From 30 Years in Lending to Multifamily Passive Income | Jay Boersma

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Show Summary

In this episode of the Real Estate Pros Pod, Kristen interviews Jay Boersma, a seasoned expert in residential lending and multifamily investing. Jay shares his journey into the real estate industry, the importance of creating passive income, and the lessons learned from his experiences in multifamily investing. He emphasizes the significance of effective communication with lenders, the value of treating tenants well, and the strategies for identifying great investment properties. Jay also discusses the importance of building systems and documentation in real estate operations, and he offers valuable advice for aspiring investors.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • Jay Boersma’s Website
    • Jay Boersma on LinkedIn
    • Jay Boersma’s Phone Number: 480-206-8659

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  Jay Boersma (00:00)
  So we really believe at Neighborhood Capital Resources that we’ve got two constituencies. One is the investor and certainly that’s the primary constituency is to make sure that no matter what we do with our opportunities that we’re delivering a great risk adjusted return to investors. But in the same token,

  A fundamental element of that is occupancy. And we believe that a big factor that drives occupancy is having a tenant base that doesn’t turn over as much as might turn over on average if they’re not treated well.

  Kristen (02:10)
  Welcome back to the Real Estate Pros Pod. I am Kristen and I’m here with Jay Boersma. He has spent nearly 30 years in residential lending while owning investment properties since 1998. He is now the owner of Neighborhood Capital Resources and I’m excited to get into this. We’re going to talk about creating passive income for yourself. Thanks for being here, Jay. So 30 years in residential lending. That’s so impressive. Tell us about kind of how you got into the industry and what that has looked like.

  Jay Boersma (02:30)
  Thank you for having me, Kristen.

  Well, I moved to Arizona from Oklahoma in 1993 and went to graduate school out here and then got out of grad school and lived in Germany for a year, but then came back and thought that I would get into commercial lending. And at the time that sounded sexy. I had no idea what that meant, but I had some interviews and had some offers and the offers were like half of what I thought that I would be earning.

  right out of the gate, but I had a friend whose mother had been an executive or was at the time an executive for a national mortgage lending company and he had gotten into the mortgage business like six months prior and he said, hey, just team up with me. I’ll teach you everything you need to know and we’ll be partners.

  I said, okay, let’s do it. I didn’t know when I was 25 that he didn’t know everything after being involved with it for six months. I thought he was a master. So that’s what got me into the residential mortgage lending space. But I just fell in love with it. I knew from the third loan that we put together back then that it was something that I wanted to pursue deeply on an ongoing basis as a career.

  Kristen (03:28)
  Yeah.

  Yeah, and you know, you’ve been doing lending for so long. Are there any misconceptions or things that you wish more investors knew about borrowing money?

  Jay Boersma (03:51)
  Well, I don’t know. um you know, lenders don’t have a great reputation.

  And that’s always been something that has been unfortunate. But I think that if lenders communicate well and quickly, then that’s really what they need to be all about. And then hopefully they’ve got some loan products that are attractive to the market. But I think just that if there is a misconception is that all lenders are kind of non-communicative and hard to deal with.

  Kristen (04:23)
  Yeah, absolutely. think that’s a good thing to clear up. So when did you start kind of investing yourself? What did that journey look like?

  Jay Boersma (04:32)
  Well, we’ve always been interested in real estate. So we started to invest in the late 90s and we

  Were involved in a just a residential ⁓ rental property and that was interesting But again, that was almost 30 years ago. We got into a situation. We had a partner He was a great partner for a number of years, but we had some tenants that Wouldn’t pay unless I went to their place of employment once a week and Picked up a weekly rent in cash because they were getting paid I don’t know if they were cashing their check or what but it became a situation

  where we couldn’t get the rent paid unless I showed up every Friday, every week to collect one, you know, a week’s worth of rent instead of monthly rent. So that was an interesting experience that didn’t last long. And then we’ve invested in a lot of different kinds of real estate deals, but we were never landlords or owners of rental property again from around 1998 or 1999 until the year 2000 when we got into multifamily investing.

  Kristen (06:26)
  Yeah, and what kind of led you into multifamily?

