GI326: Syndicating Multifamily Properties while Living Abroad with Eric Nelson

GI326: Syndicating Multifamily Properties while Living Abroad with Eric Nelson

Eric Nelson. He is a real estate investor, coach, and founder of Wild Oak Capital. He started in single-family homes and over the past 12 years has grown his portfolio to more than 1,000 multifamily units. Eric is originally from Colorado, but he now lives in Spain with his family, where he continues to invest and coach other motivated investors through his mastermind, Cashflow to Freedom.

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Transcript:

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host, Charles Carillo. Today, we have Eric Nelson. He is a real estate investor, coach, and founder of Wild Oak Capital. He started in single-family homes and over the past 12 years has grown his portfolio to more than 1,000 multifamily units. Eric is originally from Colorado, but he now lives in Spain with his family, where he continues to invest and coach other motivated investors through his mastermind, Cashflow to Freedom. Thank you so much for being on the show!

Eric:
Thanks for having me, my honor. My pleasure to be here. Appreciate you having me. This will be, this should be fun. I’m excited.

Charles:
Yes, yes. So give us a little background on yourself. I gave kind of some broad strokes there, but of yourself both personally and professionally and prior to getting in, in real estate investing and prior to getting into syndication, which I think you said it was 2019. Yeah,

Eric:
So I I grew up in Colorado and, you know, it’s like a lot of people, I, I don’t know that I knew any other path other than go to college. That’s basically what my parents told me to do. Right. So I happened to be pretty good at math, and so lots of people just sort of pushed me towards engineering. I mean, that’s, that’s kind of the best way I can describe it. Not, and not that there was like any ill will, people were just trying to help me out. But, so I went to college, studied engineering. Honestly, didn’t really like it in college and I didn’t really love it after college, you know, I just, I wasn’t really like into it. I made some money and it was fine. And so I started, started my own business thinking, okay, if I’m the boss, at least I might enjoy it more, which was partially true.

Eric:
Had some success. But, you know, I started doing the math of basically like, what does my retirement look like and how long do I have to do this until I can retire? It was, it was pretty bleak, you know, I was like, oh my gosh, I have to do this for another 30 years before I can really retire. And I was like, okay, I gotta find something else. So that’s when I really just started looking around. And it doesn’t take you much research to find real estate as an alternative kind of investment opportunity. And so for me, you know, you get a lot of tips along the way. But a friend of mine said, Hey, check out BiggerPockets. And, and that’s a lot of people’s story, I think just like learning podcast books, I dove away and I was just like, all right, let’s learn everything I can.

Eric:
And then I started investing in single family homes near my house, and I didn’t really know of any other way. I was just kind of doing that. I got really into creative financing. I got really into seller financing. And so we started to scale a little bit. Like, you know, I bought a sixplex on complete owner financing with 97% leverage. So I’m not suggesting everyone does, but that’s a really cool story. I’m not gonna share if you have time, but that was the kind of thing I was doing to scale. And then a friend of mine invited me to a meetup. So I went to the meetup and the guy there was doing syndication, which I didn’t know what that was at the time. And, you know, the more I got to know him, the more I got to know what it was.

Eric:
It took me a long time, don’t get me wrong. I was like, no, I don’t want partners. I don’t wanna do any of that. I don’t want investors. I kind of came around to the idea of, okay, actually this does, you know, suit my personality, suit my skillset pretty well, and it’s a way to scale and also provide really good returns for your investors, assuming you’re picking good deals, right? So I just kind of was like, all right, let’s give it a shot. And it kind of just dipped my toes slowly, you know, we had one deal, two deals, three deals, and like a lot of things it just sort of took off. I mean, I, I wanted to scale, but with the right team, the right people, the right seats, it just kind of went pretty fast. And you know, I wouldn’t change it.

Eric:
I’m just saying it was, I went from doing single families to a thousand units within two or three years, and that’s awesome. But it’s not for the faint of art either. I mean, we had a lot of things that were like in the air. And so lately, within the last year or so I decided, hey, I wish I had a few things that I didn’t have. And so I started a mastermind and like a little course and some coaching to help people kind of learn about what syndication is. ’cause Really, I mean, I, I had a great coach. I think you need a coach or mentor or a group or something in my opinion, but I just was missing some stuff. And so that’s kind of the full story is, you know, engineer by trade. Started doing some real estate, eventually scaled that quit my engineering job, scaled a little bit more. And then I, my family and I moved to Spain and moved here about 14 months ago. And our kids are in school here and we’re just kind of experiencing a different pace of life and different style and different culture and really feel blessed to be here. So that’s kind of the <laugh>, that’s kinda the little story. I hope I didn’t vLab your ear off there.

Charles:
No, no, that’s perfect. So before we get into syndication, and definitely we’ll get into where you are now and where you’re living now, but I think seller financing is an interesting thing that because obviously everybody knows real estate’s a capital intensive business. It is what it is, and it’s just something that obviously people starting off sometimes don’t have boatloads of cash and they’re trying to make win-win situations. Can you tell us a little bit about how you started getting into seller financing and how you normally structure those deals and Yeah, I mean, obviously buying a commercial multi-family property with 97% loan to value is, is pretty great.

