GI202: Investing in CoWorking CoLiving Properties with Jake Akers

GI202: Investing in CoWorking CoLiving Properties with Jake Akers

Jake Akers ran his own marketing firm in Atlanta for seven years prior to transitioning into real estate; and since that time, he has been involved in over 250 residential and multifamily investment deals totaling over $145 million.

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Announcer:
Welcome to the Global Investor Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host Charles Carillo combines 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 Jake Akers. He ran his own marketing firm in Atlanta for seven years prior to transitioning into real estate; and since that time, he has been involved in over 250 residential and multifamily investment deals totaling over $145 million. So thanks so much for coming on the show, Jake.

Jake:
Yeah, Charles, thanks for having me.

Carillo:
So give us a little background on yourself, both personally and professionally prior to getting involved in real estate investing and moving out to California.

Jake:
For sure. Yeah, so originally I actually grew up on the East Coast Hampton Roads, Norfolk, Virginia area. A lot of, a lot of military in that area. So I get that, that question a lot Being out here in San Diego. W was I in the military? No, I wasn’t. I act I applied for the Coast Guard at one point in time, but didn’t end up moving forward with it. But yeah, grew up around military, a lot of watermen in that area, so just kind of surrounded by kind of that hardworking American type of atmosphere. My dad actually started a construction company or building residential houses when I was in high school, and so that really exposed me to a lot of different trades in the just the housing industry. Mm-Hmm. <Affirmative> in general. And then after I graduated, I went to James Madison University in Harrisonburg, Virginia, kind of near Charlottesville and went for a marketing degree.

Jake:
Didn’t really know what I was gonna do with it. I just, I knew that, you know, sales is a part of everything, and so being able to market myself would allow me to, to be successful in business in general. And during college, I did a few different internships in the construction field. One was in commercial real estate and one was in residential real estate. And then that eventually led me into having a, a job waiting for me right outta college as a project manager overseeing new homes under construction in the, the Williamsburg Yorktown area of Virginia. So

Jake:
Yeah, that’s kind of how, how I first got going. And then I graduated in 2008 and we all kind of know what, what happened in the, the housing market and the economy during that time. So after about a year of being a project manager in residential housing, I got laid off from, from my position as a result of the, you know, the housing crisis that was going on. So definitely a, a kind of a wake up call for me at that point in time in regards to, all right, we’re, where am I gonna head from here? I didn’t really know exactly what I was gonna do, but the, the one thing that kind of really resonated with me was I knew I didn’t want to be an employee for the rest of my life and have my future hanging in the balance of, you know, someone else’s hands.

Jake:
So that’s kind of what led me to, to looking for something a little bit more entrepreneurial mm-hmm. <Affirmative>. And so I, from there, I went into direct sales. I joined a company that did direct sales and essentially had a training program that that led you to be able to open your own franchise a after one to two years. And so that’s, that’s the route that I took from there. And it, it kind of took me around, around the country. I lived, I lived in San Diego for a bit, Chicago, and then ultimately landed in Atlanta where I opened my own franchise at the time. And so that’s, that’s where I, I ran my own marketing business for seven years in Atlanta.

Carillo:
Nice. And so what was the deciding factor to get into real estate? I mean, you were in it prior, but as let’s say more of an investment vehicle?

Jake:
Yeah, so I, after leaving real estate in 2009, I, I was still passionate about it. I just like I said, I knew I wanted to, to be my own boss and, and learn more about running and managing a business. I, I’d already learned a decent amount about real estate itself, but I didn’t feel like I was an expert at, at being my own boss and, and running a business per se. So, so while running my marketing business, I always knew eventually I wanted to get back into real estate. And while I, I definitely saw a lot of people making a lot of good money, you know, during, during those years mm-hmm. <Affirmative> that I was not in real estate, you know, from the 2000 tens to, you know, 2015, 16, that’s when I, I started to get that. I don’t know that that jealousy of, okay, I, I need, I need to get back into this industry. There’s a lot of people making a lot of good money here, and that’s really kind of what attracted me to, to get back into it.

