Multifamily Investing, Vertical Integration, and the Silver Tsunami Opportunity | Chad King

Chad King (00:00)
So I highly recommend, there’s something going on right now called the Silver Tsunami, right? 11,000 baby boomers every single day are turning 65. Okay, that’s 4.1 million baby boomers every year. Of that 4.1 million, think they hold that 21 % of the population is baby boomers with 41%. They own all 41 % of all the real estate. So that’s a big opportunity if you can see it this way, right?

Dylan Silver (01:59)
Hey folks, welcome back to the show. Today we’re joined by Chad King, multifamily investor with Titan Capital Group, overseeing more than 200 million in assets under management across Tennessee, including Chattanooga and Murphysboro. He focuses on building a vertically integrated real estate operation, controlling key aspects of acquisitions, operations, execution, and so forth. His approach centers on scaling through systems, strong teams, and operational efficiency, driving long-term value.

in growing markets while maintaining disciplined deal execution. Chad, welcome to the show.

Chad King (02:32)
Thanks very much. That was a great intro.

Dylan Silver (02:35)
Hey man, glad to have you on here. Now, when we talk about managing 200 million assets under management, oftentimes people don’t talk about what it takes to get started, but at the ground level, what were those first couple years like?

Chad King (02:51)
the first couple of years are a mixture of just failing forward, figuring it out and, calling audibles, learning from your mistakes, make only making the same mistake once and pressing forward. definitely value having a mentor coach, you know, somebody in the beginning that saved me from some massive potholes. So I always recommend getting an education. but the first couple of years, you’re just giving your head down, grinding, figuring it out.

whether it’s buying commercial real estate or flipping houses, like whatever you’re getting into, if it’s buying commercial real estate and you’re just planting a lot of seeds. And I think that’s the frustrating part is like the first couple of years, like not much comes to fruition. takes a few, especially in commercial real estate space. Like it takes years for things to start to the fruits of your labor. And that’s where people drop off.

Dylan Silver (03:38)
Help paint the picture for us here. mean, so multifamily is a very competitive space right now, but it’s certainly changed over the years. And I think certainly people’s time horizons might be different now. Also the way that they’re underwriting deals might be now different versus certainly how it was in like 2019. What years were you getting started and what was the market like and what was competition like when you were getting started?

Chad King (04:05)
Yeah, well, I was fortunate enough to be getting started in that massive upswing that we saw right before 2021, 2022, like in 2016, 17 and 18, we were flipping houses and then started buying apartment complexes. So we had a lot of like early exits. And I’m aware of the fact that, you know, having an average like a 26 % IRR exit average was really because in 2019, you could buy a candy bar and it doubled in value, you know, 24 months.

So I understand that that’s the case. However, we still learned a lot of lessons from doing all those deals and had a lot of disciplined underwriting to be able to match where we’re at in the market cycle with the exit plan and then match up and pair up the debt. Cause that’s where you see a lot of people who have fallen off have just got, they got the wrong debt at the wrong time in the market cycle. You know, so we’re in a little bit of a recovery phase in the market, in my opinion.

Dylan Silver (04:54)
They did. Yeah.

Chad King (04:59)
You know, I think the valley is over. I don’t ever think we’ll see interest rates where we did at that apex that we were previously at in 21 and 22. However, you know, aside from a little bit of chop due to socioeconomic conditions and global conflict, I think rates are coming back into tolerance. And now is going to be a really good time to lock in some long-term fixed rate debt on some good multifamily properties.

Dylan Silver (05:22)
What does vertical integration look like at your level of scale? Everything from, I know you mentioned some trades companies to then even self-managing some of these properties.

