GI148: Making Millions Through Multifamily Development with Nick Earls and Eric DiNicola

GI148: Making Millions Through Multifamily Development with Nick Earls and Eric DiNicola

Nick Earls and Eric DiNicola are real estate investors who purchase/syndicate large multifamily properties in the Southeast and develop luxury multifamily condominiums in the Boston market.

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Announcer:
Welcome to the Global Investors Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host, Charles Carillo, combined decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now here’s your host, Charles Carillo.

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host Charles Carillo. Today we have Nick Earls and Eric DiNicola. They are real estate investors who purchase/syndicate large multifamily properties in the Southeast and develop luxury multifamily condominiums in the Boston market. So thank you so much guys, for being on the show.

Nick:
Thanks for having us Charles.

Eric:
Thanks a lot.

Charles:
So it’s it’s usually we’ll have guys on the show that have, you know, obviously everybody has a different background, but it’s interesting that we’ll, we’ll drill down into your development and also syndication cause it’s usually in you’re you’re in two different markets, right? So we’ll get into more of that. But before give us a little background on both you guys personally and professionally prior to getting involved in your development and syndication businesses.

Nick:
Yeah. So Eric and I have actually known each other almost 20 years now met each other when we were in high school, did a lot of teams, sports, you know, football. We were on the power lifting team, played a lot of competitive video games when we were kids. So good teamwork between the two of us kind of had that rebellious streak didn’t wanna work for someone else wanted to kind of carve our own destiny. We knew that from a young age, but we didn’t really know just kind of a vague idea. Hey, start a company someday. One or separate ways for a few years, went to different colleges. I got my real estate license and I kind of saw that as maybe this is the opportunity. I was selling smaller apartment buildings for a couple years in Massachusetts and Connecticut. And I saw the way an investor looks at real.

Nick:
I actually come from a construction background. My, my father’s a contractor, my brother’s a carpenter. But I don’t really like construction. I don’t like the nuts and bolts of it. I don’t really have, you know, I don’t have the skills for it either. So I always thought I wouldn’t be involved in real estate, but I, I saw the investing side of it as, as really actually quite in, because it gives us exactly what Eric and I have always kinda wanted is financial freedom. And, and basically security is the way we define it is being able to have passive income have assets that are ideally increasing in value, but most importantly, providing you regular income. So we have had this idea, let’s, let’s buy a rental property. And we were saving up for a couple of years. And during that time, while we were saving up money to buy our first rental property, I actually noticed that the condominium market in Boston, where I live is very, very strong.

Nick:
You have basically, it’s either the number one or the number two, depending on who you’re, what list you’re looking at, but it’s the number one or the number two life sciences city in the country, the other one in contention, San Francisco. And you have, have a lot of biotech firms. You’ve got the vaccine producer moderns, right in Cambridge. You’ve got a lot of really highly educated, well paid employees moving into the city from all over the world, all across the country. They’re moving here, but they’re moving from other countries as well. And that has caused the popul to really skyrocket in Boston. We already surpassed our projections for 2030 population a couple years ago. So it it’s been growing faster than was expected. And the people who are moving to the city are high income people. So what this does, is it the rental, the luxury rental space is very strong in Boston, but additionally, there’s a demand for people who wanna be homeowners. They wanna own condos. They don’t wanna own a single family with a hour commute. They wanna live right in the city. They want to have access to public transportation. So in 2015 we purchased a, a two family, which was in a three family zone and you could convert it into three condominiums, which we sold. And that’s been one of our main focuses of our business ever since we’re doing a couple different things now, but condominium development has been our bread and butter since 2015.

Charles:
Awesome. Yeah. Very highly educated. I, I think it’s like, you’re like within a mile of certain parts of Boston, there’s like 80 institutions of higher education. So I don’t know where else in the United States and or the world you have that

Nick:
Absolutely. That’s

Eric:
Right.

Charles:
So Eric, what’s your background prior to getting involved?

