How Alvin Johnson Turns Distressed Multifamily Properties Into Massive Value

Alvin Johnson (00:00)
Pretty much, I started as a handyman and then I went into a paint contractor and from a paint contractor I became a general contractor. Then I’ve owned a couple of mortgage companies so I understood then how the financing worked and how the numbers work. when you understand everything’s simply a math problem. And when you understand the math then you can go do anything you want to do.

Cody Crabb (01:53)
Welcome back to the Real Estate Pros podcast. I’m Cody Crabb with Investor Fuel. And today I’m joined by Alvin Hope Johnson, President of Multifamily Monopoly. Alvin’s a real estate developer operating in Texas and Louisiana. He’s focusing on distressed multifamily with heavy renovation, ground up development, ⁓ and he’s handling construction and management in-house. They’re taking multifamily assets that are

Basically ready to topple over at any second and they put serious money into it and they turn them into high-value Properties and even cooler than that. He’s joining us on site He’s literally in a golf cart out running the noise of the construction site, which is the coolest thing ever Thanks so much for joining us today Alvin

Alvin Johnson (02:33)
Hey Cody, thank you man, my pleasure. My pleasure.

Cody Crabb (02:36)
Yeah, for sure. So for people listening, give us the simple version first. When you say you’re a real estate developer, a lot of our audience is kind of on the newish side of real estate investing. So when you say you’re a real estate developer, what does that mean in your world day to day, especially being the owner of these assets?

Alvin Johnson (02:57)
Well, good question. You know, real estate developer can be a guy that goes out and buys a house. He renovates it and then he sells it. And guess what? He has developed a finished product out of something that wasn’t finished before he bought it. That’s primarily what we do on steroids. You know, we’re doing 452 units. So you may call it a redeveloper because the project was already here.

We are just coming in and enhancing it, rebuilding it from the foundation to the roofs, new studs, new interior, new wiring, mechanicals, everything’s new. And then from a ground up perspective, we go out and buy a piece of raw land, 15 acres or so. We get all the entitlements in place by the city, county, and state, and et cetera. And then that piece of dirt is ready to build apartments on our single family homes.

So we’re in the process also in Greenville, Texas of developing a neighborhood with 365 homes. We sold the first 200 lots. We’ve got 165 lots left to finish out, put the roads, stop signs, street lights and all that stuff in. And then all of those lots will be for sale to developers if we don’t build the homes.

Cody Crabb (04:12)
So you’re doing like everything, everything.

Alvin Johnson (04:15)
Well, I’m yeah. Yeah, I mean, it’s it’s just part of the progression, right? You buy one house and then you go, oh, well, that was nice. You go out and buy two houses and then you buy a duplex and then you find out how the numbers work and you go buy a 30 unit apartment deal and then you find out, well, shit, if I can do 30, I can do 100 and then you do 100 and say, well, I can do 400. It’s just more zeros and more keys.

Cody Crabb (04:17)
Yeah.

Yeah, what’s the difference?

More keys and more zeros. I like that. So is that how it worked for you? Did you kind of just fall into it on accident? Just kind of slowly growing and you’re like, let’s just keep doing bigger versions of this until it starts stops working because that’s bigger versions is more money and more money is you know, that’s Who’s gonna complain about that?

Alvin Johnson (04:56)
Pretty much, I started as a handyman and then I went into a paint contractor and from a paint contractor I became a general contractor. Then I’ve owned a couple of mortgage companies so I understood then how the financing worked and how the numbers work. when you understand everything’s simply a math problem. And when you understand the math then you can go do anything you want to do.

Now going to the moon, a simple math problem, right? If you can figure out all the engineering behind that.

Cody Crabb (06:05)
Wow. Yeah.

Alvin Johnson (06:10)
behind all of the propulsion and the thrust, you can go to the moon. So it’s just a math problem.

Cody Crabb (06:15)
I like that but man that really seems like it’s a lot more than that but you’re really right. What else is there? Figure out, solve the problem or figure out if the money works or if the math works, boom, and there’s nothing else to worry about. Yeah, you’re right.

Alvin Johnson (06:31)
That’s it. You only got 10 numbers,

right? Zero through nine. It’s real simple. You’ve got to figure out where to put them. You just got to figure out where to put them.

Cody Crabb (06:36)
You’re making me feel real bad about doing bad in my math class, I’ll tell you that. Yeah, exactly.

