$1B in Multifamily: Feras Moussa on Buying Distressed Apartment Deals

Feras Moussa (00:00)
it’s people, right? You gotta get the right people, the right seats, and we’re not perfect by any means, right? But finding the right people that can help kind of blaze our destiny to where I’m not micromanaging. Right. There’s a phrase that I really like, which is micromanage the hiring process so you don’t have to micromanage the person. And spend more time finding and recruiting the right people then I’m not having to babysit everything about and I can trust them to make their decisions. And ultimately, I know people are gonna make decisions that aren’t gonna match the decision that I would have made. But that’s okay.

if they’re doing eighty percent of what I would have how I would have done it, that’s fine. And maybe their way is better.

Joseph Crooms (02:00)
Hey everyone, welcome to Investor Field Real Estate Pros Podcast. And today I’m joined by someone that I’ve been looking forward to talking to. His name is Moussa, but we call him Feras as his first name, and his last name is Moussa. Hey Moussa, say hello to everybody.

Feras Moussa (02:18)
Hello, hello. How’s it going everybody?

Joseph Crooms (02:19)
All right, good. And of course I’m Joseph Crooms. I’m your host. Let’s jump into it. We got Moussa here, he’s ready. Moussa, tell us the short version. What’s your main focus these days?

Feras Moussa (02:29)
These days it’s really about navigating the challenges in multifamily and continuing to build up a company with some of the best people we can find.

Joseph Crooms (02:36)
What is the name of your company?

Feras Moussa (02:38)
Disrupt Equity.

Joseph Crooms (02:39)
Disrupt Equity. How did y’all choose that name?

Feras Moussa (02:42)
my background is software. previously worked at Microsoft and then had a software company and at the time, whenever I was getting into real estate, I knew I wanted to build a company around the space and I was trying to think of something that is more tech oriented and Disrupt Equity was the name that I ultimately landed on and it’s been a great name. I’ve been happy about it.

Joseph Crooms (02:58)
You told me you started about seven years ago, am I correct?

Feras Moussa (03:01)
Yeah, maybe we started real estate investing maybe nine years ago. I think the company actually turned eight this year.

Joseph Crooms (03:05)
why is your niche residential?

Feras Moussa (03:08)
for us we like multifamily, right? For those of you that are doing houses, you have a house, maybe you have a tenant there, maybe not. If tenant leaves, basically producing zero income, right? how do you really scale that? And for us, we’re buying apartments that are three, four hundred at a time. And if I have ten residents leave, that’s okay, right? We lost three percent of occupancy. If I have, a hundred residents leave, that’s okay too, because I’m still better than the zero percent that I would with a house. we like it. it’s a harder business that becomes the moat, right? You have to be able to operate, but that’s the opportunity in itself too.

Joseph Crooms (03:35)
What’s the hardness of the business that you’re talking about? What’s so hard about the business?

Feras Moussa (03:39)
It’s people, right? whether that be team members that we have, whether that be on site residents, whether that be, back office, front office. it’s really about the people. And, unfortunately with people, businesses, their problems become your problems a lot of times. you have to really navigate that as a whole and, again, provide good, safe, quality, affordable housing for people.

Joseph Crooms (03:57)
What is your book of business like now? you’ve been doing this for quite a while. say the last year, how many what’s your portfolio look like?

Feras Moussa (04:04)
Yeah, we’ve that’s actually a good question. We’ve done about a billion of acquisitions. Today we probably have about six thousand units and we’ve sold a lot of properties. And that’s probably equates to about twenty properties maybe that we still have today.

Joseph Crooms (04:15)
What does that translate into a month?

Feras Moussa (04:17)
what do you mean by that?

Joseph Crooms (04:18)
what is your volume per month?

Feras Moussa (04:21)
we’re probably buying two properties a year right now. is the goal. maybe that answers your question.

Joseph Crooms (04:25)
Okay, okay. you said you bought a billion dollars of purchases that you said?

Feras Moussa (04:29)
We’ve done about a billion total in acquisitions of apartment complexes.