Eric:
Well, I mean, as Nick said, you know, we’ve been friends since we were in high school and we always had this idea, you know, and our personalities were similar, you know, back then we were always, you know, kind of off and going to school and, you know, trying to not have to wake up at 6:00 AM and, and do all, but we, we definitely had a strong bond at that point and we knew, okay, this is what we want to do. And, and Nick sort of gave you an idea of kind of that first project, but coincidentally, you know, there was all these institutions you talk about in Boston. And I ended up going to college in New Jersey for some reason. Even though, even though what you just said is very true. And so anyway, it was, it was several years after that, you know, I was working in public equity and in private equity and York city.

Eric:
And I always joke, it’s like the first minute I sat down at my first job outta college, I knew there’s no way I can do this Def like 9 0 1 on the clock. I said, this is not happening. So anyway Nick had this idea, we saved up for a while. We got into that property back up here in east Boston. I had to move back up here which ended up being great. And so, you know, we’ve been at it with our company now for a little over six years 13 projects we’ve done. We have several right now in the pipe blind. So we, we sort of started off with that condo thing. You know, I had a finance background, so Nick brought his real estate background. We kind of morphed these two things together to the point where now we’re both just very fluent in everything.

Eric:
There’s really no division of skillsets. We definitely both have certain and weaknesses but we really compliment each other very well work together very well. And it’s not even really like a ying and a yang thing. It’s very, you know, together combined, you know, we’ve brought in other people and other friend of ours, Kyle, we brought in to help grow the business. He works with a lot of the investors and helping find deals. But we got to the point where that, that first deal kind of propelled us in east Boston, it was a by right deal. So we didn’t actually need to get any zoning approvals no variances to do the third unit because it was in a three family zone as Nick already mentioned. So that was kind of a eyeopening thing we said, okay, this really worked.

Eric:
So what you found here, man, this, this works, you know, this is something we can continue to do. This is a model we can set up and sort of scale up. That was two to three units. Then, you know, our next one was a seven unit and simultaneously a two unit. So, you know, you think, okay, a two unit maybe smaller again, but that those are very high price units and a sub market right outside Boston, another city. So that gave us the ability to do two projects at once. And then from there kind of, we just, we hit the ground running and really just used all our skills, our background, and, and said, okay, we have a new focus here. We have a real good idea of how to build this model out. And we stuck with it.

Charles:
Oh, interesting. So let’s talk about what you guys are doing now with your current investment strategy. Well, we can start off with your criteria, what you guys are working on with syndications and how you got involved in the syndications. And then we can kind of circle back to how you manage that and how you kind of put both firms together so that you have your development arm where, I guess where you guys are living in the, and then also we’re also investing I think throughout the Sunbelt. So give us a little background on how you guys got involved in syndications.

Nick:
Yeah, so it was kind of a natural evolution for us. We started off with all our own capital into our development projects and there’s a lot of, you know, people live up here, they understand the real estate market’s really hot. So there’s a lot of people are interested in investing. Most of them are local. There are people from outta the state too. I think people from out of this region everyone’s hot on the Southeast. We were too, and I can get into that in a little bit, but this is actually a very strong real estate market. That’s a little overlooked, I think because of some of the unique characteristics of it being high income people and condominiums and luxury rentals. It’s a little different from what people are used to, but we’ve built a, a pretty strong based of people that live around here and, and want to get in on this kind of strong market.

Nick:
And they’re investing in our condo projects. So it was kind of, it made sense for us. We were build building up a rental portfolio just with our own profit we were making from jobs, but obviously that’s slow going. It’s easier if you have involved. So we thought, why don’t we get our investors involved with purchasing longer term assets or apartments or, or things like that. So that, that was kind of an easy evolution for us, but when we get to the Southeast topic, I, I actually, we put a pause on the, the looking in the, so, because we saw some data that I don’t know, it’s a little troubling to me anyways. It it’s the demographic data down there is extremely strong. Don’t get me wrong. The population growth, the income growth, projected growth in the future. They’re all great. But the cap rate compression has gotten a little outta control in my opinion, so the capret compression, according to one study, I saw the Southeast as an overall region has now compressed below the Northeast, which to me doesn’t make sense because the income levels of people living in the Northeast is still much higher.

