GI169: Ground-Up Development and Managing 3,000 Investors with Michael Episcope

GI169: Ground-Up Development and Managing 3,000 Investors with Michael Episcope

After a 16-year trading career, rising through the ranks of the Chicago Mercantile Exchange he retired from trading in 2005; and in 2007, Michael co-founded Origin Investments. Origin has executed more than $2.3 billion in real estate transactions with their 1,400 investment partners and manages more than 5,000 multi-family units in 14 cities and across 8 states.

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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:
Do you have money sitting in the stock market? And you’re worried about it or worse. You have money sitting at the bank, not keeping up with inflation. My name is Charles Carillo, founder and managing partner of Harborside Partners. And since 2006, I’ve been investing my money and my family’s money into income producing properties. These are real assets, real properties with real addresses that produce real cash flow. At Harborside Partners, we provide passive investors who love real estate with a turnkey investing solution. If you want to put your money to work in real estate, but can’t find deals, don’t have the time to get funding in. The last thing that productive people want to do is manage real estate. We find the deals. We fund the deals and we manage the tenants, the termites and the properties. Partner with us at investwithharborside.com. That’s investwithharborside.com. Go to investwithharborside.com. If you love real estate, you like the idea of passive income and believe that income producing properties will appreciate over time. Go to investwithharborside.com. That’s investwithharborside.com.

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host Charles Carillo. Today we have Michael Episcope. After a 16-year trading career, rising through the ranks of the Chicago Mercantile Exchange he retired from trading in 2005; and in 2007, Michael co-founded Origin Investments. Origin has executed more than $2.3 billion in real estate transactions with their 1,400 investment partners and manages more than 5,000 multi-family units in 14 cities and across 8 states.

Michael:
Thank you for having me, Charles.

Charles:
I imagine those numbers are a little higher from the first time we spoke, but it’s great having you on, so give us a little background on yourself, both you know, personally and professionally, prior to being involved in real estate. And I, I know you grew up on it, you grew up in the business with one of your relatives, but you know, what were you doing prior to setting up origin?

Michael:
Well, you, you touched on it briefly. My first career was in commodities trading. I started down there at the young age of 19 years old and I didn’t really start my trading career though, till I was about 26, 27, got my first shot as a trader. And prior to that, I was just kind of working my way up the ladder. That was it. And I live in Chicago where the commodity trading capital of the world. I went to DePaul university, my undergrad, and I got a summer job there and just loved it, absolutely loved being down there. I was learning about finance and economics during you know, the day and then going down there and seeing how kind of the, the commodities worked in the world. And, and that’s, you know, certainly something that we see happening today with all the commodity prices and, and things happening on the, the interest rate side as well.

Michael:
So ultimately I worked my way up. I ended up starting in January of 1997 and just had a really good kind of eight, nine year career left at the end of oh five and a couple of reasons why I left and, and I’ll kind of dovetail back into how I sort of was introduced to real estate. But even through that career, as I started building wealth you know, you always have to figure out what do you wanna do with your wealth? And I knew that trading wasn’t going to last forever. I didn’t think it was going to disappear as quickly as it did, but when the computers came in, things changed and we lost our edge and, and real estate provides investors like myself, high net worth ultra high net worth investors. The ability to grow their wealth, generate passive income in a very tax efficient manner.

Michael:
And when my partner and I came together, we had very similar desires needs. We had been working on a non-profit together. We’d been working just sharing investment ideas and best practices. And in oh seven, we, we just, we weren’t finding a lot of great options in real estate. And, and we sort of just said, look, we can do this better. And, and that’s what we did is formed origin with the idea that we were gonna invest the significant amount of our capital and turn our assets into income. Cuz when you, when you have a full-time job and your trading every day, you live outta your trading account, you save whatever’s left after expenses like most people, but then when that disappears, you’re like, Hey, I gotta pay the bills. Right. And it’s not enough just to have assets. And, and that was sort of the beginning is we started like a family office and then it’s you know, so we went from two investors in oh seven and we didn’t really have this grand vision in the beginning of where we wanted to be, what we wanted to do.

