JF2730: Increase Your Community Impact with Multifamily Using These 3 Steps ft. Marcus Long

After spending 15 years focused on single-family properties, Marcus Long took the leap to enter multifamily as a passive investor. Fast forward, and he now is General Partner of 183 units and Limited Partner of 215 units. In this episode, Marcus shares the challenges he faced when transitioning from single-family to multifamily and how he achieved his success.

Marcus Long | Real Estate Background

  • Founder of Long Legacy Capital. He primarily focuses on 100+ unit Class B/C value-add properties with project scopes that allow for cash flow to commence in the first year and currently plan for 3-7 year hold periods.
  • Portfolio:
    • GP of 100-unit in Pryor, OK; 75-unit in College Station, TX; and an 8-unit (short term rental conversion) in Arlington, TX.
    • LP of 24-unit mobile home park in Canon City, CO; 103-unit in Mobile, AL; and 88-unit in Tulsa, OK.
  • Based in: Cheltenham, England
  • Say hi to him at: www.alonglegacy.com | Instagram: @alonglegacyrei
  • Best Ever Book: The Hands-Off Investor by Brian Burke

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TRANSCRIPTION

Slocomb Reed: Best Ever listeners, welcome to The Best Real Estate Investing Advice Ever Show. I’m Slocomb Reed. This is the world’s longest-running daily real estate investing podcast. Today we have Marcus Long with us. How are you doing, Marcus?

Marcus Long: I’m doing great. How are you, Slocomb?

Slocomb Reed: I’m great. Marcus is the founder of A Long Legacy REI. He primarily focuses on class B and C value-add properties with 100 plus units, with project scopes that allow for cash flow to commence in the first year, and currently plans for three to seven-year hold periods. He’s currently the GP of a 100-unit in Pryor, Oklahoma, he also has a 75-unit in College Station, Texas, and an eight-unit short-term rental conversion in Arlington, Texas. He’s an LP as well on a 24-unit mobile home park in Canon City, Colorado, a 103-unit and Mobile, Alabama, and an 88-unit in Tulsa, Oklahoma. He has been living for the last two and a half years in Cheltenham, England. Marcus, tell us how you got into commercial real estate.

Marcus Long: I got into real estate 17 years ago, more on the single-family side. I’m active-duty Navy, and I’m towards the end of my career now, but through my career, I picked up a number of single-family units. It wasn’t actually until after I moved to England about two and a half years ago, as you mentioned, that I started joining the mastermind for active duty and veterans, and I started getting exposed to some different strategies, particularly multifamily and syndications. At that point in time, I ended up investing. I had sold a single-family house in Colorado when we left. I had a little bit of cash available to invest, so I decided to invest as an LP to get exposed to the strategy a little bit more.

I invested with other active-duty guys that I met through the mastermind, because I had close access to them, I could ask questions, follow the deals, things like that. From there, I decided to transition into the GP side of commercial real estate. Towards the end of my career, I’m getting ready to transition out here later this year. Looking at it, it gave my family a lot of flexibility, geographically and timewise, and I enjoyed the impact that I can have, both for the residents as well as our passive investors and stuff. It looked like something that I really enjoyed doing and wanted to transition into as I left the military.

Slocomb Reed: Yeah. You transitioned to being a GP while your active-duty military; the ability to move around the world while still investing is super-valuable. It sounds like you’re going to value that when you leave the Navy here soon, when you retire from the Navy. Within your general partnerships, what do you specialize in?

Marcus Long: I think I bring some skills in some different areas. Because of my background in single-family, while it is different than multifamily – I’ve had a number of, like I said, single-family for 15 years, so I understand some of the property management aspects, which translates into being able to manage the assets. I’m also a finance major; while they don’t teach the real estate aspect in school, I spent quite a bit of time looking at spreadsheets, things of that nature as well. So I think as I joined in with the GP teams — some of the original ones, I wasn’t necessarily the primary underwriter, some of my partners maybe found the deal and underwrote it initially… But I think I brought quite a bit of value there, being able to look at the underwriting, poke holes or ask some tough questions to see if we can make some improvements on that.

I really enjoy also looking at it from an asset management perspective. I think that I really enjoy the impact we can have and be very intentional about how we can improve the residents’ lives. When we look at our underwriting, the things that we are doing, the CapEx, and stuff – are we doing them just to do them or does it improve their lives, and what is the ROI to improve the return for our investors as well?

And finally, the capital raising aspect – I actually really enjoy that as well, because I have a passion for education and helping others. I think that capital raising, some of that comes naturally. You spend time talking to people, educating them on different opportunities, because, as I said, they don’t teach this stuff in school. Even getting my finance degree, it’s very Wall-Street-esque; you don’t hear about the real estate portions of it. So I think spending time educating people and informing them of the opportunities that are available, like providing that opportunity to them to raise capital for these deals, comes naturally as well.

