Pivoting From Multifamily Value-Add To Ground-Up Development (Core) Syndications – Joseph Bramante

 

Real estate always offers many lucrative opportunities to those willing to pivot and are brave enough to face the risks. Joseph Bramante is one of those people who got into multifamily but continued looking for better ways to invest his money. Joining Ava Benesocky and August Biniaz, he shares his journey from working as a civil engineer, jumping into real estate, and eventually transitioning to ground-up development (core) syndications. He talks about his company TriArc Real Estate Partners, his strategies for handling more data on new development than value adds, and his experience raising private capital. Joseph also discusses their upcoming conference centered on giving passive investors the tools they need to thrive in real estate and find other asset types available to them.

 

Get in touch with Joseph Bramante:

LinkedIn: https://www.linkedin.com/in/josephbramante/

Website: https://triarcrep.com/

 

If you are interested in learning more about passively investing in multifamily & Build-to-Rent properties, click here to schedule a call with the CPI Capital Team or contact us at info@cpicapital.ca. If you like to Co-Syndicate and close on larger deal as a General Partner,

click here. You can read more about CPI Capital at  https://www.cpicapital.ca/.

 

#avabenesocky #augustbiniaz #cpicapital

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Watch the episode here

 

Listen to the podcast here

 

Important Links

• Passive Investor Conference
• TriArc Real Estate Partners
• Multi-family Millions
• Kalterra
• KC Conway – LinkedIn
• LinkedIn – Joseph Bramante
• Dr. Vincent Giampapa – LinkedIn
• JBramante@TriArcREP.com

 

About Joseph Bramante

Joseph Bramante is co-founder and CEO of Houston based TriArc Real Estate Partners, a wholly integrated multifamily investment company established in 2013. The firm is focused on the acquisition, management and renovation of multifamily properties that produce strong returns while building stronger communities. The Principles of TriArc have had ownership interests in, and/or operated more than 47,000 apartment units, totaling an estimated $1.9 billion in commercial real estate assets over an average career span of 23 years. This depth of experience has allowed them to produce an average equity multiple of 2.6 and 23.5% IRR on 5 deals they have exited. To date, the company has an AUM of $180M+ across 1,700 units and has completed over $375M in transactions.

 

 

Pivoting From Multifamily Value-Add To Ground-Up Development (Core) Syndications – Joseph Bramante

Welcome back to the show, everybody.

Welcome back, us, to the show. It’s an exciting day. CPI report came out. 5:00 in the morning, Ava is up. She’s up before me almost every morning.

Not almost, every morning.

That’s true.

I’m trying to get you up.

 

 

She’s like, “Isn’t the CPI report out this morning?” I’m like, “Yes, it is.” We jumped online and the CPI report inflation is down. That’s great.

My team was going to do a post on LinkedIn about inflation. I said, “Hold a second. CPI report is coming up.” It actually went down, so it’s not bad.

That matters greatly to real estate investors, especially commercial real estate investors because interest rates are a huge factor in the investments we make. When inflation is high, the central banks are on the world depending on where the inflation is, and now it’s global. They increase interest rates to combat inflation.

What’s your prediction for the next Fed rating?

I try not to do these predictions, but I do them on LinkedIn. I do polls usually so I get the consensus. It’s what the experts are saying, 25 basis points. What’s a bit concerning is that most experts are now saying that in 2023, the rates will not be dropped by the Fed. They might stay where they’re at. We’ll see. They say there might be a drop in Q4.

We’ll keep you guys posted along the road.

Anyhow, getting back to our show. We have a special guest. He’s extra special. I know sometimes I’ve used the word special. He is very special because he was our number one guest on our show ever. We want to appreciate him.

A couple of years ago now, he’s our very first guest.

I went back and watched that. I literally got embarrassed. I’m like, “What were we doing? What were we thinking?” The progress is you always want to get better. We appreciate him coming back on the show. He’s here to tell us about his journey and what he’s been up to over the last couple of years. He’s got a great conference that I, yours truly, will be co-hosting. We’re going to get the production of this show going and get it out there so you guys can watch it.

We’re going to hear what it’s all about. It’s called Passive Investor Conference, and it’s on from February 24th to the 26th, 2023. Joseph is going to share all the details on that.

Tell the audience a quick bio of Joseph and we can get right into it.

