GI19: Passive Investing & Conservative Underwriting in Self-Storage and Mobile Homes with Alina Trigub

GI19: Passive Investing & Conservative Underwriting in Self-Storage and Mobile Homes with Alina Trigub

Alina is the founder and the Managing Partner of SAMO Financial. It’s a boutique private equity firm specializing in helping a select group of people passively invest in commercial real estate.Alina’s business motto has been articulated well by WarrenBuffett’s indicating that “Someone is sitting in the shade today because someone planted a tree a long time ago”.Alina is the founder of two Meetup groups named, “The Power of Passive Investing through RealEstate”, which gather in NY and NJ.

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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 Alina Trigub . Alina is the founder and managing partner of SAMO financial, a private equity real estate investment firm. She host two meetup groups in New York and New Jersey and has helped her investors invested in over 120 apartments, over $10 million in self storage complexes, and over 5 million in a mobile home parks. So how are you doing this morning?

Alina: Doing great. Charles, thank you so much for having me on your show. I’m really excited to be sharing some words of wisdom with your teams.

Charles: Yeah, I appreciate it. Thank you very much. It’s great to have someone that’s very experienced in usually we’ll get someone that’s in one of the asset classes, but since you’ve put investors together and deals together in multiple asset classes, it’s great to be able to kind of pick your brain a little bit as we kind of go through these. So Alina, give us a little professional background on yourself prior to starting in SAMO financial and starting to invest in real estate.

Alina: Absolutely. So my background is in accounting. I started out as a tax accountant many years ago in, in big four. I was young, but never really enjoyed doing accounting and taxes. So have to try in public and private. I decided to switch and I switched to a technology world. So it was a completely different switch in my roles have been within technology world for the last 18 years, but more or less involved being a liaison, connecting business and technology worlds. And I liked that experience. It’s great. But, I was always number one fascinated with real estate. And number two as a form of tax account and taxes has always been in the back of my mind. I was always thinking, how can I lower taxes for a family? How can I lower the AMT because alternative minimum tax has always been a problem. And I thought that there should be a way to connect my passion for real estate and minimizing taxes. So I started researching, wanted to buy something locally where I live. It’s a tri-state, New York, New Jersey. That turned out to be a challenge as a, the prices and the taxes are extremely high in this area so that the nuts are not so well in the sense that I didn’t buy anything locally. However, that pushed me to start researching long distance investing. And that’s how I came across the world of syndication. So after doing additional research on private placements, I decided to take action and starts investing as an equity partner over, which is passive investor myself. And after doing like investing in a number of offerings, I realize the tremendous benefits of, you know, number one been passive. Number two tax advantages as number three social aspects would because no way we’re going into community and putting our efforts into improving the community and helping local folks to get a better place to leave, you know, having parts, maybe pet parks and just better pumped conditions. So it was tremendous impact. And I decided that I need to bring it to the market. That’s not something a well advertised or a well known by, you know, the folks in the community. And that helped the idea of my own company, some of financial to be born with the sole purpose of helping others to build their wealth not only through wall street stuff, which everyone’s already doing through the 401(k)s or IRAs, but how them diversify even further outside the wall street into real estate, which is the area that’s that offers a lot of more calculated risks, if you will. Where, wall street is strictly like, you know, throw in the dark and drak in my sense. So that’s, that’s how I got started in real estate.

Charles: That’s awesome. So normally when we have some on the show that it’s like multifamily is usually the biggest thing cause there’s, you know, it’s easy to, to find a investors for that. It’s easy to get financing. I’m very interested in, you know, from self storage, mobile home parks, in apartments. What is your favorite asset class of those?

Alina: Sure. So the favorite asset class depends on each individual deal. I wouldn’t say that one or the other is more favorite than the other asset class. So one way select the particular asset class we also look at the market, the demographics, market conditions and what the deal itself offers. For example, for mobile home parks, there are specific States that we would only go to to buy mobile home parks. And for instance, Arizona, well the Caroline as would be some of those States who would go, but again, the market conditions for that local area have to before favorable. For the asset class for us to even consider it. And then we’ll look at the offering itself. So consider question, I don’t favor one that’s a class when the other, I really liked the mall but what I did do as I also started was multifamily, just like a lot of other folks. But gradually as I’ve progressed in my research and as I realized the demand for further diversification myself and my clients I started doing research on the additional asset classes one at the time to determine which ones to at or before them doing that now as well, looking at the, as the classes. But that’s, you know, the ideas do their research on one thing at a time to make sure you really understand how the asset works and how it performs in a different market conditions. That’s what I did as well.

