Subscribe via:
Show Summary
The conversation delves into the current state of the market, highlighting a significant disconnect in deal pricing compared to previous years. It discusses the challenges faced by buyers in the marketplace and the strategies being employed to navigate these changes.
Resources and Links from this show:
-
Listen to the Audio Version of this Episode
Investor Fuel Show Transcript:
Jeremy Dyer (00:00)
If you remember that era, all the experts were screaming, a recession’s coming, a recession’s coming. Well, guess what never happened? A recession. So if you sat on the sidelines as an investor from 2015-16 till 2020-21, you missed out on a five-year bull run. Well, what happened then in 21 and 22? People were investing at the peak of the market cycle when debt costs were almost nothing. right?cap rates were at a historic compression you know point, and we didn’t have a lot of new product or new supply that hit the market yet.
Dylan Silver (02:09)
Hey folks, welcome back to the show. Today’s guest, Jeremy Dyer, is the VP of Capital Formation at Rise 48 Equity, and he has over 5,000 doors in multifamily. He helps connect professionals with real estate investment opportunities. Jeremy, welcome to the show.Jeremy Dyer (02:28)
Yeah, Dylan, thanks so much for having me and I’m really looking forward to diving into it with you.Dylan Silver (02:34)
I always like to start off at the top by asking guests how they got into real estate. How did you get into real estate?Jeremy Dyer (02:40)
Yeah, maybe you shouldn’t ask that question, because here I go. You ready? So I largely got involved in real estate back in the global financial crisis where we could buy single family homes for 80, 90K. We’d stick 30, 40K into the improvements and then sell those properties for two or $300,000 post renovations. And really that was predicated as a direct result, Dylan, of my desire to get involved in real estate because my wife and IDylan Silver (02:44)
Yeah, let’s do it.Jeremy Dyer (03:09)
watched an HGTV show one night and we thought that sounded super sexy. So we wanted to get involved. Fortunately at the time I was a higher income individual, you know, had capital on the sidelines to deploy, otherwise known as dry powder. My wife happened to have a knack for interior design work. So we had this in place team ready to rock and roll. The challenge for us Dylan is fast forward to 2015 and my wife and I decided to double down on kids. So we went from two kids to four kids.And if you’re reading between the lines, number three and four were twins, okay? So honestly, it was just a bandwidth issue for us. I really got to that point in my life where I couldn’t be crushing the commission checks and the bonus checks in the tech sales space, which I was in at the time, while also scaling and growing a real estate, know, active real estate business on the side, and then also trying to be a good husband and a good father all at the same time. So for bandwidth reasons, in 2015,
My wife and I decided to pivot from active real estate ownership to passive. So from 2015 until today, my wife and I have invested now in over 61 projects as limited partner passive investors. We’ve invested ⁓ with a dozen different operators, half a dozen different asset classes, from multi-family, A class down to C class. We’ve done retail, flex office, assisted living, hospice care.
Bolt marinas, RV parks, you name it, right? We’re in the asset class. And so that really allowed me to learn the business. Back in December of 2024, I published a book called The Fundamental Investor to kind of talk specifically with the investor community about some of the lessons that I learned, both as an active single family, you know fix and flipper. And then, of course, the lessons that I further learned as a limited partner you know investor in real estate syndications.
So just two and a half years ago, Dylan, I decided to start letting my friends and family know about the syndication investments that I had been making myself and how I started to see my wealth building trajectory, you know, really starting to accelerate at that time. So I started a little boutique company by the name of Starting Point Capital, and I started putting deals in front of my personal and professional network.
And it was absolutely blown away, Dylan, at the amount of busy professionals there are out there in the ecosystem today. They want they want to diversify outside of Wall Street and into Main Street. They want to get involved in real estate ownership, but they lack the time, the knowledge, the experience, the network. And so now they’re able to really leverage me to do that. And so I started putting Deal Flow in front of my investors, and I was blown away. I raised almost $100 million from
those that are part of my personal professional network, which really increased my stock price. So my stock price went incredibly high with a lot of best in class operators out there today that are looking to raise equity from retail investors to deploy into their you know future acquisitions. And I ended up joining the Rise 48 team about a year ago. And Rise 48 is an operator that has done $2.5 billion in transaction volume. They’ve raised a billion dollars in equity just in the last few years.
