GI303: Commercial Real Estate Asset Management with Wayne Courreges III

GI303: Commercial Real Estate Asset Management with Wayne Courreges III

Wayne Courreges III began his real estate journey while serving in the US Marine Corps, and after completing his service in 2007, he transitioned to a career with a large commercial real estate firm, which spanned 16 years before he focused full-time on real estate investments. Today, Wayne focuses primarily on acquiring apartment communities and developing RV, boat, and Business Storage Facilities in areas with strong market fundamentals. His company currently manages over $50 million in assets across Texas, Louisiana, and Alabama.

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Transcript:

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host, Charles Carillo. Today, we have Wayne Courreges III. He began his real estate journey while serving in the US Marine Corps, and after completing his service in 2007, he transitioned to a career with a large commercial real estate firm, which spanned 16 years before he focused full-time on real estate investments. Today, Wayne focuses primarily on acquiring apartment communities and developing RV, boat, and Business Storage Facilities in areas with strong market fundamentals. His company currently manages over $50 million in assets across Texas, Louisiana, and Alabama. Thank you so much for being on the show! Charles.

Wayne:
I’m so excited to be here and hopefully add some value to your audience. Yeah,

Charles:
No, I, I definitely think you will. So before getting into real estate and you kinda had a layered approach and can you tell us a little bit about, little bit of personally and professionally with the US Marine Corps and then getting into you know, going into kind of like the W2 route and so what you’re up doing now?

Wayne:
For sure. So I, I started my journey really, so you had mentioned US Marine Corps. I served 2003 to 2007, so right outta high school literally two days outta high school. I went into bootcamp there in San Diego for those knowing West Coast or East Coast Marines. I was a West Coast Marine. And so I went to bootcamp San Diego. I ended up in 29 Palms after our infantry and school training. Ended up in 29 Palms California with First Tank Battalion, and I bought my first single family home. I think I was like 19 18 or 19. Pretty sure I was 19. But yeah, bought our first, my first single family home. Rented it out. I mean, this is nothing like sexy, like it was a two bed, one bath, you know, in, in the, the desert of 29 Palms.

Wayne:
But it did start my journey. And I had a a good buddy Marine and his wife and, you know, they had a child. They, they lived in that two bed, one bath while I was stationed in Okinawa, Japan. And anyway, so that started the journey. And then when I got outta the Marine Corps in 2007, I really wanted to get in, you know, be in commercial real estate. I, there was somebody in, in high school that I really looked up to that was in real estate development. So it’s always had the, I always had the bug for it at an early age. And so I joined CBRE, had the opportunity to join this great company in June of 2007, and was with them for about 16 years. I started CREI partners, our real estate investment company in 2019. Grew that to a point where I wasn’t able to do both CBRE and CREI partners. I mean, I was doing good at both, but it just, you know, it wasn’t sustainable. And so June of 2023 left the W2 world, which was scary. I mean, it, it was, it paid well and it, it was something I really enjoyed and, but went in all all in on CIF partners and here we are, April 25 and going strong. So you talked a little bit about

Charles:
A friend you knew previously that you looked up to that was in real estate, and it’s always interesting how people kind of get the initial bug.

Wayne:
Yes.

Charles:
Can you tell us a little bit about what you were doing at CBRE? I mean, let’s not you know, forget about what was happening in 2007. I bought my first multifamily property in 2006 mm-hmm <affirmative>. And I bought my second one at the end of 2008. So like, I was coupled right in this, not, I had no idea what was going on or what I was doing, but I was there. And tell us about what you were doing, because, well, you said you’re staying there 16 years. I mean, what were you doing there to assist this large national firm?

Wayne:
Absolutely. So when I was getting outta the Marine Corps Lucas Group was a a military hiring company that helped source military veterans to companies. So CBRE was there. And so I, I went to this hiring conference that Lucas Group was hosting just to see CBRE. So when I, when I got there, I was like, you don’t have to interview anymore. I’m your guy. I came here from Austin, Texas, this is where I wanna be. This is what I wanna do. And, and, and genuinely I did. I wanted to join CBRE and, and they hired me, right? You know, pretty much the next day I got an offer letter. But what they told me was, ’cause I was really looking more in the development side. Trammell Crow company was being acquired slash merged into CBRE at that time. And so Trammell Crow didn’t have opportunities, but CBRE, ’cause it’s such a big company, they were like, there was this wheel they showed me.

Wayne:
They were like, you can start here in property management and, and go into brokerage or development or whatever, project management, you know, the list goes on. They touch everything in commercial real estate. So, and I was looking for, you know, job opportunity with this great company. So I, I, I took a, a opportunity on their property management side. And you know, it’s interesting ’cause like I grew into an associate director like over the years, and I just really enjoyed operating, I enjoyed the lifecycle of commercial real estate brokerage. You know, they do extremely well financially and stuff, but they, but it’s a very eat what you kill type mentality. So it’s a very transactional, and they don’t really get to see the full lifecycle of the property through renovations and value add. And so I got to see all that and over time led teams well, I was in Austin for a while leading a lot of the retail and office product that was there on the property management slash asset management side, and then went to Houston.

