How He Bought Real Estate for 50 Cents on the Dollar Through the Public Markets

Will Harvey (00:33)
it wasn’t like I just set out to try everything. I was exclusive when I was doing that one thing. but once I realized that, this just isn’t I kinda need to do things before I can make a judgment on them. ⁓ I have a quote on my monitor here. I love it. It’s ⁓ I don’t know who it’s from, but it’s action produces information. So if you don’t know

Cody Crabb (00:36)
Yeah.

Will Harvey (00:57)
the answer to something, if you go out and just start doing it, you’re gonna get information and you’re gonna learn and it may be you may quote unquote fail, but that’s data and that’s information and

Cody Crabb (01:09)
You’ll be closer than when you were just looking at it. Exactly.

Will Harvey (01:12)
Exactly. Yeah.

Exactly.

Cody Crabb (02:45)
Welcome back to the Real Estate Pros podcast by Investor Fuel. I’m your host, Cody Crabb, and today I’ve got Will Harvey with me. Will is the founder of Harvey Capital in Central Virginia, where he helps real estate investors access private capital while actively investing himself across lending, hospitality, and real estate funds. Will, thanks so much for hopping on the show.

Will Harvey (03:05)
Thanks for having me, Cody. I’m honored to be here.

Cody Crabb (03:07)
we’re glad to have you. ⁓ so I’d love to hear ⁓ you started out as a traditional ⁓ investor. you’re buy and hold ⁓ investor. ⁓ something you mentioned before we started was you realized being a landlord was not the long term path for you, ⁓ necessarily. So I’d love to hear about that story.

Will Harvey (03:27)
Yeah, absolutely. I’m in ⁓ where I was in the Northern Virginia area and ⁓ this is when I was a loan officer. So I started making decent money and I s and I just real estate made sense to me. So I started ⁓ I started just buying rentals and I got to three and I was chopping up and doing it, renting by the bedroom. So I probably created a lot more headache for myself by doing it that way and

I would have a separate basement in some of the units and run and do it as an Airbnb. And so I certainly didn’t make it easy on myself. exactly. Yeah. So ⁓ but you know, I just got to the point eventually where I was like, this is not a high price market like Northern Virginia, you’re not gonna be cash flowing a ton.

Cody Crabb (04:02)
Yeah.

Will Harvey (04:17)
unless you just get something at an absolute steal. ⁓ which I didn’t. I mean I bought these the three rentals I had, I paid retail for them. So I didn’t get any kind of deal on them. And they just weren’t cash flowing. They were paying down the debt and the it was a low interest rate. So, I knew long term that there was wealth being created. ⁓ but I was like, man, this just isn’t fun. This isn’t something I enjoy. I’m not a handy

person. I don’t like some of the guys I talked to, they love fixing stuff. they’re just kind of engineer minded and I’m not. I don’t enjoy doing that. It’s just not my thing. I like being in a spreadsheet. I like ⁓ looking at numbers, putting deals together. That’s what I enjoy. So after a while, I was like man this is not for me. So and then COVID happened. There was a huge

⁓ increase in prices. So it was just the perfect time to sell those and I kept one as my primary residence, but that’s when I pivoted but by that point I had started investing in some multifamily deals passively which was good. ⁓ and I was also flipping houses. So I was flipping houses to generate cash. That was sort of my income after I left the mortgage business.

And was ⁓ deploying that into these passive multifamily deals. So, ⁓ that’s kind of the pivot I made and it was a lot more passive. Flipping houses isn’t passive, but it’s kind of like a sprint. you kinda sprint, get it done, and then you sell it and you don’t have the house, you don’t have to deal with tenants

Cody Crabb (06:38)
Yeah. I was gonna say it’s not passive, but it’s certainly more passive than renting out every bedroom of ⁓ multiple houses. Yeah. Exactly. Yeah. So that’s interesting. you were then drawn to the finance side, you started to kind of ⁓ really, really get into the finance side, and you started Harvey Capital. Now how would you describe Harvey Capital and who your typical clientele is?

Will Harvey (07:01)
Yeah, so Harvey Capital basically started as a ⁓ I was trying to become a syndicator. And over the while I just realized that ⁓ I didn’t enjoy being an operator. So I after doing a few commercial projects, we sold one of We still own ⁓ a small hotel, we still own ⁓ and with partners,

But ⁓ still own a wedding venue in the Shenandoah Valley in Virginia. ⁓ so still operate those, but I just never really operating real estate just never really did it for me. Some guys love it. When I started a fund after ⁓ reading Warren Buffett’s annual letters and even his letters pre-Berkshire Hathaway.