They currently own 62 deals under management today in primary markets like Phoenix, Dallas, Fort Worth, and North Carolina.
Dylan Silver (07:21)
I’m a big fan of everything in the multifamily space. I’ve had so many folks on this show in multifamily, from small multifamily all the way up to you know uh multi-use facilities, commercial, residential, first floor you might have retail. I know you’re based out of Minneapolis. When we when we talk about the multifamily space, there’s so much that goes into a different niches.different areas of the country. I’m a Texas licensed realtor, so I love Texas. But I think multifamily for so many reasons is appealing and it’s becoming more popular now than ever, especially to meet the needs of housing crisis, quite frankly. Are you seeing any areas of the country where you’re more bullish on than other areas? And are you seeing certain asset classes within multifamily that
you are maybe more preferential to or is it or is it unique to the deal?
Jeremy Dyer (08:21)
You absolutely nailed it. It’s not unique to the deal. We’re focused on a very small demographic, okay? We’re focused on a B-class workforce housing demographic, okay? We like to buy properties in areas that have strong job growth, wage growth, and population growth. We’re primarily targeting those safe, affordable neighborhoods. So you live in Texas, right? We love Texas, okay?That’s another reason why we’re out in North Carolina. We’re primarily focusing on markets that are both landlord friendly, okay, because in this business, when your business is predicated upon renovating units, sometimes you need to force occupancy down in order to free up units to renovate. So we like states that we can evict a tenant, for example, after 60 days notice, right? Which is another reason why we like Texas, North Carolina, and Arizona.
because we’re able to effectuate our business plan in those states and not have to be concerned with executing our business plan because of local regulatory environments. But our primary bread and butter is really to focus specifically on those safe, affordable neighborhoods in that B-class demographic, workforce housing. And again, we like states that have strong population growth, wage growth, and really quite frankly, there’s a good diversification of jobs. We don’t typically like to have
one particular industry have more than 20 % of the jobs in any specific market. We also like markets that have a low concentration of construction workers. Why? Because typically during times of economic recession, the construction jobs are the ones that typically get hurt first.
Dylan Silver (09:56)
Mmm.When we’re talking about some areas where there are diversification of jobs, where you’re also talking about, you know, the the B-class multifamily properties, what’s your approach to A, making sure that you are buying these deals in the right market conditions? Because you were talking before about hopping on here, you know, there is a lot of people who bought deals in
2020 that over leveraged themselves. They didn’t know it at the time. No one has a crystal ball. But how do you generally avoid that type of thing? And and then follow up follow up to that. How do you also know which deals to pass on even in good market conditions?
Jeremy Dyer (11:16)
Yeah, no, it’s a fair question. And the truth is, that just what you said, and that is nobody has a crystal ball, right? You know, nobody really knows where we’re at in the economic cycle or the market cycle. We know what happened in the past, but nobody has assurance about what’s going to happen in the future, which is why myself as an investor, you know, I’ve chosen to adopt the same strategy that your financial advisor is going to tell you to adopt.And that is the dollar cost average, right? There’s going to be times where you invest at the peak of the market cycle, and there’s going to be times when you invest at the trough of the market cycle. The important thing to assess as an investor is are you investing with an operator that has mitigated these three risk factors? Number one is operational risk, right? Who’s the team? What’s their track record?
What type of leadership do they have? Do they cast a vision? Do they create a culture? Are they attracting best in class talent? That’s risk factor number one, right? There are syndication teams out there and operators that are two men in a truck. There’s guys that are a team of 20 and there’s guys that are teams of 300 where everything is vertically integrated and they can control the execution risk from acquisition all the way through disposition. That second risk factor is just what I said and that’s execution risk. Will execution
Dylan Silver (12:29)
youJeremy Dyer (12:37)
Risk of what the execution risk associated with the strategic business plan is the strategic business plan to renovate classic 1980s vintage right multifamily B class product into an a class type finish if that’s the business plan right there’s a tremendous amount of execution risk involved in renovating units right it’s not just execution risk on the property management sideIt’s execution risk on the construction side, the supplier side. Tariffs have been a big discussion as of late with new supplies, right? Those are all risk factors. And the third component is the one that none of us can control, and that is market risk, okay? I can’t control the market. I can’t control whether the Fed decides to be looser with monetary policy or more restrictive with monetary policy. I can’t control if a new developer
decides in three years, they’re going to resurrect the competitive property right across the street with 300 units and it’s going to be brand new, right? Which is going to apply pressure on my ability to force NOI growth through organic rent growth, right? So there’s all these different risk factors involved that every investor needs to look at. And the other thing to note is just case in point, okay? I was an investor in syndications back in 2016 and 2017.