Slocomb Reed: Yeah, that’s awesome and it makes sense that you can do it quite remotely. It’s interesting, too, that when you talk about capital raising, for you that is the joy you find in educating others. Speaking of capital raising, these deals in which you’re a GP, you underwrite to a three to seven-year hold. Why not just underwrite to the five-year hold every time, like everybody else?

Marcus Long: I would say that we are generally underwriting to a five-year hold, but we look at opportunities in either direction. Five years is probably similar to other people, but depending on the project and stuff, we’re looking for opportunities… In one case, one of our most recent ones, we were looking at it where if the market’s right, we might sell it three years; if not, we’ll refinance there and continue to hold it beyond that. Others, we have underwritten at five years, but if the property is performing, we wouldn’t actually mind holding on to it longer than that. So I would say that we probably do underwrite to five years, similar to other people, but we just like to have that buffer and not lock ourselves into one timeframe.

Slocomb Reed: Gotcha. Marcus, what’s been your biggest learning curve so far as a commercial real estate investor? What I’m really asking is, what’s your biggest screw-up and how did you fix it afterward? What’s been the toughest part of this so far?

Marcus Long: I don’t know that we’ve massively screwed stuff up, but I think that based on your question, the learning curve from 15 years of single-family – I did a lot of that in a small community close to my hometown, where I knew the banker personally, I knew the insurance agent personally, I knew the real estate agents personally; I knew a lot of them. It was a lot easier to talk — I shouldn’t say it’s a lot easier to talk to them, but I knew them and it was easier to coordinate those transactions.

So I think moving into the commercial real estate space, there’s a lot more at play there. With the SEC attorney. The insurance is very different on a larger property, or working with a broker; there are a lot more things going on. You are taking large sums of money from your investors, and they’ve entrusted you to do that. So I think that that has been one of the biggest transitions there, is — I don’t know if complexity is the right word, because once you’ve learned, you’ve gone through your experience, it’s not necessarily complex. But there are a lot more moving pieces than there are in single-family, and a lot more like legalities that you’re working through taking other people’s investment.

Slocomb Reed: Gotcha. So this is way more complex… Why not just stick with the single families, why not just end up with 150 of them?

Marcus Long: I think that, for me, there were a couple of things. As I got in and was exposed to the strategy, just the scale, the economies of scale, and the ability to get the same returns or better returns, in many cases, with a lot less transactions. Because with single-family, you’re going to do that multiple times to do that.

The other thing for me — this isn’t to say that you can’t have a massive impact in the single-family space. Obviously, those residents and stuff need a place to live in as well; but for me, part of it also was the impact perspective. As I mentioned before, with these communities, the things that we do, whether it’s simple as putting washers, dryers in a unit, barbecue grills, and park benches, or things that we can do to make residents lives better or build a community around that complex – I find fulfillment in that.

Also, I mentioned the ability to provide our passive investors an opportunity. A lot of people don’t realize, and I think, “Hey, these are wealthy people that own all these apartment complexes.” And it doesn’t have to be massively wealthy people; it can be my family, my friends, or others just like me, and you to do that. I think that’s a pretty powerful thing, to provide that opportunity.

Slocomb Reed: Marcus, you’re an LP on a 24-unit mobile home park in Canon City, Colorado. I’ve never heard of Canon City; is it close to a major metro area?

Marcus Long: It’s kind of Southwest of the Colorado Springs area.

Slocomb Reed: Kind of Southwest of the Colorado Springs area. Let’s play a game. I’m going to make a broad assumption that I want you to respond to; and I’m not going to be offended, no matter what you say. I’m going to be a little reactionary, because that’s the way that I think most people are going to hear this. So here we go. Marcus… There’s no way to syndicate a 24-unit mobile home park in Canon City, Colorado. There’s absolutely no possibility for scale and there can’t be enough room in it to bring in limited partners. That’s just not going to work. Please respond.

Marcus Long: Admittedly, it was one of my first investments. I knew the syndicators pretty well, so that didn’t even come across my mind whenever I was investing in it myself. I think they did it simultaneously with another property next to it. There’s not a lot of [unintelligible [00:12:43].08] on the deal.

Slocomb Reed: Are you in on that property next to it as well? Or were you?

Marcus Long: I am not. No, it was separate from this; they were just buying it altogether. But this particular property – it’s a low number of LPs. I think the rehab they have done is pretty significant to the properties, and the rents are significantly higher than even…

Slocomb Reed: Oh, do you guys own the mobile homes themselves, or just the land?