I read all those and I was like, this is what I wanna do. This is like I couldn’t figure out what I wanted to do in life. I just knew what I didn’t wanna do,

Cody Crabb (08:00)
Yeah.

Will Harvey (08:01)
So I tried all that. I was like, I don’t know what I want to do, but I know I don’t want to be a landlord. I know I don’t wanna flip houses. I know I don’t I read his letters and saw what he did and was just kinda hooked on that fund model and just be being a, value oriented type of investor. I started a fund a while later and ⁓

That’s pretty much how I’ve operated ⁓ since 2023.

Cody Crabb (08:26)
Wow. Yeah. So yeah, I find that really interesting because I think a lot of people when they get into real estate, they’re like, it’s one thing. They think of it as I’m a flipper, I’m a landlord. Like they think of it as like I this is what I do. But I really like that not only did you were you not satisfied with that, you’re like, well, I’m gonna try everything and see if it works.

Will Harvey (08:46)
Well it wasn’t like I just set out to try everything. I was exclusive when I was doing that one thing. but once I realized that, this just isn’t I kinda need to do things before I can make a judgment on them. ⁓ I have a quote on my monitor here. I love it. It’s ⁓ I don’t know who it’s from, but it’s action produces information. So if you don’t know

Cody Crabb (08:49)
Yeah.

Will Harvey (09:10)
the answer to something, if you go out and just start doing it, you’re gonna get information and you’re gonna learn and it may be you may quote unquote fail, but that’s data and that’s information and

Cody Crabb (09:22)
You’ll be closer than when you were just looking at it. Exactly.

Will Harvey (09:25)
Exactly. Yeah.

Exactly.

So, you know, that’s kind of what I what I did and I had a couple of properties that I lost money on, but none of it was catastrophic. We made a lot of money on the flips and it just wasn’t my you know, you gotta do what you enjoy and it just wasn’t my thing, you know.

Cody Crabb (10:16)
Yeah. Yeah, I know people that I don’t really understand why, but like you said, they just for some reason they really love getting in there and digging in and doing that. Yeah. But if it’s making you miserable, then why? Why would you do that to yourself? well this is interesting because now you’ve been an owner, a flipper, a landlord, a lender. ⁓ what perspective out of those do you think makes you better at what you do today? Like maybe the one that had the best influence out of all.

Will Harvey (10:42)
man, I think I really it’s so hard to pick one. It’s like all of it, you know, because when you mesh it all together, it’s like a lot of lenders are ha have just been lenders. They work at a bank, they’ve never really invested in real estate, they might own their property their primary residence and maybe they have a few rentals, but they’ve never put a syndication together.

they’ve never walked in the shoes of the borrower that they’re lending to. Whereas now where w you know, from my standpoint as a as a lender, I have walked in the borrower’s shoes and I’ve done flips and I’ve had projects that have been frustrating and, you know, I’ve had to pivot on different renovation jobs when we discover something that was unforeseen and you know, so I’ve been in their shoes and I can

I’m not looking at this solely from the standpoint of the lender. And I think also that is good for investors that are in our fund because, you know, if we have a project that, you know, we’ve done about coming up on fifty loans and we haven’t had any foreclosures or defaults yet. it’s only a matter of time. ⁓ but

if it’s not if it’s when that happens. I would like to think that I’m in a pretty good position and have a pretty good base of knowledge ⁓ to, you know, if we take a property back, I’ll know what to do with it. I’ll know whether to whether to hire a contractor and take it the distance and finish it. Or if we should just if we just sell it and get out and

move on and just sell it as is at a discount, I think everything kinda blends together and those past experiences help me as an investor and lender today.

Cody Crabb (12:38)
So for someone that has never borrowed private money before, what are some things they can do to kind of immediately make them look like a stronger borrower in your eyes?

Will Harvey (12:49)
Yeah, I think that whenever we deal with newer borrowers, I love working with people that come to us and have their stuff together and have a plan and have an answer to questions. it doesn’t necessarily have to be the right answer. if they have an answer, it shows that they’re thoughtful enough.

to think that through and plan it out. And generally people that do that and think two or three steps ahead and think in terms of contingency plans and plan A, plan B, plan C, those are the people that I want to work with and that ⁓ generally are gonna perform well and are gonna, run into problems and know what to do when they encounter them.

on the contrary, I talk to some people and I can tell in ten seconds that we probably don’t want to work with them at this point because they’re just not really prepared. I’ll ask them, hey, can you what do your numbers show on this? what is your rehab budget? What is your and these are pretty simple questions. These aren’t like I’m not asking some super niche granular question. ⁓ but

You’d be surprised at how many people don’t ha you know, haven’t really done that work and ⁓ can’t send that and for they can’t send me an Excel spreadsheet. And I’m sorta like, if you haven’t taken the time to do this, it’s probably not someone that we want to work with.