Wayne:
Anyway, so it was a really great career path, but I wanted to own our own properties. I wanted to provide opportunities to investments for friends, family other, you know, investors. And, you know, my clients were more MetLife, Invesco, JP Morgan’s very institutional type groups. So yeah, that was really the journey. Now, at the end of the day, like for me, ’cause I, I did see a lot of the cycles, Charles and you had mentioned it like, it was a pretty rough time in oh eight and oh nine. A lot of the brokers, you know, had to leave their careers. A lot of, I mean, it was a lot of turmoil in commercial real estate. I feel very blessed. ’cause In property management, our, at the time our salary was reimbursed by the properties and the properties had to be managed because you had tenants. And so lights still had to come on, janitorial staff needed to still show up engineering, maintenance, accounting services, et cetera. So it was very, in my mind, recession proof type position. But it really set up that foundation, Charles, for like what we do now. And that’s operate real estate. Like this is not, I’m not coming in from an outside industry learning this as I go. Like, this is all I know is operating commercial real estate. And I, you know, definitely give credit to CBRE for building that great foundation all those years.

Charles:
Yeah, that’s awesome. You, you mentioned a little bit before, but can you kinda explain the transition from being an employee at a large commercial real estate company to really you know, for, you know, 16 years to starting your own firm. I mean, it’s, it’s it’s quite the jump. I mean, how did that work? How did you kind of manage the stress involved with that and how did you kind of prep yourself for this transition?

Wayne:
Yeah, so I mean, definitely starts with the family support unit. I would say one of the things that I, anything with any big company, the entrepreneurial spirit, especially when you’ve been there a long time, does decline, at least for me, because there’s a lot of standard operating procedures. There’s like, Hey, we have to be consistent in Austin, Texas versus how we’re managing properties in Shanghai or Sydney, Australia, wherever it is. Like, that’s, that was one of the things that was important. It’s like gonna, McDonald’s no matter where you go, the burger tastes the same, the fries tastes the same. And so not comparing CBRE to McDonald’s in that sense, but those consistencies is a, a very good thing for large commercial companies. And, and it has to be that way when you have thousands of employees, right? Those procedures. It really wasn’t until I went back from my MBA while going to CBR working for CBRE went back to North Carolina through their executive program and really started bringing up my entrepreneurial spirit once again.

Wayne:
And that’s when, at the time I did my, one of my business plans on this company that I was creating CREI partners. But, you know, through that journey of, you know, learning as much as I can through CBRE and then having sort of that mentality of like, my nine to five was paying for my five to nine, you know to me it was a sacrifice, but it was one of those things that I really wanted to do. And I would say like, for those that like, don’t wanna be active in commercial real estate. ’cause Not everybody wants to be active. Nobody, not everybody wants to be dealing with the day-to-day. I mean, this is a gut wrenching industry. Like it’s, you’ve seen the ups and downs, I’ve seen the ups and downs. Our passive investors don’t have to deal with it. And, and it’s good for them. But if you’re not in it, ’cause you love commercial real estate, like this is not, like, this is not a get rich quick, you know, everything’s gonna be rosy forever. So, you know, it, it, you know, I was able to handle a lot of things and, and, and do what I, my passion was. And, and that really helped, you know, those a lot of hours of building a business while working at W2.

Charles:
Kinda at your previous position, I mean, you asked this managed large institution institutional office buildings like you were saying before, MetLife and Vasco, these were your, your clients on one end, and then you had who they were, the tenants, they were also managing on another end. How did you transfer that experience to apartment buildings? Because it’s, it’s similar, but I mean, it’s commercial real estate, but it’s a little different. But you still have, you know, I mean, you’re now owning the properties and your tenant is now not as well capitalized individual as someone that’s working paycheck to paycheck, et cetera.

Wayne:
Yeah, I wouldn’t say office and multifamily. The, the similarity similarities. There are a lot of, when the accounting side, a general ledger income statement, aging report, a lot of those things. I mean, that’s no matter what asset class you’re in, there’s a lot of familiarity with the, the accounting operations. You know, real estate is a people business. So no matter if it’s a, an attorney, you know, customer that’s a, you know, your tenant or you know, somebody who is living in your, your, your, you know, your multifamily, that customer service mentality and that people first business translates to both sides partnerships with the property management. Like I know what it feels like to be in the property management role working both, you know, trying to take care of a resident or a tenant and also serve the demands of the owner because both have differing viewpoints.

