How to Turn Around Distressed Multifamily Properties | Zach Bagby

Zach Bagby (00:00)
Yeah, absolutely. So my most recent project is probably best example to to real world example that illustrates this. So we we picked up a property that was forty percent occupied, had a history of violence and homelessness and crime in the area. Within ten months we we completely turned around, filled it up, evicted all the tenants that weren’t paying, camera, security, and the people that live there love it.

And they’re paying every month, so completely changed things around.

Joseph Crooms (02:03)
Hey everyone, welcome to Investor Fuel Real Estate Pros Podcast. And today I am joined with a young man. His name is Zach Bagby. And and and I think I hope I pronounced it right. I believe I did. If not, he will correct me. I’m your host, Joseph Crooms. Today I’m joined by someone I’ve been looking forward to chatting with who’s been making some serious moves. He comes from a tech background. We’ll get in a little more to that. But he really used the tech into

easy into the real estate realm. So but he’ll let I’ll let him discuss that button. Hey, Zach, say hello to everybody. Hello. All right. I think our listeners are really going to take something away from how you’re approaching this your business. So let’s dive right in. Zach, why tech to real estate?

Zach Bagby (02:53)
Yeah, absolutely. So yeah, I think no matter what path I would have started on my career, it would have led to real estate. So I I got curiosity for financial freedom in college. Actually started reading books, everything started taking me back to real estate and little purple book by Robert Kiyosaki that everyone reads. So that led me to dig into it a lot deeper and started with the fourplex

about a year out of college and then just gone from there.

Joseph Crooms (03:24)
Zach, how long have you actually been into the real estate?

Zach Bagby (03:26)
Yeah, I think it’s been eight years now.

Joseph Crooms (03:28)
Right. And what’s been your what’s what what had you found what have you found to be your niche?

Zach Bagby (03:32)
Yeah, my my niche has become Class C, value-add, workforce type housing, the kind of stuff that that nobody else wants to touch.

Joseph Crooms (03:40)
Why do you think they don’t want to touch it, Zach? Tell us tell us.

Zach Bagby (03:42)
Because it’s hard. A lot of challenges, a lot of lessons that I’ve learned the hard way. I think it’s easier to pick up a clean building and hold it for ten, fifteen years. What I do is difficult to turn something around, change the culture, change the the tenant base and completely flip a a business within twelve to twenty-four months.

Joseph Crooms (04:02)
So Zach, describe that what you mean by change the tenant base, flip it around. For those that may be listening, hey, what is this guy talking about? Detail in layman terms is and share with me exactly what it is that you do.

Zach Bagby (04:17)
Yeah, absolutely. So my most recent project is probably best example to to real world example that illustrates this. So we we picked up a property that was forty percent occupied, had a history of violence and homelessness and crime in the area. Within ten months we we completely turned around, filled it up, evicted all the tenants that weren’t paying, camera, security, and the people that live there love it.

And they’re paying every month, so completely changed things around.

Joseph Crooms (05:37)
Got an idea now. So Zach, where’s your, what is your volume now of revenue for when you say you said 10 years, let’s say from three years ago, where’s your volume at now?

Zach Bagby (05:51)
Across the whole portfolio, is that

Joseph Crooms (05:52)
Yes, yeah.

Zach Bagby (05:53)
Yeah, I mean three years ago was a handful of very small properties, maybe 10K a month across them. Now we’re looking at a hundred K plus a month across all the properties.

Joseph Crooms (06:06)
Zach, I noticed you keep saying we. So, do you have a team?

Zach Bagby (06:10)
Yeah, so it’s it’s primarily been me from the start, but a couple of years ago I brought in a partner, Courtney, who also helps she focuses more on the asset management side and reporting and financials and I focus on finding deals, raising capital and pulling everything together.

Joseph Crooms (06:27)
And primary where you operate now, is it just in Colorado or any other marketing areas that you’re looking into?

Zach Bagby (06:34)
Yeah, primarily Colorado in the Front Range from, you know, Colorado Springs up north to Fort Collins. We do have a property in Iowa, sixteen unit that was an interesting story as well.

Joseph Crooms (06:45)
All right. Well if you’re talking about interesting stories, so we’re interested. Tell me about the story.