Michael:
We just wanted to do good deals. And then we started bringing in friends and family because what you realize when you’re building a firm is that it’s expensive and we had a decent amount of money, but not enough to amortize all the costs over. So I always like to say in the beginning, probably the first four or five years it was, if my partner and I were paying four or 5% management fees and everybody else was paying 1.5% because we had to supplement the platform. But understanding also that we were gonna get performance fees. And so it was more of a, a loan to the firm for a while. And, and that was sort of the beginning and we crystallized what our, our mission and the vision was. And it was really, I think in about 2015 that we decided that we were gonna stay and, and focus on the high net worth investor, that this is the investor, the taxable investor, the individual who really needed an institutional platform and, and keep in mind like there weren’t a lot of great options cuz the jobs act didn’t come out till 2008.

Michael:
So it wasn’t as easy to find deals, find, you know, go to organizations. So we built it and that’s what we did. And, and in 2015 we had about 80 investors and by the end of 2017, because we applied marketing and just digital lead generation to meeting people, we had over 450 and then today we serve more than 2,700 investors. And I think it, wow really comes down to three things. It’s number one this notion of alignment, my partner and I have invested more than 70 million in our own deals next to investors. And I think that gets people really comfortable. And we have a saying, you know, we create funds. We wanna invest in and then we do right. We do deals. We’re still the largest investors at origin and our track record as well, speaks for itself. We’re top decile. And then we have an institutional quality team.

Michael:
So a lot of repeat business, that’s been a great, you know, journey from the beginning and you know, just take you all the way back. I got my you know, hands dirty in real estate. When I was younger with my grandfather, he owned buildings on the west side of Chicago, bought him in tax sale. And, and so I sort of, you know, maybe unknowingly at that time, you know, got to understand the lifestyle that it provided for him. And you know, I never really thought he worked. Right. Cause he had so many buildings and passive income and he was always over at the house and I’m like, what does grandpa even do? Oh, he owns real estate. I’m like, okay, that’s cool. So, so that was sort of, you know, maybe that seed that was planted and then it came full circle at the end. And so, you know, very proud of what we’ve built today and you know, it it’s been a fantastic journey. That’s gonna continue on.

Charles:
That’s funny cuz I went to a new doctor yesterday and then doctor, he looks on what you’ve done and I say I’m a real estate investor. He goes, oh, so you do nothing. So it’s, it’s funny how that’s kind of the connotation of PLC, but between oh seven and 2015, what kind of deals were you, what kind of projects were you investing into similar to what you’re doing now? Or were they smaller properties? Were they in multifamily predominantly?

Michael:
Well, you have to remember that the world look very different in oh seven. First of all. Oh seven was more of a I would say a fact finding mission, right? Going out there trying to establish ourselves, looking at it. And my partner and I were trying to develop our strategy. We came from the trading world and it was very important to us for, to look for edge. How do we get into deals at the right basis? How do we do things off market? And, and that time in the world, it was capital that had all the leverage deals did not have leverage deals were everywhere. You could have pretty much closed your eyes and bought everything. So our, we were more generalists. We were looking at buying really good high quality deals at bargain ment prices. And you know, there weren’t these trophy assets.

Michael:
We were certainly tracking in a much smaller size of assets. Our assets were, you know, we would buy assets at 3 million, 5 million, you know, probably our biggest asset at that time was like 16 million. And they were all really good, but we were sort of getting our feet wet and understanding and I got my master’s in real estate and I would call, you know, kind of the investing in oh 8, 9, 10, that was sort of the PhD in real estate and getting our, our hands dirty and understanding what we liked to do and what we didn’t like to do. And it, you know, it was interesting because we bought a lot of loan pools in the beginning from banks. I mean there was no bigger edge at the time and you, you, you know, what we realized is that banks weren’t selling bad real estate. They were selling bad borrowers.

Michael:
And so we had to then deal with, you know, the kind of bottom of the barrel borrowers there. And, and we have, you know, just some interesting stories, but we quickly realized like this isn’t really what we wanna be doing. There was a lot of edge and a lot of, you know, good deals there, but it also wasn’t scalable for us as well. And, and that was sort of a moment in time, the bank loans and over the years as the market normalized, what we realized is that you, you really have to have operational excellence to compete in the market. Right? It sounds great that you’re gonna do all these, you know, industrial office retail, multifamily student housing, but at the end of the day, if you do everything, you know, the market is confused about what you do. So we slowly narrowed it down over the years.