Eric:
Yeah, I mean, I’ll do a back ’cause I don’t know your audience that well. So I’ll just say seller financing basically means the seller acts like the bank and they can only basically, I mean, there are some things around it. You know, pace mortgage does wraps and there’s other things out there, but a true seller finances, basically whatever equity they have in the house, they can carry that amount, so to speak. So let’s just take a simple example. Someone inherits a house and it’s worth a hundred thousand dollars. They could, instead of a bank, they could act like the bank for you. So you could say, Hey, how about I give you 10 grand in cash, you act like the bank with 90 per or $90,000 or 90% carry and I’ll pay you a monthly payment. And some people say, what’s in it for the seller?

Eric:
Well for a lot of sellers, they want that monthly payment. So in that example, someone maybe inherited the house, or maybe they’re older and they’ve paid off their house, they don’t wanna worry about how to invest that money, they just want a monthly check. So if you offer them a decent return and then you get a monthly check to them, that’s kind of nice. Plus they can defer some taxes, right? So if you give someone a hundred thousand check, especially like an older generation, they’re like, well, I don’t really wanna pay the tax bill on this come April either. So you say, okay, well let’s, let’s spread it out over some years. And it’s more manageable. Plus you’re getting a monthly income, you don’t have to worry about where to invest it. You know, it’s very like repetitive. Every month is the same number.

Eric:
So that’s what’s in it for them. And then the other thing is they have a lien, right? So if you, if something happens to you or you can’t service the debt, meaning you can’t pay your loan, they get that house back. And in a lot of cases you’ve either paid them a lot along the way or improved the house or both. So they get an improved version of what they already owned before. So they kinda know like, all right, well sweet, I’m the bank, I get monthly payments, I don’t have this giant tax bill, I don’t have to worry about where to in, like, invest this money. My recourse is the house I already owned. That’s kind of sweet too for you as the investor. Like in my case, first of all, I was outta money, right? So you do a handful of deals and to your point, I was like, my wife and I don’t want any more cash.

Eric:
What, what can we possibly do <laugh>? So we had to leverage pretty high. And I will say to your audience, going really high leverage is extremely risky if you don’t know what you’re doing or if you’re not getting a deal. So in the case where I bought the million dollar property, and if you have time, I’ll just tell the story quickly, Charles. Okay. Basically what I was doing early on was, I, I, we just had a baby. So I would walk him along the streets every day and I would just walk the streets of the town I lived in any for sale sign or for rent sign, I would just call, almost have passed the time ’cause I’m just walking my son, right? And I’d be like, Hey, I see your house is for rent. I’m not looking to rent, but I’m looking to buy. Would you consider selling?

Eric:
And that was just honestly like my original tactic. I didn’t know that there’s all these mailers and better tactics to do this, but it worked really well because people were like, oh, like a real person’s calling, you’re really interested. I’m standing in front of the house. I’m a real buyer. And so that’s, that was kind of, I got my leads early on. So this particular deal is obviously a multiplex. And the gentleman was there, he sitting in the yard and he was putting up a for rent sign. And I was like, oh, hey, how you doing? Looks like a nice place. Would you consider selling? And he was like, yeah, but you know I have to think on the price. And I was like, oh yeah, no sweat. Like, call me and, and figure out what you wanna do. So he called me back and he, he was like, he gave me his number.

Eric:
He said, well, I think I need a million dollars. And he’s an older gentleman, so I think he thought that’s an enormous number. There’s no way I’d go for that. But he just kind of went for it. I was like, all right, here’s the reality is where I’m from in southwest Colorado, that’s actually a really good deal for a sixplex. So I was like, Hey, I’m not gonna argue with you at all. I will pay that price, but would you sell or carry? And he’s like, what’s that? And so I just kind of gave him the spiel I just gave you. And I said, talk to your lawyer, talk to whoever you wanna talk to and here are the pros and cons, here’s the risks and if you would do that, then we could give you about 30,000 bucks in cash if you’d carry the rest.

Eric:
And he, he was like, okay, well let me talk to my attorney. Quite honestly, his attorney wasn’t really happy with the deal deal ’cause he is like, this is pretty over-leverage, right? But he’s like, okay, cool, if you wanna do it, let’s go for it. So we bought that deal and we improved it very quickly. We, we put all the remaining cash we possibly had into that deal, improved, it got rents up. And then what the coolest part about that story is I was paying him more in a mortgage than he was making in his rents. ’cause His rents were so low and so outta a date. So it was just a really cool scenario for both of us. He’s like, wait, you’re gonna give me more than I was already making? I don’t have to do anything. I was like, absolutely. So that’s kind of what, what happened.

Eric:
And there’s actually more to that story, but basically what I’ll say is if you know what you’re doing and you’re comfortable with that risk, you can leverage pretty high. In some cases you don’t have to either. I mean you can just do like an 80% loan to value with seller carry and sometimes they’ll give you a better rate too. The other thing is you don’t have to go to the bank. Not that I dislike banks, but the lending process can take a long time and can be frustrating and it’s paperwork intensive and blah, blah, blah. So seller carry can be easier in a lot of ways too.