Nick:
So I don’t think that that’s, there’s some sort of speculation going on there. And I don’t know if that’s a bubble or what it is I might be wrong, but it just seemed, it was throwing up a few red flags for us. And what we decided to do is keep this mentality of getting, you know, into apartment buildings rather than just condominiums, but we’re doing it in our backyard here. We’re using the same sort of mentality that most people are using. We’re looking for value, add deals, and we’re looking for places with really strong demographic data. We wanna see strong population growth. We wanna see income growth. We wanna see crime rates going down and you can find those in satellites, cities outside of, you know, we’re Austin. But if we look at some of the smaller cities in Massachusetts, those are extremely affordable alternatives to living in this.

Nick:
Like I was describing all these high income workers flooding into Boston. What happens to the people who are already living here or just the regular people are trying to move here. They have to live in these surrounding cities. They’re more affordable and what’s happening all across the country. People are chasing affordability. So we’re, we’re pursuing that apartment strategy right in our backyard. And we’re adding a little bit of extra value with our development knowledge, what we’re focusing on right now, our office to apartment conversions, cuz there’s a lot of UN under occupied underutilized office buildings. That would be better served as apartment buildings.

Charles:
Interesting. I, I didn’t think about it initially, but that’s great if when you guys were doing both different models the, you know, mul indication in multifamily, out of state and also Dell film and you can utilize your same investor base. And now I just, as you said that I was like, well, this is fantastic. Cuz usually I found it’s easier with passive investors be investing initially in something that’s close to where they live or something where they’re familiar with, which is usually similar. And, and then you bring in the projects that might be farther from home that you’re also working on. So that’s very interesting. When you’re talking about, I think, you know, people coming down to the Sunbelt, the area like that to invest and like you said, there’s a lot of capret compression and but it still doesn’t have the income that you have in parts of new England. Where do you mean is your strategy to develop ’em rent ’em and or develop ’em and sell ’em? Because I think it’s a completely different business plan because myself being a landlord for 15 plus years in Connecticut, very tenant friendly state that’s different than selling cuz you avoid a lot of issues after going through the red tape initially. When you sell it and just let me know what you, your thoughts are on that and how that works into your, your strategy.

Eric:
Sure. well I I’d say, you know, we’re very opportunistic guys, our, our company, that’s kind of our, our approach at winters spring capital is where’s the opportunity. If we have some sort of knowledge in it or we see someone else kind of a, a peer of ours, if you will doing something we think we can do it. And that doesn’t mean we know what we’re doing. We’ll bring in, you know, experts, consultants, we’ll talk with all the right people, try to learn as much as we can. So there’s really no opportunity in the realm of real estate that we won’t always consider. And it’s really okay, where’s the market going? Where’s the opportunity here as the red tape in Boston, for example, and the condo market continues to, you know, wrap tighter, thicker, if you will. We’re, you know, trying to pursue some of these other opportunities.

Eric:
So to answer your question, we, you know, we’d build and just sell condos so we didn’t have any assets to hold onto. Then we started to see okay, to, to go up to some of these bigger projects and get, you know, much bigger loans. You need to have a decent amount of assets on your balance sheet. Mm. So we started saying, okay, we gotta figure out how these guys are in Boston at least, or buying or, you know, buying some land, building a apartment building and you know, being able to hold onto it. And the numbers were just, it was tough for us to make that work, even though rents are pretty high in Boston, the NOI you’d get just kinda wouldn’t support what you needed to make any money on the building. And the purchase price of the original parcel of land was just too high.

Eric:
So we, we started figuring out, okay, well, a lot of these guys are doing that. They’re building and selling it like a four cap or something selling their completed asset after they stabilize it. And you know, that’s good enough. It, the, the debt to, you know, the buyer is not really relevant, just looking at the NOI. We were looking at the whole picture, okay. Then we need to take out debt on this thing. And it’d probably be at like, you know, 75%, whatever, you know, something like that, where it just wasn’t really working. So we figured out kind of this office conversion opportunity could work for us where we, you know, redevelop it. We go in one of these satellite cities go in we completely revitalize bring it up to its highest and best use have all these residential units, maybe keep some retail on the first floor.