Michael:
And today we only do multifamily. We have kind of a three strategies across multifamily. We do ground up development, we do value add, and we also do preferred equity to ground up multi-family developments. Now we’re not doing anything in the value ad space today. For reasons that we can get into in a little while, but it’s more of a barbell approach. And I will say that we have you know, by, by specializing in only being in multi-family, we have become much more productive as a firm and I think better. And it’s a better way to to just execute and deliver a product for investors that we can feel really good about because we understand our markets, we understand our entire data set. All of our technology, our team is built around only doing multifamily. And that’s all we think about when we walk in in the morning and it would be a little bit more difficult if we were doing all of these other asset classes and being more generalists, you know, trying to compete against people in those verticals. So we have always favored multi-family we like it. We don’t think, you know, it’s, it’s not going anywhere. It is cyclical, but it’s tend to be have been a, a lower volatile asset class because if it’s, you know, necessity right. Versus an office or a retail or hotel or other things other asset classes, those nature.

Charles:
So when you’re looking, cuz you’re in eight plus markets, what do you, what are some of the most important parameters that you, that Origin’s looking for when you’re choosing markets? Because you’re in some markets, I mean, you have most people, everybody knows they’re like Sunbelt, that’s where everybody’s going, the Southeast, all these places. And you’re outside of that a little bit with some of your assets, as I, as I’ve seen in quick research, how are, what are the parameters that you are looking for when choosing these markets?

Michael:
It, it really, so when we look at the markets, we actually invested heavily in predictive analytics a couple years ago, this, this was one of the, this helps us with our decision making process, but it basically we call it in internally origin, multi Lytics. We hired two data scientists from the university of Chicago because growth is one of the most important things that you can get right in investing, right? You put in a growth rate of 8% and the model works all day. You put in a growth rate of 0% and you know, you’re gonna lose money. And what was frustrating to us is that we, we were renting the, you know, this, this other, and I don’t, I don’t want to disparage any groups out there, but they weren’t good. Right. You know, they would show, okay, over the next five years, you’re gonna a growth rate of two and a half, 3, 2, 1, whatever it was.

Michael:
And then you would back test them or ask them for back testing and it was never accurate. And so we really looked at this and said, all right, we need to spend money here. This is critical to our business, understanding, you know, growth rates. You, you’re never gonna be a hundred percent accurate in forecasting cuz there’s too many variables out there, but we certainly believe that we could build something better and we did. And so I’m, I’m telling you that story because it always starts with the market. You know, looking at that at, at sort of a 20,000 foot level first and understanding what are the drivers behind the growth in these markets. And ultimately you need population growth, you need job growth. And these are in business friendly. These are in tax friendly states. These are in moderate climate states. These are in lifestyle cities now.

Michael:
And you know, you don’t really need an, an AI model or a predictive model to know that salt lake city is a great environment to know that Austin is a, is a great city to invest and to know Phoenix. I mean, those are, those are pretty obvious ones, but when you’re looking at those all together and understanding what do they look like on a relative value when you’re ranking these cities, where is the affordability? Where can we still, you know, find great deals? Then the, the data in the analytics helps because technology can process millions of pieces of data. And we couldn’t do this, you know, if we had a research team of 10, so that’s been really, really helpful for us to kind of rank the cities. And then what our technology also does is it brings us down into the submarket and, and ranks them as well.

Michael:
And we can also bring this down all the way to the property level. And what you find is there’s, you know, affordability is still a huge driver in these markets and the technology helps us find the areas that are still the most affordable to be building. Because when you have, when you can build apartments at affordable rates, that means that you can increase prices, rents, things like that. And so, you know, again, it starts with the city, or I I’ll say even the state, right? So we’re only in the Sunbelt states. It goes down to the city. We generally are in city of a million or more in terms of population. And then it’s the submarket as well. So, you know, in the submarket that we cater to are generally renters by choice. So these are white collar, 70, 80, 90, you know, thousand and above incomes, college educated and, and of course, location, right?

