WS1380: Skills and Systems for Scaling | Brett Bowman

EPISODE 1380

[INTRODUCTION]

Brett Bowman (BB): At the end of the day, people are only part of the equation. Having systems and tools in place that really help you is key.

Whitney Sewell (WS): We all want to scale fast, to say the least, right? We’re all wondering how to do that. You see, somebody else has done it. You just asked him, “How did you scale so fast?” I hear it all the time, personally. Well, our guest today has also done just that. And he did 1,000 units while working a day job as well, that’s not very common. But, I tell you what some skills that he has, that he’s going to share with us today are around systems and scaling and the technology that he uses. 

He’s a tech guy, but he’s gonna share some of those systems in the tech that he’s used to scaling that’s helped him even some meeting, agenda type things that are so helpful when you’re getting started. That’s something that seems so hard to figure out at times. But, man, when somebody’s already been there and done that they can just share, hey, this is what works for us. It was gonna save you so much time moving forward. 

But our guest today, Brett Bowman, he’s the cofounder of Suncrest Capital, a vertically integrated operator of 20 mobile home communities, with over 1,000 units under management, with background and high tech and corporate finance, he enjoys using technology and financial analysis to create dramatic scale. And, he’s done just that. He’s going to share some great tips with you on how he’s done it today on The Real Estate Syndication Show. 

[INTERVIEW]

WS: Brett, welcome to the show, man. Everybody is asking me, man, how do you scale fast? Everybody wants to get there as fast as possible. Right? And you seem to have figured some of that out. I mean, you have moved fast. No doubt it. It didn’t happen without a lot of work and possible a lot of pain points that that have steered you one direction or the other. But I’m looking forward to getting into that today. 

Brett, give the listeners a little more about who you are. Maybe your focus in real estate and let’s dive in.

BB: For sure. Thanks Whitney, it’s fun to be on your show. I appreciate it. Yeah, and absolutely, you know, it’s still figuring out some of that scale. But we’ve learned a ton as we’ve gone. So quick background on me, I’ve got a background in corporate finance. And I’ve worked in tech for the last decade or so. And so, really, for me, I really am very passionate about building systems and operations that scale and making sure that we’re being as efficient with our time as possible. 

So I got into real estate investing a few years back, but particularly we started syndicating about three or four years ago. And the way I got into it was I started as a limited partner, and then kind of stepped in with one of the sponsors I had been an investor with, I asked, “Hey, can I come on your team and just kind of mentee and learn a little bit with you?” And what I did was I offered up my skills of underwriting and acquisitions, having, you know, again, coming from that corporate finance background, that’s kind of a rarity in this space, and people that are fine with underwriting. 

So I did that with one sponsor, and ended up branching out with two others. So I had three sponsors at the same time that I was kind of just underwriting for and learning. And I got to know a lot about the syndication process and various asset classes, including multifamily and industrial and retail. And then my business partner and I, we actually live in the same neighborhood kind of serendipitously were introduced to each other. And he had already been investing in mobile home parks, just him and his wife. So he and I bought one together. 

And then after that, I said, “Hey, this is a pretty cool business model with mobile home communities. And I know syndication, how about we merge the two together and make this work.” And so here, we’re a couple years later, and that’s been working out really well for us. 

WS: Nice. That’s interesting. I mean, it’s great. Your background, I always love highlighting how somebody gets started and you know, really goes through some, I think the willingness right to step out, you talk to other sponsors, use your skill set, which they needed, right, and was offered to work for them. I think you said you started underwriting for three other sponsors. No doubt you learned a lot, right? I mean, from those sponsors, you were willing to go out there and do that. Were those paid positions? Or were you doing that for free? Or what did that look like? 

BB: I didn’t get any salary from any of those, most of those were volunteers, but from two of the sponsors, I got some small, like general partnership shares as kind of compensation for my time in there, which was good, but honestly, I wish I would have done it for free, just. But learning is massive in this business and being able to learn from various people, everybody does a little bit differently. So being able to learn was crucial for me. 