Wayne:
And at the end of the day, the property manager has to have the fiduciary responsibility of the owner, but that’s their, I mean, their, their client is the owner, not the tenant. But a good property manager is able to balance both and, and make it a win-win for both. And so having walked in those shoes for many years and seen obviously the ownership mindset and then the resident mindset or the tenant mindset being able to lead, I was telling one of our team members this week, I’m like, you’re really not an asset manager. Like he is an asset manager. He is a full-time asset manager for CRAI partners, but I’m like, really, it should be asset leader. Like, the leader piece of it is more important than the manager because you gotta lead people. You gotta make people feel like there’s a bigger cause, a bigger reason why we’re doing this, you know collectively building a better community, building a better experience, taking care of our investors.

Wayne:
If we do all those things, like we’re gonna grow together and do really well with everybody, you know, like I said, growing together. So I, I would say a lot of those things that I learned working for a big company even in the Marine Corps, I mean, there was many times where like you’re working with the enlisted and officer officers and they both have different mentalities, different approaches. And so being able to, you know, work through those you, you know, those roadways of being able to get everybody aligned and on the same page really added to the experience of what we do day to day at CR partners. Interesting. Okay. Can you Break down a little bit About your current investment strategy? We went into a little bit in the intro about kind of the states you’re working on and kind of what your assets under management are, but udo you mind breaking down a little bit about what you guys are looking for in properties, the markets,kind of your overall criteria of what you’re

Wayne:
Buying? I’m so excited about what’s going on right now. I mean, we’re, it’s April 9th, the markets are crashing. Things are tough out there, tariffs are happening. It’s a great time to buy real estate. It’s more of a reason to get into hard assets. That’s doesn’t really care what’s going on globally. Doesn’t really matter what’s going on. Geopolitically, doesn’t matter what a tweet or anything that’s happening on social media, at the end of the day, it’s very local. And so, I’ll give you an example. We, we went under contract a couple weeks ago on a property that is not necessarily distressed, but the seller’s portfolio is distressed. They bought this property for $3 million less, or excuse me, $3 million more than what we’re buying it for la you know, so they bought it for $3 million more last year than what we’re buying it for this year.

Wayne:
It’s, it’s just incredible. The last deal prior to this was a loan assumption deal, 3.84% fixed rate loan assumption with Fannie Mae day one cash flow. Prior to that it was a seller financing, 6% fixed rate. Like when people say there’s no deals, then there’s no deals. And I love hearing that and I love that people are, you know, like, oh no, I’m multifamily. I’m like, great, it’s music to my ears. It’s less competition. But those that are like us who are like, Hey, we’re actively looking for off market opportunities, building broker relationships using software to see when loan maturities are, so that way we’re getting ahead and trying to, you know, purchase off market or see if they’re distressed, see if they’re on the watch list. Those are things that we’re, you know, we’re closely monitoring. We’re getting into newer assets than where we were just a couple years ago.

Wayne:
‘Cause Prices have gone down. So there’s opportunities to buy newer quality product, larger unit counts. Our investors I’m very fortunate that our investors continue to grow and invest with us and refer people with us. ’cause They see the consistent cash flow, they see the great tax depreciation that they’re getting off the multifamily. So we’re very bullish. I’m super excited. What’s going on? Just as we talk, you know, treasuries are going down. There was below 4% on Friday and now, you know, it’s, it’s going up below over 4% now. But these are, these are good times for real estate. And I was telling one of my team members earlier today, and I really mean this is, I I put the visual of being a lighthouse. So right now there’s people worried about their investments oil and gases, you know, under $60 a barrel.

Wayne:
There’s a lot of stuff going on, right? But at the end of the day, like real estate is at safe harbor. You know, we’ve got the lighthouse, we’re choppy. Waters all around us. Let’s get the word out. Like, hey, real estate is a physical asset that’s local driven. Everybody needs a place to live. And Charles, one of the things I saw over my career was when economic times got tough, recessions happened. Office and retail definitely struggle. There’d be many times I’d go into an office the next day and one of my tenants moved out because the night before, they just got all their stuff out. ’cause They, they couldn’t pay rent. But on the multifamily side, everybody needs a place to live, you know, and maybe that means that some of ’em are, you know, moving in with each other, et cetera. I mean, people will survive, but they wanna a roof over their head.

Wayne:
There’s a lot of community organizations, a lot of federal help. The government does not want, you know, thousands of people going homeless. So when you think of like instability, market instability and what’s going on, it just all in all just makes me personally more bullish on buying Charles, you were buy, you were in that timeframe, like where you were buying assets, you were owning assets during the oh 8, 0 9. Remember all those people that continued to buy those properties during times of, you know, instability you know, they did extremely well. But the people who just sort of stayed on the sideline and like, oh, I don’t know what’s gonna happen. I wanna sort of see what happens down the road. I think they miss a great opportunity. So yeah. So we’re buying, we’re bullish and excited for opportunities.

