Subscribe via:
Show Summary
In this conversation, real estate attorney Keaton Frieberg shares his journey into real estate, discussing the unique perspective attorneys bring to investing. He highlights the current market dynamics in Texas, the appeal of multifamily properties, and the growing trend of seller financing. Keaton also provides insights into acquiring distressed properties and offers advice for new investors navigating the complexities of real estate.
Resources and Links from this show:
-
-
- Investor Fuel Real Estate Mastermind
- Investor Machine Real Estate Lead Generation
- Mike on Facebook
- Mike on Instagram
- Mike on LinkedIn
- Keaton Frieberg’s Website
- Keaton Frieberg on LinkedIn
- Keaton Frieberg’s Email Address: [email protected]
- Keaton Frieberg’s Phone Number: 210-503-2800
Listen to the Audio Version of this Episode
Investor Fuel Show Transcript:
Keaton Frieberg (00:00)
You know, I have a real interesting one that I, I this, you know, first came across my desk maybe three, four years ago, but it’s, ⁓ buying HOA foreclosures. So here in Texas, the HOA has the right to, under certain conditions to foreclose on a, on a property if a, ⁓ if a homeowner isn’t paying their dues. Now, usually it has to get to a certain amount before that happens, but it makes it, sometimes these properties can make their way to the courthouse steps and be auctioned off for 20.$30,000, I’ve seen one be auctioned off for $7,000. Now, you have to keep in mind that you’re taking subject to the pre-existing and senior mortgage.
But you can get in super duper cheap and ⁓ there’s some strategies to that method, which has been super interesting to see.
Dylan Silver (02:25)
Hey folks, welcome back to the show. Today’s guest, Keaton Frieberg, is a real estate attorney in Texas out of the San Antonio area, Keaton. Welcome to the show.Keaton Frieberg (02:38)
Thanks Dylan, I’m super happy to be here.Dylan Silver (02:41)
It’s great to have you on here. I always like to start off at the top of every show, regardless of who I’m speaking with by asking guests how they got started in real estate.Keaton Frieberg (02:49)
youYeah, no, great question. My first
to real estate was I was going to law school and I told my dad, hey, you I really like this place. It’s kind of close to close to campus. You should buy it and you should let me rent it from you. And so he is like, OK, he’s like, it needs a lot of work. And I was like, well, you’re a handy guy. Why don’t you buy it, fix it up and then let me rent it from you for something really cheap because I’m your son.
And so that was actually my first introduction. went, we went and he bought the house. I helped him fix it up and he’s actually now, what is this? Seven years later, he’s about to sell it. So he’s about to realize all the, all the effort that he put in, you know, seven years ago. And actually after that first purchase, he ended up buying a couple, maybe three or four more duplexes and he got super involved in real estate. So that was my very first introduction.
Dylan Silver (03:45)
Wow, so was kind of maybe divine intervention because it sounds likeworked out for him too.
Keaton Frieberg (03:51)
It worked out for both of us and he and I have since gone on to buy properties together, which is great.Dylan Silver (03:57)
Now, what I find interesting about attorneys when it comes to real estate specifically is I’ve spoken with, you know, real estate attorneys who are not investors. And I’m thinking to myself like this is the person who would be most adept at understanding everything that’s going on. But it strikes me as being relatively common now that I’ve seen more and more attorneys that not everybody who’s a real estate attorney is even interested in investing.Keaton Frieberg (04:24)
Yeah, it blows my mind because I mean, you can do well in the legal field, but if you want to build passive, long lasting income, then you really should get your you should dip your toes into real estate at the same time.Dylan Silver (04:40)
And, know, specifically when we’re talking about how complicated investing is for the average person, I mean, as an attorney,you’re looking at it through the lens of, you know, contract law, I’m imagining in many cases. And so it’s not as like ominous and overbearing. So, you know, you’re the people who understand a lot of this better than everybody else does. I’m a realtor in Texas. And so I think the Trek contract is like 12 pages long. And then you’ve got the attorney
you know, broker relationship with the Trek board. And so there’s now more and more attorneys on that board. And so it seems to me like, you know, there’s maybe not as much interest as you would think. Do you think in your perspective, that there’s anything maybe within someone self personally or maybe a tolerance for risk that makes it so that they are more interested in real estate investing or so that they’re not interested at all in real estate investing?
