DJE Texas (00:02.318)
Welcome to the DJE Podcast, where you will learn about real estate investing from real life examples. Here's your host, Devon Elder.

DJE Texas (00:15.982)
Hey there, welcome to the show. Thanks for joining us today. My guest is Jonathan Twombly and he is a an attorney that left Wall Street in 2011 to go full time into real estate and he's done a lot of multifamily deals since then. He's been a JV or Kojip on about a quarter billion dollars of multifamily real estate and then we spent a lot of time in this podcast talking about value at the value at hotel space. So that's that's a pretty interesting space, but we also spend time talking about.

how he got his first few investors, how he kind of went about that backwards and then ended up building something more long -term in terms of growing an investor list and building those relationships. So we spent some time talking about that. Some of the trials and tribulations of doing large multifamily deals with partners, he kind of went right into the large multifamily space and skipped all the single -family stuff that a lot of us started. So.

Jonathan's a sharp guy. A former attorney has done a great job with a portfolio over, you know, for a while now since 2011. So it's great to get his perspective on where the market's been. And we spent a little time at the end of the show talking about kind of what he's seen out there and what he expects for the future. You know, the near future for commercial real estate. So hope you enjoy this interview with Jonathan. This episode is brought to you by DJE Texas Management Group.

San Antonio, Texas based real estate investment firm with a track record of transacting on several hundred million dollars of multifamily land and industrial deals throughout Texas. EJE has been in business for over a decade and is approaching 100 team members in San Antonio. To learn more about DJE visit djetexas .com or the link in the show notes of this episode. This episode is also brought to you by apartmenteducators .com.

the complete ecosystem for professionals to learn how to find, finance, and operate large multifamily properties for profit. You can get started with a free mini course and learn more at apartmenteducators .com or visit the link in the notes. Jonathan, welcome to the show. It's great to have you. How are you, sir? Great. It's great to finally meet you after all this time. So glad to be on the show. Yeah. Yeah. We all kind of have these.

DJE Texas (02:38.606)
these real lives that we lead and then these digital lives where we kind of connect on social. And obviously we know a lot of the same folks and have been in the business a little while. So great to have you on here. Look forward to diving in. For those folks that are not familiar with you, and I guess for me too, I'm always interested to hear what people's on -ramp was to this commercial real estate world. I know you're an attorney and have some other experiences in your background prior to real estate, but love to hear.

what got you turned on to real estate and into this business? So let's see. I mean, like a lot of people, I think I'd always been interested in real estate in some way or another, you know, and, um, my dad was actually an architectural historian. So I spent a lot of time as a kid, just going around, looking at buildings with my dad and then helped my dad restore his 1810 farmhouse that he lived in. Cool. So, you know, kind of always had buildings in my blood.

but didn't do anything about it professionally. And like you said, I was a lawyer, I practiced law on Wall Street for more than a decade. And the last part of that was doing real estate related law. So I was actually a litigator. So I saw deals when they fell apart and saw the partnerships when they fell apart and got my exposure to it that way. But after practicing law for a while, it really wasn't helping. Just...

wasn't happy with it, really wanted to break into some kind of investment field. I wasn't really sure whether it would be real estate or equities, but it wound up being real estate for a variety of reasons. But to make a really long story short, I'd been practicing law for a long time, wasn't happy. Got to a point in my career where this is right after the financial crisis, the work dried up, and I kind of knew

They hadn't said anything at the firm, but I kind of knew that they were getting ready to fire me because I was just sitting around making like $300 ,000 a year and not doing anything. And I knew that this wasn't going to last, but I also wasn't interested in it lasting. I had tried to quit before and they would talk me out of quitting, but I kind of knew that this time probably was going to wind up with me out of the job. And I started doing a lot of networking.

DJE Texas (05:04.174)
try to break into real estate, wound up meeting somebody who was putting together a syndication business. I had no idea what that was. I sort of jumped into it after I did get terminated. And that was kind of how I broke into the business. That partnership didn't ultimately work out, but it kind of got, I got my feet wet and started talking to investors, brought investors in, learned how to underwrite deals. So I kind of got my education in that partnership. And then after that, went out of my own. Yeah.

