Equity Save Secrets: How Multifamily Investors Can Protect Capital in a Distressed Market

Nate Armstrong (00:00)
There are people out there who are driven with self-centered fear and self-centered greed and yeah, and I learned a long time ago, if you chase the dollar, you will never have enough. If you chase doing the next right thing, you’ll be fulfilled for the rest of your life.

Cody Crabb (01:46)
Hello and welcome to the real estate pros podcast. I’m Cody crab with investor fuel today. I’m joined by two guests, actually Nate Armstrong and Chris Lavin. are co-CEOs of home invest group. These guys specialize in helping rescue troubled troubled multifamily deals.

They bring in fresh capital, they help stabilize the asset, ⁓ and they ⁓ help out when things start going sideways. Chris has a really awesome story behind the mission of the company, so we’re gonna get into that, talk about what’s happening in the market and how they approach these equity saves. ⁓ Nate and Chris, thanks for joining us today.

Nate Armstrong (02:23)
Thanks Cody. Thanks for having us.

Cody Crabb (02:25)
Of course. Well, Chris, like I said, we were chatting a little about your backstory before we started here. ⁓ I’d love to get a little bit of info on your background and kind of what shaped the way you see business now that led you down the path that you went down.

Nate Armstrong (02:41)
Well, ⁓ you know, 14 years old, was literally ⁓ dying behind a dumpster. I was homeless, living there, and that night I’d gone to sleep and woke up to being kicked and beaten and ended up getting stabbed. I was literally dying in a pool of my own blood. And I got there as a result of an absolutely horrific ⁓ home life that put me into that space. But in that moment, behind that dumpster,

⁓ When that was happening, I didn’t know that there was a God and I didn’t know that he even cared that I existed ⁓ and a miracle occurred. He sent someone basically to rescue me and that person was in the form of a prostitute that literally saved, not only saved my life, but put hope back in my heart that there was a God, that he did care, that he did love me, that I was worth something.

And that moment has fueled me to move forward in everything that I do so that we can do the best that we can to make sure that no child ever feels the way that I felt in that darkest moment of my life. That no child believes that God doesn’t exist and that God doesn’t love them and that they have no purpose or worth. So that’s what drives our company and that’s what the more is in believing more. More has nothing to do with profits, has nothing to do with…

with cash or money or assets. has everything to do with using the talent that God’s blessed us with to have a positive impact in the world. That drives our company and that drive turns into ⁓ capital success in ways that you just wouldn’t, couldn’t even imagine. Because our focus and our goal is on the positive impact, the profits just seem to come easier than in any other circumstance that I’ve ever been in. know, God bless me on that. What’s that?

Cody Crabb (04:33)
Isn’t that funny?

I said isn’t that funny when you’re focused on the good stuff, somehow it just works out. Yeah.

Nate Armstrong (04:41)
Correct. know,

God has blessed me from that moment behind the dumpster ⁓ to many successes. I built several companies and exited very well. And along the way, I learned that, you you got to pay taxes. And that’s something that I don’t like doing is paying taxes because those tax dollars, they don’t feed kids. They feed a government that builds bridges to nowhere. So through Home Invest and through other multifamily transactions, we’ve learned to

to minimize our tax consequences and maximize our ability to have a positive impact in the world. So that’s the mission goal of this company is to help our investors avoid taxes or kick the tax liability down the road while earning profits, but most of all having a positive impact in the

Cody Crabb (06:16)
That’s fantastic. So I’m curious, I have the real estate current present day part and I have this origin story. I’m curious how those connected. What was the bridge between those two?

Nate Armstrong (06:30)
taxes. ⁓ My last exit was for a large eight-figure ⁓ exit, I didn’t want to write that $20 million check to the IRS. And in order to do that, I knew enough about real estate that that could be the vehicle with which would help me defer those taxes or mitigate my tax liability. And I started searching on the internet for gurus, right?