Joseph Bramante is the CEO of TriArc Real Estate Partners. His background was in engineering and working for global firms such as ExxonMobil. Joseph started his real estate investing career after the GFC, and ever since he has found great success in multifamily investing. We believe this interview with Joseph will bring great value to passive investors looking to learn more about the lucrative world of multifamily syndications. Welcome, Joseph. We’re happy to have you back on our show.

It’s great to be back again. It’s great to see all the progress that you guys have made being the inaugural guest on your very first show. That’s awesome.

Thank you for that.

Let’s dive into things, Joseph. Tell everybody what’s your background and then your start in real estate, please.

I’m an Engineer. I got a job at Exxon overseas and worked in some pretty crazy locations. Australia was my favorite, but then I ended up spending the last three years of my career in Papua New Guinea, which is a little island North of there, where I made a fairly sizable amount of money. As an ex-pat, unable to spend anything. I was a mid-20s kid making more money than I knew what to do with. This was in 2010. My manager was a rotator. I was full-time in that country. He would rotate back home to Houston. Every time he had come back to the job site, he seemed to own a new rental property. I didn’t know what was going on, but he was buying these houses for $50,000 and then renting them for $600 a month. I thought that was pretty cool.

I decided that I was initially going to go down that route and try to buy a whole bunch of those houses. I wanted to buy 80 houses at once. I was trying to get a portfolio loan for $3 million. I had this beautiful spreadsheet and kept calling the banks to try and get this off the ground. They kept telling me no for obvious reasons but one lender finally said, “Go buy an 80-unit apartment complex.” That was when the light bulb went off my head that a normal person can buy an apartment complex. I did like any good engineer. I read some books and taught myself the ins and outs so I thought of the industry. Just like that, I went and found the apartment complex and bought it sight unseen. I’m still living in Papua New Guinea.

I bought a small 26-unit apartment complex. I went through the ringer on that first deal. We did a 30,000-per-door renovation on a 25,000-per-door acquisition. Back then, those were crazy numbers. Now looking back, we just knocked it out of the park, but not without issues. We almost had to go bankrupt on the property. Within six months of buying the property, our vacancy went up to 15%. We were negative cashflowing. The insurance I bought was fraudulent so we didn’t have insurance. We were going into hurricane season, so that was a big deal.

We found out we were trying to pull a permit for something and the permit required an environmental. I didn’t get environmental because they didn’t tell you to do that in the book and the lender didn’t require it. Environmental came back hot for asbestos. It was in the crapper. As icing on the cake, Exxon decided to let me go around that time. I was like, “No money coming in, negative cashflowing, asbestos.” It was a terrible situation, but we turned the whole thing around. We doubled our money on it, and ever since then, that moment, I decided that this is what I want to do long-term. Fast forward, we continued. Through that process, I met my two partners, Carrie and Deborah. We formed a company, TriArc Real Estate Partners.

We started progressing, doing about a deal per year, until recently, we started doing multiple deals a year. We have built out the company to where we’re sitting at about 1,800 doors. We’ve got five executives at our company. We’ve got a full-time VP of acquisitions who came and who’s got a similar experience to mine as far as I’ve been doing this for a couple of years now. He came from a pretty big outfit. They’ve got 30,000 doors so he came from a big syndication background. My two partners, Carrie and Deborah, each have 30 years of experience.

In 2020, we brought on a construction company. We bought a construction company and brought that on board so that we now can do, not only our own renovations but renovations for others. That’s been a good part of the business. That’s how we evolved. We did 800 doors in 2022. We got another 800 doors in a ground-up new development that we’re breaking ground in 2023.

We decided to make the switch in 2017 and 2018 and started looking into new development and getting that skillset because we wanted to be able to complete the cycle. Everybody has seen the cycle of real estate. There is a point on that cycle where acquisitions don’t make that much sense and you start going into the development territory. We didn’t want to be sitting on our hands during that part of the cycle, so we decided to go ahead and get ready to make the transition and start building those skills. It came on rather abruptly and now we’re pushing forward, obviously.

We’re using partners. We’ve got a lead developer on two of the deals and we’re the lead developer on the third deal. We’re big believers in partnering with people who’ve got tons of experience and surrounding ourselves with great people like I’ve done from the beginning from the partners that we’ve chosen to grow this company. It’s always been about subject-matter expertise. I never had relationships with any of these folks prior. It’s always been, “I recognize that you’re good at this, much better than I. Let’s partner together and form a company that can be around for a very long time.”