  Jay Boersma (06:28)
  Well, so this was prior to COVID, so we had none of that experience yet, but I was just, I’d been in residential lending for, and been working for 25 years or so and was getting into my late 40s and was starting to think about what my life would look like at the end of my career and wanted to begin to try to visualize and make whatever I wanted to have happen toward. ⁓

  2030 begin to happen around 2020 so my idea was that we needed to start building some more passive income and So we had a few hundred thousand dollars to invest and you know, I didn’t think Immediately. Okay. Well

  $300,000 $400,000 is not going to create enough passive income to live on. But the good news is that investing that money in multifamily real estate and getting actively involved in multifamily real estate gave me a whole second career to embark upon that we really love.

  Kristen (07:24)
  Yeah, that’s amazing. And kind of as you started with that, were there any learning curves? You know I feel like multifamily is such a big monster to take on. What were some of your learnings from you know diving headfirst into it?

  Jay Boersma (07:36)
  Well, without getting too in-depth, and we could explore some of these things more deeply, but you know, real estate, even going back these whole 30 years has been, you learn something new on every deal, you know, with every loan, or with every multifamily purchase, you’re going to learn something new, and you just, you hope that you do the things to mitigate the risk, so that whatever learning experience you might have is a positive learning experience that doesn’t cost anybody money. So that’s always a goal, is to make sure

  that the learning experiences move forward that way.

  Kristen (08:07)
  Yeah, absolutely.

  Jay Boersma (08:07)
  But some

  of what’s happened, some of the kind of the areas where we’ve learned is just, you know, making sure that the underwriting is accurate. And so what that means is that we end up underwriting all of our opportunities on an ongoing basis. before the opportunity closes, while we’re in the analysis phase and while we’re in escrow on buying another asset, we’re underwriting that property almost every day. I rarely is it four days that goes by.

  that we don’t put a new date on the analyzer that we’re looking at to identify, okay, this is the latest progress that we’ve made on analyzing this deal. So it’s just continual analysis, continually discovering new elements about the opportunity that you’re walking into.

  Kristen (08:55)
  Yeah, you sound like you’re very good at creating systems.

  Jay Boersma (08:57)
  Well, my wife is excellent at creating systems and she’s the organization queen. So we both love to underwrite. We both do different elements of the underwriting sheet, gets all the information in place. And then I look at all the kind of the variables and all the what ifs and kind of create ranges of what the outcomes might be. So, but she’s the system person.

  Kristen (09:18)
  That’s amazing. I mean, it’s very important. think that’s something people struggle a lot with is creating the right backend for their business.

  Jay Boersma (10:00)
  you couldn’t be more correct.

  But, just really just documenting everything. So one of the things that we do is we build teams. In multifamily investing, there’s, we have partners, we can’t do this alone. So we have both active and passive partners. But one of the things that our active partners are constantly praising us for, it’s her, she, Tana deserves the accolades for that, but we really document everything and create Google files and places where really all the information

  involved in any of these opportunities is housed in a place where everyone can see it.

  Kristen (10:36)
  Definitely, I think that’s really good advice. And with the full multifamily opportunities right now, what are you kind of seeing? Are you excited about that space?

  Jay Boersma (10:45)
  Well, we’re really excited about our primary market of Oklahoma, where we’re…

  Tana and I are both born and raised in Oklahoma and we’ve been in Arizona now for 32 years and we definitely have participated in the great real estate runs of Phoenix over the last 30 years with respect to Residential lending and we would love to be invested more in multifamily units in Arizona, but right now the the sellers still are holding these assets

  Too dearly for us to be interested in buying much We look at assets in arizona every day, but what we’re finding in is that in oklahoma and back all through the midwest properties or markets that weren’t Subject to or that haven’t recently been subject to an oversupply Are actually performing better. So we feel blessed that we’re comfortable being in Specifically oklahoma, but we’re interested in all of oklahoma’s neighbor states and then up into the midwest

  as far as market opportunity.

  Kristen (11:50)
  Yeah, that’s amazing. I I think that’s a really good thing to highlight. think people get a little confused about the market, especially right now. There’s a lot of information being thrown at everyone. But it really is segmented. There’s different markets that are performing, you know.

  all the time, there’s always a market that’s performing well. And I know a big foundation of your, you know, as you get into multifamily is treating your tenants very well and kind of that personal touch. So I’d love for you to talk a little bit more about that.