Marcus Long: They do own the mobile homes, yes.

Slocomb Reed: Okay, gotcha. I heard 24-unit mobile home park, and the reason I’m being so terse, Marcus, is because my expectation is that most people in our space who hear this are thinking the same thing that I am. I want you to have the opportunity to respond to that. So the first thing is the real value-add in this is that you were also buying the mobile homes.

Well, you were an LP, so I’m asking you about your opportunity to invest capital in this, and what you saw and what you’re seeing. But we’re talking about 24 mobile homes, as well as the land, and you said there was some serious value-add potential here. So what kinds of returns are you seeing here? Is this another five-year hold? Are you expecting to sell this after a turnaround period?

Marcus Long: Yeah, it was a similar five-year hold type of thing to sell. And from the returns perspective, I don’t really know that yet, because in all honesty, we didn’t get distributions for a significant period of time, because of the amount of rehab that they were doing to the project. We just recently got our first distribution. And it was communicated that that distribution would be delayed. As we all know, there are different types of deals; sometimes that distribution comes six months in, sometimes it’s going to become 12 to 15 months in, depending on the type of deal. So that was communicated…

Pretty much, we had all of the units, and when you see the pictures — we showed pictures sometimes on social media, and people are like, “That’s not actually a mobile home.” We’re like, “Yeah, it actually is.” They did a really nice job, they’ve done a great job with the rehabs. It’s taken a while to start getting that income coming back in from the increased rents after the rehabs. I think the total value of the property at the sale will be pretty nice.

Break: [00:14:53][00:16:49]

Slocomb Reed: I know you’re an LP so figuring all of this out is not your responsibility. But I’m wondering, who is the end buyer for this property? Are they planning to package it with the property next door, to find someone who’s buying larger-scale properties?

Marcus Long: I honestly don’t know. I know they bought that at the same time together. Whether they package it to sell together at the end, I’m not sure if that’s the GPs intention at this time or not.

Slocomb Reed: Gotcha. Do you know the average rent for those mobile homes?

Marcus Long: I did look at them recently. I asked for some of the financial details when I was filling out some of my real estate owned for some of my own acquisitions. I don’t know the average off the top of my head, I know that many of them are up over $1,000 now for the rents.

Slocomb Reed: Okay. A couple of things, Marcus… It sounds like you’ve got yourself in a great situation as an LP, if you’re not having to ask for the financials and you’re not needing to have all of these details in order for the GPs to perform, number one. Number two, I should have asked you to lead with the rents because you’re getting $1,000 a month for mobile homes. This 24-unit is then producing over 24k a month in gross revenue when fully occupied. That sounds like a much more scalable deal now, and that’s not what people think of when they hear syndicated mobile home park. That sounds like a cool opportunity. Marcus, your company name is A Long Legacy REI. What brought you to choose that name?

Marcus Long: A couple of years ago, I mentioned joining the mastermind for active duty and veterans and started getting into the multifamily space. When I started, some of the guys were challenging us to start a platform, start putting ourselves out there and things. I started thinking about what if there was a podcast, and what it’d say, things of that nature. I started putting my head around it and I wanted it to mean something. At the time, I didn’t know that I was going to go as a GP in multifamily and what direction exactly I was going to be going, so I wanted the name to be deeper than just real estate itself or whatever. So I was just thinking about that, and why was I doing real estate, why was investing in real estate, whether it’s single-family, commercial real estate, or anything else. It went to the impact that I mentioned, that I enjoy providing for the residents, the impact that now I’m able to provide for investors.

Real estate provides me the flexibility geographically and timewise to be more present with my family than many of my years in the military… Just all of that kind of stuff. I was thinking about the legacy. I have a seven-year-old daughter and a four-year-old son, and I started thinking about the legacy that I wanted to provide, the example that I provided them. I don’t know, I came up with a couple of other names I had in my mind, and one day that popped into my mind, and I was like “That’s it.” It was a spin on my name, as well as the legacy aspect. Once it came to me, it made sense and I never questioned it.

Slocomb Reed: Yeah, absolutely. I have a two-and-a-half-year-old daughter. One of the phrases I learned early on in my career that I stick to is digging your well before you’re thirsty. I know a seven-year-old, a four-year-old, and a two-and-a-half-year-old can’t comprehend how much you and I are doing for them and for their future, but I know our kids are going to be grateful, for sure. And especially for the trajectory that you are creating for your family and for the families of the people who have the opportunity to invest with you.