There’s a lot to break down there. Thank you for sharing your story with us. The people that are tuning in probably want to learn a little bit more about going back to when you first started. Did you buy your first property with your own money or did you syndicate it? Did you go to your family and friends? Did you have your own money saved up? You mentioned you were making good money as a young guy. Did you already know investors? Talk to us about that and how you got started, please.

The first deal was just me and one of my colleagues, so it was 50/50. It was the first $100,000 I’d ever saved up. Anybody who saved up $100,000, the first one knows how special it is. It was nice to open my account and see all those zeros there, but it was only short-lived. I wired that money out a few weeks later and I remember the feeling in my stomach. It’s that sickening feeling in my stomach, “What have I done?” Still to this day, I can remember it. It was my money. Half mine, half his.

I don’t know what he was thinking because I didn’t know what I was. I look back at the emails and whatnot. We didn’t know what we were doing. We did get fortunate that the economy was very much in our favor and the market was in our favor. While we did read the books, we felt like we had a pretty good understanding compared to what we know now than what we know then.

That’s the thing, Joseph. For a lot of people that read books or even listen to podcasts, it looks like it could possibly be the simple thing. Once you get into it and do your first deal, you ever get totally surprised because there’s so much that goes on behind the scenes. It’s not an easy thing to do. For anybody, make sure you got some guidance.

 

 

Did you take any coaching programs or mentorship programs when you first started?

Initially, no. I got laid off on a Wednesday. On a Thursday, I joined a real estate group. At that time, it was $10,000 to join. I didn’t waste any time feeling sorry for myself and I knew that I was in a bad spot. At that point, I needed to surround myself with more experts and mentors. That’s when I joined Rose Group and got that ground floor up to 30,000-foot. I already had this 30,000-foot education from the books, but I needed somebody like, “Ground floor, what do I do?” Also, hold my hand and take me through this. That’s what I got with that group.

Learning everything about real estate through books is one thing. You still need to let other people hold your hand and take you through the journey in the form of mastermind sessions. Click To Tweet

Maybe we can also discuss a bit about your background as an engineer and getting into real estate. Were you a petroleum engineer?

I was a civil engineer. My passion was always around buildings and bridges. I always thought that I would design or engineer a bridge or a building one day because they’re fascinating. They’re huge buildings. They’re around forever. You’re changing the cityscape. You get to have a real impact on society, so that was always my interest. The year I graduated, coincidentally, Exxon and Chevron came to the career day. They interviewed me and they offered me a substantial amount of money more than what the consulting firms are offering. I decided to go that route and go oil and gas. I figured, worst-case scenario if it doesn’t work out, I’ll go back to being an engineer and design things again. That was how I went oil and gas.

I always tell people I got my MBA at Exxon. Although now I’m graduating from Rice, getting my MBA in May 2023. I did officially get MBA. At Exxon, they do teach you a lot of the fundamentals of profitability, underwriting, forecasting, and stuff like that. For them, I was managing $1 billion in scope over this project and 150 different subcontractors were managing. It was a mess to take care of all that, but we learned a lot.

The connection I wanted to make was about efficiency. These large companies and corporations are very efficient, especially in the petroleum business. Do you see this indication world or the real estate private equity, as I like to call it, is it an efficient business, inefficient, or semi-efficient? What would you rate it?

I’ll say it depends on the person, more so than the industry. It’s hard to say the industry as a whole because it is company by company. First of all, Exxon is a project management business. They’re not oil and gas. They’re the world’s largest and number one project management company. Other people would actually build it. We’re just managing the projects so you get a lot of good skills from that. Transitioning back to multifamily syndication, you see a lot of sponsors who maybe don’t have backgrounds in project management or have backgrounds that are doctors or lawyers. Those skillsets aren’t transferable to syndication.

Particularly on doctors and lawyers, the accountability aspect and managing people, they tend to see more issues with that versus somebody who does come from an engineering background, you will see more of the project management side of things play out. That’s what multifamily is about, especially when you get into value-adds. It’s one thing to pencil this out on paper that’s gotten to be easy enough these days. The actual execution of it, that’s where the project management abilities come into play. Anybody can draw a picture on a piece of paper of what they would like to happen, but then executing that is the real differentiating factor.