Well, so think it’s really, I think it’s kind of fascinating that you can basically take something that is pretty much functionally obsolete. Like it’s about to be torn down and you could turn it into something that would sell for $60 million or more. I mean, that’s pretty wild. So I guess my question is, you know, other than just scale.

like more workers doing more hours and more keys and more zeros like you said. Other than just the scale, what’s the difference between your typical fix and flip that one of our listeners might take on just on their first shot at real estate versus something like this? What do you have to worry about that someone on that smaller scale doesn’t have to worry about

Alvin Johnson (07:24)
The worries are all the same. The cost of labor, the cost of material. I think the biggest thing is a belief in yourself that first you have to have a vision for what it can look like, right? And then with that vision, you can develop the belief in yourself that I can do this. And then you’ve got to find the crews that are capable of performing your vision. And then got to find the money.

It’s no different, right? Do I want to go build a house? Can I put the driveway in? Can I do the roof? Can I change the windows? This is all the same stuff. Same stuff.

Cody Crabb (07:59)
Avin, you really make

it seem like it’s just about like, yeah, just do it. What’s the problem? Just go do it. I mean, I’m sure there’s plenty of challenges here. Is the financing ever an issue? How do you usually get financing for something like this when it really is just on paper? can totally, you know, I can make this look great. Is this about convincing an investor or a bank that you can actually do this?

Alvin Johnson (08:22)
That’s one. The numbers have to make sense. The market has to be right. You know, they say location, location, location, right? ⁓ You have to have a captive audience for what you’re building. You you won’t go put a McDonald’s in the middle of a cornfield. So you have to have a freaking apartment complex and a market that has a need for it. so it’s, and then you have, you back all of those beliefs up with data. Here’s an appraisal that says, if I do this,

This is what the comps show. So same thing that you’re doing on a single family home. if you spend 30,000 a unit, what’s it going to be worth based on comparable sales, based on your rents, based on your net operating income that comes from the apartments? So once you substantiate all of that belief with data, then it’s finding the right guy that has the right pocketbook, right? The right checkbook.

A lot of people don’t like construction because a lot of people get into construction that don’t have enough construction experience. And so they get hosed by contractors that run off with money and come and do halfway, know, halfway finished jobs. And so that’s why I got my license. Even though I’ve been doing, you know, I said I started as a handyman and a painter. I’ve been around construction for 40 years. You know, I’m 60 years old, but I had to go get a license.

Cody Crabb (09:43)
Would not have I’m

just gonna say I would never have got 60 years old. I will just say that

Alvin Johnson (09:48)
They say black don’t

crack, man.

Cody Crabb (09:52)
Well, I will say I would I would absolutely have never I would have maybe said you’re pushing 50 Maybe but yeah, never 60. Sorry and I that was totally totally off-topic. I just was like I holy cow 60 was so much higher than I expected ⁓

Alvin Johnson (10:00)
We saved it.

Well, appreciate it.

But then you just have to be able to show that you’ve done it before. So will I loan you money to build one house if you’ve never built a house? If I do, it’s going to cost you out of the gazoo, and I’m going to be on your back all day. You show me you’ve done three or four of these, and you’ve successfully completed them, then it’s a little bit easier to get the money. And so we’ve been doing apartment projects for the last 15 or 16 years.

Cody Crabb (10:16)
Yeah.

Yeah.

Alvin Johnson (10:35)
And so I’ve never done one as heavy lift as this. I’ll tell you.

Cody Crabb (10:40)
this is like

the top you’ve ever done.

Alvin Johnson (11:16)
We’ve done it in smaller scale, but not this many units with this heavy of a list. I didn’t have any problem thinking that I could do it, but it’s convincing somebody else that you could and that the market could absorb the units as you bring them on. So we had to prove all of that up.

Cody Crabb (11:29)
Yeah.

Yeah,

I imagine the part of the difficulty is if you want to grow, you have to go, if you want to do a bigger job or get paid more money or whatever, I feel like you have to be able to convince people above your weight class if you’re able to do, you know what I mean? Because if you don’t, you’re just saying you have to stay at the same exact level forever. It’s kind of like interviewing for a job, like interviewing for promotions. I feel like you have to really convince people.

