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Show Summary
In this conversation, Hayato Hori shares valuable insights for new investors, emphasizing the importance of learning from experienced individuals in the real estate business. He discusses various investment strategies, including active management and passive investment options, highlighting the flexibility available in real estate investing.
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Investor Fuel Show Transcript:
Hayato Hori (00:00)
And fast forward five years later, I was doing maybe 10 to 15 deals on a monthly basis. And I thought I was doing well for myself. But when compared to where the institutional investors were,they have racked up ⁓ assets all the way up to $2 billion now. And that was within the same five or six year timeframe. And I realized the difference was that they were able to compound their assets as they continue acquiring them. And that is really what intrigued me into the private equity real estate world.
Michelle Kesil (02:03)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil And today I’m joined by someone I’m looking forward to chatting with, Hayato Hori, who runs a real estate fund called Red Brick Equity. So excited to have you on the show today.Hayato Hori (02:19)
Yeah, thank you so much for having me on the show too, Michelle.Michelle Kesil (02:22)
I think our listeners are really going to take something away from how you’re approaching the multifamily market in Chicago.Hayato Hori (02:30)
Yeah, yeah, I’m excited to share what we’re kind of seeing in the market and what we’re seeing not only in the Chicago market but also kind of like in the Midwest since that’s where a lot of our expertise has been too.Michelle Kesil (02:42)
Yeah, absolutely. Let’s dive in. So first off, for those not yet familiar with you and your world, can you share what your main focus is these days?Hayato Hori (02:52)
Yeah, absolutely. So at Red Brick Equity, what we do is we acquire multifamily buildings in the BNC class locations out in the Midwest. Primarily at the moment, we’re focused in on the Chicago market and we acquire buildings that are 20 to 100 units out in that area and are continuing to do so as a real estate fund.Michelle Kesil (03:15)
Awesome, how did you get started with all of this?Hayato Hori (03:18)
Yeah, so…Just if I had to go back quite a bit, I bought my first rental property out of college when I was 21 and I was living in California at that time. I moved from Singapore to go into California for university and there I really got into entrepreneurship and wanting to start businesses and started a few side hustles like doing e-commerce and dropshipping, starting apps and whatnot. And I made a sizable
income from that. And so from there, I decided, hey, what can I put my money into? And a friend, a great friend of mine, ⁓ he started a real estate company where he would do renovations and sell them as turnkey rentals. And I bought my first property in Memphis, Tennessee from him. And that was about…
nine or 10 years ago. And since then, I’ve really been hooked on real estate and wanted to continue going into the real estate world.
And funnily enough, now I’m partnered with him in this real estate fund as well. So him and I are partners here alongside with his father, Eric, and it’s us three acquiring multifamily buildings out in the Midwest.
Michelle Kesil (04:33)
super cool. What made you decide to go the multifamily route?Hayato Hori (05:27)
Yeah, so a lot of what we did actually was in the single-family home space as well. So I had a company called Rocket Offer. I was running that for about five or six years. And we would sell off-market deals to institutional investors and retail investors looking to either fix and flip properties or just buy and hold them. I did about 250 of those. And like I mentioned, my partners did about 650 plus fixed and flips.That was a lot of it in the single family home space, but some in the multifamily too. And what we kind of realized too, during that journey, when I was selling ⁓ my off-market deals to the institutional investors was these guys started the business around the same time as I did.
And fast forward five years later, I was doing maybe 10 to 15 deals on a monthly basis. And I thought I was doing well for myself. But when compared to where the institutional investors were,
they have racked up ⁓ assets all the way up to $2 billion now. And that was within the same five or six year timeframe. And I realized the difference was that they were able to compound their assets as they continue acquiring them. And that is really what intrigued me into the private equity real estate world.
And what I also found was having done 10 to 15 deals for single family homes, it’s very difficult to scale
continuously and add in more units on a single-family home side of things on a monthly basis when you’re in the single-family home space. But multi-family, you can buy 50 units all in one acquisition or 100 units or 200. And it just makes the economies to scale that much easier. There’s also only one roof, one hot water tank or one boiler that you have to deal with. And so it’s a little bit easier to predict some of the maintenance items that you have to deal with.
It just compounds a lot easier and better. And you also get favorable financing terms and you’re also able to ⁓ really be able to increase the valuation of the building ⁓ just through increasing the NOI, the net operating income, and financially and just numbers-wise, it made it that much easier to operate on. So those are all the reasons why we decided to go multi-family.
