The Best Ever Recap of the Best Ever Conference

Wow - what a great weekend we had at the Best Ever Conference out in Denver! If you're feeling some FOMO or wondering what the conference was like, here's a recap with my key takeaways of each session.

Friday (day 1)

Keynote: Lessons Learned From 1k Investor Interviews and $265m in Apartment Acquisitions

Joe Fairless - Conference host, Ashcroft Capital, Best Real Estate Investing Advice Ever podcast

Let's get this party started with Joe's keynote. For those keeping score at home, he controls $265,000,000 worth of real estate - more than double from this time last year. Joe walked us through a brief background, and then dove into the key three things everyone wants to do in the multifamily investment world - finding, funding, and keeping great deals.

My favorites approaches to each of these objectives were:

• Finding great deal by hosting a local meetup in your area for other multifamily owners. This may cost you some money to get the ball rolling (pick up a dinner or a round of drinks), but you will position yourself as an expert in the space. Consistency, like most things in real estate, will help compound the success of this approach over time.
• Funding great deals by being a GREAT listener while speaking with investors. Anticipate and listen to their concerns if hesitant to invest with you, and be prepared to speak to the things you do to help mitigate risks.
• Keep your great deal by raising more money than you think you will need. The #1 reason why multifamily investments fail is lack of adequate capital reserves to provide a cushion during economic turbulence or unanticipated capex. Investing in deals for cash flow (vs. appreciation) and holding conservative, long-term debt can also help during tough times.

Exploring Niche Asset Classes

- JNL Parking

Kimberly Smith - AvenueWest Corporate Housing

Divyesh Panchal - Numerous branded hotel investments

As someone with a ruthless case of shiny object syndrome - this session was both awesome and enlightening. An expert panel talked us through the ins and outs of hotels, parking, and corporate housing... none of which I have done but am now obviously fascinated with. The highlights were:

• Surface lots are an appreciation play. They will have a small or break even cash flow, but over time will become more and more enticing for developers to build on.
• Garages are a cash flow play, and can produce great returns with comparably predictable maintenance and without the hassle of tenants.
• John got started while in his MBA program and Notre Dame, and scraped a few single family houses to create a surface lot for football games.
  • Courthouses and hospitals are great locations for parking lot investments

• Kimberly walked us through how her companies can help investors find, manage, and optimize their assets suitable for corporate housing.

• Divyesh found his hotel niche with mid-level branded hotels (Hilton, Marriott etc.). He found that these offered the best risk - adjusted returns when compared with boutique, low-end, or luxury brands.
• Hotels are not for the faint of heart, and Divyesh partnered with an experienced hotel investor in his ventures to help him get a foot in the door with these big brands and understand the ins and outs of hotel ownership

Stories of Scale

Kathy Fettke - Real Wealth Network (moderator)

Matt Rodak - Fund that Flip

Dave Van Horn - PPR Note Co.

• It's hard to start a business in the real estate world... but it may be even harder to grow and scale one
• One suggestion from the panel (which I did immediately when I got home) was to create an organized list / chart of ALL of the job functions that exist within your business (even if you are doing all of them). 
  • For example, acquisitions, due dilligence, funding, investor relations / reporting, asset management etc... 
  • Then break out all of the sub-tasks that need to happen under each of these functions. 
  • Eventually, you will get to the size and scale where you can start hiring out some of the tasks you don't enjoy and that don't require your vision or strategic thinking to execute (bookkeeping is a common example).
• One visual the panel mentioned as a way of thinking about this is to take a pie chart, and each section of the pie represents time spent on a particular job function. Initially if you're a one person band, you're going to be filling up that whole pie. Eventually, you want to start making your way in closer and closer to the bullseye on some areas, but may choose to remain more engaged in others.