Carillo:
Nice. And when you got back into it, what kind of path of real estate investing did you take? Like what were you, what were you doing?

Jake:
Yep. So that’s when I, I relocated from Atlanta back out to San Diego, California. Mm-Hmm. <Affirmative>, and I, initially I got into residential f i I was an acquisitions manager for a residential fix and flip company mm-hmm. <Affirmative>. So I was going out building relationships with agents, finding off market deals that we could flip ourselves. And then from there I started my own wholesaling where Essent, you know, for people who don’t know what wholesaling is, it’s getting a, a property under contract and then selling that contract to someone else that wants to do the actual work. So that was, that was kind of the route that I, I went from there and then eventually just, you know, kept evolving into what I’m doing now.

Carillo:
Nice. So your company currently employs like a very unique investment strategy of co-living and co-working properties. Can you explain what this asset class is and you know, why you love this firm or why you love this niche and why you guys really focus on it with your firm?

Jake:
Yeah, so there’s several companies out there that do co-living. Mm-Hmm. <Affirmative> type of properties, hostile, high-end, hostile mm-hmm. <Affirmative> type of niche. There’s also a lot of companies that do co-working properties. Wework being one of the, one of the biggest ones, but there’s several others that, that emulate that model as well. But there’s not many that do both combined. And so that’s, that was part of the attraction that we had in mind when, when putting this together was kind of taking the best of both worlds, of the co-working and the co-living. And essentially, when it comes to what drew us to the niche you know, when it, when it with Covid, for example, a l that really pushed a lot of people into the remote work industry or, you know, the, the asset of remote work. And so we wanted to really cater to that, that growing demographic.

Jake:
And that’s really what, what what drew us into it. There’s a lot of people that were dissatisfied with the, the seclusion and the loneliness of working remotely. And so being able to, to cater to that and, and bring an environment that creates community and collaboration was really kind of where, where our mindset was. So what we do is we purchase multi-unit properties. Typically six to 20 bedrooms is, is the size that we’re in right now. And then we’ll add co-working space throughout and also add different type of communal areas, and then we’ll rent out those rooms short to midterm. So es essentially, it’s kind of like Airbnb meets WeWork is the, is is the vibe that we’re going for.

Carillo:
Oh, that’s, that’s that’s very unique when you’re, I mean, like I wanna get into more of kind of like the marketing and how this all works, but just like, before we get into that, I wanna talk more, because Covid brought in it, it amplified a lot of things and brought in like, I guess you would say, new fads and it amplified things that people weren’t really focused on prior. And one thing once that I pulled up was that, you know, RV deliveries being down 36% from 20 20 21. So, I mean, it goes to show you that there’s some things that just go in fads. And what I’m asking is you know, why do you believe this asset class to, to not be a fad? You guys are doing many projects with them, you’re having success with them. Why do you think it will continue that people are not gonna really be going back to the office as much? I mean, we know everything that goes on around there, but like, they’re gonna still have a, a need for these properties that you guys are renovating building.

Jake:
Yeah. Well, there was already a growing trend to remote work pre covid just as a, as a result for longer commute times, higher gas prices in increase prices for, for home, you know, home care daycare and just tech technology advances like, like Zoom and, and Skype and, you know, different type of platforms like that that really enabled people to work remotely. So I think the pandemic just accelerated the movement towards remote work as opposed to, you know, causing a need for it. And so, as a result of covid a lot of companies, I think a lot of companies are realizing that they can operate at a lower fixed cost by having less or, or even no office space, while still maintaining a high level of productivity. And Upwork is a, a pretty large reputable company. They’ve, they’ve been doing a study over the past several years, really, you know, honing in on this segment.