Michael:
It has to have connectivity. It has to have visibility. Design is really important in today’s. And then I think what our team does a really good job of is just creating that community and that living space. And, you know, I, 20 years ago, multifamily real estate was about space. And now it’s become much more about community and being vibrant and giving a place to people who can interact with one another and, and that’s evolved a lot. So I think we’re really good at that long winded answer, but, you know, that’s, that’s kind of how there’s, there’s no one answer to your question about what it is. It it’s sort of this basket that all has to, to go together. And then even when we’re at credit committee, we’re looking at deals, there has to be multiple ways of winning, right? We have to look at a deal and make sure that if we’re delivering a deal in two years, that we can make the deal work with rents that we’re seeing today, that we’re not trending, those that we’re using.

Michael:
We’re doing what’s called drifting cap rates, right? So if the prevailing cap rates are in the market are 3 75 in five years, we might use an exit cap rate of 4, 10, 4, 15, and, and that’s sort of institutional underwriting practices. So there’s always an art and a science to this. And then one thing like we had credit committee yesterday, we’re always asking, cuz we’re ranking these deals. Where’s the hidden upside. What aren’t you underwriting? What aren’t you doing this? And you know, when the team says, look, our rents are $1,600. We actually think that, you know, there’s other properties in here getting 17 or $1,800. And so like we can make our numbers on $1,600. You don’t have to be a real estate expert to be in that room and going, yeah, that feels good. I, I can see that there’s an asymmetry setting up here that’s to the upside, not downside. And that’s really what we’ve been pretty good at is making sure that first and foremost, you know, we don’t lose money. That’s the number one rule in investing and we never have on a deal in any of our funds. And because it’s that disciplined investing that we’ve adhered to,

Charles:
Are you guys kind of bowing out of the value add because now that you see prices are coming up closer to construction costs on units, is that kind of, or like, you know, new construction per units cause usually, you know, you’d buy something and you’re getting a deal on it because what you’re buying for is much less than the replacement value replacement costs. Are you seeing those numbers get really close? So you’re getting into better units than you were before because returns are similar or

Michael:
Charles you hit it on the head right there. And, and I would say we were early in doing that, we, we were looking at value add, and by the way I say early we’re wrong, right? We stopped doing value. Add, I would say in late 2018, early 2019, we started favoring the ground of development side. Because even at that time, there is so much capital chasing value add that we were looking at these deals and we were like, look, what’s the return on cost. And the return on cost, all you were doing is you were buying a property that was 15 years old, that you had put $15,000 a unit into it. And you would get, you know, a return on cost that was 10 to 20 basis points above prevailing cap rates. More like that’s not even worth it. Like why would we do that?

Michael:
And then you’re on top of that. You’re looking at an exit price at that time that was 20, $30,000 above what the construction cost, the replacement cost was back then. Clearly that’s gone up since then. So we started getting out of that market more than two years ago. And I would say that’s one of the advantages of our strategy or our model is that we’re not beholden to any one strategy. If we don’t like value, add our fund, doesn’t require us to do value, add we can just stop doing deals, right. We don’t do that. So we’ll, we’ll do preferred equity. We’ll do ground up development, but even, and, and by the way, the whole value add space in terms of basis has only gotten worse today. We’re seeing, you know, just this entire year replacement cost has probably gone up 30 to 40% over the last two years.

Michael:
And we’re still seeing projects trade for anywhere between 40 to 50% above replacement cost. In some of these deals that we’re selling, cuz we’re both buyers and sellers in the market, obvi buying, we’re doing it through ground up development, but selling some of our legacy funds and assets and we’re scratching our heads at some of the prices cuz you look at it and you’re like, look, borrowing costs are three seven today, three eight, the 10 years going through the roof and people are buying deals at three and a quarter three and a half caps with this insane amount of growth. And, and to me that just doesn’t feel like a good bet what’s going on in today’s market. So we’re gonna, we’re stepping to the side cuz you don’t buy a cash flowing asset with the intention of paying the bank every month. That makes no sense to me.

Michael:
So I hope they’re right, because if they are then ground development is going to do that much better, but we are out of the value add today and, and candidly like for us, we have this question yesterday, like where does the market have to go for us to even get interested in a value add deal. And 20 year old product today is trading way above replacement cost. And, and is that, is that a 30%, you know, discount 40% it’s, it’s gotta correct quite a bit. And I’m not saying that it’s going to, but for us to get back into that space it’s gonna take a lot.