Chad King (06:22)
Yeah, so vertical integration at scale kind of looks like at a point you have enough in your portfolio to start incorporating the other verticals that talk to your portfolio into your business model. So for us, you know, once we crossed over a thousand units within a short, tiny radius, you know, five mile radius, we were paying Roto-Rooter and HVAC combined north of a million dollars a year in the portfolio just to service all of our apartment complexes. So

It made a lot of sense to grab that cost and bring it in-house through vertical integration with HVAC and plumbing and even property maintenance. So now that revenue is able to run through us. The good news is, is we save our property LLCs. So the LLC that owns the property, they can save about 20 to 25 % because we’re doing the work at cost with our HVAC and plumbing company. And then we service residential homes outside of that in order to make profits for the business. Cause we still want the business to be profitable, be able to exit.

Dylan Silver (07:19)
Yeah.

Chad King (07:19)
you know, for a good EBITDA down the road. But in the meantime, we save our properties quite a bit. And not to mention the convenience of having all those trades, you know, right here in the office, be able to dispatch if there’s an emergency to your property. So our investors benefit, our properties benefit. And then ultimately we have a lot more control over the maintenance, the turns, the work orders, HVAC and all the plumbing stuff. So everybody wins when you can vertically integrate. It makes sense once you get to a certain point in the portfolio.

Dylan Silver (07:48)
There seems to be a lot of interest in acquiring those type of businesses from folks both in real estate and outside of real estate. And there’s lots of chatter I see about strategies to acquire, how you can acquire, what those conversations are like, are those businesses even marketing themselves for sale or not? If you can, and I don’t know how much you can divulge here, but what was the process like of buying that HVAC business?

Chad King (08:16)
So I highly recommend, there’s something going on right now called the Silver Tsunami, right? 11,000 baby boomers every single day are turning 65. Okay, that’s 4.1 million baby boomers every year. Of that 4.1 million, think they hold that 21 % of the population is baby boomers with 41%. They own all 41 % of all the real estate. So that’s a big opportunity if you can see it this way, right?

Every single year,

you have roughly 750,000 baby boomers that own investment real estate turning 65 or older, right? And then they turn older every single year. Even if 20 to 30 % of them have, you know, apartment complexes, that’s a quarter million people every year that are turning 65 that own these properties and cash flowing businesses like HVAC companies, plumbing companies, these people who have started these companies in the seventies and the eighties, the kids don’t want them. They don’t want to inherit them. A lot of these folks,

They don’t know what to do with the business. They don’t even know they have the idea of selling it based on some multiple. ⁓ So there’s a huge opportunity there. I call it the silver tsunami. And the silver tsunami is an opportunity for people of any age to acquire some of these businesses from these operators, owners, founders that are phasing out of the workforce and want to retire, whether it’s an apartment complex or a business.

I highly recommend getting in the game and being able to go ahead and go direct to sellers and direct to these owners and convey the benefits of working with, you you sell yourself directly and potentially being the buyer of their business, being transparent, forthcoming, communicating effectively. and then, you know, being able to, you know, potentially negotiate and, and close these transactions. Cause there’s huge, huge opportunity to buy some of these businesses, before they close up shop, given if there’s no kids that want to inherit or anything like that. So you gotta be in the game.

Dylan Silver (10:09)
You mentioned

like closing, right? I think some of this is, mean, people might not even realize that they have something that is sellable. I’ve heard this. It’s not going to be the case carte blanche, right? But sometimes people get to a certain age where they’re just going to close shop and you know, that’ll be the end of it. Where it’s a win-win because hey, if I am looking and I’ve got this multifamily portfolio and I’m building at scale and I want to bring something in house. If I have like an HVAC company,

that hadn’t really thought of selling but was just going to close doors, bringing them their book of business, their team on board is truly a win-win. And I’ve also heard too that there’s in some cases that owner operator can stay on for a certain period of time and stay kind of attached to the business at some

Chad King (11:32)
Yeah, 100%. I mean, you can buy the business with all sorts of creative financing. You know, if you do some good education to some of these sellers, like we’ve bought businesses where, you know, let’s say we pay 400 grand and we give them 50 grand down and then we give them 350 on an earn out based on them, you know, working for two years or they owner finance the 350 and get stipend and monthly payments, which is what they want. They want the security, not the lump sum that’s going to be heavily taxed. So you just have to really understand

what the goals are of the person that is on the other side of the table, what they’re trying to accomplish, what their pain points are, what their picture perfect scenario is. And then you can tailor your offer to that because it’s not always dumping a lump sum of money that they’re going to go have to pay 30, 40 % on, right? It can be a structured payment, finance. And then yeah, there’s definitely some earn out or some way that they can help transition. And a lot of them love to do that because…

if you educated them on the fact that they don’t have to shut their doors, their business continue operating, plus they can help pass the torch and watch it continue off into the sunset. Man, that’s a really powerful thing to be able to convey to a seller.