WS: Yeah, I love just highlighting that because most are not willing to do just that. Right? I mean, just step out and say, hey, I’ll work for free. If you’ll just let me help you. And you give me some feedback and give me some education. Right? And so everybody thinks, oh, no, my time is so valuable. Well, really, it’s not a write to that operator, because they’re having to invest in you. You know, you worked hard, though you provided value to them. And thankfully, as you said, a couple of them did add you to some deals or however y’all figured that out. But either way, you did get some compensation too. But I think even more importantly you learn skills that man have is going to help you the rest of your career, right? No doubt that was so worth being able to do that. All right. So you love systems, you love operations, and I as well. I love those things, but would you say you know you’re more integrator than a visionary? 

BB: You know, that’s funny literally just the other day my partner and I took the visionary integrator test, and both of us came out slightly visionaries, which is not great. Obviously, it’d be nice if one of us is obviously an integrator, obviously visionary through my career, I’ve done both roles. So I can pretend to be an integrator really well, but I can’t be a visionary at the same time. And I’ve learned that over the last couple years, it’s hard to do both, even if you can do each role. So definitely more on the visionary sides. 

WS: Yeah, that’s interesting. I just wondered, since you love the systems and operations, because they’re both very important, right? So let’s talk about you know, how you got into this. You talked about how you got into business. But let’s talk about scaling a little bit. 

BB: Sure. 

WS: You met your partner, you’re partnered on a project. And it’s like, okay, like this business model. Hey, let’s move forward, you have complementary skill sets, which you alluded to sounded like, and then there was talk about some of the next steps you took, or the systems that started to come into place where the pain points really that brought them about? 

BB: Sure, yeah, so I am a huge fan of partnership models. Ryan Hill is my business partner, he and I teamed up couple years ago, like I said, never really looked back here. And he and I have different skill sets and different passions. So it really we complement each other pretty well. Even though again, we’re both visionaries, we could use a little bit of an integrator helping us out. But we both when we started for the first couple years, we were both full time day jobs, and I still have a day job, he was recently able to retire from his his full time job as he was an elementary school principal. 

So his last year was just a couple weeks ago. So he’s full time now focus, which has been awesome. But you know, through that, I think it’s been extra important for us to build the systems and the team in place, then you know, when you’re full time yourself, you can jump in and you there’s a lot of grace you have because you can do the sweat equity yourself. 

For me, for example, I’ve got six kids. And I’ve got a full time job. And so this has kind of been something that I’ve been scaling aside. And some of the systems we’ve brought into places, we’ve been hiring employees over the last few years. So we’ve got five employees, we’ve got some 1099 contractors that do a lot with us. We have some amazing virtual assistants, we work with it. Really, frankly, we got lucky with some of the VA teams we found that have just been super skilled and can do a lot of the work we need. But at the end of the day, people is only part of the equation, having systems and tools in place that really help you is key. So you brought up traction, rocket fuel, actually right click and rocket fuel at the visionary integrator. His other book traction is also super awesome. It talks about how to run weekly meetings, how to make sure you’ve got your alignment with your team and people in the right seats, all of those kinds of things. 

So we’ve been patted like, obsessively putting that in our business over the last several months. We also recently read Clockwork as a team, which is kind of a similar style book. But it’s all about automating systems. And so there’s there’s a few things that we can talk about that we’ve we’ve done that have really made a big difference for us. 

WS: I’m glad you brought up Traction and some of those things. I know that the listeners have heard those things that many times different people we’ve had on the show, I’ve talked about it often as well. It’s so important that do you follow some type of structure? Right? You know, there’s many that would probably work for most entrepreneurs or businesses like yours or mine. But then you got to implement something, or some kind of system. But I don’t know that I’ve heard of that book that you just mentioned, Clockwork?

BB: Clockwork. Yeah. 

WS: Is that similar to something like EOS? 