Charles: How does it differ in regards to risk first returns for the different asset classes? Are returns pretty similar between those different asset classes? And one more thing too is since I’ve not in a, you know, it’s how does in if we have a pullback, how does that differ in between say self storage and mobile home parks?

Alina: Sure. So in terms of the returns they’re more or less similar. Self storage and mobile home parks tend to be a little more recession resistant. And that’s would be the research from priority sessions shows. You know, in with storage, I guess it’s a more or less a game and people understand that unfortunately, during the recessions, a lot of folks lose their jobs and they need to downsize. So the, the first step that they take when they downsize they gather all their belongings that they don’t want to give away or sell and they put them in a storage for an undetermined duration of time. And at a time that duration becomes permanent. Then they continue paying for the storage. So the started stands to perform or even slightly better during the recession times in general. In terms of mobile homes so our strategy is not to go into the extremes, which means that when I’m going into like really poor neighborhoods and we don’t really go into luxury like the newest, a freshly built mobile home parks, we go into so called bread and butter into those B and C areas where we know that the workforce housing type of people leave people that leaving mobile homes because the area around them does not allow them to afford living in the apartment. It’s just too expensive and that’s why they choose mobile homes. But then in a lot of cases, they buy those mobile homes, so they become mobile home parks, Oh. And theirs. And you know, as a all narrow of a property, you want to make sure that it’s, it’s a pride of ownership. So a lot of people wants to buy them. They renovate them or they beautified them and you know, make those mobile homes look at as soon as possible because that’s, that’s something they owe and then they leave in there for a long time. So that helps us as a park owners as well. When the mobile homes well maintained by their owners we do tend to okay with those. And even if they not found the regional and by that the mobile home park buy the mobile home owners what we try to do is we will try to open at least to own with different options. So the tunnel, well at least can see they’re buying it in the long grand and we held them with financing options and so forth. To get to that, I don’t know if I answered the fully of your question but I think I did.

Charles: Okay. Yeah, no, of course. I mean it’s just, it’s very interesting. There’s kind of a different, I mean, with the mobile home park as I understand it, and I’ve spoken to operators that specialize in them and it’s always, if someone’s unable to, they lose their house going into a mobile home park is the next most similar but less expensive option because you still are not connected to anybody else. You still have the pride of ownership of it is your own trailer. And I speak to other operators and they say that the whole goal is not to own any of the trailers, but also to get the ownership to the tenants as fast as possible. Is that true?

Alina: Yeah.

Charles: Not like running a D class apartment complex,

Alina: Correct. Yeah, yeah. You try to get new owners to buy those mobile homes as soon as possible. And again, it benefits both the mobile home park owner and the tenants, you know, because the tenants become the proud owners of a property and the mobile home park owner has a lot less expenses so that lowers the expenses tremendously. And maybe the overall bottom line is slightly over because now you’re charging for the pad itself. You’re not charging for the mobile home, but again, it slows your maintenance expenses tremendously as well. So you have a lot less maintenance to care about and ratio wise, your income becomes exponentially higher in that respect.

Charles: Yeah. That’s great. Now you were mentioned North Carolinas and Arizona. Are your markets that you focus on for any type of purchases is all very similar I imagine Southeast and Midwest, is that kind of where you guys are targeting

Alina: More or less? More or less? Yeah, we don’t try to target a same market for different asset classes. For us, again, the priorities that the market itself favors the asset class and works well for a specific asset class. So that’s number one priority. But then we’ll look at the overall market conditions and how that specific asset class had performed historically in a particular area.

Charles: Okay. Awesome. So investors invest with your firm or considered like limited partners are passive investors, someone that’s never invested passively into real estate. Explain how that works. And what kind of the whole process and what their responsibility is once they’ve chosen an investment vehicle.