Eric:
That’s existing, already work around them. So we can, it’s like a covered land play. We can bring in money as we’re doing it. And then already have them set up and get to the point. The value of the building we’ve created is a lot higher than what we owe the bank for the construction and the acquisition loan where we can refinance and hold onto it. And so kind of what we’re looking at that is, as far as our investors go we’re bringing in people who are used to our condo projects where they’re paid, they don’t receive anything for like two years, you know, two, two and a half years. So they’re kind of used to that. Mm-Hmm <affirmative> and you know, we incentivize ’em with higher returns for something like that, rather than regular distributions. Which just isn’t possible when you’re building from scratch.

Eric:
You know, you really, there’s nothing to distribute for a few years. So with the office play here, we’re looking okay, it’s gonna be delayed gratification for the investors. But either way, whether we decide to hold it in refinance but you know, by refinancing or we decide to sell it at completion, we’re gonna pay back the investors, a preferred rate of return at that point. And then what we do from there just kind of depends on the market. So I guess started this kind of diet trap we’re opportunistic guys. So that’s, that’s how we see it. We see going into this with two potential exit solutions. Mm-Hmm, <affirmative> one of ’em. We would keep it either way the investors are paid back at the refi or we sell it, they’re all paid back. And then we make, you know, profit for our company that otherwise would just remained as equity in the, in the building.

Charles:
One question on that, cuz you mentioned again, the red tape, how is that? Where have I found before in a lot of these cities where you have a increased demand for residential and you know, the office to residential makes perfect sense. But I found some pushback before at Le levels of the city council and government, because usually in a city, your biggest expenses are education and police. So obviously they have to, you know, they’re adding in more rental units, more rental units you know, the taxes for those units have to, you know, some pay for or subsidize the education for possibly children that are living in these places and stuff. Have you had pushback from like these city councils and governments about this conversion or do they welcome it because they know they need more residential inventory.

Nick:
Yeah, so it definitely depends where you’re building in Boston, their lucky that they have people from all over clamoring to invest money and build in that city because every, you know, everyone understands the life sciences, the industry situation we’re speaking about earlier. So there’s a lot of investment and the city can basically turn down. Most developers be really string and still come away progressing and building. Whereas when you’re looking at some of these satellite cities like the ones we’re talking about for the office conversion, you know, a lot of these cities are former especially here in new England. A lot of them are former manufacturing hubs. Their population today is like equal to what it was and month the late 18 hundreds. So really they have the infrastructure and they have the desire to become a proper city again. And they’ve been doing a really good job over the past couple decades, basically since Eric and I have been alive, you know, we talk to our parents and we say, oh yeah, we’re investing in Lowell.

Nick:
That’s the name of the city. And they might go like, Ooh, they might shutter and cringe and think isn’t that, you know, all the, the drugs are or whatever, but actually you look at it now today, the crime rate is below the state average. So a lot of these cities they’ve been actively for several decades now yeah. On a campaign to improve and repopulate and clean up their cities. And they’ve been doing a really good job. There’s also all sorts of incentives from the state. Like they have programs where they’ll award you additional, you know, basically a grant for your project. If you invest in these, what are called gateway cities, there’s also tax credits. You can get for a lot of these historic buildings. There’s a lot of things, incentivize developers to go in. And one of them is a friendly political environment.

Nick:
You know, the, when we look at projects like this, one of the first things we do is we call the city planner and the people on the zoning board. And we talk with a local zoning attorney, that’s come from good references from brokers and other people in the real estate industry street. And you know, what we heard for this project is come in, you know, the, the thing that they were worried about is we build too much affordable housing cuz they already have too much of that. You know, they want like nice high level rentals in their city. And I think that’s an interesting point. You made about a, they they’d obviously prefer homeowners for the taxes, but these people are still, you know, they’re gonna be living right in the heart of the city. They’re gonna be patronizing local businesses. So they’re still gonna be contributing, you know, pretty significantly to the economy. So I think the city’s all all for it. And you know, having the wind at our back is nice when we’re used to dealing with Boston. Yeah.