Cody Crabb (14:11)
Well and are you expecting me to do it? Like it’s I know what you mean, yeah.

Will Harvey (14:14)
not gonna hold your hand.

Cody Crabb (14:56)
Yeah. Well, okay, that’s I find that interesting. ⁓ so w what one question that I have for you is what do your best borrowers have in common? The people that you like working with the people that you’ve come back to that have come back to you, that kind of person where it’s like this is my ideal my ideal borrower.

Will Harvey (15:17)
They’re well capitalized. So, and that doesn’t necessarily pretty much all the borrowers that we work with, it is their own capital. ⁓ but if you’re newer and you just don’t simply don’t have the capital to borrow funds, and I mean capital as a rainy day type of thing. Because if we make a loan to someone and they have just enough money to ⁓

you know, to fund the loan and nothing else, that’s not that doesn’t really get us comfortable. That doesn’t help me sleep good at night because any kind of hiccup, they’re not gonna they’re not gonna be able to absorb that. So, ⁓ you know, if it’s someone newer and they have a equity partner, ⁓ that puts up, fifty thousand dollars as equity, not as a loan, but as equity in their venture, in their

XYZ house flipping LLC, whatever that is good, because that shows that one, they were able to, they were able to go out and raise capital from someone, even if it’s a family, a direct family member. Yeah, capital. Yeah. and it means that they put the story together and convince someone to put up hard earned capital. And that’s a good thing. And then and then, obviously not to mention the capital is there. So if there is a

hiccup, that makes me feel better. just knowing that they have some skin in the game and have some liquidity there. so the biggest thing is being well capitalized, whether it’s your own money or access to money from someone like that that you would partner with. other things are just I think just simply

Doing what you say and following through on you know whatever you say. That’s just such a simple thing. But ⁓ again, you’d be surprised at how many people, you know, we hear from and they say they’re gonna get us something and we just they just ghost us and we hear from three weeks later and I’m like at that point, like, well, hey, I’ve heard another private lender talk and he says

If they’re not communicating with you now before they’ve gotten the money, they’re definitely not gonna communicate with you after they get.

Cody Crabb (17:27)
They actually it’s like meeting your girlfriend’s parents for the first time. you’re on your best behavior. If you’re wild then, then what the heck are you gonna be like later?

Will Harvey (17:34)
Bingo. If while we’re dating, if they’re not getting back to us then, they’re definitely not gonna be good once we’re married.

Cody Crabb (17:41)
Right. Yeah, exactly. Yeah. ⁓ well, yeah. So looking over the next maybe three to five years, ⁓ where do you see some opportunities for real estate investors?

Will Harvey (17:52)
well commercial lending’s been in a weird spot the past few years not just commercial real estate in general has been in a weird spot the past few years with interest rates ⁓ doing what they’ve done and cap rates ⁓ expanding and values just plummeting because of that. So I think that opportunities lie well there’s a couple of thoughts I have on that. One

I think a lot of people are gonna get shook in out of the shaken, I forget what the correct tense is, but ⁓ a lot of people are gonna get shaken out of the market, that are syndicating deals that are investing. we’re not in the zero interest rate environment that we were in a few years ago where, everything was just appreciating, the market was doing so well and

could bail you out if you overpaid for something or or anything like that. Now, operations and competency and excellence is really the way that you add value to to projects, whether it’s a flip, whether it’s a property that you’re buying to hold long term, whether it’s a syndication, ⁓ you know, operational excellence is where

the value is created today because we’re not in this crazy interest rate environment where stuff just keeps going up and up and up because interest rates are so low. ⁓ we’re in a higher rate environment and a lot of guys are especially in the commercial side, which we’re less we’ve done a few ⁓ a few multifamily deals that we’ve loaned money on.

But I’m more so speaking from my experience investing passively in in syndication, you know, mainly multifamily syndications over the over the years. ⁓ there’s a shake up and some properties are getting ⁓ tossed back to the to the lender. ⁓ I don’t know if you’ve heard about the Brandon Turner situation did you hear about that?

Cody Crabb (19:54)
Personally no. I guess a little DL on

Will Harvey (19:57)
Yeah, so Brandon Turner, the bigger p the you know, pretty much the face of BiggerPockets, he and I have nothing bad to say about him. he just there was this multifamily deal that ⁓ that he syndicated and long story short, he they got foreclosed on and wiped out ⁓ fifteen million dollars of investor equity. So, ⁓ that was a tough one and

It was kind of a wake up call for a lot of people because it’s like, Man, this guy is really smart. I think he overpaid for that for that property and I’m sure there will be a full post mortem once the dust settles and everyone

Cody Crabb (20:35)
Sounds like a combination of things, but it but I mean it’s good to it’s good to call out that like this if this can happen to him Exactly.