Charles:
Yeah, no, that’s fantastic. What I found out with doing seller financing deals is that there’s really like three things that you have to like figure out what is most important for the seller. It’s to price the down payment, the interest rate, what they really want. And I’ve found before, like when putting out offers on seller financing, I can go, like I I, my own simple thinking is I can go like 5% over what I would normally pay from a bank because I’m avoiding all the junk fees from the bank. I mean, there’s

Eric:
Totally true.

Charles:
I mean, check out your HUD one when you’re closing statement, next time you buy a property, everything in there. I mean it’s just like, it’s, everything is just like, you can just avoid it. Yeah. It’s

Eric:
Like processing fee. It’s documentation fee, it’s the lender’s fee. It’s, I mean there that’s true. Fedex, it can be an FedEx enormous number.

Charles:
Fedex it’s coffee. It’s like the whole, I mean it’s like it’s, oh it’s overnight. Fedex it’s $70, whatever it is. It’s just insane. So you do and you’re like, you know what, I’d rather pay, you know, if I was gonna pay nine 50 pay, you know, a million for it, whatever it is, and you’re just like, this is the deal that what you get. You know what I mean? This is like what I can work on. For him it was a price he got. So that’s number one. That was it for you. But also with your, going back to your original kinda your original example, like a hundred thousand for the house you sell for a hundred thousand, you literally could probably find an investor that’ll pay you 1 0 5 or one 10 for that house and being able to go in with 10%, you know what I mean? Because you have that difference that they’re willing to overpay a little bit for the ability of not having the deal with the bank. You know what I mean? And all that goes in with that. So there’s so many different benefits of it. One question I have before we move on is, when you were calling, when you’re sending out these deals, when you’re calling walking around your neighborhood were you, did you successfully ever do it through brokers or was it all direct owner when you did successful seller financing deals?

Eric:
So I, I mean a bit of both because some people for, for whatever reason, one reason or another, they just feel comfortable having an agent in between. And so I did one deal where I talked to the seller and say, Hey look, I would prefer using an attorney ’cause I’d rather spend a thousand dollars on a really good contract than 15,000 on a 6% that you’re gonna pay some realtor fee, right? That’s just, again, I can sometimes bash realtors, but that’s because I have a lot of friends that are realtors and I think an attorney is a much better position to write your contract. But anyway, so some people just prefer that. So the answer is yes, I have gone through that. What I’ll say is, in that case, a transaction agent is different in the commercial world than it is in the residential world.

Eric:
So if you’re buying a single family home and someone brings an agent in that case, I usually say it’s kind of okay and probably good to have your own representation. Not that you need more fees in there, but once they’re a transaction agent, they’re not really in either one of your best interests and so they’re not really helping you. They’re just kind of a mediator. So again, an attorney is gonna be a much better person in that scenario, in my opinion. So to answer the question, yes, I did that. I don’t really mind having someone in the middle. It just costs money. It’s kind of like you’re saying there’s no real reason. I think it’s important for any audience to know for some reason there’s like this big cloud above buying real estate that it’s complicated and you have to have all these like things in order.

Eric:
It’s like, well, it’s really not, it’s actually probably just as easy as buying a car. Now, don’t get me wrong, the purchase price is quite a bit higher. There’s more money involved, so you need to be more careful. But it’s really quite easy. I mean, the transaction really doesn’t, is no different than any other transaction. They’re just title company and inspection and some other folks involved that are not hard. So what, what I’m driving at is it doesn’t require an agent ever. And in fact, if you can go direct to seller and you know what you’re doing, that’s a really great way to save them three to 6%. And you guys can, can both hire an attorney for way less than that and feel more confident and comfortable. And then the title company does really a lot of the work too. So yes, the answer is I have, I would prefer direct to seller, but some people feel more comfortable and that’s fine. ’cause I want them to feel comfortable, you know?

Charles:
Yeah, no, I was only asking ’cause every time I’ve had in my kinda experience of which I don’t really do it anymore going, if there’s the agent there, because usually the agent will throw up roadblocks right away and they’re gonna push me back. Even though you’re giving them the idea of an offer which they should be giving to their client, right? You’re, they, I think they have some issue that they don’t think they’re gonna get paid fully out. I don’t know what it’s,

Eric:
I think it’s a, I think it’s a fear of the unknown is what I see. So, so like for, for a long time I would just call agents, right? I would call listings and be like, Hey, can I, can you ask them if they’ll sell their finance? And almost, I’d say 95% of the time they just go, oh no, they’re not interested. And I know they never asked that client, but in reality what I was hearing was I don’t know how to do that transaction, so I’m just gonna say no. And so that would be super frustrating to me, be like, it is your obligation to take this offer to your client. So I would just write it and put it in writing it and I would send it to ’em, be like, you are obligated to give this to them and explain it to them.

Eric:
And I would like make, again, I’m like bashing agents here and that’s not really the goal goal, but it’s true that you, you need to push what you’re trying to do. And seller financing is a totally legitimate, really solid way to buy real estate. So I think we’ve kind of beat this horse to death, but I do think it’s important to know what you’re up against, know what you’re doing first and then if if you’re confident, yeah, push them a little bit. If the agent doesn’t want to say, well I don’t really care, you have to give that offer to them. You know, it’s actually they’re obligated to.