Marcus Long: 100%, I’m just going to agree with you there. As I go through this and as my children get older, I want to show them everything I’m doing. Whether they go into real estate or do something else, that doesn’t matter. I just want them to see the skills or the reasons behind the things that I do. They can take those lessons and place them wherever they choose to do so. But again, even beyond our own families, the ability to impact and for those that invest with us, for them to create their own legacies as well. Maybe they love their W2, maybe they’re happily retired, whatever it is, maybe they don’t want to dive deep into real estate and do it on their own. For us to provide them that opportunity for them to go in the direction that they want to and build their own legacies I think is really impactful as well.

Slocomb Reed: Yeah, especially with our industry being so focused on commercial real estate syndicates and bringing in passive investors, it’s really easy to hone in on the numbers, how deals spreadsheet. At the end of the day, at least the most important thing to me, and it sounds like the most important thing to you, Marcus, is the impact that this is having on our lives, on our family’s lives and on the families of the people who go into business with us.

That being said, I have one last question about numbers, before we dive into the last segment of this interview, Marcus. You got into single-family rentals around 2005, before the recession; I don’t know how long you were buying SFRs yet, but do you still own any of them?

Marcus Long: I own all but one of them. We just sold one a few months ago, it’s the first one. Other than a personal residence I’d sold a couple of years ago of the rentals, the first one I ever sold was about three months ago.

Slocomb Reed: How many of them do you have?

Marcus Long: About 12.

Slocomb Reed: So you have 12 single-family rentals, while also GP-ing and LP-ing hundreds of units. How do you compare the financial returns of holding those single-family rentals over the long haul? Frankly, the amazing appreciation that we’ve seen – let’s not just talk about the last two years, but since the recession, we’ve seen not just a steady climb in property values, we’ve seen a steady climb in appreciation; appreciation has accelerated for a long time now. How do you compare the growth that you’re seeing with your single-family rentals to the returns that you’re getting with your apartments?

Marcus Long: To be fair, most of those single-family rentals were probably purchased later on, probably four or five in the first 10-year period or so, and the rest after that. Also, many of them – not all, but many of them are in a fairly rural area of Missouri, close to my hometown. I have a couple in Kansas City, things like that. Many of them are in a rural area; so there’s a big demand for rentals, there is a big demand for houses in general based on the population, but it’s not a market that sees quite the appreciation in stuff that you might see in some larger metro areas.

Slocomb Reed: Sure. But these are still assets that you’ve decided to hold longer-term. So why hold those? How does that compare to the investing you’re doing now?

Marcus Long: I would say we’re in the process of starting to offload some of those now. That’s why we sold the one in the fall. I think that I don’t have any regrets about the path that we took, some of those, between the slight appreciation, the rental income, the debt paydown; we cross-collateralized a few times, taking some of the equity in one property to buy another. Early on, it allowed us to scale to a limit and to get a number of assets there. But because of the market, of where it is, there’s not a lot of professional property management, we’ve managed some of those assets ourselves. So from a returns perspective, the amount of work and effort we had to put in to get those – it is not as great of a return on investment as I’m seeing in the multifamily space.

Some of those properties I partner with my brothers, and stuff. Part of our goal was to provide some of the family with some passive income and stuff. They all have W-2’s, so it became more work than we initially anticipated. So we kind of transitioned and are starting to sell off some of those single-family homes and turning that into an LP investment in some of my multifamily deals, to make it more passive for them as well.

Slocomb Reed: That makes more sense now, especially since you had other family members involved. You’re in England, but you had invested with other members of the family, people who are local, and that complicates just making the decision to sell and get all your money into apartments. Gotcha. Marcus, are you ready for the Best Ever lightning round?

Marcus Long: Let’s do it.

Slocomb Reed: Great. What is your Best Ever way to give back?

Marcus Long: That’s really challenging to narrow down into one, because as I mentioned a couple of times, I think we have the opportunity to give back every day in commercial real estate, how we look to intentionally impact the residents, how we’re able to give back to our investors. I get a lot of fulfillment from that, so I think those are big. As I mentioned before, I’m pretty passionate about education, personal finance, and things like that. This stuff isn’t taught in schools, and I see a lot of people get to later in life before they realize these other opportunities, other than just like [unintelligible [00:25:34].08] money into their 401K, or stocks; that’s all they’re ever taught. So I like to get back just by being there for people and providing my experiences and education and stuff. I make myself pretty available to have conversations with people, and particularly, I really enjoy connecting with younger individuals, hopefully so that they have an opportunity to implement some of this stuff earlier on in their life, to make a bigger impact.

Slocomb Reed: Nice. What’s the Best Ever book you recently read?

Marcus Long: I recently read The Hands-Off Investor by Brian Burke. I thought it was pretty phenomenal, both from a perspective — I think it’s a great book, it’s pretty thorough for limited partners, but I also think it’s a great book for general partner sponsors and operators to read as well, particularly if you’re newer, to understand what your limited partners should be asking or expecting, or if you want to be working with one advisor, maybe you only know one way to do things. It opens your eyes to some other options.