BB: Yeah, it is. I would say it’s very complementary to EOS. I don’t know that he references EOS at all in his book. But it’s more about just automating your systems making sure you know. I think his key concept that we really liked was he talks about the queen bee role, but in a beehive, the queen bee is the most important role. And she needs to be protected at all costs. And so if she’s not laying eggs, the whole hive suffers, right? 

And so in any business, you need to identify what is your queen bee role, and it’s not necessarily a person, it’s the role specifically, right? And then making sure everybody else is focused on that. So to give you an example, for our business, we operate in mobile home communities. And interestingly, you know, a lot of people think that you can take an apartment complex model and apply it to mobile home communities, it’s actually very, very different. 

And one of the main differences is that people in these mobile home communities actually own their homes, or at least generally, they own their homes. So what we’ll do is we like to buy mobile home communities that have maybe 60% Physical occupancy, meaning if there’s 100 pads, there’s only maybe 60 homes in these parks. And of those generally, some of those are old homes that are just completely worn down and maybe some you’re gonna have to remove some you’ll have to come into rehab, and then others you’ll need to buy and bring in to get to that 100% Physical occupancy. 

So homes is massive, and there’s anything from tear downs, rehabs, buying, moving, selling, all those things are just huge, right? So we’ve determined you know, I think we could get a little more specific here, but we’ve determined homes is our queen bee role and recently, what we’ve kind of been realizing is we’re not protecting that very much. It’s very easiest for us to say, okay, these two or three people that each have part of this homes, we keep giving them things that have nothing to do with homes. And so we’re not protecting that clean the role in that they’re able to focus on the most important thing I think that was my biggest takeaway from that the Clockwork book. 

WS: Okay, no, that’s awesome. I appreciate you elaborating. So I don’t think I’ve heard of that book before. But I wanted to ask you, I don’t spend a ton of time here. I’ve talked about it a bunch on the show as well. But I’d love to know where you found these quote, amazing VAs, you know, where did you source your VA s from? So I get that question often as well. 

BB: Yeah, so kind of a couple different ways. We have a team of VAs who do underwriting for us, and then another team, or at least they do the initial underwriting. Obviously, we’re in the final stages of underwriting. But we have another team that does anything from bookkeeping to our property management software, they sort of oversee and manage the even set up my bills, so I approve and pay all bills, but they’re the ones entering the invoices in our system. And honestly, the first one is that your underwriting, I got really lucky there, because they reached out to me on LinkedIn. And I was impressed by some of what they were sending me. I looked at some of their underwriting models. And you know, we did a trial run and they’ve been great. 

We’ve had other VAs where we’ve used Upwork to find them. And we’ve we’ve had some turns, you know, we have probably gone through over a dozen VAs that way that haven’t necessarily worked out. And one we actually had for over a year before we realized it wasn’t working. 

So it’s challenging find solid VAs, but I would definitely say you know, the more you can see upfront what their product is, and do some trials and very quickly see if they’re working out or not, the faster you’re gonna find.

WS: I’ve used them for a ton of different things. So it’s interesting to hear me using them for underwriting right. And you’ll see perspective, where did you find VAs that can underwrite or? Or did you have to train them? Or how did come by? 

BB: This VA team actually they’re based in India, and they reached out to me with the specialization of underwriting. So that’s actually where their specialty is. And I mean, just to give you an idea, Whitney, normally we’re paying $5, $6 an hour for virtual assistants, we pay this team $25 an hour. So yeah, it’s definitely a different skill set that we’re paying for. 

But we’ve been extremely impressed. And they hadn’t actually had mobile home community experience. So we did have to train them on how to underwrite that. And we had our own models we built for that. So we were able to show those with them. And they can, you know, honestly, they save us tons of time, or over the look at at least 10 times as many deals. 

WS: No doubt. I mean, it’s $25 per hour, that may seem like a lot, but you’re probably not employing them full time either. Right? I mean, it’s you’re sending them deals as you have them. So that is a lot cheaper than hiring a full-time employee. Right? Or numerous full-time employees, you know, in-house. So that’s incredible. 

