Multifamily Properties Are Selling at 25–30% Discounts—How to Find the Best Deals

Mike Desrosiers (00:00)
Don’t wait for the bottom of the market or—it’s hard to time. The key is now. You do want to get into it. Start looking at deals, underwriting deals, getting those broker relationships, ’cause it doesn’t happen fast. It’s not a sprint, it’s a marathon, right? And what you don’t want to do is wait until all of a sudden it’s, like, got every buy signal there is possible, and then you jump in.

Scott Bursey (01:57)
Welcome back to the *Real Estate Pros* podcast powered by Investor Fuel. I’m your host, Scott Bursey. And today we’re thrilled to be joined by Mike Desrosiers, founding partner of Growth Capital Group. Mike brings over 30 years of deep experience in real estate transactions, combined with his unique background as the CEO of a successful marketing agency.

Pros, expect to learn how Mike bridges the gap between high-level marketing strategies and disciplined multifamily syndication to secure cash-flowing properties in emerging U.S. markets. Mike, welcome to the show.

Mike Desrosiers (02:37)
Hey, welcome. Thank you, Scott. Glad to be here.

Scott Bursey (02:40)
It’s awesome having you here, and to help our listeners get up to speed, please give us the ninety-second highlight reel of how your career ignited and where you’re pouring your fuel now.

Mike Desrosiers (02:53)
Yeah. I mean, I’ve been involved in real estate, as I said—as you said—all my life. I mean, I’ve always had—mostly on the single-family side. I’ve done single-family flips, always had rentals of one type or another. I’m based in California, and it’s also been mostly in California. But several years ago, I got involved in some of these networking organizations or, or education, educ—programs and really taught more about syndicating and investing out of state in—and raising capital. And those are things that really lit up for me quickly because I was already involved in that, you know, but not—not so much out of state, not so much raising from other people. But I was quick—quickly jumped into that, and it showed a, a clear path of how to get into much larger properties. You know, 10 million, 20 million, 50 million dollar properties without having to put in, you know, all of it just all yourself.

So I partnered up with some other people that—other operators that were also even more experienced than I—than I was and already had portfolios going, and jumped into some of their properties as general partner, you know, helping to bring investors in and bring—you know, I’ve got 35 years of business experience in, in multiple businesses. So I’m able to bring kind of a lot of that to the table as well. So it was welcomed, and I jumped into one property and then another, then another, and they just kind of kept getting bigger. And, yeah, up to, you know, about 1,800 units as a general partner, and most of them in Texas, but I’m also in Las Vegas, Kansas City, Portland, and Oklahoma as well.

Scott Bursey (04:45)
Incredible journey, Mike. Hearing that path really puts your current success into perspective. Thank you for sharing where that fuel is directed now. And you know what really caught my attention about you, Mike, was the way you’ve been able to combine three decades of transaction experience with the aggressive growth mindset of a marketing CEO. That’s not easy.

Mike Desrosiers (05:56)
Yes. Yeah. But it comes together, you know. The marketing part—it brings a lot in my communication skills and, and connections with investors and operators. You know, everything’s about marketing, right? And, but it’s really not necessarily about selling. It’s about communicating and, you know, having clarity and being able to connect with other, other people, other operators, right? And so that was primarily the—you know, what really was that I really enjoy doing. I mean, I feel I’m an investor. I’ve in—I—I’ve ran other businesses. I’ve taken that money from other businesses and invested it into real estate and trying to get money to kind of make money for you, right? You have to, in order to beat inflation and just get ahead of the game. If you’re really gonna do well, you’ve—you have to have multiple sources of income coming in.

Scott Bursey (06:51)
And along those lines, Mike, curious to know, what was the moment when you realized that your marketing agency background was the key to unlocking bigger, better deals in real estate?

Mike Desrosiers (07:06)
Yeah, again, the background just connected me with whether it’s talking to brokers and being able to talk, B2B-type communication, or talking with investors. And, and was able to—I really enjoy talking to investors, actually, because I’m one, right? And I’m a business guy, and I’ve made good money in other businesses and also my own real estate.

And to be able to share that with other people that are interested in that is really exciting for me. And then it gives them an opportunity to kind of jump on board a train that’s already going and, and partner up with me and, you know, and some of the properties that I’m involved with. And we all make money together, and it’s kind of fun. I like that.