And I bought several courses and I did this and I did that. None of them really added up. And that’s when I met this guy, Nate Armstrong, who has the same heart and the same morals and the same goals that I have. ⁓ And we partnered on one or two transactions and it went so well. ⁓ I later wrote a very large check and bought half the company and we’ve been partners ever since. ⁓ Sharing the same goals, the same mission statement and really doing what we do. ⁓

to positively impact the world, and we do that two ways, right? We do it through the traditional real estate syndication, but we also share our knowledge and our experience and our expertise through our academy, teaching other people how to do what we do, right? To multiply our talents, because two men can only do so much, but if we can teach other people to do what we do and have a positive impact on the world, amazing and beautiful things start to happen with that ripple effect.

Cody Crabb (07:47)
Yeah. Investor feels huge on just the sharing of knowledge, like rising tide lifts all ships. There’s nothing, nothing bad will happen from just, you know, helping like giving out knowledge and helping spread like the expertise we have and things. so with that mission in mind, let’s talk about what you guys are actually doing in the market right now. So for people hearing this for the first time, they may not be aware of, ⁓ you know, what is an equity save? Like what, is going on? ⁓

During that process. Can you give us just a quick overview of what is actually happening in an inequity safe?

Nate Armstrong (08:22)
Yeah. So in the capital stack, is multifamily specifically, you can do it with smaller stuff, but multifamily, if you’ve ever been an investor or you’re considering investing, know that first comes the bank loan, then comes the equity on top of that. So the capital stack, the back part of it, the equity, what happens in a situation where the market changes, if values start to go down and the lender starts to get antsy and maybe the loan expires, the equity

is at risk. They can be literally wiped out by a process called foreclosure. And unfortunately, there’s a lot of that happening right now. We hit a huge debt maturity wall. It started in 2025, and it’s probably going to go for the next 24 months or so. And a lot of investors are facing literal wipeout. Chris and I, we just took another one up in Atlanta, literally this particular one. It appraised for $122 million.

their debt on it was 71 million. They were about to take an offer just over their debt amount. And it was just going to wipe them all out just to pay off the debt and get out of it. Why? Well, they made some bad operating decisions. The main general partner running it made some mistakes. And so it started to snowball out of control. And it got to the point where they needed to inject a lot of money, like a lot to get units back online and things like that.

And they didn’t have the funds to do it. So they were forced to literally just liquidate, just sell it for the debt amount. And that’s where Chris and I came in and, and Chris really put a nice proposal on the table for him and said, look, we’re willing to take over your debt. We’re also willing to inject the cash that’s missing in this equation and we’ll keep your investors along for the ride. And so what that looks like is that we’re buying it. We’re stable. We’re buying it for their debt. We’re stabilizing it with our money. And then on the backside, when we sell.

We’re going to take profit to take care of our investors, first, our new investors. And then we’re going to taking any excess profit and giving it to the original investors in that deal. So we’re helping them save. Whereas they would have lost everything.

Yeah, we saw the opportunity to come in and do this and we just couldn’t allow it to happen. Our investors are gonna make a healthy profit, ⁓ our businesses are gonna make a profit, and at the end of the day, they’re gonna get some of their equity back. mean, if you can just imagine, some of the saved other lives and they invested with these people and now that’s gone. ⁓ We couldn’t stand by and allow that to happen. And so it’s really driven by God.

Cody Crabb (10:52)
Yeah.

So ⁓ why

is it that people are finding themselves in this position? I mean, you mentioned it was kind of partially due to kind of market forces, ⁓ Is it just that or are there other factors as well?

Nate Armstrong (11:42)
Well, you don’t want me to answer that question. You go ahead and answer. You’re nicer than I am. I did another call with a seller in Texas yesterday and the seller had basically taken out a three year loan. Multi-family loans. They’re not 30 year fixed loans. They’re generally three year or five year, sometimes 10. And this three year loan, was a variable rate. So it was floating. It goes up and down with whatever the market’s doing. And he literally was bleeding cash. He, he thought that he could have got in bumped up the rents.

and then refinance into a permanent long-term loan. But what happened is that the rate environment changed drastically when he originally took out that loan, would have been a low interest loan and now it’s a high interest loan. It almost doubled on them. And when he goes to refinance with any other bank in town, they’re saying, well, you don’t have enough in rent coming in to support a loan at this level. And so that was just his kind of poor planning on, on bank financing. Really. That’s not poor planning. ⁓ That’s

Ignorance, that’s absolute. You know, these players that go into this market when interest rates are at 2%, it’s really easy to be a hero when the cost of money is 2 % and you’re giving 6 % to investors. It’s super simple. But these guys, they don’t know how to manage market or cash or have any kind of predictability. to have taken a variable rate loan is like, first rule, no, you don’t do it. Like, you don’t know where you’re end up. It’s bad business all around.