Speak to the bookkeeping, as well, how do you trust them with the bookkeeping? How do you share enough, you know, with a bookkeeping team of virtual assistants, and what does that look like? 

BB: Absolutely. So that’s again, our third, we’re on our third VA for bookkeeping. So if you’re not going to get the perfect person the first time, but I think knowing some of the language, you need to be able to ask during interviews, understanding difference between just like even the basics on a city, you can find through some YouTube videos that the you know, when you’re coming in, that this person knows what they’re talking about. 

Again, just using an example, in mobile home community space, we’d like to sell homes outright. And we use third party financing like mortgages. But inevitably, when you buy mobile home communities, you’re often inheriting what are referred to as lease to own contracts. So what that means is, the community owns the home still. And they’re sort of selling it over time, sort of they’re they’re essentially providing the mortgage to this resident. And so accounting for this is actually very complicated. 

So what I like to do in these interviews is they’ll bring in an example of lease to own contract and have the virtual assistant walk me through the journal entries of what that would look like. And even if they don’t totally get it perfect the first time because, you know, even we’ve I’ve had CPAs not necessarily no 100 percentage of the first time because it got to do some research, seeing their thought process and understanding how they’re going to do the research can be really enlightening on what they can handle. 

So I would say like, coming in prepared with some very specific examples that someone can show you how they know what they’re doing. I’ve seen resumes from VA saying that they have the CPA equivalent in their country, and I’m sure a lot of times that’s accurate, but it’s hard to verify that. So really getting their experience. 

The other thing I’ll say is I think we have a CPA that we work with, you know, obviously for tax purposes, and they’ve been willing to help us out with these interviews. I’m sure you pay for that time. So you would want to make sure that you’ve done your final candidate before you’re having somebody that’s more experienced do that. But that’s another way to just make sure you’re getting a solid person they know.

WS: That’s a great suggestion there. Ask your CPA if they’ll help you at least provide you some questions for your interviewee if they won’t be a part of it. I think that’s a great idea. Well, I just wanted to dive in there briefly because I get tons of questions around virtual assistants and how we have used them to scale as well. And you know, I love helping these people in other countries that man they were making $2-3 an hour. Now we can pay him six or eight or even 10 or more, depending on their skill set. I mean, obviously, it just changes their entire life, right?

BB: Totally. 

WS: But it helps us in a big way as well, and just helps them and their family. So I love using them if we can, if it makes sense. So let’s dive into systems a little bit, you know, obviously, you know a lot more about the systems that you’re using than you did a year and a half, two years ago, right? And so dive into some of the systems maybe you’re using now that you wish you had known two years ago? And maybe why you’re using some of these things? 

BB: Yeah, absolutely. So it’s funny, you know, I’m going to talk about these and you’re totally in this think this is common sense. And anybody would think this is common sense. In the middle of it? No, it’s funny. When I was in business school, I would learn about these businesses that were suffering, because they didn’t know about the basic data. And then here I am running a business and you know, I see firsthand, okay, it is hard sometimes to understand the data of your business and how your business is performing. 

So coming back to Traction, the book, again, there’s this weekly meeting, he talks about this kind of this level 10 meeting the weekly polls, right, and we’ve been just vigilant about enforcing that. And he has it’s a standard agenda. So the two items I’ll talk about from that agenda that I really like his first it’s a scorecard review. And it’s just a five minute scorecard review. So we now have a full time analyst that he’ll run that five minutes, and he’ll kind of talked about his profit and loss, here’s our collections, here’s our vacancy and occupancy rates. And he’ll highlight specifically where it maybe we should be paying some attention to. And that really helps set the stage for the weekly pulse meeting, which is also setting the stage for the whole week. Just kind of understand where we’re at for that. 

WS: So that scorecard review is specific to your properties and how they’re performing?

BB: Yes.

WS: Okay.