I love it. That's a great on -ramp. I appreciate you sharing that. Was there a phase of buying single -family, smaller projects, or you just kind of went right into the commercial syndication stuff? I never did that smaller property thing. And I kind of wish I had, but because I think it's a great education to do that and kind of like really get your hands dirty in property. And I sort of missed out on that stage. I...

I guess, you know, for lack of a better term, I've always been on the finance side of things, not so much on the actual like, nitty gritty, getting my hands dirty with the property kind of thing. So when I came into the syndication business, and like I said, I didn't know what syndication was, but my first partner, you know, she had like a lot of experience with actual property and she said, I want to partner with you because I think you can raise money. And I was like, really? I don't know if I can raise money. But she kind of like,

That's what the role that she had me slotted into and I sort of just, you know, went at it, I guess. But we started out, you know, in that partnership, we were looking at these larger deals down in Louisiana. And I remember the first, the first day of work, you know, when I, when I went to work with her, I just had assumed for whatever reason, because I'm here in New York City, you know, the conversation here was always, you know, basically like you buy a brownstone.

wait for gentrification to happen and that's how you make money. And I just sort of assumed that that's what we were going to be doing. And she was like, oh, no, no, we're going to be buying hundred unit properties in Texas and Louisiana. And I was like, how on earth are we going to buy a hundred units? Like that just seemed insane to me. And then at least in those days, it looked at the prices and stuff. It was like, oh, a hundred units in Louisiana cost for the brownstone in Brooklyn costs. So, you know, so we started.

DJE Texas (07:24.942)
That's how we started. And I guess I was always in that. That's kind of my entry point was there. So I just kept going with that kind of philosophy. That's great. I think there's arguments to be made for both tracks. I went the opposite route, did too many single family houses, hundreds. And there was learning. There's lots of lessons along the way. But I kind of describe it as two different tracks. You've got two different train tracks. And doing a lot of work on one train track doesn't.

necessarily push you down further on the other ones. So again, no right or wrong. And the grass is always greener, right? Whatever path we didn't take, you wonder about it. But yeah, I think it's great. And it's possible not for everybody, but for people that have the business acumen and the financial wherewithal or kind of have done something else that's been difficult and requires

certain level of wherewithal, it can be done. So that's interesting. So what was that like kind of, you had your time back fully to invest in this business. You had decided what asset class you're going to go after. You'd had a partnership. You mentioned that that didn't work out. It didn't turn into a long -term thing, but what did the rest of the business, what did your trajectory look like kind of after that first partnership? So, I mean, I...

Struggled to really break through I guess right, you know, even though I had I had capital lined up You know we went With that first partnership. We took a couple of deals almost to closing and then didn't close because we had banks back out We actually lost our lender on those deals. Wow. What time frame was this? So this is like 2012 okay, and

Banks were still pretty skittish after the financial crisis. And they were doubly skittish when we said, oh, we're going to be buying like C deals in Louisiana. And they were like, we're not so sure. Right. So we had a lender, we had two deals on the contract, same seller. And we had the money lined up and the bank lined up and then the bank backed out on us in the last minute. So that was pretty painful experience to go through. After that, we broke up.

DJE Texas (09:49.966)
I switched my focus to the Carolinas because I was interested in that market. It was a lot closer to New York, it was easier for me to get to than, you know, home of Louisiana and these other places that we were looking. And it took me about a year before I was actually able to get brokers to kind of pay attention to me and show me real deals. You know, I was getting all of the junk, the stuff that had been hanging on the market for a long time that was overpriced, like,

nothing that really made any sense until I finally was able to kind of break through with a broker through a personal connection and bought my first deal. And then it was pretty rapid after that. I sort of bought four deals pretty quickly. It's kind of how I got started. Yeah, that's interesting. It's interesting that you had kind of the capital lined up in the financial wherewithal and it still took that period of time. And I suppose that's anything, right, that you're trying to...

game mastery of the beginning is just brutal and a lot of work and no results. And then you reach some sort of tipping point and do four deals. And it just seems like that's a pattern that plays out in not just in this game, but in a lot of areas of life. Yeah. I mean, it's very hard to break through on that first one because people are going to take it seriously. It was like a new market. And it was a different time too. I mean, and maybe we're going to go back to a time like that now given.