 

It’s great that you touched on people from different career backgrounds such as doctors and lawyers getting into the syndication space and the real estate private equity space. Some backgrounds and experiences might not bring great value. What do doctors and lawyers and other groups with large fraternities or communities bring into the space leveraging that community for capital raising?

 

 

A lot of these individuals come in and are able to raise great amounts of capital. I know some physicians who’ve come over and raised hundreds of millions of dollars. This is, in some cases, a public record. Talk to us about your experience in raising private capital and equity. Talk to us about that journey and experience when you realize, “If I want to scale and be in this business long-term, I’m going to need to be able to raise capital.” Walk us through that if you may.

Being a part of that real estate group was a big leg up to raising capital because you were surrounded by investors. That’s initially how I grew. For the first four years, I was just raising capital through the investor group. I had plenty of equity. We were going at a more deliberate pace based on, “I want to do a deal, get some lessons learned, and reincorporate those.” For us, long-term was more about going more institutional, knowing that we’re not going to stay in this syndication space for too terribly long. The plan was to go more institutional.

In order to do that, you’ve got to do exceptional deals because they’re going to be looking at your track record and seeing how you perform. We were very selective about the deals we chose. Raising capital was through either the real estate group, networking, organically meeting investors, and then also partnering with some other capital raisers as well.

 

We did bring on folks who raised capital for some of our deals. We brought it on that way. There are other groups that are masters at raising capital and doing giant marketing initiatives. That’s not us. Engineers are good at numbers are in the technical side. Now we’re starting to pivot to the marketing side but didn’t want to build a big company on a weak foundation. We focused on getting that technical expertise before we started doing the marketing efforts.

Do you personally chat with investors these days? Are you part of that journey that investors take to come and partner with you and your group?

We’re always talking to different investors. Right now, it’s a bit tough, obviously, with the market the way things are, but we are always having conversations. Those conversations are to keep a dialogue going, staying fresh, and both recognize that there’s not much going on, except for special deals like our development stuff.

Joseph, I wanted to dive into this. In 2010 or 2011, you bought your first multifamily. You guys were doing value-add projects for the last few as buying one a year. When you switched to development, what was that like for your investors? How did they react to that? They were so used to you educating them on how they’re going to build wealth passively by being part of a value-add, which usually has a component of that cashflow and so forth. What was that reaction like?

Value-adds generally don’t have the strongest cashflow in the first couple of years. Investors going into, especially in the ones that we were doing the big value-adds. Our top three value-adds were about 30,000 per door. We’ve never shied away from big rehabs. In the Houston market, we had plenty of them to go after. Our investors were already conditioned to big exits and not so much on the interim.

Making the transition to new development was very similar. There’s no money in the interim. You’re going to have the opportunity to now stay in that deal because it’s brand new. You’re exiting from a new construction deal, which has a greater market appeal than exiting from the ‘70s or ‘80s product that was heavily renovated. They’re nice, but you’re not necessarily going to sell those to an institution or private equity. You’re going to try and sell those to another syndicator and it gets to be challenging.

Especially in this age, one of the things that we saw was that properties are continuing to age out. Your ‘70s vintage now was your ‘60s vintage a few years ago. They’re getting tougher to make a sell. You’re starting to see those properties have less market appeal whenever you go trading them. We wanted to start transitioning our portfolio to the newer construction stuff that would have more longevity.

Vintage properties are continuing to age out. They are getting tougher to sell and have less market appeal. Transitioning to a newer construction portfolio with more longevity is a good idea. Click To Tweet

What was the term usually for your multifamilies? What’s the term going to be for your development project?

Our multifamily was 5 and our development is 3 years. It’s a quicker turnaround. You get a better average annual return. It’s just accepting the risk that you’re not going to get anything. We’re basing these off of comps in the area. I think a lot of investors are okay with it, especially because they know the short time period and they see other products around it. You do a lot more data on new development because you’ve got to prove up those rents. It’s because you don’t have a trailing 12 to build on. Two of our deals are, one is a wrap and one is a podium. A wrap is where you got structured parking and you wrap the buildings around it. A podium is where you got the parking garage and you put the building on top of it.