Jake:
But they noted that 56% of companies globally are offering hybrid or fully remote work. And that more and more roles and positions are starting to shift to the remote work model. It’s not just you know, people in the, the tech industry per se. And so they’re predicting that by 20 28, 70 3% of all departments, so whether it be, you know, sales, marketing, hr, you name it, project management 73% of all departments, they’re expecting to have some type of remote workers involved. So yeah, I, I think it’s here to stay, you know, granted there will be some companies that are, are, are bringing people back to the office more. My wife is an example of that. She was working completely remotely. Now she’s on a hybrid where she goes into the office two days a week. But there’s a lot of companies I think that it’s that type of approach is, is here to stay. Yeah,

Carillo:
No, I just, I just wanted to kind of clarify that for listeners that might write off this asset class without really digging into it. Because I feel over the last decade or two, we’ve, the US economy as whole has been moving toward more contractors away from a lot of employees. I just little by little bring in contractors and outsourcing a lot more. And then Covid came around and now it’s like, now you’re working outside the office and now you are kind of like you said, Upwork. So these are freelancer contractors that are you know, leave an order, they work full-time for a job that they’re completely remote with. So it’s, it’s great to be able to cover all those bases. One thing though that kind of struck me, interesting, cuz I’ve never looked into this before, was that what kind of financing are you guys getting for projects when they’re coming in? So you used the example before of six to 20 bedrooms or beds I believe it was that you said. And you know, what kind of financing do you get for these projects? And is this kind of a government financing or are you going through local banks like to do this? Or how does that work?

Jake:
Yeah, we’ve been using local banks for, for the first several projects that we’ve done, just conventional mortgages. And, and we’ve done that to finance the majority of the purchase price. And then we’ve raised capital for apportion. Recently we’re, we’re doing projects down in Cabo, Mexico mm-hmm. <Affirmative> where you can, you can get a lot more bang for your buck when it comes to price point wise. And so to help combat the increasing interest rates, we’ve, we’ve just raised more capital for those and purchase those properties all cash. So it really depends on the market and, and what we can get and the type of deal we can get. But yeah, these, these properties that we’re buying are, are financable when it comes to conventional loans.

Carillo:
Nice. So once a project is completed, you kind of touched on this a few minutes ago, how are the properties really it, and like, I mean, you’re fully finishing these how these people are staying, I take it one you said short to midterm. So I imagine like from one week to three or four months. Is that correct?

Jake:
Correct. Yeah. So when it comes to the, the average length of stay, we’re seeing about about 10 to 12 days is the average day. Mm-Hmm. <affirmative>, we have, you know, we have some people that wanna stay for a whole month or more. We do cap our, our nightly stays at 29 days. And the reason being for that especially being, you know, coming from California is, you know, with the pandemic and all the, the landlord tenant regulations. So we capped it 29 days that way we’re not moving into the, the landlord tenant regulations that, that you would typically see If someone wanted to rebook for another 29 days, they could. But yeah, that’s, that’s typically what we’re seeing in regards to, to length of stay. It’s, it’s a longer stay than your, your average short-term rental where people are mm-hmm. <Affirmative> are looking for weekend stays.

Jake:
A lot of our, a lot of our, our guests that are coming through are business travelers, digital nomads, just remote workers that are looking for something new or they want to, they wanna get outta the house or, you know, just go stay somewhere unique for a couple weeks and you break up the monotony of, of working out of their, their spare bedroom or their kitchen. Yeah. So that’s, that’s generally what we’ve been seeing in regards to the types of stays when it comes to marketing, we’ve been solely using Airbnb up, up to this point thus far. They’ve dumped a lot of resources into that platform when it comes to the marketing aspect, when it comes to payment processing. So we, you know, the booking aspect of it. So that’s what we’ve utilized thus far. Maybe down the road, once we have a a, a larger portfolio, we might bring some of some of those services in-house, but for the time being it’s just way easier to pay a little bit extra to them you know, per night for, for those services. And then we’ll hire a local property management team whenever we open up a new property to handle the, the maintenance, the cleaning, you know, anything that needs to be done in between stays. So we’ll, we’ll have onsite property management locally and then we have Airbnb to, to handle everything remotely from there.