So ⁓ that was their first mistake. They got into an arena where they were uncomfortable and they couldn’t, they didn’t know how to maneuver in that arena. And like I said, it’s super easy when you’re paying 2 % for money. It’s a little bit more difficult when you’re paying seven. It’s a huge, it’s a huge difference in ⁓ cash availability in that process. Yeah. then Cody, the other one would really just be operations. Ignorance.

Ignorance. Yeah, if they if insurance rates went up after the we had hurricanes come through the whole Gulf Coast region and insurance rates went up. Taxes have gone up in several states and when operators have a thick budget and they’ve got plenty of excess, it’s easy to look good. But when things get a little bit tighter, when taxes go up, when insurance goes up and they can’t they can’t they can’t operate. Warren Buffett often says it’s easy to see who’s swimming naked when the tide goes out. Yeah. And right now the tide has gone out.

we’re seeing who’s naked know that these guys under wrote to pie in the sky dreams like we we we underwrite very very very conservatively and then archie portfolio officer makes it even more conservative so ⁓ we’re always very safe underwriting and our performers in our projections and predictions these guys are there was so that so in the dream to their investors and it just didn’t turn out to be a nightmare

Cody Crabb (14:26)
So ⁓ I guess my question is, I mean we’ve talked about what are some of the early warning signs? Like if someone does not want to end up in this position, what is like the number one thing they should be watching for? I mean you said like make sure you’re ⁓ fully aware of the risk and things, but is there any other tips that you would also call out there?

Nate Armstrong (15:28)
Yeah, if you’re an investor in a property right now, here’s the warning signs. If your GP is slow on communication, GP meaning general partner, the managing partner, if they’re slow on communication, red flag number one, because they’re scrambling, they’re trying to figure out what to do. Number two, if they’re saying, Hey, we can no longer do distributions. We can’t make the quarterly distributions anymore. That’s a huge red flag. Number three, if they’re incurring more debt on the asset to try to get through, that’s a huge red flag.

Number four, if anything from their original business plan is not being hit and they have excuses on the why that’s a huge red flag. It probably means that they’re there. If you picture a quarterback in football, when they get that ball and their job is to throw it, sometimes their linemen break down. That’s a sign their linemen is breaking down. The quarterback is about to get sacked. They’re about to get knocked down behind their, their own line of scrimmage. And that means losses for potential investors.

If you’re an investor in a project and you’re seeing any of those signs, that’s probably a good time to have another expert look over your shoulder at the deal to see if there’s something to be salvaged. Cause if you wait too long, if you wait to get hit as that quarterback and knock down, you might just lose the ball and lose your profit, lose all your money. One of the things that I also caution new investors and new deals is what’s the cadence of communication. See on all of our deals, we literally have monthly town hall meetings. We get on zoom, we talk about each property.

⁓ We allow our investors to ask questions, asking about how the business plan is executing, ask how things are. And not only that, we also have ⁓ our portfolio and all of our ⁓ important documents online available to them 24-7. So if your syndicator or your GP is not doing that, I would start asking a lot of questions, a lot of questions and pressuring them.

Cody Crabb (17:22)
Pressuring them to what exactly?

Nate Armstrong (17:25)
Pressuring them to come up with some answers and share some of their insight into what’s going on, the financials and all of the other stuff in and around the deal so that you know where you’re heading. Unfortunately, most of the time, once you sign and send your money in, you’re kind of stuck. But if you find out that your GP is not doing what they’re supposed to be doing, you might be able to persuade them, quote unquote, into refunding or giving you back some of your investment before things get real bad real quick.

Cody Crabb (17:55)
⁓ So going back to the whole mission and everything, ⁓ so what, I mean you were pretty adamant when we were talking before, you were pretty adamant that this is not just like we’re just swooping in and getting a distressed asset for cheap. Like you were like, that is not what this is. I am curious how you see that difference. like how’s your approach different from somebody just trying to swoop in and grab it?