Scott Bursey (07:47)
Absolutely. And looking at the operational side, what is a common bottleneck, if you will, you faced while scaling? And how did you overcome that?

Mike Desrosiers (08:02)
Yeah, I mean, there’s multiple bottlenecks that you run into. I mean, one is just growing too fast, of course. And I’ve gotten involved with, you know, with that, where you, all of a sudden, you’re juggling, you know, too many properties. I got into these syndications thinking, wow, this can be great. I’m gonna have all this free time. But then, you know, it got to the point where I’m—I find myself on, you know, seven hours of Zoom calls every day and, you know, trying to manage. We’re getting on these group team calls and everything. It ended up taking quite a bit of time.

But that is—you, you, you figure out how to adjust that and, and make that work. So you can’t do everything. That’s one of the great things about these syndications or these larger properties, is that you are not doing it by yourself. You know, you’re working with a team. It takes, you know, the teamwork makes the dream work, and you’ve—you, you have to rely on other team members to do their job, and then you do your job, and everybody’s in the same boat, you know, rowing the same direction and, and gets—gets it—gets it done much quicker.

Scott Bursey (09:04)
Considering the current market climate, where do you see the biggest untapped opportunity for syndicators right now, Mike?

Mike Desrosiers (09:13)
Yeah, the biggest opportunity, I believe, is going to be in the distressed properties. And so, you know, that’s having good connections with the lenders, banks, whether it’s, you know, a larger lender or a local credit union and, you know, in the, in the market that you’re looking at. They have a lot of access to these kinds of deals. And if you have a good relationship with them and they know you can close, because that’s the real key, then, you know, you get high on their list of the phone calls to make when some—when an opportunity comes up.

Scott Bursey (10:20)
Sure. Are you focusing more on specific secondary markets?

Mike Desrosiers (10:27)
Not—not necessarily. I mean, more, you know, in Texas, we’re in the bigger cities of Houston, Dallas, Fort Worth, but then some of the student—you know, I’m in some college student housing in Waco, Texas, student housing in, in College Station, Texas, and on a property in Galveston, Texas. So it is kind of all over, but I like staying in the larger population because, you know, we follow the jobs. That’s primarily—the jobs and the income and the population growth are the indicators that we wanna hone in on.

Scott Bursey (11:04)
And on that note, Mike, where do you see the vision, let’s say the next twelve to twenty-four months, for Growth Capital Group?

Mike Desrosiers (11:14)
You know, the tw—I mean, it’s pr—it’s what I just said. It’s pretty much just looking for these buying opportunities. I’m not in a hurry for anything. I, you know, the market has shifted where now, you know, where before a lot of people that are trying to get these deals couldn’t, you know, was even having a hard time getting brokers to call them back, or the deals that were sent to them, or, you know, the deals they couldn’t sell to anybody else.

And now people are getting a lot more calls because there’s a lot more properties on the market. But the, you know, the pro—the values have come down. And so some—we’re seeing properties selling at a, you know, twenty-five, thirty percent discount, even—even higher. And those are the kind of deals you want to look for.

Scott Bursey (11:59)
Thank you for expanding on that, Mike. Diving into the risks, what is the one macro threat to multifamily cash flow that most operators are currently maybe overlooking?

Mike Desrosiers (12:13)
Well, there’s a lot of value-add-type pro—income adds that you can do to properties, but it depends on the property itself. You know, there’s whatever—what—you know, might be putting washers and dryers inside the units and, and, you know, renting them to the tenants or charging the tenants. We’ve seen, you know, we’ve done some cable contracts where we’re, you know, able to resell cable to tenants at a discount, where they actually save money, but yet we’re making money on it as well.

There’s been everything from valet trash to covered parking to, you know, reserved parking. And these things can add up quite a bit. And, you know, without—you know, we don’t wanna gouge the tenants, but it’s—it—we look at it as actually bringing in an amenity, something that makes it more pleasurable for the tenants, you know, to live there and, and adds value to the property.

Scott Bursey (13:07)
Getting into the weeds of your growth, what is your go-to method for keeping investor trust during volatile interest-rate cycles?

Mike Desrosiers (13:16)
Clearly, it’s—it’s communication, communication, communication. The three Cs. Yeah.

Scott Bursey (13:25)
And that makes a lot of sense. Absolutely. And Mike, interested to know, could you walk us through what does your professional network look like right now?