Alvin Johnson (11:51)
That’s the move. That’s the

Cody Crabb (12:03)
So what are, other than your track record, ⁓ is there anything that you do to kind of convince people, the lenders and things, that you’re actually capable of this? I mean, in the moment, just out of curiosity, like with your branding, people are hearing this and like, if this guy can get this much money from anybody, like holy cow, like what do I need to do? So that’s why I’m asking on their behalf.

Alvin Johnson (12:26)
First of all understand your numbers So if it’s all it’s all in the math right if I can show you on paper that one plus one is two and Two plus two is four ⁓ Two plus two is four right now two If I can show you that and support that with data then that that tends to get people to believe you

Cody Crabb (12:28)
It’s all about numbers, like he said.

Alvin Johnson (12:51)
So whether I can do it or not, I can bring you a deal that is substantiated with data. Here’s an appraisal, here’s a market study done by, you know, all these are done by professionals. Here’s a market study and appraisal. Here’s the property, here’s a property condition report that shows what it needs. And even if I’m not going to self-perform the construction, I’ve hired a construction company that will do this work for me for this price. And here’s their track record.

Cody Crabb (12:51)
Yeah.

Alvin Johnson (13:20)
So now you just partner with other people that have the ability to do some of the things that you do not have the ability to do. It’s all about partnership, collaboration with other people. You need somebody else’s money. You may need somebody else to perform the work for you the first time. Maybe you can hire a contractor and do self-perform some of the work. So it’s all in ways of, you know, really what vision you have for yourself that you want to perform in this line of work.

Cody Crabb (13:21)
Yeah.

Alvin Johnson (13:49)
where you want to go for yourself. Do you want to be a contractor? Do you want to be an owner? Do you want to be a developer? Do you want to be a plumber? Do you want to be a roofer? I love this real estate. Maybe I just want to cut the grass. So it really just depends on where you want to go and what you want to do. Got to have a vision first.

Cody Crabb (13:51)
Yeah.

Yeah, it’s true.

And that leads me perfectly into my next question here. some people would look like you clearly are seeing things that other people are not seeing. Like when they go to, when you see a property that’s like on its last legs, know, it’s probably gonna be torn down, like you said. ⁓ You somehow see these new, I mean, what is it that you look for? I mean, you told me that something you’re working on right now has got.

dealing with termites and all kinds of stuff like that. Like what makes a property a bad deal in that case? Because I’m hearing that like, what would you steer away from then? Because it seems like you just basically take on anything.

Alvin Johnson (15:29)
Well, I didn’t, when I bought this property 10 years ago, it didn’t look like this. Okay? So I have a lot of the things that I’m telling you have come from experience. I hired the wrong contractors. I hired a contractor that put a roof on here and then extended the roof with a two by eight and a one by four and a one by two, but they didn’t put decking above the one by eight facial, the two by eight facial board.

Cody Crabb (15:35)
Really.

Alvin Johnson (15:57)
or the one by two, so they left basically a three inch gap between the decking and my facial board. So, and covered it with tar paper and shingles. Well, after about four years.

Cody Crabb (16:09)
Yeah, I’m no expert and even

I could tell you that’s a catastrophic mistake.

Alvin Johnson (16:12)
After about four years,

the water ran down the inside of the walls and caused all of that damage and termites that I saw you. So I’m not saying that I would typically go out and buy an asset like this because I’m not afraid of the asset. More so is the market. If you see an asset that looks like this is typically in an area that has high crime, that has all of those things that where people don’t want to live.

Cody Crabb (16:19)
Yeah.

Well that’s good to know.

Gotcha.

Alvin Johnson (16:39)
But that doesn’t mean people don’t live there. This asset just happens to be in this condition and it’s the worst thing in a five mile radius. So as I improve it, everything around it gets better. They say as we get better, it gets better. So as this property gets better, the whole area gets better. And so I actually become a hero by fixing this thing up and bringing it to standard where there is a housing shortage. So.

All of those things weighed in my favor. If I passed by this today, would I say, that’s an asset I want to go buy? Well, if I had the money and I knew that the market was not high crime and all of those things, then I would probably look at it. 15 years ago, I didn’t care about crime. I didn’t care about that. I thought you could throw enough money at it and hire police officers to do police detail and things like that.

Cody Crabb (17:11)
Yeah.