Carillo:
Yeah, that’s great. Cause that’s one thing I’ve always wondered about is with Airbnb is having the people, the handyman, the cleaning people there to do it. And now that you have that, your price has been, price and hassles have been really minimized because there’s not a question of who’s gonna clean that, have they showed up, whatever. And then Airbnb is strictly a marketing platform. Before you do one of these deals, I imagine you’re, I’ve heard horror stories from people doing short-term rentals or whatever, where they a city has capped out so many different of these rentals or whatever this is. Do you fit in that because you’re doing longer or is it still considered short-term cuz you’re keeping it in these areas that let’s say are more tenant friendly? You’re keeping the stays 29 days or less?

Jake:
Great question. So so we’re still considered short-term rentals because it, it’s less than 30 days. Typically once you get to over 30 days, now you’re looking at midterm rental mm-hmm. <Affirmative>. And so those types of stays aren’t, don’t fall under the category. But our our approach to going getting around that is the properties that we purchase are already designated as SRO or single room occupancy mm-hmm. <Affirmative>. So whether that be a, a boarding house or a bed and breakfast or a, a small motel hotel, there’s a lot of different types of properties that can fit into this asset class that, that we’re looking at. But in markets where they, the legislation is highly regulated when it comes to short-term rentals, we, we look for those types of properties, SROs.

Carillo:
Interesting. And one other question. Yeah. One other question you mentioned just as it’s so it’s so new to me, I just have questions about how this works. So for instance, if someone, well, what is like an op you to 10 to 12 days is your normal renter that comes in there into one of your properties. And if for me, if I’m multi-family investor would probably say an optimal rental is 24 months, somebody renews, they stay in there because now you’re cutting down on the downtime, the unit doesn’t produce rent, the make ready, all this kind of stuff I don’t have to do if they renew for you. What do you find, or for your, this, this asset class, what do you find to be really the best time that someone stays there between someone else coming in where you can, let’s say maximize everything, profits, the whole nine yards? Is it, you know, is it five days, is it 10 days? Would you rather have someone there for three weeks? I mean, what do you kind of shoot for or hope for?

Jake:
Yeah, the longer the stay the better for us because mm-hmm. <Affirmative>, just like you were mentioning, that’s, that’s less turnover when it comes to cleaning and and maintenance. So the longer the stay, the better for us. You know, the, the closer to three to four weeks we can get, then the more ideal that would be if people get more familiar with the property as well. And the, the, the big thing for these properties is that commu that sense of community and collaboration. So the longer people are there, the, the better relationships that they’re building, the more comfortable they’re getting with the area and the city too. So I think it just creates for a more, for a better experience in general. So yeah, the, the longer the better up to 29 days.

Carillo:
Yeah. Yeah. No, that’s great. And is that gonna be, that’s just obviously where you are now in California, I imagine Cabo, I don’t know anything about Cabo Mexico eviction laws. But will they be longer in these places that maybe are indifferent areas?

Jake:
Yep, exactly. So that, that was part of our attraction down to down to Mexico was less regulation mm-hmm. <Affirmative> when it comes to just short-term rentals. So we aren’t capped at that 29 day mark prices point down there, you know, we could get a lot more bang for our buck, but there’s also just a huge draw of remote workers going down to Yeah. Mexico Cabo specifically in particular based on cost of living down there, the weather, all that good stuff. So we, we definitely put a lot of due diligence into looking at different cities there or in Mexico before pulling the trigger on one. And so we’re d we have two that we’re, we’re working on now in Cabo, and then we will, we’re starting to consider, look, you know, Costa Rica, Puerto Rico, other more Americanized types of types of markets like that that may be, you know, not continental us, but will also continue to expand here domestically as well.