In pictures, this looks like starting here, where you're doing everything...

and moving towards here, where you focus on the things that you enjoy and add significant value to

• Some great books recommended were "Traction", "Scaling Up", and "Multipliers"

Benefits of Development

Scott Lewis - CEO of Spartan Investment Group

• Scott was one of the most impressive people at the conference, and has a unique energy and intensity about him. He crushes.
• Scott shared his "Developer's Ethos" - five statements that developers should keep top of mind while building their business. My favorite was "prepare to be punched in the face", because it's going to happen in real estate. It's a matter of when, not if. If you're prepared for it and expecting it, you will react more rationally than emotionally and come to a better solution in less time.
• The other ethoses were great too:

Don't Just Make It, Keep It

Ryan Gibson - co-founder of Spartan Investment Group

Mathew Owens- CEO of OCG properties

• It took about 5 minutes of listening to Matt discuss his tax strategies for my brain to start hurting.
• I guess the bottom line is... you are very likely paying too much in taxes and not taking enough advantage of the perfectly legal and managable strategies that could boost your post-tax income.
  • From a compounding perspective, this can make a massive impact on wealth accumulation over a long time horizon.
• Matt discussed a lot of things I will take back to my CPA, but I think my biggest takeaway is that I am going to hire a real estate specific tax advisor to help me think proactively about my business from a tax lens, and separate out the roles of my tax preparer / filer and tax strategist who can help me think through things more strategically and stay out of the weeds of filling out my returns.

Creative Value Add Flipping

Matt Rodak - Fund that Flip (moderator)

Jason Scott - Lish Properties, 123 Flip

Scott Lewis- Spartan Investment Group

- Co-owner of Invest Success

• This was a true all-star crew of panelists. I've been reading J. Scott's books for years and was great to finally see him in person.
• While each panelist had a different approach to their business, they all had a blend of flexibility and focus that allowed them to stay ahead of the curve while still remaining disciplined to their core competencies.
• An example of this came from Jay, who went into a flip with a partner. His "bread and butter" had been mid-grade rehabs, but the partner wanted to do a pop top and add more square footage to the house. The expected return on this approach was significantly higher, so they went with it... and Jay added a new tool to his arsenal, creatively adding more value to capture more profits.

Scaling BRRR

Trevor McGregor - McGregor Consulting (moderator)

Tarl Yarber - Fixated Real Estate

• Tarl and his team at Fixated are making big moves out in the Pacific Northwest BRRRing and flipping, and are even putting together what looks to be an epic expo in late April.
• One big takeaway and new process I am implementing is to take a bunch of pictures (Tarl takes 100) of each rehab project, each week. This becomes even more helpful if you're managing a lot of projects out-of-state. The pictures will facilitate contractor accountability, give you a great arsenal for social media, and give greater connectivity / feel to the projects if you aren't there physically.
  • Personally, I wouldn't hire a random off of craigslist to do this. I would tap into my existing network of brokers / property managers in the area and see if anyone of them would do it for some extra cash. Pictures don' t need to be listing quality, but should be taken with a good, wide-angled point and shoot camera if possible (phone cameras are getting crazy-good now too)

Raising Capital

Jeremy Roll - President, Roll Investment Group

Ryan Gibson - Spartan Investment Group

Nikolai Ray - CEO of MREX

Amy Wan - Founder & CEO of Bootstrap Legal

Matthew Owens - Owner of OCG properties

• According to Joe, this was one of the most requested topic for discussion, and the panel delivered.
• I loved having Jeremy up there to help us understand the "voice of the investor."
  • Jeremy focuses on investing in other's deals, and does a LOT of due diligence around what sponsors and deals he and his investment group get involved with.
  • He picks apart PPM's and will question and negotiate terms he finds disadvantageous to his group.
  • Pro tip: if you raise money from Jeremy, make sure you know your documents and deal inside and out!
• One other nugget from Jeremy I found interesting - he looks to make sure that the sponsors are in a compensation "sweet spot."
  • As an investor, you obviously don't want a sponsor to eat up too much of potential profits or have misaligned incentives...
  • But you also want to make sure that they are being compensated fairly and at market rates for acquisition fees, equity splits etc. so that they are highly motivated to maximize returns on the deal.
• Significant discussions around the different types of regulatory hurdles a sponsor must navigate, and the benefits / risks associated with raising capital through different avenues... 506(b) vs. 506(c), blind pools, semi-blind pools, crowdfunding etc.
  • Amy started a company called Bootstrap Legal to help investors navigate this complexity. Bootstrap's mission is to blend the high - touch strategic advice of an attorney with the efficiency of technology to significantly reduce the cost of executing a capital raise.
• Every sponsor and deal will have different deal terms and fee structures. One way to determine what's appropriate for your deal is to go onto a crowdfunding website and look through the investment offerings. What are their waterfall structures, acquisition fees, asset management fees etc..? This can be super helpful both in establishing your terms for a deal, and to help educate "newbie" investors as to how your terms compare to the market terms for syndicated deals.