Charles:
The other thing too though, is Anna, is when you’re building high class enough, right. You’re selling a condo for over a million bucks. The chances are that their children are going to public school is probably not that high. You’re saying, you said you’re selling for $600 a square foot outside of Boston. So you put those numbers together for a small, you know, a medium size condo let’s say that can get up into the seven figures pretty easily. But very interesting on that. It’s very true to also for anybody it’s like listening is like developing or if you’re investing just what Nick was saying with having the downward trajectory of crime in any of your cities and looking back at that and before you even get involved with any city speaking to the board and that’s, even if you’re buying a property that’s already built that you’re gonna renovate or value add just knowing how making sure that the town, the city is on your side and not against you when you’re trying to buy a property and you know, execute some sort of business plan that you’ve developed with your partners.

Charles:
But so one other thing too, you guys Donna that I haven’t done before and I’d like to learn more about it is a lot of land entitlements. Can you explain what land entitlement is and how you utilize it within your business?

Eric:
Yeah. so that’s probably, you know, our, our best skillset in terms of what we’ve done so far. And I, I mean I describe land entitlement pretty simply as, you know, taking a raw parcel or, you know, an underutilized parcel or just it, any property and you getting proper approvals to build something much more, almost drastic there, much different that really takes it to its highest and best use mm-hmm <affirmative>. So for example, you find a two family home in a two family zone, meaning the zoning laws say you can only build two family structures on that parcel of land and probably the surrounding ones. And you go through a long process that involves many steps and then you get approved to build, you know, a 10 unit building there, so that that’s kind of land entitlement in, in our case, especially.

Eric:
So that’s almost an exact example of something we’ve done. So we’ll find that, you know, that very first project we both spoke about mm-hmm, <affirmative> the two family to three family that zone with the zoning laws in Boston allowed for three units. We only had two. So we didn’t have to go through this long entitlement process to get, you know three units per a permit to build our three units. We just, we had the plans, we applied, there’s a small, you know, back and forth. We got the permit, mm-hmm <affirmative> with something like what we typically do, what our business model does in a longer entitlement process is okay, you find your land. And you say, okay, there’s, you know, this is kinda what we do. And there’s probably different approaches, but if you find your piece of property, maybe it’s currently a single family house and you say, okay, this is in a three family zone.

Eric:
So I could right away, you know, as long as I met the other dimensional requirements of the zoning codes, such as, you know, maximum height and the certain number of parking spaces and set from the street and side yards and all that, as long as you met those, we could right away, knock this down and build three units. Now there’s some nuance there. You know, you, you, you, the house might be deemed historical to see all different cities have different sort of metrics that they use to say, okay, this is a historical piece of property or not Boston. For example, if it’s built before 1960, you have to go through a process to determine if it’s gonna be deemed historical and they have five or six categories that they could deem it as. And, and one of them is essentially, we just deem it historical because we feel like it.

Eric:
And that’s usually sort of what happens. And then there’s a additional process. So this is just the beginning when you’re deciding I want to demolish the existing house or building whatever it is, you then have to go through the a few month process where you kinda work with the historic committee and decide it’s called the landmarks commission and decide if there’s an alternative to demolition. And usually there isn’t, it’s, it’s like you could build a off the structure, but usually, you know, the initial foundations may be very old, it’s it almost never makes sense to do that. Yeah. So they might say, okay, look, you know, we won’t invoke a demolition delay on you or they might. And then if they do invoke this demolition delay, cuz you couldn’t find an alternative and, and they deemed it historical, you have to wait 90 days to demolish.

Eric:
So that might be part of your entitlement process or it might not concurrent though to that, you’re gonna start applying, moving towards your building permit and that process, if you’re gonna do 10 units, for example, on this fictional two family, lot, I’m talking about there’s many meetings you have to meet with neighbors. You have to get neighbors on your side, local civic groups local politicians it’s a very political process. Most people don’t like you they think you’re coming in and ruining the neighborhood. Usually we’re doing the opposite. We’re finding a dilapidated underutilized house or building or vacant building and, and bringing residents to the neighborhood who are gonna pay taxes and cuz these are homeowners mm-hmm <affirmative>. And this you example so you go through this long process and then eventually, you know, you kind of, maybe you went in with the 12 unit building, you come out with the seven unit, you know, you kind of worked to the neighbors and kind of met in the middle cuz they say, no two families own, you’re building two units and we say, no, we’re gonna try to get variances to build 12.