Alina: Absolutely. So for someone who has never invested in real estate the path to start investing is slightly longer because I push them to get educated. I send them the educational materials. I recommend books, podcasts. I written a number of articles to help people get acclimated with the terms with the overall process. And I typically tr tried to write my articles around the questions that come from my existing investors audience and that helps the case to the new folks as well. But my primary goal to make sure that whoever starts investing with us has a full understanding of what they’re doing and only taken action after realizing the pros and cons of the investing and then full understands that these investments are not them, did skewed short enhancing the, there are risks involved. I want folks to know that, you know, when they see the projections, these are just that visit just projections. Nothing is guaranteed. So the risk is still there. It’s just the risk with private placements, it’s calculated where the risk was the investments could be a more or less, you know, throwing in the dark and dark and that’s why it’s a know there’s a how much higher risk in that case.

Charles: Yeah. now all of your investments are targeted toward accredited investors, is that correct?

Alina: Majority of them. The majority of the investments are for credited. We do have some offerings for sophisticated non-accredited masters, but there are fewer and are in between. Right.

Charles: And just to explain for anybody, it’s a credit investor, million dollars net worth or as a couple, they’re making $300,000 a year and they into the future, they believe they’ll make that as well. So..

Alina: Right. And that net worth excludes primary residence. So for folks living in California or New York, your home may cost over a million, but that’s not included. So you need to have, and that’s worth outside of your primary residence

Charles: With those investments that accredited cause I guess you can speak, what does it really work with investment term? the returns? Do you do quarterly, monthly distributions? I mean, what’s normal with the operators that you partner with?

Alina: Sure. Typically I would say majority, at least 80% of the operators prefer to do quarterly returns. And nowadays we tend to do everything through the wire. So we, it tried to shy away from that, sending the physical checks and the pesto is more common. But now it’s also a matter of convenience. It’s a lot easier to send them directly to the bank accounts, some low monthly, but that’s, it’s just a lot more overhead than we try to stay away from that as much as possible.

Charles: Hmm. Now with your background being a CPA, and I imagine you get a ton of deals that come in and you probably handpicked cherry pick the ones that make the sense, make the best sense, right? Less risk with the highest reward. What do you do when you’re reviewing a deal? Like what makes you say, this is something that I want to bring to my group of investors and this one is just not gonna not going to do it.

Alina: So Charles and I want to make a small correction. I was never CPA, I was an accountant, but not the CPA, but anyway nevertheless I still do review the deals. I definitely evaluate the underwriting that’s done. It looked from, I mean I don’t necessarily look for mistakes, but I look how underwriting is done and whether it’s done conservatively in my eyes. I wanna make sure that we don’t just go with what the market expectations are, but we try to, would the caution, and what I mean by that is if, let’s say the market dictates that a ranch from the bum by 5% every single year, I want to see 3% friend bumps. And the same applies for expenses. If the market says that the expenses should the bumps by 5% every year, I want to say 7 to 10% bumps in expenses to make sure we have cushion on both sides. That’s important. I also want to see, the breakdown not by year, but they want to see the breakdown monthly because that gives you a more detailed picture as to what may happen. Might month by month. You may decide to have a capital event, let’s say at months 23 or months 21. Yeah. And I wanna see that happen on your spreadsheet. The same applies to construction. If you’re doing renovations, you may decide that Olivia renovations are going to be down at month 16. So I want to see that break down what is going to happen that month 17 when all of the renovations completed. And I also want to see what’s happening on the month to month basis with your vacancies during the renovations. Because obviously those are going to be bumped up. The vacancy for the market is let’s say 10%, but you’re going through the renovations, then they, you have to give that probably as highest 20%. Just it’s turnover during the extensive condition? So I would like to see that on the underwriting. And then looking at the quantitative research, I want to make sure that all of the numbers are telling me a full picture. So it’s not just cash and cash, 8% or IRR, you know, 18% all of them combined tell you a full picture. You shouldn’t be looking at one of them individually and they happened to to, you know, write articles about that as well. So for anyone interested, I can send those articles how I view that and how I review them as well.

Charles: Can you explain what a capital event is? Just to make sure that I understand that?