Saturday (Day 2)

Champion's Mindset

Terrell Fletcher - ex NFL running back for the Chargers, CEO of Wake Up Ur Dream

• Terell got us FIRED UP bright and early on day two, most of us still feeling a little hazy after a great after party in downtown Denver
• I asked Terell what he though separated guys like Rodney Harrison and Junior Seau from someone like Ryan Leaf (the former being NFL legends, the latter being the biggest draft bust of all time). Terell thought it came down to battling through adversity, and how you behaved when things went wrong. Guys like Rodney and Junior used it as fuel to get better, whereas Ryan tended to melt down and clam up, exacerbating the situation.
• For a former NFL star, he was super gracious with his time and hung around for the rest of the conference, chatting to everyone and taking pictures. Yes, I got one too.

Mobile Home Investing

Jorge Newbery - Founder and CEO of American Homeowner Preservation (moderator)

Kevin Bupp - Owner, Mobile Home Park Academy

Frank Rolfe - Co - Owner, CREUniversity

• Back to my shiny object syndrome... I think it may have spread to the audience, because I don't think anyone in the building finished this panel without at least *thinking* that they wanted to start exploring mobile home park investing.
• Frank is a true legend of the mobile home park game, and is the SIXTH LARGEST owner of mobile home parks in the country.
• Kevin shared how winning deal sometimes comes down to the relationships you can build with the sellers. Most park owners are from the greatest generation, and place a big value on character. For many, who they choose to sell to is about more than just money. While true in most asset classes, this tends to be the case even more so with mobile home parks.
• Lot rents in parks have room to double in a short time horizon without having a significant impact on occupancy, Frank believes. Since so many parks are mom and pop owned, a lot of them haven't kept up with inflation over the past 40-50 years. There is also no new supply of new parks coming online to re-set market rates, unlike multifamily or commercial developments where new construction can push rents higher across all classes.

Landlord Automation

Divyesh Panchal - CEO of Keybot:

• Cool product demo for Divyesh's startup, Keybot, which helps automate keyless entry with a stronger value proposition than existing players
• Check out his project website for more details

Above the Line

Trevor McGregor - McGregor Consulting

• Trevor was a Master Coach with the great Tony Robbins before venturing out to start his own coaching business
• He is also an active real estate investor, meaning he brings both the Tony Robbins coaching foundation, and also understands the unique challenges and perspectives of a real estate investor from first hand experience
• I mean, this guy coached Joe Fairless and helped him grow from 4 SFRs to over $250,000,000 worth of real estate...
• He's Canadian, so he's obviously a super nice guy and very down to earth (unlike some coaches I've spoken with in the past)

Next Leap

Joe Fairless - Host of the Best Real Estate Investing Advice Ever Show (moderator)

Jason Yarusi - Managing Member of Yarusi Holdings

Danny Randazzo - Residential and Commercial Real Estate investor

Andrew Campbell - Windhorn Capital

Pancham Gupta - Mesos

• This panel was comprised of investors who had recent breakout success and recently completed their first one or two large deals
• Some key themes that the panelists pointed to in helping them breakthrough to the next level included hustle, persistence, and having someone hold you accountable to your plan (they were all coachees of Joe, and a few were also coachees of Trevor)