Mike Desrosiers (13:36)
Maybe rephrase the question. What do you mean? What does it—what—look like?

Scott Bursey (13:40)
Yes, as far as building your relationships over these years with Growth Capital Group, what has been your formula to develop those relationships?

Mike Desrosiers (13:52)
You know, I just—I mean, I enjoy networking. I enjoy communicating with investors and operators, other operators, other, you know, other general partners. I’m—I have general partners on most all the deals that I’m in, and, and a lot of them are different. They’re not all the same group, right? So sometimes I co-GP on properties, and I’m part of another GP team, and I enjoy the relationships that I gain by these general partners. And a lot of them turn into future partners of other deals. Either they invite me in to come into their deal, or I invite them to come into theirs, or to—to mine. And it, you know, it’s just—it, it just works, right? And then I—I really enjoy those relationships.

Scott Bursey (14:41)
For all of our listeners that are listening right now, Mike, and they’re saying to themselves, hey, this is somebody I really like, what would you like them to know first about your business, Growth Capital Group?

Mike Desrosiers (15:34)
You know, just—I mean, Growth Capital Group is my brand, but primarily it is me. And, you know, I’m an open book, so I’m available to talk to. And anybody wants to, you know, connect with me, they certainly can. You can look for me on, on LinkedIn, on any of the social media for sure, or my website is GrowCapToday.com. But I just recommend for anybody to set up a Zoom call or a call with me, and I’m happy to connect.

I’m happy to help. Doesn’t have to be about doing—doing a deal. It could be just about, you know, connecting and, and helping their journey along as well too.

Scott Bursey (16:13)
Interested in your take on this: when evaluating in an emerging market, Mike, what is the one sign you look for that tells you, you know, the cash flow is sustainable versus just a temporary hike?

Mike Desrosiers (16:30)
On the—well, on the market itself, it’s about the jobs for sure and the population growth. We follow that, you know, what the trend has been in population, but really it’s more about the jobs and the level of jobs that are in there. So when you’re seeing, you know, these—these facilities being, you know, built from whether it’s Amazon, Tesla, or, you know, or—or NVIDIA, and, and these are high-paying jobs. And when they set up and make a decision to build a plant in a particular area, it’s not a short-term play, right? They’re in it for the next twenty years, a minimum. And that’s where we want to be, ’cause that’s the—once they—as they start bringing on more jobs, people need a place to live. And they’re not all renting apartments, but they’re not all buying houses. And so it’s a good mix.

Scott Bursey (17:18)
That is a gold nugget of advice right there. And Mike, you really have given our listeners a lot of advice today. But is there any additional thoughts you could leave with the pros?

Mike Desrosiers (17:32)
Yeah, just, you know, don’t wait for the bottom of the market or, you know, it—it’s hard to time. The key is now. You know, you do want to get into it. Start looking at deals, underwriting deals, getting those broker relationships, ’cause it doesn’t happen fast. It’s not a sprint, it’s a marathon, right? And what you don’t want to do is wait until all of a sudden it’s, like, got every buy signal there is possible, and then you jump in, and then you’re just starting to build those relationships, though. And, you know, not only with brokers and lenders, but with, you know, investors. And, you know, the—the—the time to start raising capital is not when you need the capital, right? You start that early on. You build those relationships with investors, letting them know what you’re doing, the kind of properties you’re looking at, so—so they are, you know, one call away at—at the point where you do get into a good deal. That’s really important.

Scott Bursey (18:30)
Thank you for that, Mike. And for those of our listeners that want to keep this conversation moving, stay in your lane or collaborate with you on future deals, what’s the best way for them to reach you?

Mike Desrosiers (18:41)
Yeah, again, my LinkedIn is a great one under Mike Desrosiers, or my website, which is GrowCapToday.com.

Scott Bursey (18:52)
Mike, thank you for joining us on the *Real Estate Pros* podcast today.

Mike Desrosiers (18:56)
Thank you, Scott. Appreciate it.

Scott Bursey (18:58)
It’s been an absolute pleasure. And to our listeners, we appreciate you. If you receive value from today’s episode, please subscribe. We’ll be filling your tanks with a lineup of elite guests, just like Mike, who are accelerating and setting the pace for the rest of the industry. Until next time, keep your standards high and your vision clear. We’ll see you on the next episode, everyone.