Dylan Silver (12:38)
Now, when you have a real estate portfolio as large as you do, I’m imagining there’s got to be a team behind this that is also growing as well. But now we’re in the age of AI, so people are evaluating, well, what’s necessary? What can I offload to some type of agentic system? Are you looking at this as well and saying, you know, how large do teams have to be? What can we do by creating teams of teams? And what role does this new emerging technology play in your business?

Chad King (13:08)
That’s a, mean, it’s a big question. I’m going to answer that given the time constraint, the way that I know how. So the way that we’re absolutely integrating AI into every aspect of our business. If you’re not, you’re getting left behind. It’s making everything faster. It’s making us more efficient. However, especially in the trades business, like we are short, good folks that want to work and that have skills. especially the ones in HVAC plumbing, electrical maintenance, being able to work with your hands and have

that kind of experience. Now, everybody in our office uses AI to enhance themselves and make themselves more efficient. It’s not something we shy away from. It has absolutely changed a little bit of the dynamic internally on the payroll. There’s been a couple of people that don’t really have a seat on the bus anymore because of AI. However, there’s been other seats that have been opened up because of it as well. it’s a…

It’s an absolutely a tool and it is as good as the people who are using the tool. And I highly recommend that you use it. It’s transforming the way that we operate. It’s transforming the way that customers can interact with our businesses and how quickly we can respond. It’s making everything more efficient. I definitely…

I see the pitfalls in the future of what it could do to the workforce. And I’m aware of that because I have a lot of housing, especially workforce housing. So I’m keeping a very close eye on AI, but as far as using it in our business, we do it every day, but it won’t replace the trades and the things that need to be done by people. And I’m in the people business at the end of the day.

Dylan Silver (14:40)
Now the trade specifically, from what I understand, the average age of an electrician and a plumber is older than what a lot of people may realize. I’ve heard 40 plus, I’ve heard 50 plus. And how much truth is there to that? Is there, you mentioned that there’s a shortage, how great is that shortage? And are we seeing more people getting into those fields to where that might even out in the future?

Chad King (15:50)
Yeah, I’m actually curious that you said it what the average age of a plumber in America is. 41 years old. You’re right. I know it’s crazy. We are seeing definitely that I don’t think those things will ever phase out and we need more folks that are getting into the trades rather than going to college and getting worthless degrees. You know, I think college is a huge scam for the most part, for the most part. And when people go

and take six figures in debt to get a piece of paper for a philosophy degree or something random. And then they’re just struggling for the next 20 years of their life to battle out of that is horrible. And we need skilled people in our business more than ever. People don’t want to work. They want handouts. They’ve seen that the government’s willing to do handouts. So they’re just waiting for more of those to come. A lot of them have the entitlement victim mentality I see in the workforce that’s prevalent. So if you have any killer instinct right now,

If you have the ability to lock in and get things done, if you have the ability to be a savage in the workforce and grow and you want to deliver value and exchange, you know, your value for money, you have an incredible ability to command a lot of income right now, but you have to go skill up first. And yeah, we’re looking for folks, younger, you know, people that are getting into these trades that want to, you know, become a master electrician or a journeyman and

be able to really command. mean, these guys can command six figures, multiple six figures sometimes if they’re really good. And there’s always gonna be a need for plumbing. There’s always gonna be a need for HVAC. mean, housing is not going anywhere. So those trades have a really staple point in the market. And I don’t even think robotics are gonna be able to touch them.

