Derek Carroll - High Peaks Capital

@marktilbury Buy real estate…

I'm a millionaire. If you want to get rich, don't start a business. Do this instead:

One of the biggest issues we’re seeing nonstop is over leveraged multifamily. It seems like every other loan request we get in is a refinance that needs cash in just to break even. The 80% LTV sounds great until rents and values drop.

@KnoxHouseSales @ErikTSexton The residential deals are always about emotion. The commercial deals are always about ego.

@ErikTSexton And here I was thinking how easy you Commercial guys had it w no drama deals .Lol

Seller “I’m not splitting closing costs”. My response “we were able to get you $50k more than where you wanted to be, it’s a big net profit.” Seller “it doesn’t matter, I’m not paying the $7k, buyer has to pay it all”. Me in my head “WTF is wrong with you 🤬”.

@mhp_guy Wow, I thought the guy that was on here doing cold. FaceTime was ruthless. Cold Venmo is on a whole new level.

Just got this Venmo request from a stranger. What would you do?

@TAYVAY_ So you mean, how can you turn the off market deals into on market deals?

I have more "off market" deals than I can work on. I've always thought there should be a better way to get these deals in front of active buyers. Has anyone built a solution to this? And if so give me the results.

@kaylanknit It’s possible, but I can’t answer without knowing the language of both contracts, and also knowing local laws and customs

@CREfinanceGuy Lawn/snow company even saying the old owner should have to pay but ownership coming to us post close wanting to be made whole

#retwit I need your help! Closed on a deal about a month ago. We reached out to all service providers and 3rd parties and let them know there was new ownership. Specifically told the lawn service group we wouldn’t be needing their services. Old ownership decided to hire this lawn group and put themselves on a payment plan for 5 installments and is now saying we are required to pay $2,000 of the $10,000 contract he signed at the beginning of the season. Am I crazy right now?! 3rd party contracts like lawn care are not assumed by new ownership just because the center sells mid contract and you decided to pay in a payment plan. @jeffenck @realEstateTrent @bethanyjbabcock @Bethazor1 @JaidynCre @jasonwclark @moseskagan @AaronAZucker @bakerbaine @CREgir1

@kaylanknit Yes, your DD list should be extensive

@CREfinanceGuy Fair point! Due to prior relationships with broker i thought everything would be forthcoming when asked and told that was all DD but definitely going forward

@kaylanknit All depends on the wording of the lawn service contract, the wording of your purchase agreement, and local laws

@kaylanknit There’s a big difference between requesting “everything” and specifically including “a list of all Lawn service contracts” in your DD list.

@kaylanknit DD is 100% on the buyer to request whatever they would choose to ask for. not up to the seller to think of everything that a buyer may wish to ask for or know about. Even if well-intentioned, the seller may forget or not even think to include things the purchaser may want.

@kaylanknit Should have been one of your DD items to check and ask for all service contracts. We have seen some contracts that carry forward to the new owner. May have also been part of a vaguely worded PSA. Most contracts do not “run with the land”

@kaylanknit But like I said originally, in many states, depending on the language, the contract is not enforceable because you are not a party to it. This should be a very quick and easy answer for your local attorney.

@CREfinanceGuy What do you do when you ask for all DD and the broker admits they didn’t provide any of them to you till week after closing?

@robbiehendricks you invest in 6% cash on cash multifamily instead of the S&P is that you can borrow somebody else else’s (lender ) money to buy the multifamily, but you’re not borrowing somebody else’s money to invest in the S&P. You also use somebody else’s money (Tenant) to pay it back.