Slocomb Reed: Marcus, what is your Best Ever advice?

Marcus Long: I heard the quote, “Be the change you wish to see in the world.” I think that would be my advice. Whether it’s in business, whether it’s in our community, whether it’s in our family; it’s very easy for us to point fingers, it’s easy for us to complain about things that aren’t right. I think it takes a lot more courage to do something about it with action. That’s one of my best pieces of advice.

Slocomb Reed: Awesome. Marcus, where can people get in touch with you?

Marcus Long: The best place is alonglegacy.com. It’s kind of a one-stop-shop, you can send me an email, set the time to talk, all my social media stuff is right there, alonglegacy.com.

Slocomb Reed: Best Ever listeners, thanks for tuning in. If you enjoyed this interview, please follow and subscribe to our podcast, leave us a five-star review and share this interview with someone who could benefit from what Marcus has had to say to us today. Thank you and have a Best Ever day.

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JF1894: World Traveler, Entrepreneur, & Real Estate Investor Discusses International Investing with Elena Maurel

Elena owns property in many different countries and is involved in even more deals. She answers a few questions that someone who is thinking about investing would ask, like what’s the most investor friendly country to invest in? Which country is least investor friendly? Those questions and more will be discussed. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

Best Ever Tweet:

“It’s better to diversify your portfolio” – Elena Maurel

 

Elena Maurel Real Estate Background:

  • Active real estate investor, entrepreneur, and consultant
  • She has been involved in over 1,000 real estate transactions totaling more than $100 million
  • Based in London, England
  • Say hi to her at https://elenamaurel.com/
  • Best Ever Book: Atomic Habits

 


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Our fourth annual conference will be taking place February 20-22 in Keystone, CO. We’ll be covering the higher level topics that our audience has requested to hear.


 

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JF1769: London Investor Shares How To Scale Two Real Estate Businesses Totaling €100 Million with Nicole Bremner

Nicole has built two successful real estate companies, and is on the show today to tell us how she did it. She’s currently working on a wide range of projects, from €200,000 to €5,000,000 projects, which are both being sold as of this recording. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

Best Ever Tweet:

“It was quite easy to take that money and invest in a gentrifying area and make money” – Nicole Bremner

 

Nicole Bremner Real Estate Background:

  • Founder of two real estate companies based in London
  • Develops and invests in real estate, has close to 100 units both residential and commercial, valued at close to €100 Million
  • Based in London, Greater London, UK
  • Say hi to her at http://www.east-eight.com/
  • Best Ever Book: Oversubscribed by Daniel Priestley 

 


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TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Nicole Bremner. How are you doing, Nicole?

Nicole Bremner: I’m great, thank you.

Joe Fairless: I’m glad to hear that, and looking forward to our conversation. A little bit about Nicole – she is the founder of two real estate companies based in London. She develops and invests in real estate, and has close to 100 units, both residential and commercial, valued at close to 100 million pounds. She is, as I mentioned, based in London. With that being said, Nicole, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Nicole Bremner: Sure. I started in property after being in banking, actually. I was in banking for a number of years… Most recently I was on Wall Street at Goldman Sachs, and I started on the 15th of September 2008, when everything was just collapsing, which was a really interesting day, and not a very fortuitous day to start a new contract at the bank I’d always wanted to work at.

So anyway, I then found out that I was pregnant with my second child anyway, so I left, moved back to London, and had a third child, and still was just looking at what I could do when I grew up, so to speak. I was just really struggling, banking wasn’t for me anymore, not with three young children… So yeah, I just renovated my house, really loved the experience; was still in talking terms with my builders, and it was my partner then who said “Why don’t you give property development a go?” At that time I didn’t realize that anyone could do it professionally, so I really did think it was just the housebuilders who could do that. That’s really a bit of a background.

Joe Fairless: And now you’ve got 100 million pounds’ worth of property, so there’s a lot that transpired from then to now. And just so I’m understanding, you’ve got around 100 units, residential and commercial, valued at around 100 million pounds… So with quick math, that’s basically a million dollar a unit average, right? Sorry, I shouldn’t say dollar; a million pounds a unit, right?

Nicole Bremner: Yes. Now it’s actually probably closer to 200 units in total, spread across 11 different projects. We’ve got one project with 49 units plus a commercial, so there’s 50 straight up; then we’ve got another project with 15 plus a large commercial, others with 21… So yeah, it’s a whole range of different projects.