the way the world is. But after the financial crisis, and even in 2013, and so you're talking a few years later, there was just a lot of distrust in the market. And I remember once we got that first deal on the contract, I started talking to banks in South Carolina. And they were like, well, you're from out of state, so we're not going to lend to you. Would you buy a condo? If you buy a condo here, we'll lend to you. But you know,

And it was because they had been burned by out of state investors. I mean, it's funny. I don't mean to sidetrack conversation, but it's just a funny story. Like there was a, so I was looking at all these deals and I kept on seeing the same name in the owner, in the chain of title of every deal. So get on like, uh, not costar, another one of those vendors at the time. Right. And they would have like all the previous owners of the property and it kept on seeing the same owner. And it was always this owner. And then the sale.

DJE Texas (12:16.782)
for zero, right? So they've been foreclosed on. And apparently what happened was there was this one group out in New York City that had gone down to South Carolina, bought a ton of property to rehab it. And they went belly up in the GFC and they just handed the keys back on like a thousand or more units, probably more than that. So all the local banks were just like, oh, you're from out of state and we're not lending, you know.

Go find someone else, go find another sucker. And, you know, so we had to overcome that as well. And in those days too, I mean, we couldn't get agency financing because we didn't have a track record. So we had to do CNBS financing. That was like a whole different thing. So yeah, there was a lot of, a lot of friction to overcome in those days that I don't think certainly...

By the end of the decade, it wasn't there. I was always surprised to see these people come out of nowhere and suddenly they're buying all this property. And it's like, you guys don't have a track record. You've never done this before. Now you're buying these like $50 million properties. Like what's going on? I couldn't figure that out. Yeah. What a change in the sentiment. Yeah. I had lunch with the banker the other day and he was telling me, he came to the office and he sat out and he said, Hey, I'm just going to kind of open the conversation with.

We are not going to do deals in this market in Texas. And I just told a story of sitting down with his loan committee and the owners of the bank. And they had gotten burned in this market in like the 90s on a deal. And he's like, these old guys are like elephants, man. They never forget. It doesn't matter what's happened since then. Strength. Oh, he was bringing a deal that was like this just teed up, slam dunk.

retail deal that this loan officer was like, oh, this is going to be, you know, and they just shot them down cold because they decided they didn't like that market. And that was the end of that. And so the, you know, these guys have long memories. That's just interesting. And so how did you end up overcoming that to get into the, to, to the Carolinas at some point? So, I mean, like I said, I got the, the first I solved the broker piece. I mean, I had the, I had the equity piece solved already because I,

DJE Texas (14:38.222)
I already had my investors who were looking to do deals. Got the broker piece solved through the personal connection. On the first deal for the lending, so we went through one of my investors through his banking relationship with JP Morgan and did a CMBS deal through them. And just the same as with everything else, we did the first deal, CMBS, and then after that it was like,

On the second deal, then I went to a mortgage broker, because I figured out that that made more sense than trying to go through J .D. Morgan, went to a mortgage broker and then was like, oh, okay, you've done one of these before. It just sort of greased the skids a whole lot. And then after that, it wasn't really an issue getting the debt. But like you said, once you break the ice, it just becomes a whole lot easier because now nobody wants to take a chance on their first deal. For sure.

But once you've got one, then it's like, okay, you're approving commodity. So yeah, it's a big deal. It's a conundrum. Whether you're raising capital or getting a loan on one of these big deals, it's like, you just have to figure out a way to go from zero to one and things change a lot. How were your initial investor relationships and conversations? And we talk about borrowing credibility and building a team and things like that, but -

It's a whole lot easier to raise capital for your fourth deal. The first one, you know, is tough. Were these a lot of kind of professional relationships you had from being an attorney from Wall Street or how did you go about kind of building that first group of investors? Yeah. So everything I've done has been kind of backwards, right? So the first investors were the easiest for me because they were...

They were personal friends who kind of like encouraged me to go into the business, right? They were, they were always both of these two different guys. I mean, ultimately I introduced them to each other, but they didn't know each other, but both from different angles. Both of them had been pushing me for a long time. Like, Hey, someday I want to do business with you like someday. Whatever both very affluent guys. And so, uh, they.