Joseph Crooms (04:32)
that’s fantastic. Okay, let me ask you this. you said it’s the hardest part of the business. What’s do you have a property management company that you have also? Are you all are you sort of like one stop shopping for for in-home investor businesses?

Feras Moussa (05:37)
Yeah, we are vertically integrated we have our own in-house management company. We also have our own in-house construction company that really help us dial in the operational efficiencies.

Joseph Crooms (05:44)
Wow, let’s talk about the construction plan. what have you built homes from scratch on the land? Or have you had to start a renovation?

Feras Moussa (05:50)
No, we’ve done a lot of renovations, right? Typically we’re buying an apartment complex. We’re doing two, three, four million dollars of improvements on those properties. and for the development side, we know we’ve done one, we’ve done two developments that we’ve been part of. ground up apartment complexes, roughly three hundred to three hundred fifty units apiece.

Joseph Crooms (06:06)
And how how much of the volume is property management? Do you have property, manage it or or is it a mixture of both you do? You just give them the the the family, the the four family or and you just leave it alone?

Feras Moussa (06:18)
we manage our own properties, think about an apartment complex. Every, the big apartment complexes that you see, those are two three hundred unit apartment complexes, And for every hundred units, you typically have one person in the front office, one person in the back office. The back office is really your maintenance side, if I have a three hundred unit apartment complex, typically have about six employees that are running the day to day operations for that business or that apartment complex.

Joseph Crooms (06:39)
Which which part of the team is the most difficult to manage? Is it the housing itself or the construction or or

Feras Moussa (06:46)
the the housing all day. because again, if we have six thousand units, if you kinda do the math, the average the average property on average probably has two to two and a half people per unit. And six thousand units that’s twelve thousand people, right, of residents that we’re managing. And things happen, up and down the spectrum. People leave, people quit, people, crime happens, people have cars stolen, you have to deal with all the things that can arise around that.

Joseph Crooms (07:09)
What’s been the key to keeping your machine running smoothly?

Feras Moussa (07:12)
continuing to just work through things. it’s just that, problems happen. It doesn’t matter how good or not good a deal is, people are, whatever, but it’s about waking up every day and say, Okay, I can solve this problem and working through it. I think a lot of people get overwhelmed and start to give up. And instead, we have a good partner and really collectively, we’re willing to go fight every day, And solve things and push things forward. And

Joseph Crooms (07:32)
you’re the managing director. what is your what type of partnerships do you have?

Feras Moussa (07:36)
I have a fifty fifty partner, me and Ben is the name. We kinda both started the company a couple of years ago.

Joseph Crooms (07:41)
And what’s his job? What does he do now?

Feras Moussa (07:42)
same title. we just divide and conquer and really fit in wherever wherever it’s needed, we’re both, know, happy to roll our sleeves up and solve things. There’s certain things that I’m better at and there’s certain things that he’s better at and we just kinda just divide where needed based on strengths. it’s not a clean cut, but it’s been very good because you we we we do a good job making sure we’re constantly in sync, keeping the other person up to date just we both have full context on everything that’s kinda happening.

Joseph Crooms (08:04)
What’s your strengths?

Feras Moussa (08:05)
for me, I’m numbers oriented, I’m process oriented, and I’m I have a lot of visionary strengths, And know, I’m always almost too many ideas, It’s about how do you continue to push the company, push people forward and reimagine. I try to really push and challenge the team to reimagine what are we doing, how we’re doing it, and maybe that helps us grow to another level.

Joseph Crooms (08:22)
How has AI affected your business in a

Feras Moussa (08:26)
Yeah, I think that that’s a good question. I think it’s being figured out, we’re starting to do much more and it’s it’s a very powerful tool, And a perfect example, we do a lot of legal. We have in house counsel, but a lot of legal review. these documents, we got one today. It’s a fifty page document, and there’s a lot of nuances, and it’s been great to really have another person looking over the shoulder that can quickly give me answers. Or another good example for doing modeling, there’s a lot of times where you’ve Hey, if we do this, this, this, what happens to the return profile? Well, the issue is, that that would take me to come up with ideas, then go give it to the analyst, wait a couple of hours, and the analyst comes back with an answer. Versus now, I can say, hey, go try these different things, give me every permutation of it, and it does that calculation perfectly and it gives you the results. it’s been, it’s really, it takes a mind shift. And my background is tech, I’ve been very comfortable with it, but it’s just been interesting to start to see the new use cases that can leverage and really how does it help be a lot more efficient.