The prices tend to range from the cheapest one-bedroom units outside of central London, that might be, say, 200k pounds, and right up to — we’re selling one beautiful apartment which is all over Nest Seekers in the U.S. at the moment, actually, and it’s on at 5.25 million. So yeah, a whole range of projects at various prices.

Joe Fairless: So let’s just start from 2009(ish) or 2010. When did you move back to London and complete the renovation of your house?

Nicole Bremner: That was 2009. I moved back, and then in 2010 I started the renovation. What was interesting though, that was a bit of a catalyst as well, is that I got back from two years in New York, living in Manhattan, and I realized that my flat that I’d left had earned more than me, even though I’d been working in banking… So I was able to sell that flat, take the money and then invest that into more property in a very up and coming area, that — I’d kind of liken it to Brooklyn; it was sort of Brooklyn before it went crazy. That’s the area of Hackney. Very cool, very trendy, lots of creatives in the area, just like Brooklyn, and lots of beautiful buildings there that had been neglected… Including my very first project, which is now my home; it was [unintelligible [00:05:55].18] so it was quite easy for me then at that point to take that money, invest in this great new area that was gentrifying, and make money on that.

Joe Fairless: But you had renovated your home, but you hadn’t – from what I can tell so far – done any ground-up development or renovations on other stuff, correct?

Nicole Bremner: No, not at that point. Apart from just putting on a lick of paint on my flat that made a lot of money, I hadn’t done anything, no. So it wasn’t until about 2011-2013, around then that I started looking more seriously at property and started doing renovations on properties in Hackney. And then finally in 2013 I did my first out-of-the-ground – or into the ground, actually – development, where we dug a lovely basement. We stripped back this beautiful house, back to three walls, no ceiling/roof, really built out that project and it became a really beautiful home that we sold to quite a well-known musician. That was my first real build experience, and that was in 2013.

Joe Fairless: How do you teach yourself how to do that, in a relatively short period of time?

Nicole Bremner: Well, I was really lucky, because I was able to joint venture with a very experienced real estate investor, who had been doing it for about 30 years… Avi and I were introduced through an architect, and one of my joint venture partners pulled out at the last minute on a property, so my architect introduced me to Avi, Avi had already done his homework on the property, so as soon as he walked into the property, he went “Yup, let’s do this.” That felt very, very quick, but anyway, it’s been a very good decision, because over the last 6-7 years now we’re either working on or have done about 12 projects together… And that’s how I learned. I learned everything from him. He really was and still is my mentor in this whole property development process.

Joe Fairless: For that first project you partnered with him on, what did he bring to the table and what did you bring to the table?

Nicole Bremner: [laughs] I brought very little. I think I brought money and that’s about it. Money and eagerness, and a huge willingness to learn. I didn’t even realize that we could get bank finance, that’s how green I was. I thought we had to use cash for everything. I thought that the only bank debt you could get was your mortgage on your home, and you’d be committing mortgage fraud if you’re trying to do any sort of development… Which is true, you can’t; but I didn’t realize that there was development finance.

One thing I did do was I ran my own building team, because my builder and I had gotten along really well; we’d done some projects together before, and I was able to bring my knowledge of running a building team, project managing to the partnership… But he obviously already had that anyway, so… Yeah, it really was just my part of the cash, and my eagerness to learn.

Joe Fairless: And now fast-forward to 12 projects later approximately, what are you doing versus what is he doing? And have you brought in any other joint venture partners to fill in any other areas?

Nicole Bremner: What we’ve done is we’ve very clearly split the tasks. Initially, I was running my own build team and so was he, but then we clearly saw that he was able to do it so much more efficiently than I could… So I parted ways with my build team. Then I started focusing on the finance raising, and the dealing with architects, and investors, and helping with the marketing of the completed projects. I still do go along to the construction meetings when I can, but mainly I leave the construction very much to him.

As far as other joint venture partners, we haven’t really worked with anyone that has additional skills to what we have. Occasionally and very frequently we work with other investors, particularly with crowdfunding. We were able to raise 6.4 million from the crowd, people with as little as 500 pounds, and being able to invest in our projects… So we’ve got — I think the latest count was 169 investors, which is a full-time job in itself, just communicating with them.

But as far as other principal partners, it’s tended just to be the two of us, and then occasionally some high net worth investors have come through more silently, as investors.

Joe Fairless: So you have chosen a path that can be incredibly rewarding financially; conversely, it can also be incredibly draining from a mental capacity standpoint, emotionally, and then also financially, if things don’t work out… So what are some things that haven’t worked out as planned, and how did you approach those challenges?

