From Touring With Rock Stars to Real Estate Investing and Multifamily Deals

Erik Swanson (00:00)
Yeah. ⁓ honestly it started very small, ⁓ with just a simple solution for something I wanted to solve, and that was I was gone all the time and I didn’t want to pay rent anymore for my stuff just to be sitting there. And so it just started with a simple, hey, why don’t we purchase this three unit? I can have my stuff in one of them and rent it out.

And it was just a way to not pay ⁓ rent and have the mortgage kinda covered by ⁓ the rental property.

Dylan Silver (02:06)
Hey folks, welcome back to the show. Today we’re joined by Erik Swanson, a Chicago-based entrepreneur and real estate operator who owns Fernweh Property Group. He’s a partner and principal at Bedrock and co-founded Navigator Tap Room in Logan Square. Prior to real estate, he spent more than a decade touring as an audio engineer with Claire Global, working with artists including Aerosmith, Bon Jovi, The Eagles, Green Day, John Mayer, and Dead Company.

He then spent seven years working as an engineering manager, leading a 25-person team on major productions, including the Super Bowl, the Rolling Stones Global Tour, and film and television projects. Today, his work in real estate spans more than twenty-five transactions across the Midwest and Florida, with a focus on value add multifamily mixed use assets, remote ownership, and building scalable teams. Erik, thanks for joining us today.

Erik Swanson (02:42)
Well.

Right. Thanks, Dylan. That’s ⁓ I like the introduction. I appreciate it. Thank you.

Dylan Silver (03:04)
Absolutely. ⁓ now going from touring the world, we mentioned the bands, Aerosmith, Bon Jovi and the Eagles, to then building real estate companies, a tap room, multifamily partnerships. How did that whole entrepreneurial path begin?

Erik Swanson (03:20)
Yeah. ⁓ honestly it started very small, ⁓ with just a simple solution for something I wanted to solve, and that was I was gone all the time and I didn’t want to pay rent anymore for my stuff just to be sitting there. And so it just started with a simple, hey, why don’t we purchase this three unit? I can have my stuff in one of them and rent it out.

And it was just a way to not pay ⁓ rent and have the mortgage kinda covered by ⁓ the rental property.

And good.

Dylan Silver (03:54)
And so was that a situation

where you were living there part time or was it rented out a hundred percent of the time?

Erik Swanson (03:59)
So I was living there part time, but ⁓ I utilized the space, so my stuff was always there, but the other two units were fully rented all year round.

Dylan Silver (04:09)
A a house hack, if you will.

Erik Swanson (04:11)
Yep, exactly.

Dylan Silver (04:12)
going from there, did you see, okay, well, this is working. I can build and repeat this and potentially do this with others, or was that later down the line?

Erik Swanson (05:08)
So after I realized I’m like, this is this is great. This is working and this is like before all the books were out and like all this education on learning this stuff. So it was just going into it, you know. And now there’s just so much available to people to be able to do this. So after you know the first one worked, I was like, Well, that was that was great, let’s try it again. And it just kinda started

you start learning more and more as you’re going and it really starts scaling as you begin to learn more about lending options, construction options and really build learning the you know, the value add to distressed properties.

Dylan Silver (05:46)
Now the distress space is interesting because there’s a lot of leverage there. But of course, there’s also the possibility that ⁓ you lose your shirt if things go wrong. When you were, you know, cutting your teeth in this space, were you looking for heavily distressed assets or were you looking for things that were maybe a little bit more rental grade or even turnkey?

Erik Swanson (06:06)
Yeah, great question. ⁓ so in the beginning I was looking for more where the ⁓ the units needed to be remodeled. Basic kitchen updates, maybe flooring, painting, bathroom. Nothing like a full gut to where I’m redoing all the electrical, the plumbing, the HVAC, stuff like that. ⁓ so that’s kind of how the progression went. So I was just looking for stuff that just needed remodeling. I can increase rents to at least ⁓

you know, market rate. And that’s really where the next couple steps were. So those were like five unit buildings and also brought me into the commercial space of lending because four units and above you start hitting different obstacles ⁓ when it comes to lenders. And yeah.