Joseph Crooms (10:00)
What are you focusing on scaling next? What’s your next real goal?

Feras Moussa (10:03)
I think it’s really leveraging this next wave of real estate, real estate’s cyclical right now, it’s it’s it’s bad out there, it’s tough for a lot of different reasons. And we’ve been gearing up really hiring some more great people to start to capitalize on that next wave and just be one of the one of the thought leaders in the space, And really push forward.

Joseph Crooms (10:19)
I see that your your brain is working now ’cause you gotta yawn to get that

Feras Moussa (10:23)
I had twins, back in January and they’re just not letting us sleep well too. that’s another zone problem with the navigating.

Joseph Crooms (10:30)
Blessings be upon both of you. your twins family. Let me ask you this. When you say, what is the next phase that you believe is going to happen the way the market is now?

Feras Moussa (10:41)
I think right now we’re entering the point where more and more distress is still showing up, I don’t think interest rates are going to get better. I don’t think they’re going to get worse. I think it’s going to just go sideways. And there’s not a lot of buyers, pricing is continuing to come down though. And right now the acquisitions are all going to be yield based. And how do you really identify the right deals, the right businesses? for us, it’s really been focusing on buying stuff that’s just priced great. And we have we you we’ve underwritten five hundred deals far this year roughly and of which we’ve probably gotten in twenty best and finals and we’ve won two that we ended up backing away from. And it’s really about finding the right deals with the right basis that we know day one going in that we’re at a comfortable spot. Regardless of what happens to the market, we’re in it, know, if we’re good debt long term and it’s got a very good yield on the return.

Joseph Crooms (11:24)
every operation that I know or every operator has a moment when things just got real and you just spoke with about two that you had to back away from. Do you mind sharing incident or scenario with us where you you had to pivot real fast?

Feras Moussa (11:39)
Yeah, for us it’s about doing your due diligence, right? then one of the deals we got it under contract. had the team go out there and inspect every unit. It’s a four day process, it’s a lot of work and effort. And ultimately we just found more structural issues than we expected. That was a deal we were already gonna put four or five million dollars into, but we just identified, hey, there’s just more here needed and we just weren’t getting it cheap enough. And ultimately we had to make the tough decision to be in a back away and basically cancel that contract. And look elsewhere, right? Because we went to the seller, tried to negotiate it down. They came down some but we just didn’t get the price that we needed ultimately we walked from

Joseph Crooms (12:08)
That brings me to another thought. I I’m a homeowner and a few friends own. Do you have your own inspection company as well?

Feras Moussa (12:14)
No, we have our own construction team which will do the inspections, hire companies to come out for certain things like hey, we have foundation work or we need to get a sub out that’s really good at electrical or some of these other nuances.

Joseph Crooms (12:24)
What was some of the problems that was with it that home that you had you backed away from?

Feras Moussa (12:28)
Yeah, it was a it wasn’t a house, it was a large apartment complex. And it was foundational issues, with the issues of the foundation. issue with the siding, right? There’s just more siding work needed. And we already knew the roofs needed work, that was planned for. But again, like once you package it all together, know, you need just needed more dollars to go into the asset than what we had projected and modeled into the return profile.

Joseph Crooms (12:46)
Got you. that’s big. thank you for sharing that with us. Now I know a lot of our listeners are either early in their journey or looking to level up, and I think they’ll benefit from hearing this. When it comes to building relationships and growing your network, what’s made the biggest difference for you and your team?