Charles:
Yeah, no, it’s definitely it’s definitely true. I mean, exactly. You’re buying, it’s a little bit unknown, but that’s what you’re being compensated for. And multi-family something, there’s all these different asset classes that have kind of rear their head with people leaving multi-family and going into short-term rentals or whatever it might be. But one thing with multifamily that I found, people ask me how I survived. I really didn’t know I was even surviving it. I just kinda like, it was just, you know what I mean, collecting rent and paying your mortgage. And I think one of the things that I found was that you had a lot of people that are coming in there and you’re like, there’s not that many people moving. So you had more people that stay put. And then you had people that were moving in. I mean, I had people that were moving into that lost a house, like a half a million dollar house in like Florida.

Charles:
And my properties were in Connecticut at the time where I was living. And they were coming and paying me $690 a month for rent. You know what I mean? Like, nothing could be different from my apartment was probably the size of like one of their bedrooms or, you know what I mean? So it’s like people, when people get hit hard, I mean, they get really hit hard and it’s like they’re coming back into multifamily and it just, it, it, it gives a there’s even more people that rent your apartments, you know what I mean? Maybe not as much for a class. You know, once all the concessions burn off, but like for solid b class, for even good CC plus properties, you got people there, they have good jobs, they’re credit tenants, you know what I mean? They, they can get loans, they can, you know what I mean?

Charles:
Do more than father mirror and they’re gonna be there for years, you know what I mean? Paying you, paying you rent and being good tenants. I mean, it’s just a it’s a proven business model over hundreds if not thousands of years, you know what I mean? That’s happened where people are just renting out for people to live somewhere and with all the new type of asset classes that come up and you’re, you always look at ’em and oh, you know, they don’t have bathrooms there. They don’t have this here. But then it’s the other thing too, they goes with it because people come in how good self storage is, but then it’s like, yeah, also, well, you can make that thing in like a week. You know what I mean? It takes three years to build an apartment complex, you know what I mean?

Charles:
So it’s like a there’s all these different pros and cons, but it, it is something that’s wise always kept me grounded in multifamily. Because I just feel it is the best asset class for long-term wealth growth because there’s always gonna be demand. And even when all these new units came on over the last couple years, you’re in Texas, I’m in Florida, we saw a lot of this, it absorbed, a lot of it absorbed. And it’s like, it’s just, you’re like, wow. Like there’s that much demand. It’s actually, there’s actually demand because it’s all absorbing in these huge markets. Take Dallas for instance, you know what I mean?

Wayne:
Yeah. I mean, mic drop. That, that was, I would’ve said exactly what you just said altogether. One thing I will mention, ’cause you mentioned supply demand and new new supply coming online, as that absorbs and it do, it will over the next couple years, there’s no new permits being issued out. So we’re actually developing 150 unit multifamily and Bryan College Station for that reason. ’cause We see like, hey, a lot of people are moving in. There’s large demand, but there’s not a lot of permits if, if any, in the, in the area that are a couple. But there’s not a lot. And I see this in Austin, San Antonio Houston, where, you know, there was a lot of supply that’s being absorbed pretty quickly. And you look at over a two, three year period that absorption happens and then there’s not new supply coming on.

Wayne:
That’s when the developers start coming back in. But it takes three years. So it just a really opportune time for multifamily investments. And like we saw, you saw it, I’m sure, where people were leaving multifamily, going into car washes, going to ATM doing a little bitcoin mining, all this stuff. I mean, all and stuff. It’s like, no man, I’m, I’m double it down on multifamily being an expert of this this space and finding really great opportunities because the herd mentality of, you know, it’s not just it’s everybody, you know, people have that herb mentality and so you start seeing all these car washes, but now I see car washes at every corner and I’m like, <laugh>, I don’t know. I I just don’t get it at the end of the day, you know, multifamily you need a place to live. And all the other reasons you said earlier, and I won’t repeat it. Or very spot on. Yeah, exactly.

Charles:
If if I’m going through tough times, I’m probably gonna cancel the recurring membership on washing my, my truck before I you know what I mean, let other things go out of my family’s you know, expenses.

Wayne:
So let’s

Charles:
Talk about like how you’re sourcing deals Emmy. ’cause This is something interesting you guys run like a small general partners team. I mean, how are you sourcing many of your deals? You said you’re already talking to some great deals you have in the pipeline now, where we stand at mid 2025, almost. Are we off market? Are you on market? Is a mix? I mean, where do you usually source most?