BB: Exactly, yep. And then going into our weekly pulse, it’s a 90-minute meeting. But 60 minutes of that is referred to as the issue discus solved. So IDS section, and you focus on just your top five issues of the company, you always have this running backlog, we have this five, top five issues, and then the to do items for how you’re going to resolve those. And those two items are supposed to be done within one to two weeks. 

So for me, when we implemented this, we did this over in December, we kind of had this like, all hands all day meeting where we kind of introduced it. And we’ve we’ve only been doing it six or seven months now. But for me, it was a huge weight off my shoulders to see we’ve got the scorecard, we I know that we’re focused on most important things. Every week, I’m hearing the updates. That was huge to implement. 

And then some of the other things we’ve done that I think have worked really well as tools. So I have actually notice I’m in several Facebook mastermind groups, and people get passionate about their tools. So there are a lot of tools that work just fine. The one we’ve decided to use for project management, honestly, a lot of our meaning structures Trello. I’ve got a long project management history. So I will tell you Trello is not the best for project management, because it doesn’t have like and charts and dependencies and things like that. But what is great, is it’s super simple. I can give somebody access to Trello. And not even somebody use it and they know how to use it. Because it’s just super simple to use. 

WS: There’s a ton of value in that right there. 

BB: Yes, exactly. So we use it for due diligence tracking, we’ve got our vision, traction, our V to O, to vision, traction organizer, stuff is all on there from EOS. So the weekly post meeting we do on Trello we have a board where we track every single home in our portfolio. And we can have pictures in there. We have checklists of what rehab seemed to happen, what the status of the sale is on the home, all those kinds of things are super easy for me to look up and our whole team uses it. So that system has been really important to put in place. 

WS: That is awesome. Yes, something right. There’s so many different systems, I guess some people are so passionate about No, this is the best one. But I think you know, I like a CRM or like most things, man, the most important part is that you’re using one right for sure you’re gonna figure out you know, what you don’t like about or maybe what doesn’t work best for you, then you’re gonna hear somebody like bread on or myself on a podcast saying, “Man, I love this thing over here about what we use. And you may try.” But you got to use something. 

So dive in a little bit on your use talked about, you know, your standard agenda, a level 10 meeting, you said to five minutes scorecard review, I love that and that it’s ran, you know, like the analyst is responsible for bringing that part of the meeting. Right? So you said 60 minutes, though, and IDS is the 60 minutes total? And that’s weekly? Speak to that cadence a little bit. You know, how else are you running that meeting? 

BB: The whole meeting is 90 minutes total. The last 60 minutes of issue is that IDs portion. And that’s honestly probably the funnest part of it. But then the first 30 minutes, you’re doing the scorecard route for five minutes. There’s another five minutes where you just talk about your rocks, which are your major goals. And that’s quick, because you’re just saying is this on track? Yes. No, that’s it. There you’re going to detail at that point. If it’s on track, great if not, you create an issue to to later discuss why it’s not on track. And then you talk about highlights as far as like what are the key things from customers or clients or for our in our case, we talked about our investors or our resident’s things we need to know about for them. 

And so that’s our leadership team weekly pulse and then we haven’t done this yet. We’re starting to but we have other sub meetings that are focused on operations and home sales and we’re rolling the same format into those meetings. So we’ll be talking about even more granular issues that are specific operations versus kind of more broad for the leadership team. 

WS: No, that’s awesome. And I’m learning more and more about our meetings. And I just, I have tons of meetings every week. And I’m trying to continue to be more focused during meetings, have a better agenda, it’s a work in progress, right. And you don’t want to waste your time or your employees time. 

BB: Yeah. 

WS: And you wanted to be very productive. So I appreciate how you’re laying that out. That’s helpful to the listeners also. And you being a tech guy as well, I want to ask before we move to some other questions, what other tech are you using? That’s like helping you on a daily basis or helping you in your business or helping you with communication with your team? Or maybe even communication with your spouse, or your six kids? Or what some like, “Man, I couldn’t live without this tech every day,” whether it’s in business or personal life or both? 