Eric:
So you, then, you know, you throughout this process brought in a zoning attorney to show you what variances you’ll need. You brought in an architect, civil engineer, mechanical engineer, to help all, you know, design your plans. And they’re always in flux as you go through the neighborhood process. So then once you’re done with that whole process, which could take six months, it could take 24 months. It’s it’s really, you might, sometimes you really hated by the neighborhood groups. You gotta keep going back. So this is all still part of this overall entitlement process that we deal with. Then we get to the point where we say, okay, this, this is our best shot. We have, you know, 20 letters of support from neighbors. We hope there’s not many letters of opposition. We don’t really know they’ve been sent into the mayor’s office.

Eric:
We schedule a zoning hearing go before the zoning board of appeals and say, okay, we want to build this 10 unit building on this piece of property. Here’s, you know, our case, our legal case. These are the variances we’re seeking. You know, in this case it’d be number of units, number dwelling units that we’d need a variance. Since they only allow two, we might need a variance on number of parking spaces per unit. Maybe they require one, but there’s no way we could really fit 10 on that property. Maybe we went a little closer to the street than while too, so we need a variance on setback. Yeah. So you’d list all your variances, you’d make your case. And then they would say, okay, you know you know, they’ll vote on it. It’s a whole board. They’ll agree. Okay, we’ll grant you these variance, you can, you know, you have, you can go build this thing and that’s just sort of the start of the process.

Eric:
There’s an appeal period after that, where they neighbors can appeal the decision. You can get sued, you know, during that or at any point really. And then once, you know, you have your zoning board, ZBA zoning board of appeals approved plans, then you start working towards your building permit. You have your architect draw up your full construction set. You submit that to the city, along with all, all these other acquired documents, you know? Yeah. Seems like dozens and dozens of things. And then eventually you get your permit that says, you know, erected 10 units and that’s kind of the entire yeah. Entitlement process for us in a nutshell.

Charles:
Wow. That’s you know, very in depth, I imagine you have multiple these projects going at the same time since for so long term. One question before we start wrapping up is with that property, let’s say that that fictional or example that two family, you have purchased that two family, you don’t have it under contract or anything like that. You’ve actually purchased it at this point. And then you start the whole process. Is that correct? You’re not tying it up or anything like this. You’re actually purchased it then hoping that you can go, you know, whatever it is, a, a 10, 10 unit as we’re talking here. Is that correct?

Nick:
Could be. So we use a lot of different strategies. We’re all about minimal risk mm-hmm <affirmative> obviously there has to be some risk, but we try to minimize it as much as possible for both ourselves and our investors. So if we have of a project where we are gonna go through this process and we purchase it outright, we have to have a plan B where, okay, if we run into trouble, then the letter of the law, you can build two units. We can still make enough profit to pay our investors back with their return and maybe, you know, a little bit of profit for us. So we need a disaster scenario where we’re not losing money. No one’s losing money. Otherwise we won’t go after the deal. But what we also do is we do what are called zoning contingencies. So we’ll write offers with a contingency that I’m not gonna purchase your building today.

Nick:
I’m gonna purchase it in a year or a year and a half. Once we have approvals. And for letting me wait that long, I’m gonna pay you slightly above the market rate. Yeah. So what would actually like a pure land entitlement deal? We just did was got a property under contract with his own and contingency. We didn’t purchase it. Outright. We got it fully approved then before purchasing it, we found another developer because we have a lot of projects going on right now. We found another developer and we said, Hey, we’ll sell this building to you that we didn’t even own yet. But we owned the approvals for because they were in our name, we’ll sell this building to you. And that developer is now paying us, you know like 700, 800,000 more than we’re paying. And that’s the value that we generated just from getting those approvals. Yeah. And we have investors on that deal, you know, they’re gonna be getting their money back instead of, you know, two years, they’re gonna be getting their money back in a year because we’re able to make so much profit just from tiding the land. We don’t even need to do the construction. Interesting. So it can be really valuable, especially in a place with that much red tape like Boston. Yeah,

Charles:
Yeah, no, that’s just my question. EV I was in an investor, that’d be my question. What is your extra, what’s your exit strategies? Because obviously this is just great going to the 10 unit, but obviously we’re, there’s a lot of, as you, as as Eric went through, there’s tons of different variables. So what are some mistakes you see real estate investors and developers make?