Will Harvey (20:43)
what I’m saying. And I think a lot of those operators are gonna get shaken out and you know, also the residential market is not what it what it was during COVID and you know, for the for the few years after. So ⁓ I think that for the ones that stay patient, do good deals, don’t overpay for things, they’re gonna they’re gonna be met with a lot of opportunities. ⁓ because I think that we’re at the top of

Top of the cycle and I don’t I don’t know, it just f just feels like ⁓ we’re due for a correction.

Cody Crabb (21:19)
Yeah, I definitely see where you’re going with that. ⁓ so before we started recording, ⁓ you s you mentioned something just in passing that kind of caught my attention. You said ⁓ you’ve had great returns investing in the public markets. Now, this is something that you said a lot of people probably don’t even know this is a thing. So can you give us a little bit of a like one version of this so people can kind of learn about it?

Will Harvey (21:42)
Yeah, sure. So about six months after I launched my real estate fund in twenty my first real estate fund in 2023, ⁓ I pulled some money with my father and it’s just him and I and I’m the general partner. We formed a small limited partnership and it’s about three or four hundred thousand. So it’s not a it’s not a lot of money. ⁓ but what I’m doing with that is ⁓

at the time I was just gonna go out and look in the public markets for just any kind of opportunities that I see being ⁓ you know undervalued and where we could potentially ⁓ make decent returns on. So just finding mispriced opportunities. So I was doing that and I stumbled upon this ⁓ this after doing that for a few months and just looking at a lot of different publicly traded ⁓ companies

I stumbled upon this ⁓ this liquidating trust. It’s a super interesting situation. So JCPenney filed bankruptcy, I believe, in late 2020. And what happened was these two large mall operators, Simon what is it? Simon Property Group and Brookfield Asset Management, they’re huge. ⁓ Simon is a I believe they’re a huge

⁓ REIT publicly traded REIT. Anyways, they bought JCPenney out of bankruptcy and what they did was they took ⁓ JCPenney’s operating business and separated it from their real estate holdings. So JCPenney, believe it or not, owned about a fifth of the stores that that you see. So you know, yeah, I didn’t know that. I thought they were just leased because that’s usually how it goes. Yeah. ⁓

But yeah, so they owned about a fifth of all those ⁓ those retail stores and they spun those into this liquidating trust and gave the shares to all the creditors that were owed money from the bankruptcy. So all the all the lenders that got left holding the bag with you know with this bankruptcy filing, they were just handed these shares in this very illiquid

over the counter. It didn’t trade on a major stock exchange. It just traded over the counter. So they were handed these and most of them, I’m sure, just dumped them, you know, just sold them. We’re talking large, large banks that just have no mandate to hold these kinds of securities. So over time the price just drifted further and further down. And by the time I stumbled upon it about this time two years ago in 2024, ⁓ it was just

was at a crazy low price. It had no they had no debt. You know, I read all their filings and it put it all together and it was basically a hundred and thirty properties, no debt. They had a they had an absolute triple net master lease with the new ⁓ with the new well capitalized JCPenney operating company. It was like a twenty year lease. I think at the time there were seventeen years left on it. So plenty of runway. ⁓

Where you’re, you know, as long as JCPenney stays afloat, the new well capitalized JCPenney stays afloat, which I could look at their financials and see that they probably aren’t going anywhere anytime soon. ⁓ you know, I just concluded that this was very, very mispriced. I mean, it was trading at an implied based on the shares outstanding and the price it was trading at.

It was trading at an implied cap rate. Like if you looked through to what the real estate was worth, it was trading at an implied cap rate of fourteen percent. Which if you know anything about commercial real estate, that’s I mean, distressed office properties that are vacant and are just complete garbage trade at lower cap rates than that. You know, which low the lower the cap rate, the higher the price. So

The higher the cap rate, the lower the price. So I mean, it was just so discounted. And what and what they were doing was they were going out and liquidating these properties. It was in this trust. The trustee was tasked with liquidating these stores that they that they owned and ⁓ selling them privately to, you know, through a real estate broker. And they were basically selling them at seven caps. They were average selling them at around seven caps.