Dylan Silver (06:52)
Now you’re based in Chicago, but we have you know Midwest and Florida as areas that that you’re active in. When you were expanding throughout these markets, was it very intentional? Were you looking for deals in Florida or did you happen to be, you know, traveling and realizing that there were opportunities?

Erik Swanson (07:11)
Yep, that’s a good question because ⁓ it all really each market was based on boots on the ground. So we had a strong team in Florida and I can help bring expertise on, you know, underwriting, bringing in capital, bringing in great lending options. And we had a full you know construction crew, ⁓ realtor on the ground that really made that ⁓

A positive and successful.

Dylan Silver (07:37)
Now ⁓ when we’re building these ⁓ out of state teams, vertical integration is is key because you’re gonna need not just someone who’s gonna rehab, but someone who’s gonna manage the property and then you know, folks who are capable of coming in and addressing issues should tenant issues arise. And so how have you approached that team and building these teams when you’re not physically there in person?

Erik Swanson (08:02)
Yeah, I think one vertical integration is very ⁓ positive for what you’re doing. as in giving you the flexibility to pivot quickly on any problems, especially when you’re doing your value add and you’re having your construction component, ⁓ being able to answer questions day of and being able to look at the budget and

and adjust very quickly instead of letting that project continue and potentially putting yourself and investors in a in a tricky situation that could pop up in three months.

Dylan Silver (08:44)
Yeah, I mean the multifamily space has certainly been tricky for a lot of people over the last, you know, five years or so. And it’s been one of these situations where there’s been a lot of people get into the space. But, you know, if you’re basing the current market off of returns pre-2020 or 2021, it’s just night and day difference. How have you managed to navigate these last several years?

Erik Swanson (09:43)
Yeah. So it definitely takes time, you know, it it wasn’t like just overnight. It it’s constantly learning, reading, listening to the podcasts, being inspired, contacting friends, mentors, and just constantly keep taking a small bite of the bigger project. And it’s honestly just one day it’s like you feel like it’s you never feel fully there, but

Like you’re just able to handle more and it’s kind of growing organically. It’s it’s like, okay, now we’ve learned all this, now let’s add the next segment of growth and begin to start expanding the team and showing people our systems of procedures and and really ⁓ kind of growing that way.

Dylan Silver (10:29)
Now, when we talk about multifamily acquisitions, ⁓ folks sometimes have a niche or an asset class, whether that’s you know, B, C, A that they’re looking for. Do you have a a set niche in the multifamily space for acquisitions?

Erik Swanson (10:44)
So we do like distressed properties. ⁓ potentially purchasing a C and bringing it up to a B class. ⁓ we look for workforce housing. ⁓ we feel like the Midwest offers great potential for growth. we are seeing a lot of industries and ⁓ businesses moving to more of these Indianapolis, Cincinnati, Ohio, Kansas City. ⁓

l Louisville, Kentucky. And these are cities that are just growing. They’re they’re they’re coming up on the peak of they’re on their growth cycle. And you know, they’re doing massive expansions, whether it’s Amazon or EV or airport expansions we look at quite a bit. When we see a city investing in massive airport expansions, we know that they have a whole full

system that the city’s trying to build to make that growth happen. And those are the cities we like to target.

Dylan Silver (11:43)
pivoting here, ⁓ Navigator Taproom, you know, you’ve trained management teams to handle day to day operations, but of course that’s a different business entirely. How has that been, you know, maybe being a a separate ⁓ entity as aside from the real estate?

Erik Swanson (12:00)
Yeah, ⁓ that’s been a great experience. You know, we went through full cycles, you know, going through COVID. ⁓ we were we launched pre COVID ⁓ and we had a great response with the the neighborhood in Chicago. And we were able to actually we host a ton of events. We actually do a lot of real estate meetup events. ⁓ and so we are you know, we host maybe

four to five a month. ⁓ and they’ve been great for the neighborhood. And we do a lot of other networking events too. ⁓ and so that certainly was a ⁓

learning so much from it. I mean it was just unbelievable that like the amount of knowledge you get from just running, operating and starting the the business. I mean, that was really when the first time I was raising real capital ⁓ for something that isn’t a proven concept yet. So real estate when you raise capital, like this is a proven concept. They’re they’re just basically looking at the deal, making sure that that works, you know, sell in the story

Dylan Silver (12:53)
Yeah.