10 Tips for Better Negotiation

Jason Scott - Lish Properties

• This was the sparknotes version of Jay's new book, The Book on Negotiating Real Estate

• Jay gave us a great mix of overarching negotiating strategies, mixed in with some golden nuggets of wisdom from his experience that could make or break deal negotiations
• Of the 10 major points Jay went through, my favorites was also maybe the most obvious (but least applied) -- ask for what you want, and don't be afraid to hear no! Doing a bit of reflection.. there are definitely areas within real estate and life where I need to apply this principal.
• One simple to conceptualize (but difficult to implement) negotiating tip is to "let the silence do your work." People HATE silence in conversations. It's so uncomfortable. If you can let people continue to talk while you remain silent, even if for 30 seconds, a minute, two minutes... often times they will start negotiating against themselves. Jay has seen people negotiate with themselves and knock tens of thousands of dollars off of an asking price without having to say a word!

To Fund or Not to Fund

Kevin Bupp - Owner, Mobile Home Park Academy (moderator)

Amy Wan - Founder & CEO of Bootstrap Legal

Jeremy Roll - President, Roll Investment Group

Matthew Owens - Owner of OCG properties

• The discussion here was around the benefits and trade-offs of raising a blind / semi-blind fund vs. raising capital on a deal-by-deal basis
• The main considerations the panel suggested investors consider are:
  • Legal fees as a percentage of capital raise can significantly diminish returns and add complexity for smaller funds
  • Ability to execute and access to deal flow adds timing risk with a blind pool, where investors could theoretically commit their funds to escrow but not have them deployed or earn any return for 6-12 months. This is less of a risk for investors that participate in a syndication, as their capital is typically not committed until a deal is nearly at the closing table. Without adequate deal flow, investors could become irritated over their idle capital.
  • Track record --> more difficult to raise a fund with limited track record. Easier to start off raising capital on a deal by deal basis.

Debate - is residential real estate at it's peak?

Dave Van Horn - CEO of PPR Note Co. (team Room to Run)

Kathy Fettke - co-CEO of the Real Wealth Network (team Room to Run)

Jorge Newbery - Founder and CEO of American Homeowner Preservation (team At the Peak)

Steve Baldus - Managing Partner of Elevation Realty Partners (team At the Peak)

• What better way to end then with a fiery debate over residential housing prices? Are they at the peak of the cycle or is there still room to run?
• Attendees voted on their initial opinion (I think it was like 60/40 thought we still had room to run... we were an optimistic crowd), and then the winners were measured based on who could swing the most percentage points when we voted again after the debate. The optimistic debaters won, and we finished with around 65/35 saying we are not yet at the peak.
• Kathy has done this on national TV quite a few times, so a bit of an unfair advantage to team "room to run"
• The main arguments of team At the Peak centered around the impact of raising interest while wage growth remains stagnant, and the general length of the current economic expansion
• Team Room to Run's arguments were mainly around the supply and demand realities of the housing market, as well as the the role that tightened lending practices (as compared with 2006) have played in keeping affordability in check.
• I was hoping someone on the hot seat would have done some research and gone even further back in time than the last cycle, or the 1980s which I think was mentioned once. The housing market goes back a longggg time, and as Ray Dalio pointed out in Principals, we have extreme recency bias when trying to predict economic cycles. Everyone seems to want to compare right now with 2006ish as a baseline, when in reality there is probably another point in history with more applicable lessons.

Overall, this conference was a rousing success. It was a great mix of education, networking, and fun. The panelists were entertaining and engaging, the breakouts were a great change of pace, and I can't remember feeling bored or eager for a break. I loved the in-house breakfasts and lunches where we met new people and recapped discussions. Compared to similar events I've been to, the crowd here was very impressive. It seemed like everyone I talked to was knowledgeable, experienced, and genuinely interested in helping others and learning more. Every other person I talked to could have been up on stage themselves. Another huge thank you to Joe, Ben and Sam for putting on such an amazing conference, and to all of the panelists for sharing their insights and experiences!