BB: Yeah, absolutely. Our property management software is called Rent Manager. And it’s pretty customized for mobile home communities. But it can do other assets, too. It has multifamily, retail, and industrial, you can do all of that right manager, and we just switched to it in March. So it was, you know, we were on the building before also great software, it just didn’t have kind of the nuances we were looking for, for mobile home communities. 

And switching that out midstream was like replacing the engine on a Boeing 747 waltz in the air like that was super painful to do. But looking back, it’s been great, because the reporting is much better. Going back to what I was talking about the lease-to-own contracts, how complicated those are, it’s got bookkeeping built around that, which is pretty awesome. 

So there are a lot of really cool things that have been grayed out of that. And then we use Slack for our communication, which has been great, we actually have a channel for every one of our communities. So the individual community managers are in there, plus the specific people for the team-specific team members that are related to that group. And then the way we’ve structured our syndication so far has been portfolio based.

So what we’ve got, for example, one pocket in Iowa, five communities, and then another pocket and Missouri of four communities. So we have different GP partners into those portfolios. So we’ve got a Slack channel for those GPS, just to kind of keep things a little bit more segregated. So we’re able to do a lot on Slack. And then Trello has full communication in it as well. So between those two tools, most of our communication happens there. And then obviously, you know, email is hard to get fully away from email. 

But I recently discovered an email tool that I love and I’ve been like preaching it to everyone is called Spark, as pa rk is just super good at like, you’ve got snooze, remind me later, all those kinds of functionality are in there just they’ve just done a really clean way. That’s helped me with email. 

WS: We all need help with email. It’s one of those things that man has to be done. But it’s yeah, it’s maybe not always the highest and best use of time. Right? So there’s a fight there between those two things. That’s so helpful. I appreciate you just elaborating on some tools here. Because man, you’re probably no tech better than myself and most people listening. So I’m grateful for that. 

Well, Brett, we’re gonna move to a few final questions. I love talking about scaling, love talking about those tools, and even the meeting cadence is so helpful. But, I want what to ask you looking back now, I mean, you all scaled so fast. If you could talk to yourself two years ago, or three years ago, what would you tell yourself? Or what would you wish you had known then that you know, now, maybe that would have helped you to scale faster, or maybe you would have gone into a different asset class, or maybe you would have, I don’t know, moved into a different market or left your job faster or not got into real estate at all?

BB: Honestly, the area I would focus on is partnerships. And there’s sort of this gambit of what I’ll talk to you real quick. So first, I got my start in being a limited partner, right. And then stepping into a small GP role is just being mentored. And I would suggest anybody getting started out, that is an awesome way to learn, because you’re just you’re hands on, but also saying Whitney, you touched on this earlier, you know, every sponsor has stuff that someone that comes in that wants to participate can do, I’d say most of us are willing to compensate with GP shares pretty readily. But then moving into the next thing that I’ve learned this is sort of associated with that is when you do bring on partners, even in a junior capacity, you really got to make sure you have alignment of interests in setup. 

So we’ve learned that we can’t just say, “Hey, you’re a GP on this, because you’re (inaudible) in the loan, you’re helping us at the XYZ men, here’s your shares.” But that doesn’t really work for us, because we’ve had people that okay, well, this is my partnership structure. Have a good day, guys, bye. And then we never hear from him again. And so what we’ve started doing is more milestone based. So we’ll sort of you know, in this common in tech to where you invest your shares that will set up and say, “Okay, you over the next three years, you can earn this many shares after you do XYZ,” and it’s very, very specific. So they know “okay, if I hang around and I do these things, I’m for sure at the end of the day getting this,” taht sort of that structure. 

The other thing that you know, we’ve had some painful lessons on is bringing in co-sponsors where we need help with bigger aspects of syndication that necessarily we’re not necessarily structured to do just yet just because works still relatively newer. And we haven’t had them put earnest money into the deal or help us out with pursue costs with like surveys or legal costs or anything like that. 