Feras Moussa (13:01)
it’s about the follow up. Very few people actually follow up. I was out there too. I used to go to a lot of meetups, a lot of places and we used to host a meetup, right? And it’s about spending time with people. That’s where you find people that can help you, along your journey. Whether that be some of our best hires were people that came to our meetup, right? They’re still with us today, seven years later. Or it could be potential partners that we partnered with the deals on. all of the above are people we’ve met at meetups and I tell people don’t be the person that goes to the conference, collects a hundred business cards, and does not email anybody. There’s no value in that. just really focus the effort on the follow-up.

Joseph Crooms (13:31)
You talked about personnel that you still want to hire the right people. What type of people are you looking for? Tech savvy guys or

Feras Moussa (13:37)
for us with with what’s going on with AI, you have to be comfortable with technology, I really believe in that more and more and more and it’s moving up the stack. you have to be comfortable with tech. for us it’s people that, I can’t teach work ethic, I like to interview be the last interview for some people that we hire. And what am I vetting? I’m not vetting technical expertise of the knowledge the job, Like domain knowledge and the job, that’s somebody else. I’m vetting culture and I’m vetting basically work ethic, I can’t teach culture, I can’t teach work ethic. really trying to suss those things out.

Joseph Crooms (14:03)
Culture. What is the culture of your business?

Feras Moussa (14:06)
that’s kinda low. I can tell you our core values. first one is get, shit done. Pardon my French. that’s the that that is it’s on our wall, Second one is really candidness, transparency, resilience, teamwork. And then the last one’s innovative, those are the six core values for the company. And that’s the culture we’re trying to attract.

Joseph Crooms (14:20)
that that’s really what you can’t fake. you when when when do that a person is a good fit?

Feras Moussa (14:25)
you never know until sixty days on the job. That’s maybe my answer. you think, sometimes I’ve been fooled, You have hopes, you give people benefit of the doubt, and you realize like, hey, maybe they’re not affitated. that’s where you as we’ve grown the company, start to learn the wisdom in some of the phrases, Like hire fast, fire faster, All those things because you just really don’t know, And it’s not about spending and I’ll give you a real example. My sister recently got a job offer, it took two months of like interviews and stuff. And my sister’s a great hire, but I’m like, man, spent two months with like inner they spent interviewing my sister for two months. That’s a long time. And versus like they could have hired three people along the way and found the right home run person. it’s really that I guess maybe is my answer.

Joseph Crooms (15:03)
A and and I do apologize. What markets are you operating in?

Feras Moussa (15:07)
Yeah, good question. we’re in all the major markets of Texas and Georgia. those are our two places that we focus on.

Joseph Crooms (15:11)
More in Texas or more are you breaking into Georgia now?

Feras Moussa (15:14)
I Georgia was the first market we’ve actually scaled up in and then we exited a lot of that stuff in twenty, twenty, twenty one. And right now the bulk of our our portfolio is Texas and we’re based here in Houston. downtown is right over there somewhere.

Joseph Crooms (15:26)
I gotcha. I see you in the background. what parts of Georgia? ‘Cause I am a Georgia boy myself,

Feras Moussa (15:30)
Yeah, we like Atlanta, we all over Atlanta. It’s funny, we bought more on the south and east side than we have on the north side.

Joseph Crooms (15:36)
Or is urban markets your primary market?

Feras Moussa (15:38)
No, we’re more I wouldn’t call it urban. we haven’t really done much in urban core, but we’re more suburb workforce housing areas.

Joseph Crooms (15:45)
Gotcha. Wow. thank you for sharing all that. You time goes fast, especially I was starting to have fun with you, but you can’t fix it. before I ask you to tell us how to get in touch with you, what is it that you enjoy most about your job?

Feras Moussa (15:58)
for me it’s it’s seeing people grow, Like I do genuinely enjoy that. heck, we had an intern who not an intern, sorry, she was our first hire. she was our first hire and an intern that, six years later is part of our leadership team and one of the strongest people that we have. And it’s been fun to see people grow and just seeing the impact that we have on our team members and their families. We do a big holiday party every year and it’s great to go there and see, a room full of four hundred people, They’re you know, people that work for us plus their families and just the impact that we have.