Wayne:
So it’s a mix. We’ve done, a majority of ours are off market. We’ve been very successful at text blasting finding true owners. We, we’ve done a deal that way where, you know, it went straight to a, you know, text message a seller and, you know, took about a year and a half to build that relationship. But we eventually built a relationship where he was ready to sell. And and so it’s not, it’s definitely the slower way of doing things is the off market, like true off market of finding true owners, you know, texting, you know, sending letters, et cetera. But we still do that. We also use a software system that allows us to see expiring. And it’s not, you know, we use CoStar too, but you know, there’s other software out there where we can look at all the loan data, see when the expirations are, see if there’s any watch list.

Wayne:
It has access to all the different different loan types. And so it’s, it’s, it’s a great database to use. So we, we look at it that way. And then we, we have broker relationships. We go golfing with ’em, we go take ’em out to dinner, we build relationships. And so like this deal that we’re under contract for right now, there’s no offering memorandum. It was a call like, Hey, Wayne, can you, you know, wanna look at this? You want to check it out? Great opportunity, great story. That doesn’t happen early in someone, like if those are listening in right now, we’re like, Hey, I’m starting my career in commercial real estate. If a broker is sending you a deal early on, think about like how many people have said no to that deal before it came to you. Like it’s very unlikely that you’re gonna get that good deal the first off.

Wayne:
But building those relationships and you know, maybe even starting small, whatever it is to build that confidence that hey, you can close. But at this point, not many people can raise capital. Like it’s, it’s tough times raising capital. And we’ve proven that we can close deals, that we are transparent, we communicate, we make the process easy for the broker. And you know, so that’s been allowing us to be rewarded with, you know, new opportunities. So it, it definitely is a mix. Charles. we have one deal that we’re working on getting under contract right now. Our attorneys part of this call podcast that was talking to our attorneys about that deal that wasn’t on market deal. We underwrote it back in January and I sent a bid and you know, they came back like, Hey, you know, you’re a million short.

Wayne:
And I said, okay we’ll, we’ll keep looking, you know, being respectful and understanding, like, I get it. If they can get a million more, then why not? Well, they went with the offer that was a million more and they weren’t able to close. And so I’m literally on a flight from Los Angeles back to Houston and I’m getting text messages like, Hey, we can do an LI, we do a PSA on your purchase price, like all this stuff. I’m like, well, I still happen to be on a contract on another deal. So it’s pretty hard to like do, you know, it’s hard. Like I said, it’s hard raising capital. So doing two deals at once is, is interesting, but we were able to negotiate some timing on, on this other one. So anyway, my point is, is it’s a balance of both. And when you underwrite and just stick to, you know, where you feel like the numbers are and don’t have to stretch it and you know, if it is meant to be and you know it works out in your favor, then great, you have a confidence to close. But you know, hopefully that answered your question. But it’s, it’s definitely a little bit of both and you know, it’s a team sport, so building those relationships are important.

Charles:
Yeah, I think being upfront honest and answering right away, brokers is gonna put you front and center for any future deals. ’cause They’re gonna really respect that. So they can go back to the seller and be like, no, it’s not, this is, he’s not doing this or he can’t do this, or This is what the new terms would have to be. Or this is his situation currently. It’s not like it just sits there for days or weeks and they don’t know what’s happening. And you know, it’s very difficult to do a business with someone like that. So I see that brokers it’s a huge turnoff for them when they send out a deal and there’s just crickets, right? So it’s something where you have to kind of, to nurture that relationship, you have to have consistent communication, even if you don’t care for the deal and explain to them why if it’s something that really lines up with your other, you know, other kind of criteria, let’s just say for deals, and they send you one within that and you never hear back. I mean, you’re probably not gonna get another deal from them, you know what I mean? Must sound like a blast, you know? Well,

Wayne:
And also, and you know, one of my, and I haven’t done this was probably six years ago. I had a deal, it was in Houston, I got a, it was a letter of intent signed. I loved it. It was like across from this massive park and I was like, man, it’s gonna be my, one of my first deals. Super excited as a lead general partner. And my mentor, and I didn’t mention this before, but like even with C-B-R-E-I, I got into a mentorship program with multifamily. I still felt like having that mentorship for those first two two years of getting into multifamily on underwriting and just looking at deals like was really important. So I also will say like, yeah, I had a career in real estate, but I also spent money on a mentor, which I highly recommend for those active investors.

Wayne:
Maybe not so much. You don’t need a as much on the passive side on the active side. But anyway, so I showed him this deal after I got a letter 10. He is like, did you check the flood map? I’m like, Nope. I went to the FEMA flood map and it was like right in a bayou, like the reason why there’s a beautiful park, there was, ’cause there’s a huge flood zone <laugh>. I’m like, dang it. So I went back to this broker of like, yeah, I can’t, you know, real estate’s already a risk I can’t buy in a flood zone. And he’s like, anyway, he is put me in the penalty box probably about a year at least with that guy. But hey, he’s the one who brought me this deal in San Antonio. So long-term relationships, they do matter. And you know, checking FEMA flood map is, is also something important. You, you learn things along the way.