Keaton Frieberg (06:27)
Yeah, great question. think lawyers are inherently risk averse. so real estate, you know, there’s there’s there can be a lot of unknowns when you get into it. I mean, as you know, I mean, once you’ve done a few deals or you’ve been through a couple of transactions, things start to become more familiar. You have a better idea of what to expect. And so ⁓ I think that just the fact that there is some risk that’s associated with getting into into real estate, that that’s what isn’t as ⁓ so appealing to some attorneys. But I love risk.I I think it’s exciting to see it pay off. so for me, and then also it was hard, it’s hard. I can’t imagine being able to speak with my clients about things that they’re going through if I haven’t been through them myself. So that was one of my main deals and wanting to get into real estate too is that I wanted to subject myself to as much as I can so that when I’m speaking one-on-one with a client, we can actually, I can say, look, I’ve been there. I know what you’re going through and here’s what I did or here’s what I would do if I was you.
Dylan Silver (07:26)
Now, when we’re talking about actually walking the walk versus the other side of it, I would say most people would say, well, you don’t have to invest to be able to work with investors. Does it provide you ⁓ a second lens knowing that you’ve done it yourself? Do you reference that when you’re thinking about how to approach certain issues?Keaton Frieberg (07:50)
Absolutely. ⁓ You know, just recently we purchased a commercial building for our law firm. I mean, we handled the transaction from start to start to end, whether it’s, you know, drafting the contract, negotiating the contract, dealing with title, the whole, the whole deal. Right. And so it’s super helpful when I have other clients that are going through, you know, if they’re purchasing commercial property or even residential property, it’s just on a smaller scale most of the time. Super helpful. And then also where I can identify with my clients a lot is ⁓bad tenants all the time. And so I ⁓ cut my teeth doing evictions actually in Texas. And so ⁓ I know exactly what it looks like to deal with a bad tenant and the fastest, most expedited way to get your property back in your possession and ⁓ stop the bleeding and start generating money again. And so that’s somewhere where I can identify with telling my clients, maybe cash for keys is the way to go in this particular instance because
We just want to get you possession back so you can start making money again. I guess the.
Dylan Silver (08:52)
Iwant to ask you
question about ⁓ where attorneys come into play right now and maybe are there some other areas where attorneys could be useful that real estate investors aren’t thinking about potentially using them. Like for instance, when you need to evict somebody, you’ll need an attorney. When you need a contract written up, is there or are there attorneys who maybe wear multiple hats who may be ⁓
Keaton Frieberg (09:19)
Yeah.Dylan Silver (09:21)
looking at it from a lens as an eviction or writing a contract, but may also be looking at it from the lens of I’m an investor myself and I can do some level of consulting work with the ability to process the eviction.Keaton Frieberg (09:36)
Yeah, great question. I think that ability to consult is where my true value comes in. And it’s kind of going back to what you said, you know, I’ve been here, I knowgoing on. And really what we’re trying to do, and anytime you’re dealing with us, for the most part,
we’re making business decisions. And so what can we do to put yourself in the best position to make the best business decision? ⁓
Dylan Silver (10:32)
Now, when we talk about some of the different asset classes that people are getting involved in or maybe an on-ramp into real estate, they’re trickier now than they were five years ago, frankly, because it’s a little bit, I wouldn’t say a little bit, it’s very much a buyer’s market, not a seller’s market with so much new construction, ⁓ pre-owned homes are sitting for longer. As an investor yourself, if you’re maybe,advising or speaking with someone who is a first time investor. Are there any asset classes to you in Texas that are maybe more appealing than others?
Keaton Frieberg (11:11)
Yeah, I think that specifically here in Texas, ⁓ multi-family properties to me are the most interesting. That’s what I’m looking for. I think that, ⁓ and buying, I’m just buying things right now, really. think, like you said, it’s kind of a, it’s a buyer’s market. I agree with you, I think it’s a buyer’s market. And so I’m buying and holding right now. Because I truly think that if you hold on to something long enough, you’re probably gonna end up doing okay on it.Dylan Silver (11:38)
Now, when we talk about multifamily, I don’t know if you’ve seen this trend, but I’ve seen it from guests of the show. And I’ve definitely seen it maybe more so in some areas like Texas, where there’s a lot of development happening. It seems like there were people who bought maybe too deep, didn’t ⁓ look at their pro forma from a perspective of what if the non-ideal situation happens? What if our rates double?you know, and we have these arm rate loans. What if rents don’t rise? What if our property doesn’t appreciate very much or at all? What’s our five year exit strategy? I’ve noticed that there does seem to be some distress, not in the properties themselves, but in the operators. So they may be more open to, you know, a creative offer seller financing, or, you know, just something outside the box. Have you seen this as well in the multifamily space?