Nate Armstrong (18:10)
Yes.

Could you tell them about Frankie as well?

Oh God. Sorry. That’s all right. So listen, back in the day, I was involved in the whole Orlando music scene. You’re probably too young to know what that is. The Backstreet Boys and SYNC, all of that stuff. And a guy by the name of Lou Pearlman. Lou Pearlman up to recently ran the largest Ponzi scheme ever. $250 million. He literally stole from his investors. My best friend, Frankie Vasquez, worked with Lou.

and thought Lou was like a dad to him. And Lou convinced Frankie and everybody around him to invest everything in Lou into this Ponzi scheme that Lou was running. And my friend Frankie…

convinced his mom to put her life savings at 80 years old, 84 years old at the time, into this Ponzi scheme. And when it went south and Lou got arrested, everything was gone. And my friend Frankie’s mom was left with nothing. To make matters worse, Frankie was so ridden with guilt.

He got drunk one night, put a gun to his head and pulled the trigger.

So he took the coward’s way out, left his mom to bear the burden of burying her only son with no finances. So every one of my investors is that woman.

Cody Crabb (19:49)
Hmm. It’s personal for you.

Nate Armstrong (19:50)
I will give my last penny to make sure that they don’t lose a dime. And I guard and I steward over their money like it’s Iris’ money. Every time, every deal, always. That’s my mission.

Cody Crabb (20:06)
Wow. Pretty speechless after that. ⁓ I think if everybody had that kind of drive behind what they do, I think this would be a little bit of a different world. If you, if they had a, just, you know, that much conviction and resolve behind what they do, you know? And so that’s, that’s really admirable. And I really, I think we could do well to remember that like, I mean,

Nate Armstrong (20:20)
have fun.

Cody Crabb (20:35)
everybody is like we’re dealing with real people here everybody you know this is real estate but everybody is a person that’s involved here so ⁓ thank you for thank you for opening up and sharing that that’s that’s that’s amazing ⁓

Nate Armstrong (20:38)
Thanks.

Cody, you’re so right. And Chris, I didn’t get to tell you this, but the seller in Texas that we talked to yesterday, the GP was on the line with us. And he literally said, he’s like, well, the investors are the investors. They’re they’re big boys and big girls. And they have to understand that the market has dropped in. That’s just it is it is what it is. they’re going to go forward with whatever when I when I heard that I was literally like under the desk like like

Are you serious? You’re the guy that’s given us a bad rap. after we hung up, I literally told Jared, the other guy on the call, I’m like, I really don’t want anything to do with this with that guy in charge, no way. Horrible. People really think that way, But listen, one thing that I operate my life on is every penny that’s in my checking account doesn’t belong to me, it belongs to God. And it’s funny because I look at the money that people

give us as God’s money and we gotta steward that, right? We gotta be good stewards to everything that happens. I couldn’t sleep, I couldn’t put my head on a pillow with thoughts like that. I just don’t understand how that works and it’s horrible, but it exists.

There are people out there who are driven with self-centered fear and self-centered greed and yeah, and I learned a long time ago, if you chase the dollar, you will never have enough. If you chase doing the next right thing, you’ll be fulfilled for the rest of your life.

Cody Crabb (22:10)
Wow. Now that’s some really good advice there. Cause I feel like a lot of times with business and things, we tend to kind of try to separate that as if it’s like, they’re just card, like numbers on a page or things like a kind of not even a real, like almost a game, like where we’re just kind of playing with numbers on a spreadsheet, but it’s so much more real than that. And having, keeping that in mind is always going to be, you know, I like you, like I said, I think kind of funny that when you focus on these important things, how

Nate Armstrong (22:19)
Mm-mm.

Cody Crabb (22:39)
things just kind of have worked out well for you. And that’s, I think that’s really good example. So let’s say ⁓ someone is ⁓ the operator, they are seeing things starting to slip. I know we kind of touched on this, but I’m curious, what is like the first move that you can make to kind of make, to save it from going beyond saving, if that makes sense? what’s like, what is like, we said the red flags.

But like, can, what’s an action item for those red flags?