So we’re buying it at a fourteen cap, selling it, you know, they’re selling it at a seven cap, and we’re the shareholders were distributed ⁓ the proceeds every month. So, you know, the to summarize it, the lease income from our from our basis that we purchased shares at was delivering us a return of

of twelve percent on our money every single month just from the lease income. ⁓ and that’s on a unlevered ⁓ gr group of assets. So there was no leverage risk. Then the and then when they were selling properties, ⁓ they would distribute those sale proceeds and ⁓ you know, if you buy it a fourteen cap and sell it a seven cap, you’re basically doubling your money. You’re buying a dollar for fifty cents and then

they’re selling it for a full dollar. And you know, so it was just a it was a phenomenal it was a it was a great one to really get started in. I put a good chunk of our fund in it and ⁓ we did we did pretty well on it.

Cody Crabb (27:48)
So what’s the lesson here? Is it is it was this pure luck or was there more to it than that?

Will Harvey (27:54)
there’s always luck involved. I don’t want to be egotistical and say that, you know, it was all skill and you know I’m just great at investing. No, it was like it once I once I found it, I mean I like simple ideas. Some you know, the whole Warren Buffett thing where he says I’d in instead of instead of ⁓ jumping over seven foot hurdles, I’d rather wait and just walk over a one-foot hurdle, you know. So I’m gonna wait.

For those kinds of opportunities where it’s so simple to understand. And this one was I mean, it took me five minutes. I was doing some math on a on a piece of paper and I was like, this is this is a deal. Now I went through all their filings, read all their docs, you know, used AI to help me put it all together and ⁓ but within five minutes, I I was like, This is so simple. You know, you have this portfolio of properties, you’re buying it at this price, publicly, they’re selling it at, you know, double that privately.

This is just a pure spread between public prices and private prices. And ⁓ so that that’s all it all it was. And the takeaway to answer your question was that you know, opportunities like this exist in the in the public markets and there’s for somebody that has the you know curiosity and the time to go through ⁓ you know, and look at

tons and tons of publicly traded companies, you can find there’s more opportunities like this out there. You just have to you just have to look.

Cody Crabb (29:31)
That’s interesting, yeah. ⁓ so for someone that wants to kind of look for the first time, like what would you recommend to l just kind of to f to kind of flag to read for later kind of thing? Like what would you what would catch your attention? ⁓

Will Harvey (29:44)
⁓

man, that’s such a good question. So with AI today, it’s really changed how you know it it’s like you can go in and you can set up a stock screener and screen for different parameters like market cap, you know, all kinds of stuff you can you can screen for. The sector they’re in, ⁓ all kinds of stuff you can you can screen for.

⁓ but what I what I found is the real the real the real opportunity lies in the information edge that you can get. So ⁓ you know, some someone like myself that that looked at that has a real estate background, I was able to look at this deal and it was it was like because I have an edge in in in real estate over someone that is just

a generalist investor that doesn’t have any kind of real estate expertise. It was like I knew in two seconds that this was a deal. And then again, if someone has an oil and gas background, you know, that’s what I would look at if I were them. I’d look at oil and gas companies because they’re gonna know stuff that I couldn’t, you know, I I couldn’t even guess what the right answer was.

Cody Crabb (31:05)
That’s a really good point because everyone’s got some kind of expertise. And if you can kind of use that to your advantage, you’re gonna see stuff that people wouldn’t.

Will Harvey (31:13)
bingo. Exactly. Yeah. Yeah.

Cody Crabb (31:15)
Great. Well, this has been really awesome. Thanks so much for all the advice and the awesome little words of wisdom you shared with us here. ⁓ if people want to find out more about you and what you do online, where can they go to do that?

Will Harvey (31:30)
Yeah, they can go to my website, go to harvey-capital.com/invest

Cody Crabb (31:36)
Awesome. So can you give us a little sneak peek like who should be going there? Who should be checking this out?

Will Harvey (31:42)
⁓ well they could just they could just go to Harvey Capital as well just to see what we’ve done and you know I publish if someone’s newer and is wanting just to just to read stuff and learn, I publish my semi-annual letters from that fund I just mentioned. I publish monthly updates from the hard money funds that we have and so if someone’s just trying to

dig deeper on what we just talked about here, they can read all those updates and get a much better understanding ⁓ than, just listen to me talk about it here for a few minutes.

Cody Crabb (32:18)
Yeah, totally. Yeah. The action, like you said, what was the quote again?

Will Harvey (32:21)
yeah, ⁓ action produces information.

Cody Crabb (32:23)
That’s

right, yeah. So definitely take that advice and get that done. go do something about it. ⁓ I can’t thank you enough for hopping on today. Really appreciate it. And audience, thanks so much for joining us and we’ll see ya on the next one.