DJE Texas (17:04.013)
had said to me when I first started contemplating going into business with my original partner, they had both said, hey, you know, if you do this, we'll give you money to invest. And so it was and it was substantial money. It wasn't like, you know, 50k was like I could do a deal with their with one of these guys money. Right. So that so that helped a lot. And I know most people are not in that position. But the so I was very fortunate that I was in that position. But it came back to kind of haunt me later because.

I relied on those guys too much and didn't go and develop an investor base independent of them. I had a trick, I had a smattering of other investors, but not really enough to do deals on my own. And I got really complacent. And so I actually had a deal teed up. It's really funny because I just saw this deal come back on the market. But I had a deal teed up. It was from a seller we already bought from, right near a property I owned. It was really...

clean, smooth deal. And I went to my guys and they were both out. And because one of them was like, getting divorced, I can't spend any money right now. The other one was in Japan. He was like, look, when the yen was 90 to the dollar, I would buy any deal you put in front of me I wanted. Now that it's like 120, it's not as interesting to me. So I'm out. And so here I was with this great deal. And I couldn't... I was like, I don't have anybody to invest in this deal. I went and tried to like...

pound the pavement, find people to invest in. Let my money go hard to buy extra time. And ultimately, I couldn't close the deal because I just didn't have enough extra firepower outside of those two guys. So that was a really bad experience. But it forced me then to go and figure out how to find investors. Yeah, that's a very good point. It's like this private equity.

equity, whatever you want to call it, big check writers on deals. Seems appealing. You're doing a $4 million capital raise. Sure would be nice if $3 million of that was one check, but that check leaves you at the one yard line with hard money. You're scrambling. So there's trade -offs there. And also interesting too, I just, in my experience, a thousand times where you get your teeth kicked in and then you've got to

DJE Texas (19:29.358)
do something new and that's how you kind of grow the business through those painful experiences, right? Oh, absolutely. I mean, you really only grow through those painful experiences. You don't really want to go through it, but it's very easy to get complacent. If you have something that's working, why change it? Right. And I always knew like in the back of my mind, like, well, I need to go find some other investors, but it was hard and I didn't know how.

I had a few early conversations that were like kind of went really badly and I didn't want to repeat that again. So I was like, okay, I got my guys, I'll be fine. And I really didn't expect that they were going to, you know, A, both drop out and B, both drop out at the same time. And, um, but like I said, it did then force me to figure out how do I find investors? I'm like, what do I say to them and how do I get them onto my list? And, um, you know, so I, I did.

Then solve that problem. That is interesting. I see what you mean by saying, you know, you kind of did it backwards. You're fortunate to have those relationships, which is great. It's not a bad thing. And then later we're developed kind of the way a lot of us have this kind of organic thing where you grow a larger investor base. And so what did that, what did that look like for you? Was it, was it setting up content? Was it conferences and meetings and putting people on an email list or.

How did you go about building that almost kind of from scratch, right? At that point or close to it. Yeah, so the way the way that I did it. It's funny, it wasn't it wasn't really a plan per se, well, the way that it worked out, it worked out pretty well. So I hired somebody was like, look, I need help with marketing. I don't know what I'm going to do. So I hired this person who was like a Facebook person. She said.

You got to start a Facebook group. Right. And so I was like, okay, I'll start a Facebook group. I didn't really expect it to amount to anything, but I started this Facebook group. And at the time there were really no other multifamily Facebook groups. Right. Well, there were a couple, this is probably about 2015, 2016. And I mean, there were a couple of groups, but they were all very low quality. They were basically just people throwing deals into a group.

DJE Texas (21:57.742)
into a black, like this Echo, whatever, just pitch a deal in here. And it was a lot of like wholesalers and stuff. And nobody really providing any value. And what I started doing was just having conversations in the Facebook group and posting just a lot of, I wouldn't say it's like content in the sense that I was like posting articles or things, but I would like write my thoughts about the market and write my thoughts about how to do deals and.

And it just got a lot of attention. And then I figured out that, so Facebook allowed you when you have a group to ask questions when people come into the group. And so I would say to people, you know, the first question was like, do you agree not to spam the group? The second was, I forget something, maybe what are you interested in or who knows? And then third one was like, if you would like my free download, give me your email address. So.