Charles:
So your firm really focuses on funds versus syndications and what are some of the pros and cons of funds versus individual syndications where I’m actually picking the property. If I want to be an LP in it versus I’m investing to a fund, they tell me there’s gonna be 10 projects this year. And maybe I’m investing when there’s only three or four that have been identified. Yeah. Can you speak to that?

Michael:
Absolutely. we’ve written articles on this too, but I think the point you bring up about syndicated deals is what people like about them is that they can see a deal. They can invest their money right away in that single deal. The con is that number one, you’re not diversified. You can buy a lot of deals and be diversified, but you know where you’re not diversified. And this is what maybe is a misunderstanding about funds. First of all, your fees are gonna be exactly the same, right? In a fund structure or a deal by deal structure. You’re going to pay fees, you know, both on the investment management. So I hear people, oh, funds are more expensive. They’re they’re not actually in a fund though, the difference is, is that all of our promotes as a manager are cross collateralized and that’s a big difference right?

Michael:
In that, the sense that if we have 10 deals in a fund and five double their money and five don’t do well. Right. and we return something let’s say below the preferred return, let’s just say the preferred return is an eight. We don’t get paid. If you take those SIM the same 10 deals and you do it as a syndication and let’s say you lose just extreme examples, five of the deals, you lose a hundred percent of your money and five of the deals. You double your money. Well, guess what? You’re paying fees on all of those five where you doubled your money, even if we’re they’re with the same manager. So that’s kind of a really important point. And I would tell you that a fund, you have to think about it like a company as well. And when things go sideways in the world, which they will eventually a fund manager has the ability to borrow from one property and move to another because at the top is the fund.

Michael:
And then you have the fund owns a hundred percent of all the properties and then the O the owners, the investors have a piece of that fund. And so, you know, historically like we’ve operated funds. And if we had a an office deal, right, we’ve done office before. And if suddenly a tenant blew out and we needed $4 million to reten that space, well, we had the ability within that fund structure to bring the money up, right? If you do that deal by deal. And suddenly you, you find yourself in a situation where the sponsor now needs money, guess what they’re calling all of the investors for that money. We have a lot more flexibility in a fun structure than in a, in a syndicated deal of ideal. I, I actually think syndications are better for the sponsor. They’re easier. Again, they don’t cross collateralize your promote. So, you know, you’re going to invariably make, you know, more money over the long run in that structure and, and for, you know, but I, I think the other thing when you’re looking at that balance sheet, I don’t that can’t be underestimated, especially if you think that there, you know, could be you know, some storms on the horizon fund is a, a way better model in that situation.

Charles:
Yeah. I also like ’em too in the sense that you’re gonna pick up some properties. So in funds I haven’t invested into they’ll show you, you know, your monthly report, they’ll show you collections and you’ll have some that were properties that were in tougher shape when you’re buying ’em. So they’re in the eighties, you know, 88% collections and you have some, and then they go overall, we’re at 96 or 95. So at that point you’re spreading your money over a lot more doors and a lot more I think it’s just less risky. So, and

Michael:
It’s also, you know, for the individual investor and I’m sure people this resonates with people, you have a full time job, right? And our job is to evaluate real estate and pick the best 10 to 12 deals for our fund. You can try to do that, but I, I just don’t know how you can compete against a firm like ours, that we do this every day in and out see hundreds and hundreds of deals every year, you know, but I, I do know a lot of people and by the way, we do both. So it’s not really. And, you know, and or sometimes it’s an, and, and there’s oftentimes that in our fund, we might have an over concentration in a geographic region or just a deal too big. And then we bring that out in a side car opportunity, but understand that deal has been vetted already by us.

Michael:
We’re putting our money into it and it’s going into the fund. And by the way, like, this is how I I’m in a lot of private equity out there, venture things like that. I get shown deals. And whenever I get shown an individual deal, my whole thing is, well, if you’re showing me this deal, chances are, there are more sophisticated people than me who see hundreds of deals all day long that have passed on this. You know, I’m not gonna do it unless one of my fund managers who I know, and I trust says, Hey, we have this side car opportunity. That’s going into the fund. Well, I know these, I know that they’ve vetted this entire you know, area or this vertical, if you will, they know the competition, they know this deal. I trust them. They’ve done well. And I’ll throw a little bit of money into the side car deal, understanding that. And that that’s a you know, it’s work for me.