Zach Bagby (06:50)
Yeah, so had a had a couple good deals back to back, was feeling confident, felt like I could take on the world, saw a broken broken hundred year old building in in Iowa, felt like I could fix up, bought it at a incredible price for what I thought, and then a few months in the the city actually moved in and shut shut it down on me. Kicked all the tenants out and I had to fix everything, bring it up to code and yeah.

Joseph Crooms (07:15)
You know, Zach, one of the questions we were gonna ask you. Can you tell us about a moment where a deal that you had to pivot fast where deal went wrong? So you sort of beat me to the punch. So how did you recover from that, Zach? What did you learn?

Zach Bagby (07:28)
I learned quite a few things. So I think if I was going to move into a new market again, I would not take on such a heavy value-add project as that one. I’d want to make the connections first, have a strong property manager in place before I I move into something like that in a a network of contractors and even mentors in in the area that I can lean on. On top of that, I I mean what one thing large that I’ve learned is to learn how to cut your losses.

So I think I would have had a better outcome if I would have just sold at a loss as soon as thing as you know, as soon as things turned and the city shut it down. Instead I ended up selling everything I I owned to to keep my investors whole and completely renovate the building.

Joseph Crooms (08:14)
Well, Zach, thanks for sharing that, man. That’s the kind of stuff people don’t talk about enough. And honestly is what separates the folks who are just dabbling from the ones who, you know, who are in it for the long term? Let me ask you the question. What do you after learning this, what what are you most focused on solving or scaling at?

Zach Bagby (08:32)
Yep. Up next for me is getting the word out, marketing, raising more capital, doing more deals. I feel like I’ve I’ve made the mistakes and I’ve got the systems in place to scale this thing next to the next level. We operate really well and my last project has has proven that. So yeah, just scaling.

Joseph Crooms (08:50)
You talked about and I know she said it was twice operate. When did you when did you feel that click, click, click? All right, I got this now. It’s been a year ago or or after that incident or wha what makes you a mature market marketer now?

Zach Bagby (09:07)
I don’t I don’t know that I’m a mature marketer, but on the operating side, we’ve I think every year you kind of add on and add things to your existing system. And then once it starts to click, it becomes a lot easier and repeatable, right? So this last property is so about a year ago when I purchased it, that’s when everything clicked and it it made sense and we found a system that works that we can apply to any future projects as well.

Joseph Crooms (09:31)
Thank you. That’s big, especially when you’ve already been moving, you made your mistakes. The next move can either compound things or create chaos, depending on how you play it. Now I know a lot of our listeners are either early in their journey or looking at level and think they’re benefiting from this. I heard you talk about making sure that you had a property manager stuff. When it comes to building relationships and growing your network, what’s made the biggest difference for you?

Zach Bagby (10:42)
Yeah. Consistency and always responding. So being responsive and then following up. So you can rely on me, I’ll get you an answer to your question. I’ll check in with you. You can ask me anything. I’m transparent. I think some people might ignore an email. I don’t I don’t ignore emails, so

Joseph Crooms (11:03)
Do you mind sharing me what what does it look like from clock start to finish? Who how you know, how when you market, I knock on your door, I’m interested. Tell me what that looks like. How do you look?

Zach Bagby (11:14)
On the investor side or working?

Joseph Crooms (11:15)
Yeah, I’m an investor. I and I I got this building. Tell me what that looks like.

Zach Bagby (11:19)
Yeah, absolutely. So if we have a new offering, well let’s let’s assume I don’t have a new project under so we gotta build the relationship. Like to meet on the call, figure out what what each person’s goals are and how I can connect what I do to to their goals. And if it doesn’t fit, that’s that’s completely fine. But from there we continue to build the relationship. I share and educate through emails and webinars and variety of other events that we kind of host.

And then once the the time does come and we have that relationship, I’d love to to to share the opportunity with you and see if it’s a good fit as well.

Joseph Crooms (11:58)
Okay. You come from a tech background, am I correct?

Zach Bagby (12:01)
Yes.

Joseph Crooms (12:01)
How is how do you feel AI is benefiting you or do you see it as an enemy?