Charles:
Yeah, yeah, that’s definitely important in the places that we’re investing in Florida and Texas, you know what I mean? Yeah, it’s just I didn’t think about

Wayne:
It. I was like, there’s a be great big park

Charles:
<Laugh>

Wayne:
Right in the bayou.

Charles:
So I wanted to kind of transition what, before we wrap up into kinda operations and in preparation for this episode, I read that you utilize third party property managers instead of like vertically integrating. And I mean, I personally feel in-house management when you see it from syndicators, it’s more of like a marketing tactic versus a true benefit to investors. I, you know, I I just like, I don’t see how shaving half percent off or whatever they try to sell it or the more control you’re gonna have by doing that versus using a third party. I’m not always sold on it. You know, why outsource management for you?

Wayne:
Yeah, so initially and, and still to this day, it’s it’s scale. We don’t have the scale in any particular city where I would feel comfortable with having my own management company. So say, you know, in Houston we have three multifamily properties. If one or two of those property managers are out sick or on vacation, well that leaves me one manager to manage three properties. There’s just not the scale or, or you know, say a maintenance guy is sick or, or leaves the job. Like, you know, you don’t, to me, you having a management company that has multiple resources, you’re leveraging in on those larger resources that they have, whether it’s accounting, maintenance, construction management, obviously property management, leasing specialists. So you’re tapping into that larger piece. So that’s one big reason why I do it. And really the second one is I like the arm lengths distance.

Wayne:
I like, I think it’s important from an investor standpoint, and I’m not saying I’ll never go vertically integrated, just while I, I have a really great management company MLDC, if they or I couldn’t find another great management company, then you have to do what you have to do. And that’s find people within your team and manage it. But in this case, we have a really great management company that’s grown with us that’s very ownership minded. Like they think like an owner, which is important. It’s very hard for property managers to think like an owner. They do. But in doing so, you know, we have that arm lengths distance. They are, you know, doing what they’re really good at and what they’re best at. And that’s managing multifamily properties. It allows me to focus on our growth as a company on the development acquisition side.

Wayne:
So we can scale in different markets and be more strategic on acquisitions. But I also see in, and I hate to even bring this up, but it’s just reality. Fraud continues to be a thing. It, it seems to be coming more, it has been coming up more recently things as deals go south for, you know, a lot of syndicators for different reasons fraud has been brought up and co-mingling enough funds, et cetera. And I don’t know. I just think of like from a passive investor standpoint, like for me as a sponsor to say like, Hey, we have a professionally managed company who’s an expert at this market, who has the resources. Like to me, there’s a lot more pros than the cons of saying, well, I don’t have that much control. ’cause You do have control as an owner, you know, you can do a 30 day notice and find another management company if they are not performing after many times of trying to work with them, right?

Wayne:
It’s hard to do that when you’ve got employees in integrated to your staff because you know, you gotta source those people and then you gotta train those people and you gotta, you know, it just, anyway, there’s a lot of different reasons, but I would say the biggest two is scale, which, you know, takes care of the assets when, you know, there maybe a drop in personnel showing up for work for whatever reason. And, and two, just having that arm length distance I think is, is really important. Yeah, definitely. There’s a lot of fraud. There’s a lot of commingling that’s going on now. It’s I mean you can anybody that’s in the real

Charles:
Estate, estate commercial real estate circles with syndications, they’ll see it. And that’s like another benefit too, where people are like getting into deals and they have like family offices as large parts of the investors and you’re like, okay, that’s another group that’s signing off on the books. You know what I mean? No matter what’s happening there, there’s a very low chance it’s gonna be fraud because the majority of it’s their money and they’re probably signing on every check that goes out over a certain amount of money. You know what I mean? And they’re signing off on every construction thing that goes out, and they’re definitely signing off on any distribution that goes anywhere that’s outside of the properties realm. So that’s that’s definitely an important thing. The other thing I found is, or I found interesting in this scenario when working with people that are bringing on third party management and do this if I’m a passive investor, but also if I’m partnering with people in the general partnership is as I’ve been looking more over the last few years into people’s relationship with their lenders, I always use looking to the relationship with their property managers because I’ve switched property managers myself.

Charles:
And it is a nightmare. I mean, it’s a nightmare. It’s expensive, it’s extremely time consuming, you know what I mean? I, it’s you sometimes you’re just like, I’ll just manage a thing myself. You know what I mean? You, you get to that point, you know what I mean? Which you have to tell yourself. No, but the thing though is that in that scenario, you’re like, you, you, you’re, you’re again pulled into a lot of the day-to-day and stuff like that. And what I’m saying here is that it can be extremely you know, when you’re, when you’re bringing on these people and you’re having it, like I know that they don’t have to switch management if it’s like their sixth asset with that property manager. You know what I mean? And as I feel more comfortable with that because no one’s like, Hey, the property’s doing so well, we’re gonna switch management.