Charles:
Yeah. So, Michael, what are some mistakes that you see kind mistakes you’re seeing now from other real estate investors? I know you talked about, about paying the bank every every month, but what other mistakes have you seen, let’s say over the last few years, or in your, in your investing career, in real estate that just happens over and over again with new investors or with seasoned investors?

Michael:
Yeah. Are you talking about like individual investors investing with us or managers on the ground

Charles:
Operators that are buying properties themself and whether they’re doing asset management, whether they’re managing it themself and then, you know, that’s, that’s mainly where I was kind of going with them.

Michael:
Yeah. I mean, in, you know, look, I I’ll go back. I’ve always been a student of real estate and just understanding why do deals fail? And it’s always because things are priced to perfection. You know, they pay too much for the land, the it’s the left of, you know, side of the you know, just the wrong side of the tracks over there. It’s you know, and, and then you have a manager, you know, sometimes that just doesn’t have a balance sheet or doesn’t have a good partner on that side and stuff. So, you know, to me, it always, you know, Charles comes down to people, right, and who are managing this and what their expertise is. And we’re not seeing a lot of what I’ll call, you know, huge mistakes today because the market has been so good. But, you know, I mean, when, when the tide goes out, we know what happens and those things will, and, and I would just caution anybody, especially investors is, you know, look at the track record of the manager, look at their balance sheet, look at their history, look at how much money they’re putting into the deal, et cetera, look at the fee structures that can, you know, tell you a lot about a manager.

Michael:
But I’m not, you know, I’m not gonna throw stones on any of our competitors out there. I think like in the world that we travel in, which is more the institutional, I think there’s a lot of really good companies and great choices for investors today that weren’t around, you know, seven or eight years ago. And, and we always tell this story like candidly, you know, if the world looked like it did today, when we were getting out of our trading career, there’s a chance that we didn’t, you know, we don’t build origin because the, the transparency in the market has really weed out a lot of the you know, just the, the, the groups that didn’t do a great job on behalf of their investors. And, and they’ve been losing market share ever since. And the ones that do do a really good job, they’ve been gaining market share and getting bigger and bigger.

Charles:
So with, since you’re over, over overseeing a lot of investor relations over 2,700 investors, how crucial do you find communication with your LPs and your other operating partners in, in becoming successful in doing additional deals and doing more deals with those investors?

Michael:
It’s everything. I mean, I, I think communication is really kind of the third leg of the investment stool. And we, we started like, we do a lot of webinars now, and, and ironically, this started like we did webinars pre COVID, but we started doing more and more webinars during COVID. And we started in March of COVID. And I remember this conversation because the world was just thrown into a dump and the conversation was, well, what are we gonna say? And my answer was, I don’t know, like, we’re gonna tell people, we don’t know what’s going on, but we have their back and we’ve made some really good decisions and we’re gonna do everything in our power to make sure that our portfolio isn’t you know, is doing as well as it, it can be during these times. And so, and that is really when we started what I’ll call, you know, maybe overcommunicating, because if, if two managers, you know, are out there and, and doing sort of the same job, and one is over communicating, and one is under communicating one overcommunicating.

Michael:
And I don’t wanna say over in a bad sense, but communicating more often in a simpler way and easier and letting you know, they’re gonna, they’re gonna sleep better at night. And so we have really kept up that pace of doing, you know, a webinar for each of our funds, either monthly or bimonthly and supplementing that with our quarterly reports. I, I just, I don’t think that in today’s day and world, today’s day and age, that you can over communicate because it’s very easy. If somebody doesn’t want the communication, if it’s via email delete, if they don’t want to watch a webinar, they don’t have to watch it, right. It’s optional and they can opt in. But I do believe that you have to cater to your lowest common denominator and the people who are most nervous and want the most information. And and it’s a big mistake that a lot of investment managers made historically. I think it’s gotten a lot better today and certainly webinars and, and everything, you know, the, the constant updates is now more table stakes than it is even outperforming in the market today. So, and that’s something that we’ve always believed in from day one, just in, in the way we report on the technology side, our portal to the quarterly reports, the way we write them and all the way to the webinars.