Charles:
Yeah. Yeah. So you can just make an offer, submit it into the agent and go from there. But okay. Yeah. Perfect. Yeah, thank you so much for sharing that information with you know, your prior deals and kind of how you did that because you know, that’s one roadblock after you start getting starting and you know what I mean, making some money and now you’re running outta money to invest and using creative financing as can be, like you said a win-win for everybody. So transition to where you are now and what you’ve got going on. So talk to us about, a little bit about what Wild Oak’s doing, kind of what your current investment strategy and your criteria for investment is.

Eric:
Love it. Yeah. we are basically in three markets. So we’re in Tulsa, which is my personal favorite market. I love everything about investing in that city. We’re in some parts of Arkansas Fort Smith area specifically. And then we’re one city in Texas because we have a really outstanding partner there. So our strategy is basically like really focused on the markets. We know, and part of the reason those markets are so great is because we have really good property management there. And so if you’re starting out in syndication, if you’re listening to this, they are your number one partner, number one tool. Have a very good property manager, it’ll make your life 10 million times easier because they’re the person doing all the leasing, all the evicting, all the collections. Really the day-to-day you might be finding the deal. You might be asset managing, but they’re doing the day-to-day.

Eric:
So those are the three markets we’re in. We actually find a pretty nice niche in like a 50 to 120 unit deals. Lots of folks are looking for a hundred, even 150 more units more. And we’re like, eh, we’re actually okay with that. A little bit smaller again, because our management’s okay with that. So we have several properties that are like around 50 units and our manager can do part-time for the leasing agent, part-time for the, for kind of the maintenance because that’s what you hear. You know, you want to go for a hundred or more, then you can afford payroll. And so in this case, if you have under a hundred, make sure that your manager can do that. But that’s kind of our niche. The other nice thing about those properties is, let’s say for example, we just close on an 80 unit for about four and a half million bucks.

Eric:
And the purchase price makes it easier to raise the capital amount needed and we don’t have to go to other people like funds of funds or you know, pro equity. Like those kinds of things. I, I’ve kind of shared, it’s like kinda shy away from, I don’t need other partners in the deal that we don’t know really, really well. So we can kind of raise the money in house, we can purchase the deal. We have very, very good management. There’s actually less competition under a hundred units. So maybe I’m like tipping my cards here, but that’s where we are. And that’s the, like the current investment strategy, it’s worked really well for us. And to your point, we’ve slowed down buying a little bit, now we’re ramping back up. We’re seeing deals really, really strongly now. But in 24 specifically it was pretty rough for multifamily deals just didn’t pencil. And so we’re not gonna buy deals that don’t work just to buy deals. So I’m kind of with you on that.

Charles:
So, so one thing here with kinda like when you’re in that area with property management, ’cause this is obviously like you said, the onsite property management, you know, the first couple deals that we syndicated, we had under a hundred units and you know, there’s always that issue of running the onsite management, having the leasing person, the handyman kind of figure all that stuff out or text, whatever. And how did you guys, how do you do that? So you have, you don’t have anybody full-time, you just have part-time people in say a 50 or 80, like say the 80 unit property. How do you have that? I mean that’s probably big enough where you can have full-time person, correct. 80

Eric:
Is big enough. That one we have full-time. You have to be really careful. You just have to underwrite your payroll to what it is. ’cause The payroll’s gonna cost the same for 80 units as it does 120. So it’s just gonna be expensive, you know, for what it is per unit. So you have to recognize, okay, a person’s salary is going to be the same whether they’re managing 80 or 120. But yes, so to answer your question, what we normally do is we’ll split it. So we’ll say either our property or our property manager’s amazing should take our property and either another one we own, let’s say we have a 48. So for example, we have a 48 and a 48, but before we had both, we just had the 1 48 unit property, right? So she said, okay, we’ll go halftime with yours and halftime with another client we have that has like a 60 unit.

Eric:
And to answer your question, yeah, they would be literally on our property half of the time and on the other property half the time. So we would do like eight to noon or something. So we just have like a big sign on the door that’s like leasing agent here, eight to noon if we’re not here, call this number or whatever. Or there’s all the virtual stuff you can do now, but it is nice to have a person there, right? Or even better is for tenants. So if tenants have a problem, they can come talk to the leasing agent or whatever and that’s nice, right? Same goes for maintenance. So a maintenance person is, you can’t afford them full time on a 48 50 unit property. So you can split them with another property. So that’s what our manager does and it works really well because the payroll is half the price, which makes sense ’cause it’s half the size. But that’s, that’s hard to find in certain markets. You know, there’s not managers that will do that or maybe they’re new and they don’t have another property to split that person with, right? So you have some hurdles, but just to be really, really clear, if you’re going for an under, let’s say 80 unit property, yeah, payroll’s gonna be expensive if they’re there full-time or be clear with your manager, Hey, can we have someone part-time there and see if they can help you out?

Charles:
Yeah, that’s a great, that’s a great tool. Great thing to say because that was the issue we had. They wouldn’t split like that. So that was, it got expensive.