Nicole Bremner: Well, I can give you many examples, unfortunately… Right now, as I’m sure you’ve seen all over the press, we’re going through Brexit here in the U.K, and it’s just been a disaster. It really has. I don’t think there are any businesses that have benefitted from this, and even down at the local nail bar, the ladies there were saying how quiet they are… And friends who have security companies, and recruitment companies, everyone is just getting a battering right now… Because there’s just no visibility.

That came at a time when the government also announced tax reforms on landlords. That was also quite catastrophic for many landlords. Thirdly, they increased the tax for people buying more than one property.

Joe Fairless: Man…

Nicole Bremner: All these things just created this perfect storm for investment in the U.K. The government is really sending a message with the tax reforms that they want to try and professionalize the industry, and they don’t want the regular person to be able to participate in this industry anymore; they just want the big corporations.

So that’s really the headwind that we’ve been facing. With that in mind, I’ve got a number of examples. One that’s been quite public, and that I’ve been really open and transparent about, is this beautiful five-million-pound property in West London. We bought that really cheaply at the time, put a lot of money into making it just the most beautiful apartment you could find on the market, and then we had this three-pronged attack of the tax changes plus Brexit, and the whole market for luxury, prime property in London just evaporated overnight. So now we’re left with this stunningly beautiful apartment that we’ve had to short let unfortunately, which takes the shine off something new… And we’re getting, luckily and finally, after 15 months on the market, we’re getting some low, cheeky offers… Which are fine; I welcome cheeky offers, they’re offers all the same… But we’re getting offers that are even lower than the money we’ve spent on that property, which is a really bitter pill to swallow… But sometimes you’ve just gotta cut and run, don’t you…? So we’re trying to work out what to do with that.

Joe Fairless: So is the thought process, “Hey, there might be some change in the headwinds, or change in the direction of the way the wind’s blowing, so let’s hold on to it”, or is it, like you said, “Cut it, and let’s move on”?

Nicole Bremner: It depends which of us you ask on which day… [laughter] [unintelligible [00:13:11].19] headache it’s causing… So today I’m feeling quite positive; it’s got short-term lets booked right out until August on the property if we want them… So my current thinking is that we’ll hold it. The rental income covers the interest cost on that, and I really just don’t believe we should sell it for less than we’ve put into it… So we’ll hold it for Brexit to settle down. Because all these things – look at the tech bubble, and the world financial crisis of 2008… Everyone forgets, people move on, house prices recover. Everything goes back to normal. If you look at long-term charts, these are short-term blips. So my current thinking is that we hold it, weather the storm, and wait until things turn. Then we’ll get five million or six million for it, so… That’s my current thinking. But ask me tomorrow and I might have changed my mind and decided to “Let’s just take anything for it!”

Joe Fairless: Yeah, fair enough. Therein lies the challenge of any developer… And perhaps you can challenge me on this, because first off, I’ve never developed anything, so there’s that; I don’t have experience with what I’m about to say, so I’m coming in from just an academic standpoint. My theory is when you do a development, it’s not cash-flowing, therefore you have a lot of cost upfront, and if things change when you eventually have it developed and it’s stabilized, then there could be some trouble from a financial standpoint… And then conversely, if things change positively, then even better. Or if they do what you think they will do, then great, you accomplish what you were set out to accomplish. So my question is “How as a developer could this challenge, this five-million-pound property in West London, how do you attempt to mitigate the risk from that happening again on future deals? The development risk – how do you approach that for future deals?”

Nicole Bremner: Yeah, that really is the million dollar question, and you’re absolutely. That is when most developers come unstuck, and the number of developers who unfortunately go under is very high, and the reason is simply cashflow. As you pointed out, these developments are really cash-hungry, and if you don’t have the cash to put into them… Us property developers by nature are all glass half full; we share a lot of traits with gamblers even, we really do. We set up this base case, mid case, best-case scenario, and no one ever believes that we’re gonna hit the base case, ever. They always think we’re gonna hit the mid and above. And yet, when we do hit that, we’re just completely under-prepared for that.

So I think that the only way to mitigate against these occurrences is by holding much more cash than you thought you needed, and even double that again.

So just to tell you, some developers are doing really well right now. I had the fortunate opportunity to interview Tony Pidgley, who’s the chair and founder of the Berkeley Homes Group here in the U.K. The largest housebuilder in the U.K. They’re having a great time right now, because they have been hoarding cash over the last decade, because they could see that properties were getting expensive, so they were going against the grain, holding on to cash. Right now they’re sitting on huge amounts of cash, and they’re not at the beck and call of lenders; they’re able to just to go out and buy, and landowners are wanting to buy not just because of their name, but because it’s just an easy transaction. There’s no waiting for banks to come through, and things like that.

So yeah, if you’ve got cash, cash is king, and you’re going to win every time… But property developers are always chasing that next deal, and it takes a lot of discipline to hold back the cash that’s needed, and I’m guilty of that.