Charles:
No, it’s like the property’s like, it’s not anywhere near performance proforma, anything like that or over budget, all this type of stuff. It’s not doing well if we’re now looking to really switch boats, you know what I mean? So it’s something where I don’t want anything to happen. And that’s one way of minimizing risk, I think is going in and being like, ’cause if someone’s like, this is our seventh deal and seventh property that’s with this management company in this market and we’ve been doing this for, you know, 10 years, I mean, you’re pretty much just plugging into something that already works. You know what I mean? Like the chances are of that being disrupted or possibly losing money is very minimal. Versus someone that’s like, Hey, we we’re gonna start self-managing your own properties. We’ve got three properties. Well I have no idea about, you know what I mean about anything that’s going on here. And it’s like, there’s so much unknown. I mean, how do I know that you guys are any good? And also I’ve heard from brokers, it makes it more difficult to sell when you self-manage because they don’t know that what you’re putting for fees is accurate and they don’t know if they can replicate that. On the other side works is if you just said, you know, you manage your, you named your management company, here’s who manages it, here’s what they pay, here’s a T 12 and here it is in here. It’s much different. Right?

Wayne:
Absolutely. A hundred percent. And I’ve seen that properties that we buy are, you know, they’re, they self-manage and we really, for whether it’s self-managed or managed, we’re not really, we’re putting in our assumptions and our numbers, just like, I’m sure you are too. And but yeah, it’s, look, we can scale with property management, great property management. Now it can go vice versa and you gotta be quick to fire. There was one deal I was not quick to fire. This was different management company, but one that, you know, manages over 20,000 units and you know, just, you know, larger multifamily management company and I just felt like a number, their regional had 20 plus properties. I would call him and then he’d be like, well, I’m, I’m in the middle of financials, I got 20 other. Like, he’s just like telling me his woes.

Wayne:
And I’m like, man, this is awful. So, you know, finding a company that you know, doesn’t overload the regionals, doesn’t overload you know, that the property manager has it, you know, you can’t put one person on 200 units. We do one person for every 100 units. But, so just being strategic about the payroll staffing and then you have to Charles like, and we have a full-time asset manager does this like every week we’re on calls with the property management company. ’cause One week, two weeks, if you’re not on ’em, things can shift. And that’s where I was saying you’re, it’s not so much being an asset manager by being an asset leader. But on top of that we get a KPI report, it ties into Yardi and other management platforms. And every day I get a report first thing in the morning. It’s one of the first things I look at is how are occupancies doing? Lost the leases vacant units that haven’t been turned yet, what our collection rates are. You know what, it just gives me a snapshot of everything. And then, you know, then we, and then I have a meeting once a week with our asset manager as well. So it’s just one of those things you just can’t keep your eye off. Even if you have a professional management company, you’ve gotta, you know, you gotta be hands on. Yeah,

Charles:
No, that’s definitely true. It’s definitely true. If I’m gonna be a passive investor with someone, I want them their hands into a renovation. If we’re disrupting the whole business that we’re buying, you need to be like, you told me an expertise. You need to be like in there. Someone has to be there checking with contractors, interviewing contractors, stuff like that. If they’re putting in hot water heaters, I mean obviously we don’t need to have an asset manager there, right? But if we’re like disrupting units, we’re taking units offline, which are gonna be several months of not only us spending thousands of dollars, but us losing thousands of dollars in rent. I mean, it’s completely very important for that. And the same thing too is when we get reports from our management company, there’s things in there too for your management. So like your marketing. So it’s like where’s these yields coming from?

Charles:
Where are we start? Where are we, where are we getting leads? Where are we getting leads that turn into tenants? Where are we gonna pour a little bit more gas on and turn up that marketing to get more people in the door? And I mean, there’s so much stuff that you have to do as an asset manager and I think it’s kind of overlooked from investors ’cause they think, oh, the property manager, well the day to day, yes, no one’s calling me if there’s a emergency on the property per se. You know what I mean? But the thing though is that it is something where, you know, we just have to know what’s happening there. And you have to, like you said, keep checks on exactly it and maybe it in the butt because it can take many months for bad issues to really rear their head if you’re not on

Wayne:
Them. Yeah, absolutely. More of a reason to be a passive investor, <laugh>. Exactly. If you don’t really love this business or don’t have the time, you can still enjoy and benefit from investing passively. Yeah. So

Charles:
One last thing, Wayne, before we get information in your company. I know we’re gonna a little bit longer here is with everything we’re talking about with third party management, how do you best align, you know, how do you put up make everybody’s interests align when it comes to incentives with property managers, with asset managers, and with the ultimate, you know, syndicators and past

Wayne:
Investors? Yeah, so great question. On the property management side you know, the management company typically will see a, a fee. And it’s typically based on a percentage or a minimum annual fee that covers their overhead, their regionals, their accounting a lot of their expenses. In a lot of cases it, it’s not even really a profit center for them. ’cause They, they have all these resources that their company’s paying for, which we benefit from. So in our case, that’s typically three point a half percent. And then just depending on the size, it could be a 3% or a three point a half percent, but usually in that range. And then every quarter our property manager and our maintenance get bonus based on net operating income. I used to bonus on a number of leases, which they still get lease bonuses, right?