It’s very complicated structures to build or more complicated than your traditional garden style, which most value-add properties you see these days are. For those two, we’ve partnered with a group out of Dallas called Kalterra. They’ve been building new development for as long as we’ve been doing acquisition or maybe a little longer. You partner with these groups and they do all the underwriting for you since everything on that proforma is completely created versus on an existing acquisition, it’s based on some actual numbers. Whereas here, we’re basing it off of comparables and nearby properties, so it is more of a gray area.

With that said, the opportunity for outperformance is much greater on new development, which is one of the attractions. For us, I do a value-add deal. I know that generally, it’s going to hit between a certain range IR, but with new development, I can estimate. Usually, when we’re doing those, we’re estimating from the middle to the lower end range. There’s a much higher range of potential returns in the high 20% range you don’t see in value-add.

We don’t advertise in development. When you look at historicals, they all tend to hit around there because it is hard to underwrite these to a degree. Because of the amount of conservatism that you end up putting, it suppresses a lot of those returns to what seems like a comparable return to an acquisition but in reality and actual performance, the new development deal seems to perform much greater.

Do you guys lease up your developments, and then sell them off to the buyer?

Yes. My partner, Deborah, did exclusively new construction lease-ups for most of her career. We do the lease-up and the stabilization, and then we will offload them.

I know where Ava was going with this because one of the first deals that we acquired was a syndication deal. We purchased a newly built project in Orlando from a developer. Our value-add was that the developer had recently built this project. They had brought the occupancy to 90% to sell it to us. They wanted to quickly bring the occupancy high so the rents were below market.

As soon as we were purchasing it, the value-add was going in and bringing the rents back to the market, and that was the meat on the bones that were left for us from the developer. Is that a strategy that you guys utilize where you’re not trying to maximize and bring in the best possible tenants? You’re trying to bring the occupancy up so the asset is stabilized and then the syndication group or institution can purchase it and then they have a margin for value-add? Are you focusing on having a perfectly stabilized asset and then hoping for an institution to purchase from you?

I personally believe that’s more of a story that’s told by brokers than a strategy. From our experience, as developers, we’re not going to offer rents lower. What you will do is you’re going to offer a big concession, which is a one-time concession to attract them in. The rents may be a little bit lower than the market, obviously, to appeal to them, but you’re not so far off-market. For example, like $100,000 dealt-off market and they were talking $5 million to $10 million purchase price that you’d be giving up versus holding it another year and letting it stabilize if you needed to. For us, we don’t see that developers are going to leave that much untapped rent. What you would see is a pretty high concession, but those burn off.

Ground-up developers won’t offer lower rents. They offer a big one-time concession and the rents may be a bit lower than the market to make people want to stay. Click To Tweet

The concern is that you’re bringing so much product to the market. You’re building a 200-unit apartment community or a 300-unit apartment community. For that submarket, that’s a lot of supply coming into the market in such a short time. That’s why the idea is their rents are below market to just be able to bring in, but it depends. What are the regions you’re building anyway? You must do feasibility studies to see that there is high demand for housing in the area that you’re building.

Two of the projects are in Houston. One is in Garden Oaks, which is North of the Heights area. It’s one of our upcoming areas. We’ve already owned three properties in Garden Oaks that we’re renovating so we know the demand that we’re seeing there. There are also three other projects being built within a one-mile radius of ours. We know it’s growing. The other property we’re building or the other market we’re in is on the light rail. It’s in Houston, but it’s East of the Heights area. It’s the opportunity zone gentrifying area. It’s great because you go into these submarkets, the first thing is a lot of flip homes starting to happen. Houses getting torn down or houses getting renovated. That’s always the first sign of a renovation or gentrification of the submarket. In this area, you can see exactly that.

Both properties are sites that we’ve owned. There are existing apartment complexes that we bought. One in Garden Oaks, we bought exclusively to tear it down. It was buy it, don’t touch it, don’t spend another dollar on it, tear it down. We’re going to build something on top. The one on the light rail, we bought that one in 2014. We did a renovation and the goal there was to do a rehab big enough to get us to this point where we can tear it down. That’s worked out well.

The other property is outside of Houston. It’s outside the Richmond area. A smaller town. Because there was less data out there, we ended up doing an actual survey. We surveyed and worked with the government. They let us publish on their social media platforms. We got about 1,000 residents there to respond. Of that, 238 were pre-qualified based on their income, the apartment they wanted, and the rent they were willing to pay. Mind you, we’re only building 232 units. We were 100% qualified already for the project. It hasn’t even broken ground yet so we’re excited about that one. That’s how we got the data in these smaller markets where it is tough. You got to work with the municipality there.