Joseph Crooms (16:24)
where where would you like to be at next year?

Feras Moussa (16:28)
Yeah, I think the goal next year is really how do we start to really get momentum, right? I think this year, last year were flat, A little stagnant for a lot of different reasons. And really how do you start to get momentum as a company on the acquisition side? The market’s been really weird, but I think hopefully it’s starting to shake up and start to make some positive attraction.

Joseph Crooms (16:45)
What numbers are you looking for at would you like to do next year?

Feras Moussa (16:48)
We’d like to buy six deals next year, Somewhere in that range, that four to six. And if the average deal is thirty million dollars, you could do the math, we’re somewhere around two hundred million of acquisitions.

Joseph Crooms (16:56)
Good. Moussa, I I we’re running out of time. you can’t fake these relationships that you talked about. You talk about what’s made the biggest difference for you. But but let me let me go back to that question one more time because we got a few more minutes. How do you manage the property management team and the construction team? What’s how do you balance them and the real estate? What’s how do you balance that, man?

Feras Moussa (17:16)
it’s people, right? You gotta get the right people, the right seats, and and we’re not perfect by any means, But finding the right people that can help blaze our destiny to where I’m not micromanaging. There’s a phrase that I really like, which is micromanage the hiring process so you don’t have to micromanage the person. And spend more time finding and recruiting the right people then I’m not having to babysit everything about and I can trust them to make their decisions. And ultimately, I know people are gonna make decisions that aren’t gonna match the decision that I would have made. But that’s okay.

if they’re doing eighty percent of what I would have how I would have done it, that’s fine. And maybe their way is better.

Joseph Crooms (17:43)
When did the construction how many years was the cons is was the construction scheme in place?

Feras Moussa (17:48)
We’ve had that for four years now, probably. we’ve had the managing company for probably about six years, construction company for about three and a half, four years.

Joseph Crooms (17:55)
And when you say management you’re talking about property management as well.

Feras Moussa (17:57)
Management. Yeah. That’s where the bulk of the headcount is, right?

Joseph Crooms (18:00)
Yeah, I I guess is that the most difficult part to manage?

Feras Moussa (18:03)
Hundred percent.

Joseph Crooms (18:03)
Why?

Feras Moussa (18:04)
It’s people. Like I said, all the problems become your problems for whether that be staff that we have or tenants and their problems. And so you just kinda have a little bit of everything that happens.

Joseph Crooms (18:14)
Thanks for saying that, Moussa. listen, we are out of time now. that 20 minutes goes so quick, especially when you you’re you’re you’re you’re rambling and you’re talking about what you the facts, but I think I got some good information out of you. all right, before we wrap up, if someone wanted to reach out to you to Moose, and I want you to repeat it twice, and may want to collaborate and learn more about what you’re doing, what’s the best way to reach you?

Feras Moussa (18:35)
Yeah, the best way is just go to disruptequity.com. And we have a we have a form on there to contact. We have for those of you who wanna be investors with us, you could reach out there too. that’s definitely the best place.

Joseph Crooms (18:43)
Give it to us one more time. Somebody started looking for the thing.

Feras Moussa (18:46)
disruptequity.com. D-I-S-R-U-P-T equity dot com.

Joseph Crooms (18:50)
Thank you very much. That’s perfect. well listen, I appreciate your time, Moussa, your story, your perspective. And excuse me for calling your your your your lap by your last name, but it’s a cool last name.

Feras Moussa (19:02)
I like it.

Joseph Crooms (19:03)
your perspective. We need more people in this business who are doing things right and not just helping the communities, helping people have a home, helping people have a job, and also a vision for the future.

God continue to bless you in that way. for those of you tuning in, I know you got some value from this. Make sure you subscribe. We got more conversations coming from people just like Feras Moussa out there doing real business, helping real people. we’re going to see you on the next episode of Real Estate Pros Podcast. Moussa, tell everybody to talk to him later.

Feras Moussa (19:32)
Alright, I’ll talk to you guys later. Thank you.

Joseph Crooms (19:34)
All right. God bless. Thank you. Take care.