Alina: Absolutely. Yeah. Thanks. Thanks for the question. Capital one, so potentially if we’ve done extensive renovations to the property and it’s value had appreciated over time. We’re at the point where we may decide to go back to the bank and do a cashout refinance. So in other words, we would pull some equity out and guess what the technique take goes if we pull it out. That goes back to the investors. Basically your, you know, initial pro-rata percentage ownership that you invested with us. If we pull equity out, let’s say everyone gets a 30% back. If you put 100,000 you’re getting 30,000 not that you’re just getting 30,000 back. You’re also getting this 30,000 back tax free. It’s because again, it’s not a taxable transaction. You’re getting a part, a portion of your principal back where in wall street would you get something that this is like unheard of?

Charles: No, it’s great. Yeah, the conservative underwriting is a great thing. I was talking to another underwriter yesterday and when he looks at a deal, he just takes out the rent increases and just runs the model that way, which is very simplified, but it makes perfect sense because the whole rent model with anything in this value add industry a value add a concept through real estate is just, you know, you’re making it nicer and you’re, you’re increasing the rent. And the thing is that if you can take out those rent increases, so when you buy it, if something happens, you have a pullback recession, whatever it might be, you can, the thing will still cashflow. It’ll show you can keep, maintain occupancy. You can do all this and it will still during, you’re still paying bills and if you have to hold off your business plan a little bit. So.. Well that’s great. So what I’m, you host two meetups in New York and New Jersey. Is that one of the primary ways that you find investors or kind of build your whole investor base from the Northeast since it’s so difficult to invest?

Alina: So I started at meetup with sole purpose of helping people locally and that would be regardless whether they want it to be active or passive investors. These is not my primary source of investors, although I do get investors from the meetups nowadays. But a majority of the people come in through referrals or repeat customers for the most part. In terms of the meetups, people gets tremendous value from them. And the feedback that I’ve been getting is special for my New Jersey meet up, cause the frequency is it happens a lot in rural from the New York, the feedback is exponentially great. People are very thankful and you know, I even had one member of move away from a job to another state and he said that whenever he is going to be coming to visit his relatives, he’ll try to overlap it with the meetup time because he’s been enjoying our group so much. So. Yeah. And I’m really happy that they bring so much value to others.

Charles: Yeah. Local meetups are a great way of learning and just networking with people that even if they’re not active yet or they’re not involved with in one way or another, that you’re dealing with people that are involved with it. And it’s, I mean, yeah, it’s great reading and doing podcast, listen to podcasts and all this, but when you’re actually speaking to someone and you’re making that connection, it’s awesome. So I can’t stress that enough. So when you’re, you know, we have some syndicators that listen to and you know, it’s always, we have people that want to build a bond with their investors and you’re a very hands on when you’re, when you’re working with your investors. Explain how that differs. Cause I, you know, you sometimes speak to other operators and I’ve invested passively before and you’re like, well, you know, I wish I could, you know, you wish you could, I could hear more often from them or I wish I could get this from them. How is it different when you are working with an investor versus the normal sponsor that you don’t hear from?

Alina: Absolutely. Absolutely. It’s a, when you look at the typical sponsor it’s someone who has many different responsibilities and if the team only has so many partners, if it’s one tool, they have to handle all these responsibilities. So when people like myself command that specifically concentrate on being the invested liaison, our sole purpose is to build a relationship with investors, help them get acclimated with the investing process helped them select the appropriate investments for them and then work with the operator. On the other hand whenever they have the DLO Frank and the invite us to join the men we decide which offer we want to invest in. So being in-depthly is, and the role gives me a much more exposure to the deals out there and another spectrum. It gives me a much greater exposure to the investors and that keeps me much closer to them because that’s what I constantly, majority of my time. Obviously, I do my own underwriting of evaluation, valuations, looking at the deals some of the asset management tasks as well. But again, by majority of my time is spent as being an invested in the years on and not where many of those hats that the typical operators have to wear.

Charles: Yeah, it’s amazing how many people you’ve spoken to and I was at a conference a few months back and people, they raise their hands, how many people are getting emails from syndicators and you know, a lot of people raise their hand. How many people wish that they could get, get more in contact with their sponsor on deals. They’ve gone. And it was like the majority of them raised our hand. And it’s funny that you’ve invested with someone or, and you know, these, usually these groups will have multiple offerings come out per year and they don’t even handle their current investors.