Eric:
Yeah, we’ve had that problem too. I mean we had a 32 unit and it was really challenging. I mean mean it was too expensive to have someone there and it was too risky not to have everybody there. So it was kind of this really weird thing. And so we kinda landed on part-time and it’s worked okay, but it’s still pretty expensive for 32 units. So I will say there is a threshold where people ask me like, should I go for 20 units? I’m like, man, that is a hard size actually. Like I would personally prefer to manage a hundred unit property than a 25 unit property. Now the capital might be easier to raise, but it’s just an easier deal. You’re gonna get better leasing, better maintenance, you know, just you can afford the payroll. So that’s another tip as well. If you can’t raise the capital partner with someone who can, who you really like and know. And that’s really the other tip to multifamilies. It’s a team sport. It really is. I mean, you gotta have partners in pretty much every regard. And so finding people who can do the things you can’t is really the, the major tip to become a syn indicator.

Charles:
Yeah. And our first syndication deal, we, the main property was a 32 with onsite office. And then what we did to kind of spread that a little bit more scale it I guess a little bit, we bought another portfolio of quads and a three unit around that 27 units. So we had 59 units and that took down, that took down the burn a little bit. You know what I mean? <Laugh>, but it’s, it’s still,

Eric:
Yeah, well ’cause then it’s cool if those people live in that house, they can go to that leasing agent too, you know? So that’s a really smart idea.

Charles:
Yeah. So it’s, yeah, you had one leasing agent and it was kind of like, it’s surrounded as best we could when we bought it. And so I guess, you know, the only thing, yeah, I mean if you, the thing with buying small is just like, you just have to like really scale it fast. If you want to get that third party, if you’re managing yourself, then you can kinda do whatever you want. But if you’re like, real goal is to get like real third party manager on there, I have understood. It’s like you’ve gotta like scale and like a somewhat of a close area as soon as possible. And so yeah. Or by,

Eric:
By a yeah or by a hundred people. Large

Charles:
Property first <laugh> or buy a large

Eric:
Property, which I know know is daunting at first, right? But it is kind of cliche, but it is, it is easier in my opinion to, to run a hundred than it is 25. It’s just harder to purchase.

Charles:
So, so Eric, what is be your advice for investors looking to hire a property management firm? How, how did you do it? How did you find them? How do you vet them? Yeah,

Eric:
My number one tip for this is to call every broker you can find in that market. So let’s say it’s Kansas City, get on LoopNet or correct C or whatever. If you’re new and look at all of the agents brokers, call all of them. First of all, introduce yourself and say, Hey, I’m looking for a deal. Get on their email list. So that’s a good exercise anyway. But before you hang up the phone, say, Hey, by the way, who’s your preferred property manager in this market? And if you ask 10 people, probably six of them will say the same name, right? And that is your person. So let the brokers or the people in the market kind of do the vetting for you. Obviously then you want to talk that property manager, explain what your goals are, explain how you’re gonna work, ask all those questions about fees and how they work and will they take on new people and all those things.

Eric:
But let the market people tell you, you know, who’s the best. You just ask as many people as you can and pretty soon to a point to the best property manager. Then from there you can bet them a good property manager also will take the time to look at your deals that you’re close to purchasing. So I, I kind of like caution people don’t waste your property manager’s time, but if you have an accepted LOI, they need to be looking at your underwriting immediately before you sign the PSA. In fact, even like as we’re approaching best and final, we’re letting our manager know, Hey, we’re looking at this deal. Here’s our general lease numbers. Do you agree? And a good manager will be like, yeah, I agree or no, or Oh no, that’s a terrible neighborhood. Or Oh there’s tons of crime there, stay away.

Eric:
Or or you’re low on rents, right? You could actually pay a little bit more. I mean we have that sometimes. So a really good property manager is your friend from even before purchase towards, you know, the end of the deal, right? And so that would be a good way to vet somebody is if you have a accepted LOI you’re close, see how they act when you ask them to look at your underwriting. If they’re like, nah, it’s, it’s annoying, then that’s not your, that’s not your pm. If they’re on your side and they start looking in and they really dive into your numbers, that’s a really, really good sign. So those are a couple tips I have.

Charles:
Do you walk your units during due diligence with your pm We’ve done that before and pay them and you know, they know firsthand what’s going on, what they’re getting into <laugh>

Eric:
A hundred percent. Yep. We will pay them and they don’t always charge us. We have enough units with ’em now they don’t charge us anymore early on is it’s definitely nice to offer, say Hey, I’ll pay for their time. But yes, I insist on walking every single unit, someone on our team or myself and the property manager. I’ll say, Hey, walk 10 or 15, they don’t have to walk every single one. I might send them videos or pictures of some really, really rough ones. Inevitably, and this is just a caution and a reality. If you buy a hundred unit property, I can pretty much guarantee you two of those in there are gonna be real gross. I mean, I hate to say this, but people live in some weird conditions and some sad conditions and you do see that. So the reality is when you walk a hundred units, you’re probably gonna see some stuff that you wouldn’t live in personally.