Eric:
I, I think one of the things we we see a lot is and, and we started seeing this kind of with the Southeast deals we were talking about mm-hmm <affirmative> down there earlier with the cabaret compression is overpaying mm-hmm <affirmative>. And now one thing, you know, we were just talking about yesterday is there’s a, there’s a price you can overpay. Or if the numbers still work, maybe it’s like an off market deal or something. You can overpay in a sense because it, the numbers still work. And, you know, it’s the only way that you’ll be able to take this deal down. But when you start chasing these things like cap capret compression going on down there, we, we are seeing deals where it was like, you couldn’t even, you couldn’t get a Fanny Fred loan, you couldn’t get any conventional financing.

Eric:
The only way it would work was if you had like a three year bridge and, and your proforma numbers were at, you know, those maybe produced three years out, a good outcome where you’re almost taking a loss the first three years and you’re going in at like a four and a quarter cap. So we we’re, we’re gonna see how the water, those play out, cuz we saw some of those purchase in the last year. I’m curious in the next year or two, how those, those work out down there, but that I think a big thing that always sticks out to us is really overpaying and chasing chasing those deals that aren’t gonna perform for three years when there’s plenty of other deals out there that can be more creative about.

Charles:
Right. Okay. What do you think are the main factors that have contributed to your success?

Nick:
It’s a combination of flexibility and always learning new things. So as Eric said, we’re opportunistic, we start out a condo development. We have an affordable housing project right now. We’re doing this office convers in which involves like historic tax credits. We’re constantly learning new things and looking at people who are a few steps ahead of us in one way or another and trying to see what they’re doing. Right. And always asking the experts, you know, speak with people. Don’t try to Google and talk to people. Who’ve been doing it for 15 years.

Charles:
Okay. And how can our listeners learn more about out you and your businesses?

Eric:
You can go to winter spring, capital.com. We’re both on LinkedIn as well. Eric Dean Cola and Nick Earls. We have an Instagram account winter, spring capital, and also Nick wrote a book on development. It’s at winter spring, capital.com/development D book. It goes through our entire process kind of shows you if it’s something you wanted to start doing on your own and figure out it really details everything for you. Including that entire entitlement process I went through in much greater detail.

Charles:
Okay, awesome. Great. I will put those links to the show notes. So I wanna thank both you guys for coming on today and looking forward to connecting with you guys in the near future.

Nick:
Thanks Charles. Really appreciate

Eric:
It. Absolutely.

Charles:
Talk to you soon. Bye bye. Thanks

Eric:
Charles.

Charles:
Hi guys! It’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in get involved with real estate, but you don’t know where to begin, set up a free 30 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com. Thank you.

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About Nick Earls & Eric DiNicola

Nick Earls: Nick is the co-founder and managing principal of Winterspring Capital and has over a decade of experience in all phases of commercial real estate, including asset management, sales, new construction development, and property management. While building his own portfolio, he has also guided many investors down the path of multifamily investment, management, or development. He is an expert on multifamily condominium development, underwriting, and asset management in the multifamily space and is also the author of the top-rated book “Making Millions through Multi-Family Development.”

Eric DiNicola:  Eric DiNicola, co-founder and managing principal of Winterspring Capital, has a strong financial background spanning over a decade. Eric understands the importance of investment diversification.  He began working in public equity in 2010 and moved into the private equity markets where he worked on valuations and capital raising.  Joining forces with Nick in 2015, he leveraged his investment experience and expertise to accelerate the growth of Winterspring’s real estate business.   Heading up our acquisitions team, Eric leans on his extensive broker network to keep Winterspring’s deal pipeline full.

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