And at the end of the day, there’s not that alignment of interests, because we’ve got a lot on the line with that money, and they don’t. So it’s really easy for them to not necessarily bring the close to really make sure you’re sending a written agreement at the beginning of any partnership. Even if you’re months out from a closing, it’s good to have that alignment. And make sure you’ve got very specific expectations for both sides of the partnership. 

WS: What do you expect Brent over the next six to 12 months to happen in our economy? You know, I know you have all the answers.

BB: All of them. 

WS: I know you doubt and none of us do. But still we’re you know, all of us are basing decisions on whether we’re buying or selling or all these things based on what we may think is gonna happen, right? And we’re pulling information from all kinds of different places. Maybe where are you pulling that from? And how is that changing what you’re doing in the future? We’re buying selling those things over the next six to 12 months? 

BB: Sure. Yeah, I think something that’s on everybody’s mind right now is rates, right, with the Fed every few weeks, increasing rates, that’s impacting residential as well as commercial, we actually have have a large portfolio put under contract, and in February when rates were in the threes, and now we’re looking at high fives, maybe low sixes on that portfolio. And honestly, most of the clips we’ve been getting have been floating rates, which is risky in a market like this. 

So deals have changed a lot in the last quarter, I would say. So going forward, what I’d say is people are going to really, I think be focused, hyper focused on fixed rates, at least no, we are hyper focused on that, or at least having a cap on a floating rate, just to reduce that upside risk. I think we’re gonna steal a steal system rate increases over the coming months, but I think that will taper down later in the year. 

And so what that is going to do is I think cap rates are going to catch up with that they’re going to lag a little bit, but I think cap rates will start to catch up. And so we’ll hopefully see some of these commercial prices soften up a little bit and be a bit more reasonable. Because right now, I don’t know about you any, but deals are just not underwriting like they used to.

So I think something’s got to change there. But in my opinion, it’s short term. A lot of people are talking about this recession coming. I don’t see that coming. I think our we have a very resilient economy, we’re in a very different place today than we were 12 years ago, or 14 years ago in 2008. And I just don’t see the same thing happening that happened in a way. Again, I think there’s a lot of market conditions that exist now that didn’t then, but I think things are going to soften up a little bit and maybe taper down. And then we’ll hopefully see, I think we’ll maybe see some foreclosures come on the market that make good deals for us. 

WS: Yeah, yeah. Well, Brett, your owner and investor asked you, man, you know, I want to invest with you in this project, whatever it may be. But Brett how are you prepared for a downturn? When this happens? You know, I’m an investor, I’m expecting the worst, you know, in six months, whatever it may be, Brett, if that happens, how are you prepared for that? 

BB: Sure, yeah. So there’s a couple of things we do to be prepared. So first is the financing, we always try to have longer terms on our financing. I know a lot of operators are okay with two to three year terms, and then they’re forced to refi out that scares me like crazy. So I prefer seven year terms, at least if I can get them to the house has had to have that fixed rate that for as long as possible. And generally, by the time you’re hitting four to five years, you’ve changed the value of that or fill in the cash flow so much that even if your rates had to go up, you’d be fine because of that. 

The other thing we do is our cap rates when we when we buy, for example, for buying at a six cap, we never assume we’re refinancing or selling at a six cap, we always expand it at least a point. So we’d be looking at seven or 8% on refi, or sale just to build in that conservatism. I think when I look at sponsor deals, that’s one of the first things I look at is the exit assumptions as far as the cap rates, because that’s a really easy way to bolster your IRR. If you say you’re going to sell the three cap, for example, that’s a massive difference to a four cap the event or even a five cap. So we look at that. 

And so for example, in one of our properties, we just caught up on all of our preferred returns. And we’re now at a point where we’re passionate about nine to 10%. But we’re only paying out about 8%. And that’s partly because the economy right now we’re just wanting to make sure we have plenty of cash flow to just be in a good position in case that something happens, right. 