Alvin Johnson (17:37)
And I have learned with some tough properties in Dallas that we own that people sometimes don’t have respect for police. They don’t have respect for the law. They don’t have respect for that. And so we’ve got one property that we have owned for about 12 years that we have continued to put millions and millions of dollars into it because of the environment that the property itself is in. Beautiful 300,000-year-old asset, but it’s surrounded by crime.

Cody Crabb (17:46)
Hmm.

Hmm. Hmm.

Alvin Johnson (18:06)
High crime, drugs, and all of those things that… Now you got good people that just happen to live in that area. They’re not a part of the crime. But, you know, it’s like driving a really clean car through a mud puddle, right? I mean, the inside of the car is still clean. It’s still a super nice car, but man, it just don’t look good after a while.

Cody Crabb (18:15)
Mm-hmm.

Yeah.

Yeah, so that kind of brings me to, ⁓ know, one thing I’m really curious about here is, so what do you look for? Because it sounds like, again, I mean, even still, you said that you wouldn’t maybe look at this one that you’re looking at now because it has some other issues, but like, you’re still looking at things that don’t exist yet. Like you’re predicting the future here. So I’d be curious to know, like, what is it that you’re seeing? What is it that you look for?

in an asset like that when you’re kind of looking to get something new. Because I feel like a lot of people are like, well, it has to have these qualifications and there’s these. But some of what you’re saying is like, it’s not even there. You’re kind of going to create something.

Alvin Johnson (19:15)
Well, that’s true. So when you go out and buy 15 acre tract of land, is it in a path of growth to where if I put an apartment complex here, I will be able to attract a clientele to live here? Is it in an area where it’s conducive for single family housing? Is it in a market that if it cost me 150 bucks a square foot to build these 2000 square foot homes, is it in a market that the general area can absorb?

$250,000 house, right? So all of those things play into it. And you know, my, so I’m not into high end housing or even though it’s no different, I wish I had started there because I’d probably be retired by now. But it’s all the same. It’s just really based on the numbers. Is it worth, is the juice worth the squeeze? Right?

Cody Crabb (20:12)
Yeah.

Alvin Johnson (20:13)
If I go do

Cody Crabb (20:13)
Yeah.

Alvin Johnson (20:14)
this asset that needs this much work and I borrowed $20 million and then I borrowed another $20 to put in it, is it going to be only worth $45 million or is it going to be worth $60 That juice is worth the squeeze. You you put in three or four years of hard work, you hire all the right people, you provide the right supervision and the right tools, and yeah, that juice is worth it. You go build a house for $150,000, you can sell it for $220,000.

Cody Crabb (20:37)
Gotcha.

Alvin Johnson (20:42)
That juice has worked it. So it’s really all in the mouth, Cody, it really is. Do the numbers work? If they work for an investor, first of all, do they work for you? Because you got to do the work. And then can you get somebody to believe you that you can accomplish what you say you want to do? If you’ve never done it before, sometimes it’s called establishing partnerships. You walk up to a guy that has done it before, he wants to grow, you may have some capital.

Cody Crabb (20:54)
Yeah, true.

Yeah.

Alvin Johnson (21:12)
Well, you provide him an opportunity for growth by providing your capital. He’ll bring you along as a co-GP or as a partner in a deal, even if it’s a single family, same fix and flip, same thing. Here’s a guy out there fixing a house right now that needs a capital partner of $10,000. You bring your 10 grand, y’all put together your agreements on paper and make sure it’s all good. And now guess what? Now you’re a fix and flipper, so it’s all the same.

Cody Crabb (21:25)
Yeah.

Yeah, it’s pretty interesting that it really is like, it’s just a question of scale. Like how much are you, how big is the project? How much are you investing? it’s like you said, like the numbers really, it comes just down to, down to that, the math. ⁓ Well, wow, this has been, I think this has been really interesting. So if someone wants to get into kind of this kind of renovation sort of, ⁓ but maybe the kind of like distress type assets.

Alvin Johnson (21:51)
It’s creative.

Cody Crabb (22:08)
distressed renovation that you’re kind of looking at. If someone’s looking at getting into that, what would you say, what advice would you have for them if they were kind of looking at this as a potential option for them to invest in?

Alvin Johnson (22:20)
You need to know your market. know, mean, there markets in every city that have distressed assets. You can go, you could off the top of your head right now, know a neighborhood, wherever you are, that has houses that are distressed, right? So if you were to go and buy a house for $20,000 because nobody else wants it, and you have to put $30,000, $40,000 in it, that’s 60 grand as an investment.