Eric:
And there’s no judgment necessarily unless it’s really, really dangerous or, you know, disgusting. But you will find some that are rough and need a lot of work. And so those ones, I’ll take some photos and send our manager. But yeah, they definitely need to walk the property. Definitely need to see some units and then we will 100% walk every single one if they refuse. If the seller refuses to let us in a couple units immediate red flag, I’m like, Hey, we’re not your buyer. We have to see every single one. Some are gonna be rough, you know, there could be burn units, there could be, you know, like we bought a property that had a meth situation in it and it, and it was like pretty hard to get past. But we did and it was totally possible. We just needed that disclosed to us so our lender knew. And that thing, that type of stuff happens. And so you need to be really transparent with your PM and they, and you need to see every unit before you buy it, for

Charles:
Sure. Yeah. Yeah. I think when we we do, you know, welcome, we grade ’em, see exactly like on our scale of like, you know, are they one, two or three, then we go back and we go, oh, well there’s more units that need a little bit more of a heavy value add when we get to that point with these units. So we have that. And the other thing too is taking a lot of pictures. So we have a couple, you know what I mean? So you, because you’re not gonna be in that unit probably for, for, I mean not that often, you know what I mean? No,

Eric:
No. You and when you, yeah, it, sorry to cut you off Charles, but when you walk to the property, you only have like two or three minutes in someone’s place ’cause it’s a little uncomfortable and you’re in someone’s home, right? So what I do is I just literally have my thumb going. There’s probably an app that would do this better than me. I’m taking pictures like more than one a second. As I walk around, I’m always very courteous to people and like asking, Hey, can I open the store? And you know, like letting people know you’re on their side, we’re gonna try and improve the property, but taking a million pictures and then you file those and categorize them later. But the more pictures you can take on that walk, the better. ’cause To your point, you may never enter that unit again. Other than smoke alarms and like a yearly, you know, maintenance type thing or whatever, dryer vent. It’s nice. Yeah. Yeah. It’s nice to have documentation of what they look like and then as they’re coming due, you can share that with your manager and say, Hey, here’s what this looks like. Heads up, this one’s gonna be rough. They usually know, you know, a good manager will do usually like a 30 or 60 day prior to move out, walk and they’ll know what it looks like. But it’s nice to have, it’s nice to have all those photos during your walk anyway. Yeah.

Charles:
The other thing too is if you are doing this, take pictures of the door, number of the unit number exactly before you start taking pictures <laugh> or you are gonna have yourself quite a mess. When you look

Eric:
Back, I always two or three pictures of the door number on my way in and then I say, okay, take a bunch of photos and then the door number on the way out and the door number on the way in. So yeah, that’s a good trick to bookend the photos ’cause they all look the same. <Laugh>.

Charles:
Alright, so let’s just talk a little bit about your team. I know we’re gonna like, one more thing is just about you know, you guys are really thorough with property management, with your asset management. What is kind of like what you consider the roles of asset management? What is your kind of a weekly or monthly overview of working with your pm kind of entail?

Eric:
Yeah, good question. So we have honed this in pretty seriously. And I’ll back up a little bit. There are basically, in my opinion, three roles. They don’t have to be taken by three people, but there’s basically three roles to multifamily. One is asset management. She just asked about incredibly important. That person needs to be super detailed, open to looking at a lot of Excel documents, looking at your projections of where you are, those kinds of things. The second one is raising capital. It’s incredibly challenging right now to raise capital. I don’t care who you are, I just had a mastermind with someone yesterday who’s raised a ton of capital. He’s like, it’s really hard right now. It’s just a, it’s a challenge. So someone who needs to be able to raise capital, again, that could be multiple people. And the third is basically a person who is good at communication.

Eric:
So it could be investor communication, talking to brokers, acquisitions. Those are the three kind of roles so to speak. And they can be mixed with several people. So our team looks like Bonnie is our asset manager. She’s outstanding, she’s really detailed, she’s great. Shane’s kind of the behind the scenes person. So he does all like all of the things that you don’t hear about, right? Like lending and again, all of the paperwork and all that stuff. And then the third person or like thing that I was, and that’s actually the other thing I was gonna say was like you need someone who’s pretty detailed, right? Dealing with all the paperwork, making sure all the documents are in order. And then myself and my brother and I’m usually like, I’m more into the acquisition side and communication with investors and my brother’s kind of like our capital raiser also helps with asset manager.

Eric:
So there’s kind of four on our team. It does intermix with other folks as we need. But to answer your question about asset management, we have basically a weekly call for every property. It’s pretty fast ’cause you can go through pretty quickly. But we have basically a, a tracker, like a KPI tracker. Okay, what’s collected, what’s outstanding, what is the vacancy? What work orders did you have this week? What is the expected rent? And then any evictions coming up, like basically tracking that. Then we take those numbers and we take them and say, okay, where did we project we would be this month? And where are we against that projection? Are we high or low? And why? And those, that’s kind of the, the basis for asset management is looking at a big picture of, alright, we projected we’re gonna to collect 60 grand in rent.