Michelle Kesil (07:45)
Yeah, absolutely. That makes a lot of sense. How is that like going in your market in the Chicago area? What does the market look like? What are some trends that you’ve been observing?Hayato Hori (07:56)
Yeah, so in the Chicago market, we just read the Q3 2025 reports about a month ago when that came out. And the national vacancy averages that we’ve seen is around 9 % or so. But in Chicago, the vacancy rates are 4.7%. So significantly lower than what the national average is, which is always great. Chicago has great occupancies as well. Every deal that I see that comes through our desk typically has a 90 % plus.plus
occupancy, unless the seller doesn’t want to put in the capex to improve those units and actually make them run ready, or it’s just a complete gut job that ⁓ we’re being presented. But otherwise, the occupancy is very, very strong in Chicago. Also given that it’s the third largest populated city in the US, that helps a ton. And another thing that we like to take a look at is the job market as well. So Chicago has a very diverse job market as well. ⁓
And one thing that we always like to take a look at is the number of higher education institutions in a market because that also determines how many companies want to be out there and how long they want to be out there for as well because that means they have better town pool. ⁓ Something that we’ve seen, I live out here in Miami, Florida, and something that we’ve seen that I’ve heard from other fund managers and other… ⁓
executives in the space is that
talent is quite difficult to identify here and so they’re gonna have to bring in people from New York or Chicago and fly them out here into Miami, Florida. But Chicago, because they have great universities like University of Chicago, only university in Chicago, and there’s many others, it really helps that talent pool and it gives us justification to say, the job market is gonna be healthy here, it’s gonna continue to grow. And across the Midwest, we’ve seen some very, very
strong ⁓ rent gross in the area as well, just because supply is also very constrained in the area. Chicago doesn’t make it that easy to build new construction. so because of that, supply is constrained and demand stays high. And therefore the rents continue to go up on a consistent basis. It doesn’t shoot up like the sump belt did in the past few years, like Texas and Florida, but it’s been consistently going up year over year, which is always
nice and very predictable too.
Michelle Kesil (10:28)
Yeah, absolutely, that makes a lot of sense. So you live in Miami, yet your acquisitions are in Chicago. How does that work management-wise?Hayato Hori (11:12)
Yeah, so actually since I bought my very first property when I was living in California, I my first one in Memphis, Tennessee. I’ve been doing everything out of state and so has my partners. California was just way too expensive. I didn’t have the funds to buy anything in California. And I think a lot of people in California who wants to buy properties are also struggling as well, but that’s.besides the point. so everything that we’ve done has been out of state and we’ve built up great local networks and relationships. So we have a great property management company that runs our buildings in Chicago. We frequently visit Chicago as well for new acquisitions, pipelines, and relationship management, and obviously asset management as well. So we go out there every one or two months to check on our existing buildings and also new possible buildings that we want to acquire. But we work very, very
closely with the property management company, get on calls with them on a weekly basis, email them almost on a daily basis for the many other buildings that we have. And so that’s how we continuously manage the asset and continue to do so.
Michelle Kesil (12:20)
Yeah, amazing that you have those processes in place and are able to do that.Hayato Hori (12:24)
Absolutely,Michelle Kesil (12:26)
What are you most focusing on solving or scaling to next in your business?Hayato Hori (12:31)
At the moment, what we are really focused on is diving into this 20 to 100 unit range in Chicago. At the moment, we’re always having our eyes peeled for the other markets that have similar qualities as Chicago, where there’s like no rent control, but there is significant upside. There’s consistent rent. There’s great population. There’s a diverse job market. And so all these different things we take a look at in many different cities that we want to go into.We really like Chicago because it does check all of our boxes at the moment, but it doesn’t mean that we are not looking at other markets. And for us, we want to continue acquiring these 20 to 100 unit range buildings over the course of the next five or so years. And we want to get up to, you a thousand units where we have asset under management for and continue to scale from there.
Michelle Kesil (13:28)
Amazing! Sounds like an exciting plan you have in place.Hayato Hori (13:31)
Thank you, yeah, we’re super excited about it and happy to continuously work on it to get there.Michelle Kesil (13:37)
Yeah, what have been some of the major obstacles you’ve experienced on your journey and what are some things that you’ve learned from them?Hayato Hori (13:46)
I think the biggest obstacle is a lot of the unknowns that come out in the real estate market. There’s a lot that we don’t control. So one of the things that we don’t control is like interest rates. And so I don’t think any of us could have predicted, you know, in 2020 that rates would be cut down all the way to two to 3%. And then only two, three years after that, it would jump right up to six and a half, seven and a half percent. And soFor us, seeing how big of an impact interest rates make on the acquisition side, but also on the sales side of things, we’re very, very ⁓ cautious in our underwriting to make sure that we are always taking a look at these things as we’ve gone through that cycle as well. ⁓ And other things that we’re always keeping an eye out for, again, are other parts that we just cannot control. So not only interest rates, but… ⁓
jobs as well that’s affecting the market, supply that we don’t get the control in the market, what we’re seeing in the market there. For example, like in the Sunbelt region, in Miami and Houston, Texas and ⁓ Austin, Texas as well, those are some of the markets that were really, really hot the last three, four years. But now vacancies have started creeping up and the rents have stabilized, if not come down slightly in some of these markets.
some of the vacancies that we’re seeing in some of those markets are like 10 % plus. And so that’s because a lot of supply was built into those market because it’s just way easier to build them. And I think over the course of the next five to 10 years, those… ⁓
the rents will continue to increase and occupancy will continue to go up and stabilize. But those are things that we like to take a look at just to make sure that we’re not in the other side of the cycle. We’re not timing things incorrectly where that can happen and affect our ⁓ our asset, if that makes sense.