I was able to build up a list of several thousand people on that basis. And then the group was really, really effective because at the time it was really the only group on Facebook having real conversations about multifamily. So that was how I really grew like sort of my initial base of investors outside of my original kind of small group. And I did some partnering with other people too to bring in their investors. But that was really how I grew my...

my list initially. Yeah. I think it makes a lot of sense. And then those people that were on your, your list, are you sending a monthly newsletter? Are you doing webinars and other content? Are you just launching deals? How do you approach that? Yeah. I mean, I've done a number of things. I mean, I have to say, like, I'm not the best with the list about being consistent. You know, I've gone, I've done different things. I've had a daily email. I've had, um,

just posting when I have a deal. I do try to keep in touch with them as often as possible. So now I'm a little bit more organized about it. So I do send out a weekly newsletter of interesting articles about the multifamily business that we find. Things like, if there's any updates, I'll send them out. But I just want to make sure that they know I exist. And I'm sending them some value every week. So that's been...

DJE Texas (24:21.582)
pretty good. I'm able to automate that with my assistant. So she compiles the articles and sends them out. And that's a good way of just kind of keeping top of mind so that when I do have a deal, people haven't forgotten about me. Also recently, I'm sorry. That's a good case. That's a lot of content. Yeah. And then recently I've also been devoting a lot of energy to LinkedIn, which I find to be a really good platform. Facebook, unfortunately,

But a couple of years ago, they changed their algorithm. And just so I had like in that Facebook group for a while, I've been getting like 30 leads a day into that group and it grew to about 12 ,000 people. Then they started changing their algorithms and nobody saw the group. I literally overnight went from 30 leads a day to three a week. And, uh, and just, they just shut off the spigot. So, uh, after that, it just became a lot, not only that, but even within the group.

it stopped showing the posts to people. So I was not, I was doing a lot of posting and nobody was seeing it. So I wound up just kind of letting the group sort of wither because it just wasn't, it just stopped being helpful. And then, you know, there was a proliferation of Facebook groups after that too, about multi -family. So I wasn't the only game in town anymore. You know, so that also hurt. So LinkedIn I find very good. Interesting. And today your fan, LinkedIn. Yeah, today LinkedIn. I mean, you know, LinkedIn used to just be this.

sort of graveyard for resumes. Now it's become a really good discussion forum. It's migrated that way, yeah. Yeah. We've got an internal company group on LinkedIn that's, you know, pick your platform, you kind of do anything, but that was the one we chose to kind of share some internal, all kinds of internal content. But that's been interesting. That's put me on LinkedIn more.

in general, kind of on the public side, but yeah, that's good. And we've done some marketing on there as well. Well, I want to switch gears, Jonathan, and talk about hotel stuff. I mean, multifamily is great. We both have done a lot of that and we talk about it all day. That's great. But I'm curious, you know, if this is a newer venture, what got you into it? What does that look like for you? And just kind of the whole thing around that. Yeah. So,

DJE Texas (26:45.678)
This is not a business I expected to find myself in. And I think like a lot of multifamily people, I was a little bit, well, not a little bit, definitely wary about the hotel space because I was like, oh my God, like if there's a recession, like nobody's going to come, you know, it would be empty and it's going to be really, who wants that? COVID, everything, but even without COVID, just like, oh my God, what if the economy goes bad? Like, I mean,

Nobody shows up. So what are we going to do? So what happened was during COVID, my wife and I bought a house in upstate New York in the place where we would always vacation. And in order to get to this house, we would always have to pass by this one particular hotel, which is in just this spectacular location. Like it has this commanding view of one of the lakes up there.

It's like on top of the hill, you drive out of town and you get the crest of the hill and you see this 30 mile long lake laid out in front of you with this hotel right there at the top of it. And every time we drove by, we would have the same conversation. Man, somebody ought to do something about this crappy old hotel in this amazing location. You know, it's just such a shame. And so we were spending a lot of time up there and I started thinking like, boy, I'd like to be up here more.