Erik Swanson (13:04)
on a you know, a concept is is much difficult. Much more difficult, yeah.

Dylan Silver (13:08)
I would like to get a little bit granular there. You know, for folks who are raising capital for projects, this seems to be a common bottleneck for guests at the show and real estate investors at large. What’s been your experience and maybe any feedback that you have for folks who are starting along that journey?

Erik Swanson (14:05)
Yeah, absolutely. I mean, for my personal journey, it started with, you know, u utilizing my own money. ⁓ I was more comfortable taking bigger risks, ⁓ jumping into ⁓ bigger projects. I was okay with losing my own money. ⁓ thank God they they panned out and were successful and worked out, but that taught me a lot prior to reaching out to investors.

who generally will be in your inner circle. So you wanna make sure that you have the education, that you’ve read the books, you’ve listened to the podcast, and actually have skin in the game and have tried it. ⁓ but I don’t want to discourage anybody for waiting on just you raising the money yourself. ⁓ but it is good to have that actual practice of going through the acquisition, going through whatever remodel and then whether your exits the cell or to

refinance cash out is usually our model and we hold long term for cash flow.

Dylan Silver (15:04)
Pivoting back to to multifamily, I’ve seen now what feels like people having to pivot, for lack of a better term in the multifamily space from, you know, maybe a three year ⁓ time frame to longer time horizons, and then also realizing that maybe this, you know, ultra luxe, you know, class A with two pools and a gym and you know, ⁓ a brand new facilities may not be the way for them to go right now.

What’s your perspective on maybe some pivots that need to be had in the the multifamily space for syndicators and, you know, fund managers to be successful today?

Erik Swanson (15:42)
Yeah, ⁓ definitely things are changing. ⁓

I think it’s very important to understand the actual deal, but I think targeting markets as well is is where kind of our mindset is. You know, we want to make sure one, we have boots on the ground there, but two, we’re looking for markets that cause all of them aren’t in their same cycle of there’s a few markets that are definitely having multifamily issues. ⁓

But honestly, really looking at other markets that are in their upswing.

Dylan Silver (16:14)
Now, when you’re identifying where to invest specifically, I’m sure that some of these markets may feel like tertiary markets. And ⁓ at at first glance it may seem like, okay, well, what’s going on, you know, in in these markets compared to some of the ones that may be more top of mind? But of course, it’s those tertiary markets where the gold is. When you’re going in and you’re ⁓ evaluating a deal and a market, what are some of the first things that you’ll look at?

Erik Swanson (16:42)
Yep. So one of the first things we’re looking at growth. ⁓ what is the year over year growth of you know, demographics, income, medium income, and and seeing what the actual city state is doing to inspire growth as well for local businesses, ⁓ larger ⁓ l larger corporations of

medical or ⁓ Amazon, things like that. And so those are really our key indicators. And we’re looking at, you know, your average rents, what those are going for, and really can the current population handle more ⁓ more rentals in

Dylan Silver (17:25)
we are coming up on time here, Erik. Any new projects that you’re working on? And then also anything that you’d like to mention directly to our audience.

Erik Swanson (17:33)
Sure. Yeah, we’re working on currently underwriting some ⁓ some projects in the Midwest area. ⁓ few of them are two of them are about 170 units plus ⁓ value ads. And so we’re looking to get those under contract and and move those forward. ⁓ obviously we’re always, you know, interested in people

booking

you know, anywhere we can help anybody. ⁓ especially investors looking for operators that are have been through the cycles, have certainly ⁓ have a a good game plan and have internal verticals. And so if anybody’s interested, ⁓ certainly reaching out to me via email or going to our website. ⁓ a good email would be [email protected] spelled F E R N.

W E H P G dot com. And we just have a you know a lot of different opportunities and scopes on projects and we’re trying to build relationships and and loyalty.

Dylan Silver (18:35)
Erik, thank you so much for your time today. Thanks for joining us.

Erik Swanson (18:39)
I appreciate it, Dylan.