Alina: Sure.

Charles: You know, so it’s just, it’s just amazing how that works. But other than getting reading books and maybe going to the meetups, what are, are there any other tips that you, or advice that you would offer to someone that’s looking to get involved passively or directly in real estate investing?

Alina: Absolutely. I think it’s [inaudible] essential to anyone deciding to invest in real estate in addition to education is to work in their self-development because personal development is essential part of becoming an investor. When you’re doing something you, regardless whether it’s real estate or you know, trading bonds, stocks or ETFs or whatever else you decide to do or buying other things, you have to be open mind that you have to be open to the opportunity and a lot of people have that closed mind. They’re just afraid to take the first step. And that’s simply because how we were programmed, how we’re educated. I think our school system don’t spend enough time on educating children on and preparing them to the actual financial world. They don’t talk enough about lawns and that’s so wellbeing how to take care of their finances. And so I believe that they’ll start in school and because we don’t have that proper financial education in school, I think people need to spend more time when they’re young adults and, or even after they are young adults, you know, even not millennials, a baby boomers, that’s everyone spend some time on working on their self improvement and self education because it helps them to open up the doors to those opportunities that are available to them, they just don’t see them because they’re so close minded. And, you know, I was in the same boat myself and until I spend some time on reading books like miracle morning or the richest man in Babylon or even these, that poor that I was in the same boat. I was afraid to take the steps. I was afraid to look at anything. It’s just the way of life that we will have and we need to change them. But that in addition to educating yourself, you do need to understand how storage works, how the market works, the demographics, the recession time. That also is essential part of the education. And that comes through books, podcasts and extensive networking with others.

Charles: Yeah, it’s amazing. People probably for the most part I think don’t look into their financials until maybe they are in their early twenties or so out of college and they say, I got a bunch of student debt. I’ve got a car loan. While, you know, and it’s so easy to acquire debt that like, that that goes down in value or that doesn’t make any money compare to, you know, buying real estate, something like this. So it’s a completely different mindset. So you’re a hundred percent correct. So Alina, how can people learn more about your meetups and I’ll put all the links in the bottom, yourself and your meetups?

Alina: Sure. so my website is samofinancial.com I’m available on LinkedIn, Facebook, Instagram, Biggerpockets in terms of the, they both on meetup.com they’re called power of passive investing. One says New York and says New Jersey. Everyone is welcome to join us or a child to me with any questions. I’m more than happy to help out.

Charles: Okay. Well that’s awesome. Well, thank you very much for being on the show today and yeah, I look forward to speaking you in the future and if anybody else also what we’re doing is I’m doing a 15 minute call so if anybody has any questions and wants to set up a strategy call with myself, you can click the link below and do that. But Alina, thank you very much for your time and I’ll speak to you soon.

Alina: Thank you Charles. It’s a pleasure to be here.

Charles: Thank you. Bye bye.

Charles: Hi guys, this is Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in investing in real estate and you don’t know where to begin, set up a free 15 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com

Announcer: Thank you for listening to the Global Investors Podcast. If you’d like to show, be sure to subscribe on iTunes or Google play to get new weekly episodes. For more resources and to receive our newsletter, please visit global investor podcast.com and don’t forget to join us next week for another episode.

Announcer: Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of harborside partners incorporated exclusively.

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About Alina Trigub

Alina is the founder and the Managing Partner of SAMO Financial. It’s a boutique private equity firmspecializing in helping a select group of people passively invest in the commercial real estate.Alina’sbusiness motto has been articulated well by WarrenBuffett’s indicating that,”Someone is sitting in the shade today because someone planted a tree a long time ago”.Alina is the founder of two Meetup groups named, “The Power of Passive Investing through RealEstate”, which gather in NY and NJ.

Inaddition, Alina offers educational webinars in collaboration with various administrators of self-directed IRA companies.Topics revolve around aspects of getting started investing in syndications byusing funds in solo 401k or self-directed retirement plans.

Alina has helped her clients to acquire and invest in:

  • over 1200 apartment doors
  • over 10MM Fund focused on self-storage
  • over 5MM Fund focused on mobile home parks

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