Maybe if I do some business up here, my wife will let me spend more time up here, right? So I started looking for multifamily assets up there and I couldn't find anything, but I came across that hotel for sale. And here I had been like for a year saying somebody ought to do something. I thought, well, maybe I'm the somebody who ought to do something about this. So I looked into it and knowing that I don't know anything about hotels, I thought, okay, well, I got to find somebody who knows something about hotels.

So through a business partner, it turned out that one of his in -laws had a hotel management company, contacted him, showed him the deal, what do you think? And he had just recently done several of these very similar things like rehab, repositioning of an independent hotel. So he took a look and he's like, yeah, I think there's something here. And then because I really wanted to be very conservative about this, I just went to one of my investors.

DJE Texas (29:11.502)
Um, actually one of the original guys, right. And said to him, Hey, look, I've got this opportunity. Would you like to do this? Just the two of us. And so she said, yeah, he was interested. We actually did the whole deal for cash, um, including the rehab, you know, no debt, just no debt at all. Yeah. I mean, we didn't, we probably wouldn't have even been able to get debt if we tried. Um, like totally vacant. I mean, not functional. Well, no, it was running. The problem is that.

The way that, so I'll give them two minutes, like why I really like this space, but the way that people run these hotels is not the way that like you and I would run a multifamily property or even a hotel now. They're running them to make a tax loss, right? So they're paying themselves a salary, but they're not maximizing the value of the asset. They're...

making it look like it's losing money so they don't have to pay taxes. And the problem with that is that when you take that to a bank, the bank goes like, there's no cashflow, we're not financing this. So these deals are not financed yet. But that creates a lot of opportunity too. Anyway, so we rehabbed this first one. We got the rehab finished last year. Hotel's operating really well.

What I noticed and why I suddenly became attracted to the space was because I realized a number of things. One is that these hotels, these independent hotels are owned mostly by mom and pops, right? Like I said, they run them in this way to avoid paying taxes. Very often, they haven't put any capex into them for a very long time. And...

They're now having, there's a big generational changeover where a lot of these owners, they're baby boomers or sometimes even older than that. This is like, if they want to retire, they have to sell this asset because all their network is tied up in it. And, and there are very few people who want to buy them because of the condition that they were in because you can't finance them. So that for me, it's like, wow, there's a lot of, if you can find hotels that have a really good location, like the first one we did.

DJE Texas (31:30.03)
It's like, wow, this is almost like a no brainer if you can put the financing together because you've got this amazing location and you've got a really undervalued asset and it needs work. I can do that from my multifamily background. I know how to structure these deals. And then the other thing that's really interesting, so there's a lot of like, you can buy these assets at a really reasonable price. But then the other thing that's really interesting is that these owners, they use no tech, right? They're running these things in a very antiquated fashion.

And even if they're online, like you might be able to find them on Expedia, but you can't make a reservation online. That's crazy. Right. So they're leaving all this money on the table and they don't want to do it because, oh, it's too much trouble or whatever. Or they, they have all these weird ideas about hospitality from the old days. Like, Oh, we might get overbooked and we always want to make sure we have a room available for somebody who drives out because we want them to know that there's always a room. Right. And it's like, well, why wouldn't you book?

up every night if you could. Oh, no, no, you can't do that. So what we found is that even before you spend a dime on of capex on these properties, you can increase you can increase the revenue by about 20 percent just by making it possible for people to reserve online. Right. So so that hotel, the first we took it over right before the high season started just by putting just by making it possible for people to buy to sort of book online.

We had the best month the hotel had ever had in its entire history, just before we spent any money on it. And then after we did the rehab, that same month the following summer, we doubled that revenue. So by being able to charge higher room rates. So having noticed what I noticed, I saw like, oh my God, there's this really, I think, big opportunity in this space to find these undervalued assets, modernize them.

Institute the tech that needs to be instituted, run them professionally, and you can create a lot of value. And then you go from an asset where the buyer pool is really limited to an asset where now it's stabilized, you can finance it, it's rehab. There's a much bigger buyer pool for that asset now. And there's even the possibility of putting a flag on it if you want to, which will make it even easier to sell and finance. So that's - Yeah, the international brand on the hotel. Yeah. Yeah. Yeah.