  Jay Boersma (12:20)
  So we really believe at Neighborhood Capital Resources that we’ve got two constituencies. One is the investor and certainly that’s the primary constituency is to make sure that no matter what we do with our opportunities that we’re delivering a great risk adjusted return to investors. But in the same token,

  A fundamental element of that is occupancy. And we believe that a big factor that drives occupancy is having a tenant base that doesn’t turn over as much as might turn over on average if they’re not treated well.

  Okay, so what we do at Neighborhood Capital Resources is we focus on providing a safe, comfortable environment for our tenants that they can live the life that they want to live while they’re there.

  Kristen (13:11)
  And how do you how do you foster that?

  Jay Boersma (13:15)
  Well, a couple ways. So maintenance is a fundamental element of that. A lot of operators have slow and not good maintenance, but we’re on the spot addressing maintenance issues very quickly. But also we do events and just find ways to show the tenants that we care about them by building community at our assets.

  Kristen (13:37)
  Yeah, absolutely. And what are some of your tips? I know people have different strategies in terms of the units and how to make them the best possible for you to get a good return, but then also the tenant to have a great environment to live in. What are some of your tips? Do you have certain amenities that you either take out or put in these units?

  Jay Boersma (14:01)
  Well, so there’s both interior and exterior amenities. And so we do dog parks. That’s kind of our thing. We allow tenants to have dogs at all of our assets, dogs and cats.

  America’s become more and more pet crazy over the last 20 years we think and so we want them to be able to have their pets but in general we when we purchase an asset we’re going to Do what we can to bring the rent to the top of the market for that asset and that usually or frequently requires interior upgrades to cabinetry countertops appliances flooring lighting all of those things

  Kristen (15:22)
  Yes, amazing. And what are your best tips for identifying great properties, especially around the Oklahoma area?

  Jay Boersma (15:29)
  Well, so we look at value add where we believe that we can improve the property and then increase the rent. And so ⁓ a tip for that would be, and on all of the opportunities that we’ve had, the market rent has been, or the rent at the property has been below market rent.

  even based on the condition of the interior and the exterior of the asset. So there’s been a little bit of runway, a little bit opportunity for us to increase the rent even without doing the upgrade. But then once we do the upgrade, we can increase it even more and force appreciation by adding value to the units.

  Kristen (16:10)
  Yeah, absolutely. And what kind of people, I know that you work with investors and you help them create great opportunities. What kind of people do you work with?

  Jay Boersma (16:21)
  We work with all kinds of different investors, but many of them are business owners, people that have some interest in real estate, obviously, and in private equity investments. But really just anyone who’s interested and has some capital to invest, we’re happy to talk to those people.

  Kristen (16:37)
  that? Well, to kind of wrap this up, what would be a piece of advice that you wish you learned earlier in your career that you can share with everyone today?

  maybe just some early road bumps you had that you can kind of share what happened and how you got through it.

  Jay Boersma (16:52)
  You know, I would say that just to make sure that the people that you’re partnering with are really the people that you want to partner with, both from a passive investor standpoint, do your homework on who the operators are that you might invest in their opportunities. But then…

  As an active partner, you have to do the same thing. And so you’ve got to go beyond the basics of the background check and that, but really spend some time making sure that your long-term goals are in alignment so that you don’t step off on the wrong foot right out of the gate.

  Kristen (17:24)
  Yeah, absolutely. think that’s great advice. Well, tell everyone where to find you and how to get involved with Neighborhood Capital Resources.

  Jay Boersma (17:30)
  Well my phone number, I’m a telephone guy, my phone number is 480-206-8659 and our email address is NC, as in neighborhood capital, so ncresources.us.

  Kristen (17:50)
  Amazing. Well, thank you so much for being here, Jay.

  Jay Boersma (17:52)
  Totally my pleasure, Kristen.

  Kristen (17:54)
  And thank you everyone for listening. Hope you got some inspiration for your own business and great takeaways. Definitely check out Neighborhood Capital Resources and we will see you back next time. Bye.