Eric:
We’re at 54. Why? What, where do, why do we think we can do better than we could than we’re doing now? Or hey, we have we have $10,000 in outstanding payments. What’s going on? Why are the, you know, why are the rents late? And that’s just asking the property manager what’s going on with the late rents. You know, like it’s not their fault. Maybe someone has a financial burden, so do we need to help that person? Or maybe someone hasn’t paid for three months. Alright, is it time to start talking about eviction? Right? So those are the things that we talk about weekly on every call. They’re pretty quick. Unless there’s something going on in the project, usually 15 minutes you can go through weekly about those things I mentioned. So that’s kind of what we’ve done is the manager fills in our KP tracker, which takes some three minutes.

Eric:
Then we get on the call, we talk about those things. If there’s something that we need or they need discuss a little bit and move on. I don’t think you wanna beat beat it to death. It can be, you know, rushed through pretty quickly, so long as you’re on track. And then once you get off track, then, then the harder conversations start. Okay, what do we need to do to change? What do tenants need? What are we missing? Do we need more capital? Do we need to improve some things? You know, there’s, there’s, you get deeper from there, but, but usually 90% of projects are gonna be fairly on par with what you thought, unless something’s going wrong.

Charles:
Awesome. Yeah. Well thank you so much for breaking down that. So let’s talk about what you’re doing now. 14 months ago you moved to Spain with your family. Can you tell us about how your experience has been so far and what really inspired you to make the move?

Eric:
Yeah. you know, originally my wife and I, we we’re, we love to travel and we’re kind of like adventurous people. When you have kids you kind of settle down a little bit. But as they were getting a little older, our kids are five and eight now they were four and seven at the time we moved. We’re like, man, now’s a really actually good time for us to kind of explore the world. ’cause They don’t have like a million sports. They don’t like, their friends are kind of malleable at that age. I mean it’s, it’s true that kids just kind of get along and they move easily. And so like, it’s kind of a now or never thing. So what originally we thought to do was just like, move to a different country for each summer. So we’re like, oh, let’s just like move abroad somewhere for a month or two each summer.

Eric:
So we did that. We went to Mexico for like five weeks the summer before we moved here. And we’re like, that was pretty cool, but it’s not long enough <laugh>. So we’re like, let’s go somewhere for a year was the idea. So we did wanna learn Spanish a little more. We did wanna be in Europe, so it kind of pushed us to Spain. Beautiful country. Anyway, I’ve never been, it’s an amazing place. So we decided to move to Spain and we got a visa for three years just in case we wanted to stay longer. And the visa process is not terribly complicated, but it’s not easy either <laugh>. But anyway, so, so we, we’ve been here a year and so we decided about halfway through, like, okay, well we’re enjoying it, kids are enjoying it, let’s stay another year. So we decided into the second year, which we just started our second school year for the kids. So we have a third year potentially, or we can move back to Colorado. We, we know we’ll land back in the states. We wanna raise our kids there. We, we love where we live. We just wanted to show them a kind of a different culture and style and you know, it’s kind of cool just to let kids know there’s lots of other world out there and for us too. I mean, we get to see different food and culture and language and all that stuff and we really enjoy it.

Charles:
So you still have your house in Colorado, you’re renting it out or Airbnbing it or,

Eric:
Yep, which is kind of cool. I mean, we rent our house and, you know, all cards on the table. We’re, we’re getting quite a bit more rent, rent on our mortgage, so we are making money in our house at home and it’s significantly cheaper to live at in Spain. So it’s just, it’s worked out financially. And what’s crazy is my team has been really cool. Like, I’m like, Hey, I’m overseas so I kind of have to take meetings in the mornings. So we kind of set up all of our property meetings in the mornings in the States and everyone’s kind of okay with it, you know, and, and I was really transparent, like, I’ll be super available if you need, I’ll leave my phone on loud during the night. Don’t call me if you don’t need to, but, you know and then, and then it just works well for our team so I can do acquisitions from here and you know, Bonnie can do asset management from Colorado and Shane lives in Tulsa and their brother lives in Denver, so we’re kind of scattered anyway so it just kind of works out.

Charles:
So you’re seven hours from Colorado, is that what it is?

Eric:
Eight from Colorado, seven

Charles:
Hours ahead. Okay, so you’re six hours ahead of the east coast. Okay, you got it.

Eric:
Which actually, you know, isn’t too bad. Like you do a 2:00 PM meeting in east coast, it’s 8:00 PM here. It’s not ridiculous. You just kind of get used to that shift a little bit.

Charles:
Yeah, no, I my wife and I travel I’m, I’m a Italian citizen. My wife just took her language test, so we’re waiting for a passport to come through. Oh

Eric:
Man, that’s awesome.

Charles:
So she’s pushing to move to Italy next year. So we’re, we’re putting that all together. But anyway, the thing is that when I would work, we’d go for like three weeks to a month to Italy at a time. And yes, I’m used to that, that whole, the whole game, the whole six hours behind kind of thing. And you know, you have to like set one day where you’re going later on calls and another, but it, it works. I mean it sounds kind of like but it, you know, everybody in the other thing too is that Spain and everything is like, they’re like hours behind us with how stuff is done. Same in Italy, you know what I mean? Like, dinner is much later than it is there, you know, you know what I mean? So it’s not, it’s not like a huge, huge difference, like, you know what I mean? It’s maybe just a half that time really.