I quickly get a couple of predictions from you before we move and discuss the conference. We started the show by talking about the CPI report. We’ve been in an increasing interest rate environment over the last few quarters. It’s truly interesting what’s been happening. You’ve been in a bull market for such a long time since you started. What are your predictions for 2023 when it comes to multifamily and value-add business models? You’re switching to development. What are your predictions when it comes to interest rates and the market?

Are you from the school of thought that there’s going to be syndication groups or other investment groups under the water because of not purchasing a rate cap, having to repurchase a new rate cap, or the rates being so high that now they’re in a negative cashflow situation? Give us your prediction for 2023 and we can go from there.

I think a lot of the properties that were purchased in the last couple of years, the post-COVID properties, you’re going to see those struggle the most. A lot of those bridge deals were done with debt funds. I also think that those debt funds weren’t equipped to service the properties or to deal with a return of the assets. You’re going to see probably a lot of extend and pretend where they’re going to extend or work with the lender or sponsor there to kick things down the road until something improves because they’re not equipped to manage a deficient situation.

I am aware of several groups that are struggling. You’re starting to see CapEx dollars spent to service debt, which is not good, or disservice operating expenses which frees up money to then service debt. You’re starting to see people do stuff that buys them time. The question is, how much time can you buy before things either improve or get so bad that you can’t buy any more time? My predictions are CPI is a great indicator. PCE is another one that we look at, your Personal Consumer Expenditure. We need to get that one down closer to 2%. What the Fed is looking at is the PCE number. Looking at the last time that the numbers were this high back in the mid-1980s, it took about 5 years for it to get down back to 2%.

The interest rates were up to 20% at that time.

It’s going to take a while. People think that it’s going to happen quickly, we’ll be done, and we’re back to business. No. This is a long-haul thing. If you’re struggling now, you’re going to be struggling for a little while. I think that’s something to be mindful of. This isn’t going to correct yourself. With that said, there is a possibility. I left the presentation with Dr. Mark Dotzour. He’s a former chief economist for A&M. He gives a market update every year. His presentation was talking about the Fed’s got these two tools at their disposal. One is mortgage rates that they’ve figured out how to increase, and then obviously the other one is the Fed rate.

 

 

They’re doing their best to slow down this inflation hopefully without derailing us. There’s a 30% chance they’re saying that it will derail us and something is going to break. If something breaks in the economy, then mortgage rates will drop back down to probably 2% or below. Everybody’s going to refinance. You’re going to see commercial real estate boom again and it’ll be back to the heyday. There’s probably a 70% chance that this is more of a drawn out slower burn.

Is it a soft landing idea?

Maybe. I don’t know about soft, but it’s going to be a grind down. He thinks that cap rates will probably stay in the 5% to 6% range. We’re not going to see them get crazy low, but they’re not going to go crazy high either. The one good thing is that every month, we’ve got all these T-Bills that are refinancing from 0% up to 4%. If that increase continues to happen and if it goes up to 6%, then that effectively could increase our spending on debt service by $600 billion, which is a substantial portion of the defense.

Powell is restricted. That’s why he’s trying to go fast before all these T-Bills start refinancing and the government’s own debt service starts to get out of hand. I don’t see it and he doesn’t see. I’m just parroting what he said. If they don’t see a quick reduction in rates, this is going to be more prolonged. Also, keep in mind that if you look at the personal checking balances of private citizens, we’re at all-time highs. It’s a gigantic $5 trillion or something like that in checking that people are sitting on. The risk is that if they don’t correctly address inflation and they do a quick patch and try to get back to business as normal, then people will start spending all this money that’s in their bank accounts and will be right back where they were.

 

 

Let’s talk about the conference.

It’s Passive Investor Conference. I’m looking forward to hearing more about this. February 24th to 26th, 2023. What’s it all about?

Just quickly here, if you are a passive investor tuning in to the show, looking to get into this bit lucrative business, you’ve heard about Joseph’s journey and our journey, I’m sure you’ve heard it before. We’ve always got a lot of our education through online sources, books, podcasts, YouTube, and a lot of events. This conference is focused on passive investors, so a lot of great people coming and speaking. Joseph, please go ahead.