Nate Armstrong (23:12)
Yeah, let me just kind of take you to a 10,000 foot view. So when Chris ended up partnering with me, one of the first things we did in the portfolio that I already had is he looked through the whole thing and said, hey, interest rates too high there. like strategize, look at the whole thing, see it from a 10,000 foot view. And Chris pulled some strings because of his, ⁓ God’s blessed him and he’s done very well. So banks love him.

We literally had the vice president of Greystone fly down from New York to meet with Chris and basically say, hey, borrow more money. And so Chris has access to some loans that everyday people are never going to touch. And so if, let’s just say you’re an operator out there or you’re a limited partner on a deal and you don’t really know if it’s in trouble or not, but you’re worried about it. I would have someone like Chris look at it.

And see, is there another financing option? Is there a different way we can bring in equity instead of, you know, not paying the taxes because it seems, you know, like the easy one to skip taxes pound you double digits, like the percent and penalties and late fees, like don’t, don’t start making those corners cut. Instead you bring in somebody that might be able to help. And someone like Chris, he’s got a heart. Number one, number two, he’s got financial savvy. So having him look over your shoulder could conserve a lot in that equation.

And from an LP’s perspective, the actual mom and pop investor, what they should be doing is, like I said, asking for the financials and asking for insight into what the deal is doing if they get seen these red flags. And then force their GP to make decisions and make moves to go outside and seek outside counsel and to seek help and to make decisions that will be maybe uncomfortable for the GP, but will save the deal at whole. There are deals that we’re not doing or performing the way they were supposed to.

And Nate and I literally gave away our GP portion to make that deal whole. ⁓ We’re not making any profit on the deal to make sure our investors were protected. There were some assets that were presented by an operator that weren’t as they were supposed to be. And the guy lied, imagine that. ⁓ And it was somebody that we trusted. ⁓ we took the position that, nope, we’re the ones taking the hit. The investors are going to do fine. And we’re able to make those moves as an LP investor.

You’ve got to pressure your GP to do the right thing, to expose what’s going on, to be honest and open and candid about the deal so you can work together as partners to save the property.

Cody Crabb (25:37)
Yeah, so ⁓ let’s look down the road. mean, right now ⁓ things are looking good. ⁓ What plans do you have to kind of build this out as you’re going down, let’s say, five, 10 years down the road? And what’s the biggest challenge you see standing in your way from doing that?

Nate Armstrong (25:57)
Okay, so I’m gonna take us back to the Blues Brothers movie. I don’t know you’re old enough to know who the Blues Brothers are. You remember the Blues Brothers? All right, so they can’t stop us. We’re on a mission from Gatton, right? It’s one of the big lines in that movie. Right now, I’m here to tell you that ⁓ we’re almost out of the season of buying, right? So the easy, cheap deals where like Nate was talking about.

Cody Crabb (26:03)
I’m aware of the concept. I don’t know if I’ve actually seen it.

Yeah.

Nate Armstrong (26:23)
The debt wall has ended that time in 2025 is where all this debt has come due and these people can’t refinance at reasonable rates because they don’t know how to operate. These deals are getting less and less and less and it’s being more difficult to acquire them. So buy, buy, buy, buy, buy. We plan on acquiring between 500 and 750 million dollars this year in additional assets.

to ride the wave out and then just ride these properties into the next five, 10 years, continuing to add at least 150, 200 million dollars a quarter. Those deals are gonna change in what they look like because of the state of the economy, obviously, interest rates, right? That’s a big effector in these things. And lastly ⁓ is insurance. Insurance in some of the regions have been prohibited from acquisition as a result of the rates.

So we’re starting to see insurance rates pull back and other things that are going to affect the price of these properties. So we have fortunately been blessed to partner with, like Nate said, Greystone. And now we’re partnering with another big lender that they will hand us their properties so that they don’t have to operate them or bring them back on their books, have us take over their loans and just go out and continue to operate the property. Because most people don’t know this, but when a bank closes on a property, let’s say it’s a hundred million dollar loan.

they have to have 700 million in cash to shore that up. So they don’t wanna do that. They’d rather come bring in a special operations, get somebody like us, put us in there, let us take over the debt and move it forward. So our strategy right now is to do the next right thing, continually, continually, continually. And people are recognizing us for who we are and what we’re doing. And it’s just getting easier in an insane market, believe it or not. I’m sorry, that was a real simple question I answered with a complicated answer.