DJE Texas (34:00.494)
That's fascinating. I love all the low hanging fruit in there. And that sounds really cool. What did you guys end up doing with that one? Is it a long -term hold for you? Did you end up selling it? Yeah. Yeah. So we're holding everything we buy. I mean, we did, like I said, the first one completed the rehab in 2023. We closed on the second one in Vermont end of last year. We're almost done with the rehab on that one. And we're just...

looking for more of these because I just, like I said, I feel there's a lot of value there. I mean, it's obviously, you know, you got to roll up your sleeves and figure out how to finance them and you got to do all the work. But, you know, we're pretty vertically integrated on this. We do the management in -house. We have our own work crew. So, and it's great because like I'm like a multifamily, you know, where you've got to roll your rent roll in order to do your rehab.

Like a hotel, it's going to be empty every night. It empties out. So you can just, we have our crew, they come and they live on site and they don't leave until they're done. And so we can turn the whole thing around in five, six months and, um, and be ready to rock and roll in a pretty short time. And we have, you know, design team that we work with. They have, they own the factory in China that, uh, you know, we buy from. So it's, it's a very smooth process. Yeah.

I feel like too, once you've kind of done like C -class multifamily, you know, other projects are like, yeah, it's going to be hard, but I mean, it's all relative. Yeah. That's not hard compared to what, you know, what you might've seen, seen before. It's like, yeah, this is like easier in a lot of respects. Um, well, I want to talk to you a little bit kind of from your vantage point, having professional career, uh, you know, a long commercial real estate career. We're talking in Q2 now, 2024.

What are you seeing out there? What do you, what do you think's ahead for the next year? And how are you guys approaching that? I mean, um, it's kind of a big question. So yeah, I, so what I'm, what I'm seeing out there, I mean, is I guess what everybody wants to see. Not a lot of stuff. I'm not seeing a lot of stuff on the market. You know, there's kind of a trickle of, of deals, you know, whether it's multifamily or hotels, there's not a lot out there. Um,

DJE Texas (36:25.006)
And in terms of the debt and equity markets, LPs are definitely skittish right now. It's hard to raise money. And on the debt side, I mean, debt's expensive and I don't see that changing. I'm not in the camp of like, hey, rates are coming down. I don't think they're coming down anytime soon. I think we're kind of like in this until we work our way out of it. I don't think the Fed is coming to save us unless there's a recession.

which will create a different problem, right? If we have a recession, then it's going to be hard to fill apartments, right? So I think we're basically in this until incomes catch up, people can pay more rent, you kind of grow your way out of the problem at a new higher cap rates and new higher interest rates. And because of that, I think I'm just sort of even more all in on the hotel space because if you're doing like a deep value add, it doesn't...

It almost doesn't really matter what is going on with the economy. If you're buying something at a big discount and you're buying it based on where you are right now, so you're like, okay, the economy is not so great, but I'm buying it at a discount relative to the bad economy, you're going to be fine if you do that. I think in the hotel space, the sellers are... Definitely the market is a little bit...

slower than it was, but there's still like that generational turnover is happening. Those people are retiring now. They're not waiting till the economy improves or interest rates come down to list of property. They're listing their property because they're like, I'm done. I've worked my last season at this. I don't want to be owning this hotel next year. So, you know, that's, that's happening, you know, so I'm just looking for more of those kinds of opportunities. Yeah. I like it's exciting when you find something that works, that is.

maybe a little off the beaten path that you've got, got a proven path to make work. So that's, that's awesome. Jonathan, while I really appreciate your time, I love hearing your story. Thank you for sharing that with the audience here. If somebody listening wants to connect, what's the best way for them to do that? Well, connect with me on LinkedIn for sure is a great way. And if you want to go to my website, there's a free download there, which you can get. And that website is it's apartmentinvestorsclub .com.

DJE Texas (38:50.51)
And there's a free checklist you can download there and also sign up for my email list. So that'd be the best place. Awesome. We'll link to that in the show notes. If you're listening, you can scroll through and click through, visit Jonathan and the website there. Thank you so much. I appreciate it and wish you guys continued success. Thank you. Thanks for having me. All right. Take care. Yep. Thank you for listening to the DJ podcast. For more information, please go to DJE Texas .com.