Keaton Frieberg (12:31)
Yeah, mean across all asset classes. I’ve seen sub twos there, sub two agreements come across my work or contracts come across my desk almost daily. Sub twos, assumptions and seller financing are huge right now.Dylan Silver (12:47)
Now, San Antonio, I lived in San Antonio for about four or five years. And what I noticed about the city specifically is it does seem to, at least from my perspective, get hit a little bit harder than other areas of the state by real estate trends. I’ll give you an example. So I was a wholesaler prior to being a realtor and I did feel like it was just slightly more challenging to, youacquire properties for the right price after 2023 and then pair them with investors. It’s still not easy to do it in DFW where I later moved to, but it was a little bit less challenging. Have you noticed this as well about San Antonio on the single family side that it does seem to be impacted by these macro trends, maybe more than some other Texas cities?
Keaton Frieberg (13:39)
Yeah, yeah, and going both ways too. So I think that, ⁓ you know, when things are going good for San Antonio, they’re going really good for San Antonio, maybe better than Houston or Dallas or Austin. ⁓ Obviously without Austin’s little bump that I had a couple of years ago, but also on the downside, yeah, we’re feeling it. also, you know, in addition to buying holds, I do some fix and flips and our fix and flips are a little, I think they’re a little, it’s a little harder to get these things done.here than I imagine some of the other Texas markets.
Dylan Silver (14:09)
Yeah, I I have that sentiment myself, especially working with a lot of investors. I saw it in real time and I was just one person, but I was feeling like, man, this is drying up. And then ultimately the DFW market, wasn’t easy to fix and flip up there either, but a lot of that can be attributed to the massive influx of new developments, you know, pretty much everywhere. And I wanna touch on that, Keaton. So we’re seeing…developments in San Antonio, it seems like there’s a subdivision going up everywhere. But at the same point in time, they’re also developing multifamily. I’ve spoken with some multifamily investors who
told me, know, if your multifamily deal started in 2022, and it’s wrapping up in 2024, and you’re like, you broke ground in 22. And now you’re finishing up in 2024. It’s somewhat challenging because things have changed drastically. So you have to
prepare for the market to change. When you’re looking at these multifamily deals, what’s some of the stress tests that you’re looking at? Is it something as simple as, okay, we have to prepare for rates to double? Is it something like, well, there may be more ⁓ pressure ⁓ downward in rents than there are upward?
Keaton Frieberg (16:12)
Yeah, great question. ⁓ So for multifamily acquisitions, me and my team, all that we’re looking for right now, because to an earlier point that you made, there’s so many seller financing deals out there right now that that’s what we’re doing. We’re doing seller financing with maybe a five to seven year balloon. ⁓ Obviously, want to refi before rates go down, we want to refi before we can. So we’re still only getting into a multifamily deal if there’s good cash flow.There are deals out there that still cash flow and you can structure them, especially with the seller financing deal ⁓ to where they cash flow. And how we’re doing that is saying, okay, ⁓ seller, you want this thing, we’ll give it to you full price. We won’t negotiate on price, but we are gonna negotiate with you on interest rates. And then at that point, we know that even if we have a lower vacancy than we’d like that we’re still gonna be just fine, because we’re still gonna cash flow.
Dylan Silver (17:07)
Yeah.The seller finance space is super, super, I would say, hot right now. I’ve had both experienced and novice investors reaching out to me about ⁓ locating them seller finance properties, properties that they can make offers in seller finance. And I would love to get your feedback. How do you broach this conversation with, you know, listing agents or with sellers themselves directly, especially if they’re looking
Keaton Frieberg (17:14)
Yes.Dylan Silver (17:36)
you know, for a traditional, you know, offer and not thinking about seller financing.Keaton Frieberg (17:42)
Yep, days on market. If you’ve been on the market for a really, really long time, then it makes this whole seller financing, like let’s move this property conversation a lot easier. I mean, all it is, and it’s usually not me that’s actually discussing it with the other agent. I have another agent that I work with, but basically all he’s saying is, hey, this has been on the, you know, this property has been on the market for a long time now. Does your client have any interest in holding this note for, you know, a period of time?And that just, that opens the door.