Joe Fairless: Let’s talk about a success story. What’s a project that you’re really proud of?

Nicole Bremner: I think the project that I’m most proud of hasn’t quite finished yet… But we bought this beautiful rooftop development around City Road, which is sort of a tech hub of London… And we bought it off — I’m not sure if you’re familiar with Simon Cowell, the judge of X Factor, but we bought it off his brother, Nick Cowell; he’s a pretty lovely guy, who’d owned an estate agency here in London… And they were selling it with planning permission just for two flats, on to of this really beautiful building.

My business partner Avi could see that there was quite a big gap between the ceiling of the top floor and the roof of this building. We got an engineer up there and worked out that we could probably get another floor on this building without increasing the visibility of that additional floor from the street view, which is what the planning department are worried about.

Sure enough, our architect did this beautiful scheme, went back to planning, but unfortunately the planners didn’t even look at the scheme and just rejected it. So fast-forward two years later, we’ve finally won on appeal, so we over-doubled what we had previously bought, and now we’re building it out… But my goodness, it’s being a challenge. Sometimes you feel  like you’ve got obstacles at every turn… But with this particular project, it’s just beautiful. The computer-generated images that we’ve got currently are just really lovely.

Every time I walk through this site I just get this beautiful feeling. The views are lovely, and the feel of the project is beautiful. I just can’t wait for it to be finished, and stand in these lovely apartments, looking out over London… And hopefully, if things go to plan, one of them will be my homes, so…

Joe Fairless: Oh, nice.

Nicole Bremner: …I’m very excited about that.

Joe Fairless: What is your best real estate investing advice ever?

Nicole Bremner: Best advice is cashflow, and it comes back to what I’ve said before – develop the discipline to understand that this is not about short-term gain; this is about building a long-term legacy… And if you can have the discipline and develop that discipline to hold back cash and know when to say no, your career is going to last your life’s time, rather than just be for the next couple of years.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Nicole Bremner: Sure, let’s do it.

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [00:19:25].12] to [00:20:07].11]

Joe Fairless: Okay Nicole, best ever book you’ve recently read?

Nicole Bremner: Oversubscribed (I think that’s the name) by Daniel Priestley… But pretty much anything by Daniel Priestley.

Joe Fairless: Okay. You are introducing a new author to my world, so thanks for that. Best ever deal you’ve done, that you haven’t talked about already?

Nicole Bremner: Englefield Road, in Islington, Central London.

Joe Fairless: How come?

Nicole Bremner: We did it at the height of the market; we bought low, renovated beautifully, on-time, and sold within a couple of months at a peak, just before the market bottomed out… And also, it was just a stunningly beautiful development. This is the one that was bought by quite a famous musician. He’s a lovely guy as well, and has invited me around a couple of times to see what he’s done to the place, and see all his musical instruments. That was a great deal.

Joe Fairless: Best ever way you like to give back to the community?

Nicole Bremner: I sit on the board of two charities. One is for [unintelligible [00:20:55].19] which sounds very weird, but a cause close to my heart… And the other is for cancers of the neck and throat, which again, is something that’s very close to me, having experience in that area. I sit on these boards, and I’m really excited to give back in that way as well, and any other way I can through mentoring or advice on investments.

Joe Fairless: How can the Best Ever listeners learn more about what you’ve got going on?

Nicole Bremner: I’m prolific on all social media – Instagram, Twitter, LinkedIn, Facebook… Or you can go to my website, NicoleBremner.com.

Joe Fairless: Nicole, thank you for being on the show, sharing the successes as well as the lessons learned from being a developer, and how you got into it, how you initially structured the deals with your partner, and how roles have evolved and how you two have settled into what your strengths are, in your areas of focus.

Thanks again for being on the show. I hope you have a best ever day, and we’ll talk to you again soon.

 

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Best Ever Show Real Estate Advice

JF263: She Went From Homeless to Having a Multi-Million Dollar Portfolio in TWELVE MONTHS. How’d She Do It?!?

She has an incredibly inspirational story, but that’s not all! Today’s Best Ever guest shares with us her rocky road to success, how important relationships are and some impractical ways to generate leads you may not have heard of before. You’ll go from eating Ramen Noodles to eating caviar if you listen to her story and take some action!

Best Ever Tweet:

More than anything else, our mindset controls our situation.

Kemi Egan’s real estate background:

–          Author of international bestseller The Power of Real Estate Investing based in London, England

–          Host of Turbo Charge Your Success podcast

–          Co-founder of Freedom Academies and Freedom Investment

–          Went from homeless to having a multi-million dollar real estate portfolio in just 12 months

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