Cody Crabb (28:15)
No, that’s

how, that’s pretty much everything in this business is like easy question, hard answer. So thank you for doing that. And I think it was very clear too. ⁓ So if people wanna learn more about what you’re doing or work with you or collaborate with you in some way, where can they go to find out more?

Nate Armstrong (28:24)
.

Yeah, multifamily help. So it’s multifamily.help. multifamily.help. That’s where you go. It’s a website multifamily.help and we’re happy to look over your shoulder and give another look. And we’ve got all kinds of ways to help you. are the partner with you deals, we have an Academy to teach you how to do these things safely. We have ways for you to get involved with us directly to help you be in on your deals with you. We like that we’ve been blessed with amazing

Cody Crabb (28:44)
like a website, it’s .help. Yeah.

Nate Armstrong (29:06)
amazing experience and wisdom as a result of mistakes and just lengthen in the market so that we can help in all kinds of ways.

Cody Crabb (29:14)
Wow. Well, Chris Nate, this was a really

powerful conversation. I appreciate you guys sharing what you did and the heart behind the business ⁓ and as well as the practical side. So ⁓ I really appreciate the insights you’ve shared. ⁓ And Chris, for being so vulnerable and open, think it’s sometimes we don’t get a whole lot of that. And I think that’s that can really make a difference to to really. Yeah. So so we appreciate we appreciate all that. ⁓ And so ⁓ last question here as we wrap up.

Nate Armstrong (29:35)
Thank you very much.

Cody Crabb (29:43)
What would you say if you had one little nugget? I’d love one from each of you. Um, for, for, uh, operators or investors that are listening, um, you know, let’s say you’re in front of it. mean, you are in front of an audience of real estate investors. Let’s say I was, you were at like a conference or something. hand you the mic for like a 10 second. Here’s a little tip that I think would help you move the needle that most people don’t know. I’d love to hear one from each of you. That’s, is one of my favorite things to ask. Can we get some good stuff?

Nate Armstrong (29:58)
And close it.

You go first. I’m sure that already I’ll… All right, so listen, there’s two ways to succeed in this world. One way is to just succeed financially, making that great investment. The second way to succeed and the more fulfilling way to succeed is to invest, make money and have a positive impact. Find a partner that has got that purpose and that goal. And I’m here to tell you, you will never worry about your money again and you’ll never worry about fulfillment. It’s the best thing in the world. Invest with purpose.

Cody Crabb (30:11)
Yeah, no pressure.

Wow, and you somehow made it even more succinct after that. That’s amazing. All right, Nate, I pity you for having to follow that, but go ahead.

Nate Armstrong (30:48)
man, that’s tough.

Yeah. Start a nonprofit. Do something much bigger than yourself. Do something like this weekend. We got a bunch of kids coming here through our home of us kids nonprofit and we’re teaching them something simple, but it’s public speaking skills so that they don’t have the shaking ease in front of their classes, things like that. But we get more joy. Yes. Doing that than closing a 71 million dollar deal. Yes. So start something that makes your heart heart pump, man. Yeah, for sure. It’s a beautiful thing.

Cody Crabb (31:17)
love that.

Wow and you still did it you stuck the landing okay well thank you guys so much for joining us like I said we really really appreciate your time.

Yeah go ahead..

Nate Armstrong (31:24)
⁓

I just got one more thing. I want to

make sure that we properly shout out what you and Mike are doing in the investor fuel community. There are very few really good people out there that are gathering a community like this. I love what your work has done. It’s only grown and gotten better over the last 14 years that I’ve watched it. So just thank you guys for doing what you Absolutely. Thank you guys.

Cody Crabb (31:45)
Yeah, well, thank you. Thank you. And I will make sure Mike hears that as well. That’s always great to hear. ⁓ Well, like I said, audience, if you got something out of that, which I’m sure you did, please go ahead and hit like or subscribe so you can get the next episode. And until then, we’ll see you on the next week’s episode of the real estate pros podcast. Take care.