Carillo:
Yeah, that’s great. Yeah, I remember Cabo like 10 years ago and there was so many people from California there, it was like being in south Florida, so many people from New York, so <laugh>. But

Jake:
It really is you, you go to a restaurant and you, you know, one side of the menu is English, one side Spanish. It’s just, it’s very easy to get around down there as, as a US citizen and a lot of Canadians down there as well. Yes. So and they’ve, the government in Mexico has made it very appealing for international investment, both US and Canadian to come down, sync money into the area and help build up their infrastructure. So that was another attractive aspect o of that area was just how easy they’re, they’re making it for international investors to come in.

Carillo:
Nice. So Jake kind of as we finish up your, some of the questions that we ask every guest what do you, what do you think are some of the common mistakes that you’ve seen over the years from being in so many different facets of real estate investing common mistakes that you see real estate investors make?

Jake:
I’d probably say one of the biggest ones is I just see a lot of people give up or, or, or get out of the game when they run into hurdles. And that, that’s kind of the nature of real estate is there’s always gonna be market shifts and, and curve balls that come your way. And so I think that’s, that’s one of the, the biggest differences between those that succeed and those that don’t is the ones that succeed. They, you know, they, they pivot, right? They adapt, they adjust, and they just, they continue to, to push through.

Carillo:
Interesting. over the many years, you said of going through 2008, 2009, as I did as a real estate investor being involved with real estate and now to where you are how has your relationship towards money changed over those years?

Jake:
Yeah, that, that’s a really good question. I think, you know, growing up where I did around a lot of blue collar type of workers and, and community in general, I used, I used to work for money mm-hmm. <Affirmative> chasing a paycheck, you know, just need, needing that money to pay bills and, and anything extra go towards, you know, fun, fun spending. But over the years since then I’ve, I’ve learned a, after being more involved in real estate, I’ve learned to, to flip the script, so to speak, and to, to put my money to work for me by purchasing assets that generate more income. So that’s essentially what’s led me to my role right now with homework, is that my, my number one priority is helping others to invest into cash flowing real estate by becoming limited partners in our projects. And so that, that’s what creates completely passive income stream for them.

Carillo:
So tell us about that. How, how can our listeners learn more about your projects, your business and get in contact with you?

Jake:
Yeah, so our website is homework.com and that is without the e, so h om w o r k.com. My email is jake homework.com. We also created a website, passive retirement.com, which is a little bit more on the educational side when it, when it comes to learning about passive investing in general as opposed to just our niche of co-working, co-living. So that’s, that’s something we’re looking to build out and to grow over the years is financial education through real estate and helping people to retire passively by putting their money to work for themselves.

Carillo:
Yeah, that’s great. I was reading over both those websites prior to this interview, so a lot of great information there and it really explained gives you a really good foundation for learning more about co-living and how this can be a great part to addition, I guess you’d say to anybody’s real estate portfolio.

Jake:
Yeah. Yes, for sure. And that’s you know, anybody that, that has questions about our asset class or just about investing in real estate in general, I’m, I’m more than happy to, to share my experience, my, my pitfalls, the, the, the learning curves that I, that had along the way, cuz that’s essentially what helped me to get to where I’m at now, is other people sharing their time with me.

Carillo:
Well, thank you so much for coming on today and you know, looking forward to connecting with you here in the near future, Jake.

Jake:
Yeah, I appreciate you having me.

Carillo:
Have a great rest of your day.

Jake:
All right, you too.

Carillo:
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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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 Syndication Superstar, LLC, exclusively.

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About Jake Akers

Jake ran his own marketing firm in Atlanta for seven years prior to transitioning into real estate. Since relocating to San Diego, he has been involved in over 250 residential and multifamily investment deals totaling over $145m in assets repositioned. Jake currently seeks to help others passively invest in commercial real estate in order to attain financial freedom.

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