Wayne:
It’s like 95 or a hundred dollars per lease and it’s split between them and the, the maintenance based on a perta share. So the maintenance is just as important as the leasing person. So they, they do get a piece of that pie. But we also, on top of that, which is I think most multifamily owners do some type of incentive for leasing. Maybe they don’t incentivize their maintenance guy, but we do, we also then do NOI targets, so based on budget. So if they meet or exceed the budget, there’s another bonus that they’re getting every quarter. And then at end of year they get a end of year bonus. So not only do they get the salary, not only do they get the leasing commissions for each unit lease and each renewal, and in many cases, especially recently, we incentivize them based on our business plan.

Wayne:
If the goal is to renew, keep heads in beds, de and depending on the, you know, the economy and the market, we’ll incentivize higher renewal rate of commissions versus the new leases. ’cause We want to incentivize renewals, right? So it just depends on how your business, if your business plan is, you want to turn units so that you can renovate, get people out, bring in new people, then in incentivize on the new leases. So anyway, so there’s a little strategy on that. Do the NOI for our asset manager within CII partners, you know, we incentivize based on, you know, there’s a salary, right? And expectations but based on certain KPIs and such, there’s also bonuses on on that as well. So you know, there’s you know, most I would say management companies, you know, financial incentives are key.

Wayne:
But, you know, I think I’ve got one property manager, Charles, that he doesn’t wanna work on weekends. He’s got a family and I’m like, that’s fine. Don’t you don’t have to work Saturday, just keep my property over 95% occupied and collections tight and you don’t have to work Saturdays. And ever since I own that property, he is been the property manager. He is never worked a Saturday <laugh>. I’m a 98 98 9% because that’s what he, it really, it drives him to have his weekends. So it drives him on the, he still get off, gets all the bonuses and everything else. But as an owner, I’m, you know, I can be flexible and realize like, hey, the team, the boots on the ground, they have their own life going on and they have their own incentives thing that motivates them the most. So as an owner, let’s listen and see what we can do to adjust. And, you know, it, it creates loyalty within the team, but also makes them really wanna try harder so that way they can get whatever motivates them. Yeah, that’s awesome.

Charles:
I love the the bonuses to maintenance. That’s a, a great way of spreading around and having everybody have like a collective interest into renting the property and actually doing a good job because it’s just, you know, someone’s walking the property and there’s an extra smile or there’s an extra this or that ’cause they know they’re getting bonus, whatever it might be that motivates ’em, as you said, then it’s a win-win for everybody in your group.

Wayne:
A hundred percent.

Charles:
Dan Wayne, thank you so much for coming on today. How are our listeners learn more about you and your business? All

Wayne:
Right, first of all, I love educating passive investors. It’s one of my passions, whether you invest with us or not, that to me it’s a personal choice to you. But like educating. So we did a course, passive investor coaching.com. It’s a free course. They’re broken up in modules, so passive investor coaching.com for those that wanna like learn about passive investing and, and really get sped up at a much faster rate definitely check out that. If you wanna learn more about CRI partners, check out CEI partners.com. But Charles, it was really great. I love having these as conversations, hopefully added value and excited to keep building the relationship.

Charles:
Yeah, Wayne, thank you so much for telling us everything about how your business works and the unique approach it’s taken toward syndication and multifamily investing. So thank you so much and I’m looking forward to connecting with you here in the near future.

Wayne:
Absolutely. Thanks Charles.

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About Wayne Courreges III

Wayne is passionate about helping busy professionals build generational wealth by offering the opportunity to passively invest in commercial real estate syndications. His company, CREI Partners currently has over $50 million in assets under management in Texas, Louisiana, and Alabama.
To build wealth for investors, Wayne focuses primarily on acquiring apartment communities and developing RV/Boat and Business Storage in areas with strong market fundamentals along with strategic partner relationships.
His objective is to protect investor capital while providing high yield returns and giving back to communities.
Based out of Central Texas, Wayne leads the investment lifecycle and investor relations for CREI Partners as the Lead Sponsor and General Partner.
Wayne started his real estate journey while serving in the US Marine Corps. After completing his service as a Marine Corps Corporal in 2007, he started a career with a Fortune 125 commercial real estate firm that spanned 16 years before focusing full-time on real estate investments.

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