Dylan Silver (17:16)
Yeah.

Yeah, no, mean, to your point, I think especially, you know, in the hottest markets in the country, people, you know, are commanding top dollar per hour billable hour for plumbing for electricians. I’ve even seen because of this, people even go to like handyman services or people with less certifications to fix some of these things. And I don’t know if that’s always the best, but there’s certainly a place for that, certainly in the single family space.

Bonus question for you here, Chad. As someone who’s scaled in the real estate game and in multifamily specifically, what’s something that breaks at scale that most people might not expect?

Chad King (18:10)
What’s something that breaks its scale that most people would not expect? That’s a good question. Limiting beliefs. ⁓ I know that’s kind of a weird one, but limiting beliefs break its scale. when you start to…

grow your business, you have to let go of some of the fears and some of the subconscious things that you’ve, you know, maybe have been imprinted in you from a young age that, you know, money is evil or that, you know, all people who got wealthy and rich or greedy and like some of the things that I think society puts into folks who have the desire to get rich and wealthy. And really what money is, is an amplifier of the heart. And when you have a lot of money or if you’re a good person,

Dylan Silver (18:33)
Yeah.

Chad King (18:51)
And success is your duty and your obligation because of what you can then do with that wealth and how you can help other people and put food on other people’s tables. So I think there’s limiting beliefs at scale that like, you know, you’re going to have more problems, but you get paid in proportion to the difficulty of the problems that you solve. So when you can solve bigger problems, you get to make more money and create more wealth. And that ultimately is going to give you the freedom.

that I think most people are after. you’re listening to this podcast, it’s probably because you want more out of life and you want to be able to do whatever you want, whenever you want with whoever you want for however long you want. And in order to obtain that freedom, you’re going to have to scale something. Right. And now I definitely don’t recommend, you don’t have to go get 2000 units and have multiple businesses, but I do recommend that you focus on ownership of things, having equity in things and equity that pays you.

and having cash flow, both slow, fast, know, medium cash flow money and trying to figure out those different buckets that can ultimately feed you so you don’t have to continue to trade your time for money.

Dylan Silver (19:58)
It’s a great point. And I think most of the time people are confronted with kind of their reflection of how they view about money, what their precept beliefs are. And when you get to a certain point, you realize like, hey, I can’t continue to have this because it’s creating like internal conflict. It’s just not going to work. Like you can only fake it till you make it so far and then it has to become reality. And certainly

you know, for folks who are going from let’s say one segment, let’s say, you know, fix and flip into larger multifamily deals, you could potentially have that friction come up at some point. We are coming up on time here, Chad, any new projects that you’re working on, and then as well, what’s the best way for folks to reach out to your team?

Chad King (20:44)
Yeah. New projects that I’m working on. We close one in seven days. I’m closing a 72 unit and on April 8th, we have a 40 unit that just got awarded to us. We’re on a pace to close about one deal a quarter on the multifamily side. So both those projects are here in Tennessee. So we got those two deals that are rolling. We’re actively selling one now that we’ve been, you know, pretty active for a while. We’re kind of buying and selling assets and trading in and out of them.

constantly. So selling some of the older vintage, buying some newer stuff. So yeah, we got a couple of deals going. We have a new fund that we launched for folks that want to get invested in the vertical integration of the platform, get invested in some of the deals, because capital is like our biggest constraint right now and our ability to say yes to the right ones. Because we have discipline underwriting metrics and we get now we know we have established in the market. So we get

We see great opportunities really before anybody else and the only thing that’s preventing us from scaling is capital. So we’re working on growing that aspect of the business. If anybody’s interested in reaching out to us, you can follow me on Instagram @mrchadking, MRChadKing. You can connect with me on Facebook or you can go to our website and just fill out a form, book a call with Ronan and have a chat with us.

Dylan Silver (21:57)
Chad, thank you so much for joining us today. Thanks for your time.

Chad King (21:59)
I appreciate it, Dylan. Thank you for having me.