If you remember that era, all the experts were screaming, a recession’s coming, a recession’s coming. Well, guess what never happened? A recession. So if you sat on the sidelines as an investor from 2015-16 till 2020-21, you missed out on a five-year bull run. Well, what happened then in 21 and 22? People were investing at the peak of the market cycle when debt costs were almost nothing. right?
cap rates were at a historic compression you know point, and we didn’t have a lot of new product or new supply that hit the market yet.
Well, what ended up happening in 23, 24, 25, early 25, right? What we started to see is we started to see a lot of distress from operators that weren’t able to keep their deals, and it’s really been those deals that we’ve been aggressively targeting and buying from other severely distressed sellers over the last 36 months. So we’re really in a position you know
Dylan Silver (14:51)
Right.Jeremy Dyer (15:04)
where we feel confident, we’re buying at the bottom of the market and taking advantage of that.Dylan Silver (15:51)
When we talk about acquisitions in the multifamily space right now, you hit the nail on the head. There is this pressure on investment group syndications who have purchased at the peak of the market and now they need to exit. And so I was talking with with folks this week who don’t have tremendous experience in the multifamily space, but they’re even able toacquired deals because of the degree of distress in some of these funds and syndications. It sounds like you’re seeing the same thing all over the country that right now there’s a lot of multifamily owners who over leverage themselves and it’s actually a great opportunity specifically in multifamily.
Jeremy Dyer (16:35)
Yeah, I know you’re exactly right. mean, like when it comes to commercial real estate investing, it’s not that much different than Wall Street. You want to buy low, sell high, right? That’s pretty basic 101, right? Well, when people were buying at the peak of the market cycle, they were buying at the peak, right? They were buying at max prices. Well, where we’re at today after a certain amount of price discovery, you know this because you’re in real estate, you know, on the sales side, there’s a 30 % discount or disconnect between what we’re buying deals at todayversus what those deals would have traded for just 18 to 36 months ago. The reason why there’s not more buyers in the marketplace right now, as opposed to how many buyers there were back at the peak of the last market cycle, is there’s a lot of buyers that got in trouble, right? They got caught, right? When the tide started to come out, they got caught with their pants down, okay? And it’s those types of deals that we’re now aggressively attacking and going after, and we’re able to raise the money for it.
We’re able to raise the equity to buy new deals because we still have a strong brand. We were still able to weather you know the headwinds you know caused as a direct result of the historic run-up in interest rates and new supply glut that hit the market. There’s a lot of operators in the space today that unfortunately, if they’re still around, they’re not transacting deals because they can’t raise the money because they have a reputation crisis on their hands.
Dylan Silver (17:59)
Right.You know, when when we talk about folks who are investing in these deals, it’s not just folks who may have lots of experience. It may be folks who saw the opportunity in multifamily and unfortunately, you know, they might have invested with the wrong people. You mentioned earlier how important it is to vet the operators who you’re investing with even more so than the deal. And we’re seeing no greater example of that than right now with what’s happening in multifamily, quite frankly.
We are coming up on time here though, Jeremy. Where can folks go to learn more about what you’re involved in, to reach out to Rise 48? I know that you work with both accredited and non-accredited investors.
Jeremy Dyer (18:37)
Yeah, that’s right. So thank you for that. So yes, we do partner with both accredited and non accredited investors. We do raise capital through what’s called a regulation D 506 B, you know, type of structure. We do have to have a material relationship, you know, with a prospective investor before they decide to invest, you know, partner with us on one of our projects. For those that are interested in learning more, you’re welcome to check out my book on Amazon. It’s called the fundamental investor. I also host my own podcast called the freedom point.I’m relatively active out on LinkedIn under Jeremy Dyer. And you can always check us out on our website at rise48equity.com.
Dylan Silver (19:17)
Jeremy, thank you so much for coming on the show today.Jeremy Dyer (19:21)
Dylan, thank you so much for having me.