Charles:
Yeah, no, I totally agree with that with passive investments I had during COVID I always liked to see these the emails on the fifth and the 10th showing collections. Cause that was the big thing I was worried about. Right. Everybody didn’t know what was going on. So we’re like, oh, lemme just see what the collections are. And then you get this number and then, you know, still wait until the end of the month. You know what, so you’re that definitely the communication’s so important, especially when you’re going through such a, such a time that we went through a years back. What do you, the main factors that have contributed to your success?

Michael:
I’ll just say tenacity and not giving up and always understanding that I, you know, I don’t know what I don’t know. And so I’m always open to, you know, exploring and looking at new ideas, but hard work and things like that. And I think that’s really what brought my partner together, my partner and I together. And we both kind of share those, those same values about research knowledge, treating people with respect and, you know, origin has been, you know, when we planted that seed back in 2007, there’s no magic bullet to building a firm. It takes so much, it takes the right team establishing the right culture. It takes, you know, years and years of creating that track record and doing the right things over and over because we are ultimately in the business of establishing trust. And the way you establish trust is by doing what you say you’re going to do and continuing to do it over and over and over.

Michael:
And I think that, you know, especially when you’re establishing trust in a digital way, people are always looking for inconsistencies in what you do. And, and I remember years ago, some, one of our team members in the business development, the capital raising department said to me, and this is when we first made our foray into kind of the digital exploration of lead generation and, you know, finding new investors and people would dig in and they still do today into the PPM, into everything we do looking for those gotcha moments. And he said, you know what I love about my job. There just are no gotcha moments. We don’t hide things on page 38. We don’t, and, and everything we have, there’s a reason and a method. And when we try to hold it up front and center, and I think in the beginning, we were maybe even penalized for that by saying, Hey, here’s what we’re gonna do. We’re not gonna put an IRR in front of you. That is some off the wall, IRR, we’re gonna, you know, market what we believe that we can generate. We’re gonna, you know, put the fees right here. We’re gonna put everything up front and center because that’s how we’d wanna be treated as investors. And that’s the way we believe in doing business. And, and we’ve always been in this for the long run and, and that’s how we’re gonna continue going. So it’s, you know, there’s no magic bullet, just a lot of hard work.

Charles:
How can our listeners learn more about you and origin

Michael:
Go to origin investments.com you can connect with anybody there. You can also download our materials. You make it super se simple, you know, for people to look at our funds, do research about us. And then if you want, you can connect with somebody right there on the website, or once you do register on the website, you’ll be automatically enrolled into a, a marketing what I call you, just your you’ll get email from us essentially like <laugh>. And so, you know, you can opt in for a phone call, you know, during one of those processes as well, so.

Charles:
Okay. Well, sounds good. Thank you so much for coming on today and looking forward to connecting with you here in the near future.

Michael:
Thank you, Charles.

Charles:
Talk to you soon.

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 Michael Episcope

Michael Episcope is principal of Origin Investments, co-chairs the Investment Committee and oversees investor relations, marketing, and company operations. Origin is in the top 1% of private real estate North America-focused fund managers by Preqin. Michael brings 25 years of investment and risk management experience to the company and believes that calculated risk-taking in inefficient markets is the key to building wealth. He regularly contributes to Forbes, Entrepreneur and Huff Post, as well as frequently speaks on real estate investment panels and podcasts. After a 16-year trading career, rising through the ranks of the Chicago Mercantile Exchange, and twice named one of the top 100 traders in the world by Trader Monthly Magazine, Michael cashed in his chips and retired from trading in late 2005. His new focus was on managing the wealth he accumulated and enrolled in the Real Estate Master’s Program at DePaul University. Michael learned about the physical aspects of real estate in his youth as he helped his grandfather manage his apartment buildings on Chicago’s west side, so it was natural and comfortable that he returned to those roots. In 2007, Michael and business partner, David Scherer, founded Origin Investments. In the 15 years since its inception, Origin has executed more than $2.6 billion in real estate transactions, with an average equity multiple of 2.4x, and has never produced a realized loss for any of their 3,000 investment partners. Origin’s team manages more than 5,000 multi-family units in 14 cities, across 8 states, giving their investors the peace of mind of stability in their returns because they aren’t reliant on any single market.

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