Michelle Kesil (15:45)
Sure, totally makes sense.What have been some of maybe like the ways that you learned how to get into the multifamily world? Like did you just get a mentor, read courses, just jump in? Like how did you learn this whole world?
Hayato Hori (16:44)
Yeah, so I kind of learned on the job to be honest. So when I first started my company,rocket off for about five or six years ago where we’re selling the off-market deals. We learned how to underwrite single-family homes, but there are also investors who wanted to buy multi-family homes. So when that time came when a seller said, hey, you know what? I am looking to get rid of this 15-unit building. Do you guys have an investor for it? I did have an investor for it. ⁓
we had to do the underwriting to make sure that it penciled out for these investors. And we would speak very closely with these institutional investors and retail investors looking into that space. And we actually learned from them on how they underwrote their deals. And I got to see how many different investors underwrote in very different ways, because some people are very conservative, some people are not, and they’re very optimistic as well. Some people add certain line items into their underwriting and some others don’t.
From seeing that over and over from actual investors that were doing deals on a daily basis, I was able to just understand and really be able to gather ⁓ how many different groups ⁓ underwrote their deals. And so from there, I was able to kind of learn on the job and figure out what people typically like to take a look at and what is it that ⁓ doesn’t quite matter as much as I thought it did and continue to refine.
the process and go from there.
Michelle Kesil (18:18)
Yeah, that’s so cool. I think sometimes just getting in the action is the best way to learn.Hayato Hori (18:23)
Yeah, exactly.Michelle Kesil (18:24)
If someone is a newer investor listening to this show, what are some advice that you would share that you wish you had in your journey?Hayato Hori (18:32)
For new investors, the advice that I would give if I were able to go back in time and give advice to myself too as a new investor, I would say just try to learn as much as possible from people who are actually in the business who are doing it. It’s really important because you see so many things on social media now as well and some people may have done those things that they planned or they might not have but really finding the people who are actually in the business and are doing that full-time.really gives you an idea of what you can expect and what you shouldn’t expect when you’re going into a deal. ⁓ And also really determine whether you want to go into real estate, because there’s many different ways you can go into real estate ⁓ that doesn’t involve you being an active landlord. So if you wanted to do fix and flips and you wanted to buy and hold your own property, you’re gonna have to do those things actively. But if you didn’t wanna do those things and you just wanted to go into real estate to be able to have a
hedge against your stock portfolio or your crypto portfolio or whatever that might be, then there are other ways that you can invest in real estate without you having to do active management of it as well. And so the other ways is like going into like a private equity fund like ours and investing passively. There might be certain ⁓ criteria like for us, we can only accept accredited investors, which means like you have to have.
You have to make 200K or more a year or 300K or more joint with your spouse or like a million dollars in debt worth excluding your primary residence. But there are also other ways. You could be like a private lender to people who are fix and flippers and you can make money that way without being an active landlord too. So I would ask yourself whether or not you want to be on the active landlording side of the operation in real estate or whether you want to be passive and really determine which path suits you best. And from there really carve out
your ways and really understand what the intricacies of these deals would look like. And whenever you feel like you have just enough information, would say 70, 80 % is honestly all.
as much as you need to know to really just dive in because from there problems will arise. You just have to be able to be creative and come up with solutions as they come up. You’re never going to 100 % know everything in this space. It’s just impossible. ⁓ Every fund manager in the world is continuously learning something new on a daily basis. So you just can’t expect as a new investor to know everything. So once you feel comfortable enough, the next step is taking that action and diving in and figuring it out from there.
Michelle Kesil (21:04)
Yeah, that’s some really good advice. Thank you for sharing that.Hayato Hori (21:07)
Thank you. That’s a great question.Michelle Kesil (21:09)
So as far as your fund, are you looking currently for investors to collaborate with on that?Hayato Hori (21:17)
Yeah, we’re always looking for investors in the space who would want to come in ⁓ and invest alongside with us. You know, get ownership of the deal, upside, but passive. And so a lot of investors love that. And ⁓ if you want to be an active landlord, great as well. That’s something that you can definitely go out and do. That’s how I got started. And so if you have any questions, I’m more than happy to answer any questions that people might have too.Michelle Kesil (21:44)
Cool. Well yeah, before we wrap up here, if someone wants to reach out, connect, learn more, where can people find you and connect with you?Hayato Hori (21:51)
Yeah, one easy way is [email protected]. Feel free to send me an email with any questions you have. I check that on a daily basis. So if you have any questions, feel free to reach out. Don’t hesitate. I’m also somewhat active on my social media on Instagram and TikTok as well if you want to reach out there, but I would respond better on email for sure. And then you can find more about our company on redbrickequity.com and… ⁓there’s all that information that we have there too.
Michelle Kesil (22:23)
Awesome. Well, I appreciate your time, your story, and your perspective. Thank you for being here.Hayato Hori (22:28)
Thank you so much for having me on the podcast, Michelle, and hope everyone has a great rest of their day.Michelle Kesil (22:33)
And for the listeners that are tuning into the show, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators who are building real businesses and we’ll see you on our next episode.