Eric:
Yeah, exactly. I mean the average dinner in Spain is gonna be like nine or 10, and so you, that just dinner time is just super, super late. So yeah, I mean I think you’re exactly right. My, a good friend of ours just moved to Italy actually. We’re just there like two weeks ago and they love it. We love that country too. So you, I mean, you know, but it’ll be great if you have any questions anytime, reach out.

Charles:
Yeah, definitely. Just one last thing because you know, you know, taxes, it’s a very complicated thing and I just wonder for people that wanna do this move, I mean you probably, I mean you have dozen, you know, different businesses, syndications, K ones, I mean, I imagine it’s a nightmare if you lived in America. How does that work now? Because obviously you’re a visa, so you know, you have some sort of work visa over there, so obviously you have to at least file something with him or pay something, whatever it is. Like your accountant back in the states was fine with doing this. It’s the complicated thing. Do you have an accountant over in Spain as well and how do you find ’em?

Eric:
Yeah, good question. I mean, you and I both probably have a significantly more complicated tax situation than most people, right? If you have a W2, you can have a Visa, you can work in the states, super simple. I will tell you, you will pay significantly more tax now it costs about half the price to live in Spain as it does to live in Colorado across the board. I mean, name anything except for gasoline, it costs half the price. You go get groceries, it’s 40% of the costs is in the states. And I’m talking like Whole Foods, like it’s very good food for very cheap, very amazing living for very cheap. But in Spain you’re gonna pay 49% tax on your income. So it is an enormous number. So to answer the question, yes, the way it works is you pay taxes in Spain. So let’s say you make a hundred grand, you’re gonna pay 50,000 of that to the government.

Eric:
But the way it works is you, the, you pay first in Spain and then if there’s more, would you have paying the states, which is super rare. You you get a credit and so you don’t double pay and then you pay the reserve. If you overpay, you actually get a credit in reverse, which you can, which you can use on your taxes in the future. So you’re actually, if you’re going to remain a tax resident in the United States, or if you’re gonna return to the United States, then you basically you’re gonna pay in the long term you’re gonna pay United States rate. If you’re gonna live in, in Europe long term, yes, you have to pay taxes. At least in Spain, you have to pay taxes on the money you make. Now it’s more complicated than that, the money we make as in businesses. So you, there are ways to pay less as a business, but the, the total perfect way to do it would be to claim it all and pay their rate and it’s definitely painful.

Charles:
<Laugh> you, so do you have, obviously you have an accountant here. Do you have an accountant there? Oh yeah, so

Eric:
Answer the question. We have both. We have both. So they work together. So basically my account at home is like, I don’t do that overseas stuff. She was amazing, don’t me wrong, but she just is like not my forte. So there’s a account, yeah, there’s an accountant here who does that for a living, does like international stuff. So I’m using that person, he will file in Spain and then my account in the states will just take that Spain filing and go from there. And so she was comfortable saying, all right, as long as you have the filing, I can, I can take that and go with it. So it is, that is another step. The tax situation’s kind of a tricky one. Now some people you only have to live, like if you’re living less than six months per year here, you don’t have to pay taxes. So lots of people I know will live in Spain for like five months and 30 days leave and go somewhere else and then come back and that’s a pretty tough thing to do with kids. So that’s not a great strategy in our situation, but it does work.

Charles:
Interesting. Well thank you so much for coming on. I want to, before I let you go, I want you to talk a little bit about your coaching and then how people can learn more about what you’ve got going on with your, with your firm.

Eric:
Cool. Yeah, I love that. I mean, wild Oak Capital is wildo capital.com, so if you’re interested to invest, reach out there anytime, even if you’re just interested to talk about real estate, reach out there. My email is Eric ERI c@wildoakcapital.com. If you learn about coaching, the website is Eric Nelson coaching.com. Basically what I’ve done is I’ve created a group, right, a mastermind of people looking to do the same thing. I will one-on-one coach, some people, but in the mastermind we provide a ton of education. We have a weekly call that’s a cheaper kind of more, more broad approach to education. And also you have like built in partners. So I really love the mastermind. I wish I would’ve had something like that. So that’s kind of what I’m, what I’m doing is creating a, a group of people learning together. So again, as Eric Nelson coaching.com, you can see the mastermind in there too. But appreciate you letting me pitch that. I think it’s really important to get educated. So that’s the most valuable thing you can do. Step one is to learn what you’re doing.

Charles:
Fantastic. Well, Eric, I won’t keep you any longer. Thank you so much for coming on today. We’ll put all those links into the show notes and looking forward to connecting with you here in Europe or back stateside.

Eric:
Sounds good. Thanks for having me. Appreciate it.

Charles:
Thank you.

 

Links and Contact Information Mentioned In The Episode:

About Eric Nelson

Eric Nelson is a real estate investor, coach, and founder of Wild Oak Capital. He started in single-family homes and over the past 12 years has grown his portfolio to more than 1,000 multifamily units.

Originally from Colorado, Eric now lives in Spain with his family, where he continues to invest and coach other motivated investors through his mastermind, Cashflow to Freedom.

His focus is on helping people create more time and freedom in their lives by investing in real estate the right way, with a strong mindset and the right support.



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