Dylan Silver (18:15)
Hey, I’m gonna take that one to the bank. I’m gonna put that in my repertoire there. I’ve noticed that there does seem to be some hesitancy, I would say from investors in general for making offers that are on market. Some investors will just say, I’m strictly looking for off market. But especially as an ⁓ realtor, I’m looking at it from the lens of, okay, well, it’s on market. They’re trying to get eyeballs. They might not love the offer, but.I would still rather have an offer than no offer. So I’m going to entertain everything. Plus the realtors got the fiduciary responsibility to present every offer to the to the client.
Keaton Frieberg (18:54)
You got it. You got it. Yeah. mean, whether it’s on market, off market, I mean, as long as our numbers work, don’t, it doesn’t really matter to me. The numbers work, they work, whether it’s on market or off market. ⁓ Yeah. And a lot of, a lot of off market from my experience anyway, and my clients experience from what I see, a lot of this off market stuff is, ⁓ you know, cash to close quick, something super duper quick, which is fine in some circumstances. We do that a lot for our residential acquisitions, butFor some of the bigger commercial ones, we’re not coming with cash to close in five days, like lot of these, like you would see from a wholesale or something like that.
Dylan Silver (19:32)
Right.It’s not going to be tough to put together a syndication on a 50 unit apartment complex overnight. But I’ve also seen this trend. I’m curious if you’ve seen this as well from folks who are I don’t want to say agnostic to asset class because you can’t just jump from like single family to 200 unit apartment complexes. But I have seen people be more open minded to hey I’ve got to try a different strategy or I’ve maybe got to have you know
Keaton Frieberg (19:35)
⁓ Yeah.Dylan Silver (20:01)
my ⁓ arms in a couple different buckets here in order to make this thing work. I’ve seen specifically flippers get into new construction. I’ve seen people start looking at small multifamily and then larger multifamily starting syndications and this type of thing over the last three years. Have you seen this as well?Keaton Frieberg (20:21)
I have, and to be honest with my clients, I do caution against it a little bit. I think that sometimes it may look sexy to go move from buying and holding something10 years to doing a quick fix and flip, but the problem is that you spend all this time and energy figuring out how to buy and hold something, how to be a good landlord, or how to put the right people in the right place to do the right job at the right time, and then all of sudden you’re gonna switch over to fix and flip, which is a whole new world to live in. So I think it’s fine.
and especially if you’re gonna be in it for the long haul, but I caution against just jumping just because ooh, this looks good for right now, because also things might change. So I’ve seen it, I’ve seen the trend, ⁓ I support it if you’re gonna be bought all in for the long run.
Dylan Silver (21:06)
The fast money is slow money is what I say. The fast money is slow money. So if you have people in your network who are buying and holding and they’re doing well in that, I don’t know if now’s the time to jump into fix and flip. It might be one of the more challenging times in Texas real estate to do that when D.R. Horton and Lenar have homes for darn near $230,000, $40,000 brand new. It might be smaller, but that’s what your flip is going up against.Keaton Frieberg (21:20)
youDylan Silver (21:35)
I want to pivot here, Keaton, and ask you some granular questions, if I may, about ⁓ some of the ways that single family flippers and buy and hold investors are acquiring and have traditionally acquired distressed property in Texas. ⁓ Maybe give away some of the gold, but not all of the gold. I’d love to get your feedback on this. I have experience, know, ⁓ foreclosure auctions, probate lists.⁓ Divorce, death in the family. I’ve just gone up and knocked on homes. There’s a strategy of if it’s high days on market, I’m gonna make an offer there. Have you had, or have your investors had any particular success in one of these avenues? Or do you really think it’s dependent maybe on the person and their appetite for that specific lead strategy?
Keaton Frieberg (22:23)
You know, I have a real interesting one that I, I this, you know, first came across my desk maybe three, four years ago, but it’s, ⁓ buying HOA foreclosures. So here in Texas, the HOA has the right to, under certain conditions to foreclose on a, on a property if a, ⁓ if a homeowner isn’t paying their dues. Now, usually it has to get to a certain amount before that happens, but it makes it, sometimes these properties can make their way to the courthouse steps and be auctioned off for 20.$30,000, I’ve seen one be auctioned off for $7,000. Now, you have to keep in mind that you’re taking subject to the pre-existing and senior mortgage. So if there’s a senior lien up there that’s for 100 grand, you are gonna be stepping into the shoes of the previous owner and you gotta fulfill that obligation, But you can get in super duper cheap and ⁓ there’s some strategies to that method, which has been super interesting to see.