Cody Crabb (22:32)
Yeah

Yeah.

Alvin Johnson (22:48)
Can you sell it for a big enough return to make it worth your while? You need to know your market. So it doesn’t matter if it’s a car, if it’s a house, if it’s a wagon, you need to know your market. It’s all the same.

Cody Crabb (23:01)
Gotcha, so do your homework, know your market, learn those numbers. Yeah, and I think also, it’s something that you didn’t say, but I’m just gonna assume is a big part of what you do is have some imagination. I mean, it seems like if the math works out, and you can imagine this working out and having a thriving community, mean, go for it, I would say, yeah.

Alvin Johnson (23:05)
and learn the numbers.

You got to.

You gotta, I said the vision, right? So if you can create the vision for yourself in any area of your life. If I have a vision for a six pack, guess what? I gotta go to the gym, If I have a vision of being a freaking 500 pound donut, then all I gotta do is go to the bake shop. But it starts with a vision, a mental picture of whatever you want.

Cody Crabb (23:50)
Yeah, that one’s a little easier. But yeah, I think it’s pretty fascinating to me that really it just comes down to that. I think it must be pretty rewarding too to kind of renew some of these communities that need the housing and maybe kind of need some love and other people don’t see that.

Alvin Johnson (23:51)
Yeah, it is, it is. It is.

It’s rewarding. ⁓ You know, if I had known what I knew 20 years ago, it’s just as much work to do this as it is to go buy a Class A building that’s already had all this work done. ⁓ It’s probably a little bit easier to convince people that it can be done because they’re looking at a shiny object that’s already there. You may have to put together a little more cash to get there.

But real estate is not a get rich, quit, game. It never was meant to do to be that. ⁓ But it’s a get rich for sure game. If you’re willing to stay in it and do the work and treat people right and do the right thing. No doubt.

Cody Crabb (24:48)
Yeah, true.

Wow, for sure. Wow, well thank you so much for all this Alvin. If somebody wants to connect with you about a potential job, they wanna connect with you for some other reason, how can they get a hold of you?

Alvin Johnson (25:09)
Alvin Hope Johnson on all platforms. Today, my Insta and my Facebook are just on silent. ⁓ Actually, I’ve got them not deactivated. I got them paused. But alvinhopejohnson.com, my website, Alvin Hope Johnson on LinkedIn, Insta, Facebook, TikTok, Alvin Hope Johnson. Yeah. [email protected].

Cody Crabb (25:30)
Wow. Wow, Alvin Hope Johnson.

Alvin Johnson (25:34)
is an email address. The reason I went silent on social is because sometimes you have to have introspect, right? I gotta quit looking at what everybody else is doing and I need to focus on me and what I’m doing. And the only way I can do that sometimes is go in a closet. I need to cut off all distractions and I need to sit here and I’m focusing out on a job right now. We’ve got 45 guys driving bulldozers, swinging hammers.

Cody Crabb (25:51)
Yeah.

Alvin Johnson (26:03)
pushing brooms, framing guns, putting carpet down, hanging sheet rocks, spray painting walls, spraying texture, right here. And this is more important than sitting here scrolling on my Instagram today. So I cut all those distractions off for about six months, and then we’ll see what happens.

Cody Crabb (26:09)
Yeah, and you’re right in the middle of it, yeah.

Yeah.

Gotcha.

Well, so who’s the ideal person to reach out to you? Who would you hope reaches out to you? ⁓ If you’ve got questions or just anything like that.

Alvin Johnson (26:28)
Anybody, man. It doesn’t matter. Questions?

Yeah, [email protected] is a good email address for me. ⁓ I’ll answer any question, but just be ready for a real answer, right? Because it all starts here. And if you don’t believe you can do it, neither do I.

Cody Crabb (26:41)
Yeah.

There you go. There you go.

Love that. Well, that is a perfect place to end. Alvin, thank you so much for your help today. It’s been a real pleasure. And thank you listeners for joining us as well. If you liked what you heard today, please go ahead and give us a like, a subscribe, a comment, all the things, and make sure you follow the podcast so you don’t miss more awesome conversations with people like Alvin. It truly has been a great time talking to you, Alvin, and we thank you so much for your time today. Yeah, we’ll see you later.

Alvin Johnson (27:12)
Thank you, Cody. My pleasure, man. God bless.