What you alluded to there was a lot of the conferences and the vast majority of them are a bit one-sided. They’re talking about how you become a syndicator. They teach you the same basic information about multifamily, but then it shifts to underwriting and everything you need to know to be good at being an active investor. From the passive investor side, you’re left with a half understanding of everything that goes on. This conference was intended to do a couple of things. One was to provide the passive investors specific to multifamily with an understanding of how to break down a deal. Ultimately, how to choose the best deals with the best sponsors and the best markets. It gives you this secondary type of calculations you can do that I had to custom engineer and figure out a lot of this stuff for myself.

I know how to do it on my side, but if I didn’t have access to the proforma, how would I reverse-engineer some of these things? What can I determine just from the generic single-page proforma that a lot of syndicators put in their presentations? This whole course in our conference is about breaking out those investment packages and helping you choose the better deals to invest in. Especially in our market where things are hairy. You’re going to see a lot of syndicators try to push the envelope and push things that they probably shouldn’t push because they’re trying to get a deal done. Deals are tough to get done right now in general with the current markets.

The other thing that they’re going to get exposure to is all the other types of assets that they’re available to them from RV parks to mobile homes, self-storage, industrial, and cannabis. I’m getting in some private equity deals myself where you’re buying into or investing into small businesses. We got a speaker and investing in franchises. All of these are from experts. They’ve all been advised or the guidance they were given for their presentation was, “Pretend your best friend has presented a deal to you in your particular expertise, what advice or counsel would you give them before making that investment?”

It’s about giving the passive investor the tools they need to be a little bit dangerous when making investments and those other asset classes as well. That’s what we’re covering. We’ve also got a market update. We’ve got KC Conway, the Chief Economist for CCIM. He’s going to be coming and giving a full hour-long presentation on the market and the forecast for the next year and years to come. We’ve also got Dr. Giampapa. He’s the leading physician on anti-aging and longevity. He’s got a clinic out in Costa Rica. He’s going to be talking about all the advances in stem cells and everything that’s going on. It’s fascinating stuff. We’re trying to cover the full gambit of things that an investor would want or need to know for their investing career.

Ava can touch on this. A lot of times, investors that get on calls with us, they’re tired of conventional investing. Invest in the stock market, listen to what financial advisors say, and watch your portfolio go up and down very erratically. Whereas, the alternative investment space gives you other options. Options that are not only what institutions and large banks are pushing, but it’s also being able to invest with a syndication group. You talked about cannabis and asset classes that exist within the real estate sector. It’s super exciting. This is the best of the best for alternative investments conference.

August, what is your topic about?

I’m going to be talking about BTR and SFR, but I’m also going to be co-hosting it.

Do I get a free ticket?

Sure. We can talk about it. I can work on something.

You’ve got connections.

Ten percent off.

Thank you. Here we go. Let’s go to the next segment.

Thanks so much for sharing all your wisdom and your transparency. It felt like you had a crash when it came to your background and everything else. Also, making the transition from syndication value-add to the ground of development. Thank you for that.

Thank you, Joseph. Here we go. Ten Championship Rounds to Financial Freedom. Joseph, whatever comes top of mind, we’re going to start.

Take your time. Some of these questions might make you think, so go ahead. This is an opportunity for people to learn more about what goes on up there in your brain.

It can be dangerous.

First question. Who was the most influential person in your life?

My grandparents. I’ve had many people mentor me throughout my career and my life. They were the ones in my mid-teens and up through my early twenties that have played a key role. One even helped me get into college, helped me stay focused, and gave me that wisdom I need to not get distracted with all the little stuff going on around.

Maternal or paternal?

They were my adopted grandparents. I got an interesting background. I got my blood family side, but then I was pseudo-adopted by a secondary family. They were our babysitters growing up, but then we got to be close with them and started going to holidays, Christmas, and Thanksgiving. Basically, we became part of the family. They’re my maternal grandparents.

You’re a pretty sophisticated guy. I wish I was adopted to get a little bit more sophistication in me.

What is the number one book you’d recommend?

