the basic. You can’t buy an apartment building, like an ADM building, on your own. But together with 15 other folks, we all can own a part of this, an actual ownership. It’s not like a re-
You’ll get all the tax benefits on the backside and we’ll walk you through it. And that’s usually when we’ll set up another cause. Like, great, let’s go skiing if you’re interested. Awesome. We’re also in a position where we’re we’re not trying to convince you to invest with us. Like, if you’re interested, we’ll show you why it makes sense and you want to come with us. Awesome. We’d love to have you. We’re going to ask you a bunch of questions. We want to make sure that you fit with us as well. But we’re in no hurry. Like, ours is a long-term process.
Dylan Silver (20:30)
Ben, we are coming up on time here. Where can folks go if they’d like to reach out to you or learn more about Wild Oak Capital?Ben Nelson (20:38)
Yeah, you can find me. I’m pretty active on LinkedIn. So find me on LinkedIn there. It’s at BenNelson303. A little bit on Instagram, but not too much there. Or you just go to Wildoakcapital.com and check us out and shoot us a note. We’ll get back to you.Dylan Silver (20:50)
Thank you so much for coming on the show here today,Ben Nelson (20:53)
Thanks for having me. Appreciate it.