Zach Bagby (12:08)
No, I think it’s a a huge asset, at least in this stage where it’s at today. So for me, I’m still doing a full-time job, you know, eight to five, nine to five. And I’m doing this on nights and weekends. So I’m able to accomplish significantly more with the help of AI. Both as a thought partner, I think I mentioned to you before I’m not a part of any guru groups or anything. So I’ve been kind of figuring it out on my own. It helps me kind of go back and forth from a strategic

perspective, but also in execution, analysis of deals, identifying markets, aggregating data, a variety of different things.

Joseph Crooms (12:43)
When do you think you’re going to to to make that switch at full-time real estate?

Zach Bagby (12:48)
Yeah, when I feel confident enough that the real estate stuff can can cover take care of my family.

Joseph Crooms (12:56)
Okay, okay. And I mean you’re doing pretty good on a volume basis from what you shared with me. What what would be the magic number that you that you’re maybe shooting for?

Zach Bagby (13:05)
Yeah, I think there needs to be consistency, right? I can’t have just a deal here or there. We need to be able to execute and up d up markets, down markets, and find find the deals that that get me through those those times as well. I don’t think there’s like a specific number. But I’d like to consistently have enough income rolling in that I don’t need to worry about my family. That’s that’s what’s most important. So those golden handcuffs of the day job are are tough to shake.

Joseph Crooms (13:33)
I got you, man. And last question we we’re about w unfortunately running out of time, but when you w what are you doing to make sure that happens? What it would have you realize, I gotta get this in place.

Zach Bagby (13:49)
Yeah, I think it’s inching forward. There’s a lot of different aspects of the business from raising money to acquisitions to operations to everything in between. So I I kind of tweak and increment and add new new wrinkles and pieces to each p part as we kind of go through each cycle. So it becomes easier next time. Growth becomes easier, there’s less of my time involved. Right now I’m focusing on yeah, putting my brand out there and finding more investors.

Joseph Crooms (14:18)
Thank you. Do you find that the the parts are moving quickly? Like are you are you better at acquisition or you better and and you know, what what do you feel that you’re you’re you’re the you’re more a master at?

Zach Bagby (14:30)
Yeah. I feel my like my strengths lie in the the underwriting, acquisitions and operating piece. So the the real estate nuts and bolts. What I’m still focusing on and learning and growing are the investor acquisition, investor nurturing, capital raising portion of the business.

Joseph Crooms (14:50)
That was good. Yeah, you can’t fake that. Relationships, everything, but also from what I’m hearing from you, the the constant growing of knowledge. All right. You can’t fake that. So right now, before we wrap up, if someone wanted to reach out, connect with you, maybe collaborate or learn more about what you’re doing, what’s the best way to reach you, Zach?

Zach Bagby (15:10)
Yeah, LinkedIn’s best. So Zach Bagby on LinkedIn.

Joseph Crooms (15:14)
You know what, Zach? Somebody’s getting a pen trying to get that information. Do you have a web page as well? You

Zach Bagby (15:19)
I do, yeah. Z B three.

Joseph Crooms (15:20)
Can do them both. I’m sorry. You can give them both.

Zach Bagby (15:22)
Absolutely. zb3RE.com.

Joseph Crooms (15:25)
And the web page won’t you repeat it twice? Everybody got their pen now.

Zach Bagby (15:28)
Yep, zb3RE.com.

Joseph Crooms (15:32)
That’s the web page, right?

Zach Bagby (15:33)
That’s it.

Joseph Crooms (15:34)
And then on on LinkedIn they can find you where?

Zach Bagby (15:36)
Zach Bagby.

Joseph Crooms (15:37)
Okay, sounds good. Well, perfect. Well, I enjoy listening to you. I appreciate your time, your story, and your perspective. And I I know you’re going to reach a goal. We need more people in this space who are doing the right thing, doing things the right way. And people not only trying to help communities, but build wealth for other people. And for those of you tuning in, I know you got some value from talking to Zach Bagby before you s so make sure you subscribe.

We got more conversations coming with operators just like Zach, who out there building real business. We’ll see you at the next episode. But before I announce what episode, hey Zach, you have anything else you want to say to the audience?

Zach Bagby (16:15)
No, I’m excited to be here. Appreciate the opportunity.

Joseph Crooms (16:18)
All right. Well, Zach said he’ll see y’all later at the next episode of Investor Fuel Real Estate Pros Podcast. And we had a good time with Zach Bagby. Make sure y’all check him out. Talk to y’all soon.