The final thing I’ll say when and I know this long, long-winded answer, being in mobile home community space, it’s often referred to as a recession-resistant asset class. I don’t know I’d go exactly to recession resistant, but it’s pretty close. Because if you think about it, people that are buying single-family homes that can no longer afford single-family homes. The next step might be high luxury apartments, or it could be into a mobile home community. It’s a mobile home communities are sort of considered the bottom rung of affordable housing. But it’s even a step above that because they’re still owning their home. They’re still building equity in their home. They have no immediate neighbors, they can park up at their house. There are a lot of benefits there that I think just make the mobile community more resilient anyway.

WS: What’s your best source for meeting new investors right now? 

BB: Well, we do a lot of conferences. We’re in a couple different masterminds, we meet some investors that way. I think, joining podcasts like yours we need obviously, you got huge base, it’s a great way to get introduced to people. Another area that we’ve haven’t focused on enough, but we have recently is search engine optimization. 

So we have our website, we have actually a couple we have one for our communities, and then one for our investors, and doubling down on search engine optimization. I’ve seen people coming through that more and more are saying they’re finding us just from Google searches. That’s been helpful. 

WS: I appreciate that masterminds, SEO, there’s tons of different ways, but man, yeah, masterminds? I’ve heard so many people on the show talking about masterminds lately, and I couldn’t agree more man, it’s usually a great group, or when you can find a mastermind that’s focused right and excelling and ahead of you and pulling you along. Or maybe you’re pulling others as well. It’s very powerful. 

Brett, what are some of the most important metrics that you track? It could be professionally could be personally, either one or both? 

BB: Mostly, metrics we track professionally or related to our community performance. So we like to see collections and calculate collections is there actually different ways to calculate it to neutralize this based on like, trailing or just the existing month, but collections is crucial. We also look a lot at home sales. So how fast are we selling homes? And then how fast are we turning around a home from like, we need to rehab it, we thought it would take two weeks, is it taking six weeks actually to rehab it, things like that to make sure we’re measuring our contractor performance as well. And then looking at the time to sale, and that time to sale is really crucial when we’re building in the same market. We like the markets we’re in. 

And if we want to continue building up in those markets by buying more assets there. If we’re seeing a time to sale that’s larger than two to three weeks, that’s indicating that maybe we shouldn’t be doubling down in that market. So yeah, those are kind of our crucial metrics. 

WS: What are some habits so that you are disciplined about that to produce the highest return for you? 

BB: One of the habits that helps me a lot is waking up early in the morning. And that means different things to different people with six kids early in the morning may not be the same thing as other people, but I like to be up at least an hour and a half before I need to go for meetings, have a nice breakfast exercise, get ready for the day. And that just helps the mindset why is it so much, I don’t I’m not a meditator, but doing that helps me kind of just think and be it’s my alone time coz my kids aren’t up yet. So just helps me clear my space. 

WS: No doubt about it. I couldn’t agree more man that time before it gets rough, right, so important and structured. So what’s the number one thing that’s contributed to your success? 

BB: I’d say the partnership model as I talked about before, just not being afraid to partner structuring the right partnerships, and having the right partners have helped me a ton. And how do you like to give back, we like to give it back to our communities. So the main way we do that is by improving them through major capital returns, like new roads, new sewer, new water, and things like that, without increasing rents dramatically. We are big believers that we are affordable housing, and we want to make sure that we keep it affordable. 

WS: Brett, very grateful for your time you’ve been very generous and transparent with how you’ve scaled and many systems that you’ve used to do that and even hiring the VAs to to the tech specifically the weekly meetings and then the cadence of that and how the agenda is so helpful, grateful for your time today. how can listeners get in touch with you and learn more about you? 

BB: Absolutely. And it’s been a pleasure meeting with you of course. I’d say the easiest way our website suncrestccap short for suncrest capital, so suncrestcap.com. You can see Ryan and I on there and then my email is just [email protected]. 

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[OUTRO]

WS: Thank you for being a loyal listener of the Real Estate Syndication Show. Please subscribe and like the show. Share it with your friends so we can help them as well. Don’t forget, go to LifeBridgeCapital.com where you can sign up and start investing in real estate today. Have a blessed day.

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