Dylan Silver (23:21)
heard this before and it carries more weight coming from you, I can’t wrap my head around it. So are these people current with their mortgage but not paying their HOA fees?Keaton Frieberg (23:30)
Sometimes, sometimes they are, sometimes they aren’t. They could be current on their mortgage. Usually they’re not. Usually it’s both, but the HOA forecloses prior or before the senior lien ⁓ holder forecloses.Dylan Silver (23:42)
I was gonna say, I know some people don’t love their HOA, right? But imagine just being so petty, or like, I don’t care if I lose my home, but I’m not paying the HOA. We’re gonna move. I almost respect that.Keaton Frieberg (23:53)
It’s crazy. And there’s some circumstances where somebody dies and then all of a sudden they’re not paying their dues and then it gets racks up. The estate hasn’t come in to clean anything up yet. And so there are some other circumstances that arise, but that to me has been super duper interesting.Dylan Silver (23:59)
Yeah.You know, and it’s interesting when we’re talking about HOA because, you know, I’m right now in Northern New Jersey visiting my parents. There’s not HOAs all around the tri-state area, but it seems like practically every new subdivision in Texas and even the established ones are in HOAs. I, as a realtor, I like the idea of HOAs because it holds property values, but then also on the flip side, you know, people can be foreclosed for HOAs.
it does, you know, I guess, lend some degree of risk if you’re you’re entering an HOA. That’s another way you could get foreclosed on.
Keaton Frieberg (24:47)
Yeah, it’s crazy. Like I said, when I first found out about it, when I had somebody come to me and say, hey, look, this is what we just did. I was like, what do mean you just bought somebody’s house for $10,000 because of an HOA violent, or because of HOA dues. I thought it was insane. But yeah, I know you’re absolutely right.Dylan Silver (25:02)
Now, I’m familiar with like Super Tuesday, the first Tuesday of every month, County Courthouse steps. I’ve been to that foreclosure ⁓ auction in San Antonio, downtown San Antonio. ⁓ Is that where they’re foreclosing for the HOA as well?Keaton Frieberg (25:10)
youSame place, same time.
Dylan Silver (25:20)
Will they announce it? If this is an HOA foreclosure, you have to know.Keaton Frieberg (25:25)
Yeah, sometimes the trustee is gonna, when they read off their script, they’re usually saying the instrument by which they’re foreclosing on or how they got to be able to foreclose on a particular property. So yeah, you should know. if you go by the auction script, the auction lists of all the properties that are being foreclosed on, it usually tells you and it’ll tell you that this property is being foreclosed on by the HOA andDylan Silver (25:41)
Yeah, the ROTI report, yeah.Keaton Frieberg (25:48)
here’s the senior lien that’s in the amount of whatever it is.Dylan Silver (25:52)
Now, there’s some people who love to buy at the auction. There’s some people who don’t love to buy at the auction. There’s folks who like to buy off market and on market. When you’re looking at, well, where do I put my time and attention to? You’ve got the HOA, that seems to be something that’s working for you. What advice would you give to folks who may be just starting out and may be overwhelmed? Hey, where do I start? I don’t necessarily, they might not have the…the money to start buying HOA foreclosures if they’re competing with some other folks, but maybe they do. Where would be your advice as a starting block for a newer investor?
Keaton Frieberg (26:29)
My very first property that I bought was an on market property. was in New Braunfels, right in between San Antonio and Austin. It was a duplex. I was on Zillow. I messaged the realtor and ⁓ I said, hey, I’d like to see this property. He’s like, ⁓ that actually got taken down a little while ago, but I have this one over here. If you want to come check it out, I went and checked it out. I did my numbers. ran the, you know, what I thought rent was going to be, how much the mortgage was going to be, whatever. Andended up purchasing that property and it’s been the best investment that I’ve ever had. mean, it’s cash flows and bonds. No, and that was the best and it was on Zillow.
Dylan Silver (27:03)
You’re kidding me.Hey, that’s a testimony for everyone who’s listening to this and says, don’t make on market offers. Here we have a story of how this works out from time to time. Keaton, we are coming up on time here though. Where can folks go if maybe they’re interested in reaching out to you? Maybe they have a deal that they would like to bring your way or maybe they have a legal situation and eviction and would like a consult. How can folks reach out to you or your team?
Keaton Frieberg (27:13)
Yeah.Yeah.
Sure, yeah, they can go to our website, www.txsuits.com, or they can email me, Keaton, K-E-A-T-O-N, @ txsuits.com, and our phone number is 210-503-2800.
Dylan Silver (27:53)
Keaton,thank you so much for coming on the show today.
Keaton Frieberg (27:56)
Thanks for having me. -