The number one book is David Lindahl’s Multi-family Millions. That was the book that got me started. The secondary book I would say would be mine coming out this summer of 2023. I got a book exclusively on passive investing from the eyes of a passive investor. It teaches almost everything that’s in the conference, except maybe a little bit more detail. Something you can plan for that book is that it’s something that you’ll keep on your desk whenever you’re reviewing investment opportunities.

If you had to travel back in time, what advice would you give your younger self?

How far back are we going? If I were going back in time, I would’ve not wasted so much money on stupid stuff and invested more. There was a period when I got laid off where I was sitting on a sizable amount of money. I wasn’t budgeting myself well and had spent a lot of money on going out and enjoying myself. It’s funny how you can blow money when you’re not paying attention. After that point, I learned how to budget and live more like a true entrepreneur than just spending on whatever I wanted. I would’ve probably bought a whole bunch of crypto and then sold it at the right time.

Same. Those are two things I would tell myself, too.

What’s the best investment you’ve ever made?

The best investment would be my first property. The timing and everything. It was hell going through it, but now, we’ve made a 2X return after 3 years of ownership. Now we’re about to tear it down and build 100,000 square feet of self-storage. It should make another 2X to 3X return on that. It’s grown to be a bit more than that because our original investment was only $250,000. Now we’re going to be making millions of profit on it. That was more so a factor of timing in the market. Things were very cheap back then.

What’s the worst investment you’ve ever made and what lessons did you learn from it?

I don’t want to say worse but it was a tough one that was due to the market. It wasn’t anything in our control. We bought a deal right before COVID, and that deal, obviously COVID completely messed up everything and caused a lot of issues with the evictions and supply chain. This was our largest renovation. We’re doing a 37,000-per-door renovation on this property, so it’s a huge $8 million rehab. It messed up all our plans. We’re still going to exit and do very well, but we should have done much better than what we’re going to do.

How much would you need in the bank to retire now? What’s your number?

I don’t know. What do you do when you retire? That’s the whole point. I’ve taken long vacations. I’ve traveled Europe for three months and was anxious to get back and work. To go through with it, maybe $100 million would be good. From there, you got plenty of money for family planning in the future. Also, for passing down to the heirs and all that, and then for investing. I think that would be okay, but I would still be doing the same thing I’m doing now. I’d still be buying and building properties. Just because I got a bunch of money, I don’t plan on not doing this anymore.

You don’t plan on retiring. I love that. If you could have dinner with someone dead or alive, who would it be?

I haven’t thought about that one. I like Ray Dalio. He’s a smart guy, so I’d probably want to meet with him. Historically, I would want to meet with Roosevelt or one of the early presidents like Lincoln to understand in our minds and all our history books. We were told a certain story and it would be cool to see how they were. How much propaganda has been pushed along through the years? You tell a story and it gets retold versus “Were you really this person? Have you read the Bill of Rights? Did you guys think all this stuff 200 years later?” I’d be curious to see what they knew or what their foresight was.

If you weren’t doing what you’re doing today, what would you be doing now?

If multifamily hadn’t worked out for me, I probably would’ve been back at oil and gas, maybe for Shell or Chevron. I’d be doing project management for Shell or Chevron, most likely.

Joseph, book smarts or street smarts?

You learn a lot of street smarts along the way, but the book smarts allow you to fast-track a lot of that stuff. I think street smarts, you can pick up as you go, but book smarts, you can’t just pick that up on the fly. You’ve got to put in the time, read it, relearn it, and apply it. Books are a combination of somebody’s street smarts that they wrote down. They’re similar.

If you had $1 million cash and you had to make one investment, what would it be?

Probably into my deal that we’re about to break ground on. That’s what I would do. It’s in an emerging market ground up. Emerging markets are the holy grail for development. Finding one and getting into one, the returns and potential are much greater than what you could underwrite.

You all heard it. If Joseph had $1 million, he’d be messing in a ground-up development project, a multifamily just outside of Houston. This is awesome. We appreciate you being here. We got our first guest that has revisited again. It’s a great feeling for us.

Quickly let everybody know what’s the best way that they can reach.

The best way would be to connect on LinkedIn. It’s my name on LinkedIn or you can send me an email at JBramante@TriArcREP.com. Those are the best ways. Our website, TriArcREP.com. There’s a button in the middle of the page to become an investor if you want to learn more about us and connect.

Thanks for being here. I’m looking forward to the conference.

Likewise. I’m looking forward to seeing you guys there.