Had a meeting this week with a legend in multifamily. 10,000+ doors 96% occupancy Ridiculously low LTVs Sub-4% debt on 7-10 year loans. Iron clad. The calm in this man's energy, my heavens. Just completely settled, confident. Here are 10 nuggets from the meeting: 1) First, you've never heard of this man. He's not on social media. Doesn't wear a watch. Isn't a guru. Just a guy that's been buying property forever and operates it. If you saw him walking down the street, you'd think he was a cool suburban dad. 2) Portfolio is at 96% in a soft market. How? They keep rents low. As @resetbasis always says, rent is the ultimate competitive advantage. As such, they get 70% renewals and sub-1% delinquency. 3) They selectively sell older assets that will need substantial capex and 1031. Since few good A- or B class deals are trading, they are simply 1031'ing into new development they are doing themselves. He said he still cannot believe the prices people are paying for older product. Doesn't even underwrite the deals that come in from several local brokers. 4) Re: New construction, they are getting the units built for ridiculously low costs ($160k/door all-in). How? They're not trying to build resort-style product with granite countertops and yoga studios. It's "approachable A class", which for all intents and purposes is B class. Again, rents below market. They'll lease up in no time. Set it and forget it. 5) Said much of his career has been sitting on his hands doing nothing. Deals need to hit 10% cash on cash at stabilization and grow from there or they don't move (He said: Why would you invest in multifamily for 6% cash flow when you can buy the S&P?). They plan to hold indefinitely and return capital as the market allows. 6) Sees no real opportunities in primary and secondary markets. Tertiary, though, he is seeing a small window opening. Not nearly as much supply (and in some regions, zero new supply), still can have favorable demand drivers/employers. 7) We asked what he'd do in our shoes at 2000 units if we want to build a business that stands the test of time like his. He basically said: keep doing what you're doing, never betray conservative criteria, never get cute with debt, treat residents excellently, and stay out of the press. 8) Real Talk: He politely scolded us for making no money on property management (we don't). He said with our track record we deserve to get paid for working long days managing the assets ourselves with excellence, particularly if we are exceeding pro forma. 9) He resonated with our deal structure (straight split w/no AM fee), and mentioned that is how they have structured their deals for 30+ years. They only partner with a very small list of high net worth LPs that have grown with them since humble beginnings. Obviously their track record is immaculate. 10) Decorum: He printed out my email exchanges with carefully thought out answers to my questions handwritten in the margins. He took notes when I was speaking the entire time. Not a whiff of ego. Genuinely was trying to get to know us, share his experience, and connect. Offered to be a sounding board for us going forward. Extremely generous. It's humbling to talk with someone who has seen and navigated it all. Operated through the GFC. Kept clean, stayed discipined, didn't rush. Flew under the radar. Built something that will live forever.

@connorclift35 @dig_deeper1 It’s usually poor use of lines if credit and back leverage that does in a debt fund.

@dig_deeper1 Lot of shops losing money too. Cuts both ways

Hard money lenders make more money than developers make.

@CaseyMericle @credealjunkie We are usually overwhelmed by deal flow so sometimes I’ll pass on a deal because of all the local nuances that I don’t have the time to be my head around it.

@credealjunkie The other day someone on here commented on one of my posts sayin’ something like “How do we even know you do deals? Why don’t you tell us about one.” My thoughts where something v close to what you just mentioned Yeah I’m just making all this up without the help of AI 😂

I've been involved in buying about 80 commercial real estate properties, and I'm constantly amazed at the volume of random details needed to close. Add in city-specific rules, lender requirements, etc How do you learn this stuff? Reps. There are no books. Just gotta do it.

@credealjunkie Brokers call any deal off market that didn’t run formal rounds of bidding with a call for offers and then a best and final.

The most meaningless term in CRE might be "off market." A broker just described a listing as "off-market, but shown to multiple parties." Which is it? But, of the 29 deals we've closed recently/have in contract, only 12 were fully marketed. Maybe "fully" is all that matters.

@kenashley I’m sorry…for the addiction you are about start. Never have I finished an activity other than gold where I can be absolutely frustrated with the results, can’t believe I paid for that frustration and then can’t wait to do it again tomorrow.

So, I have news. I'm taking up golf. After 30 years in CRE, I thought I would give it a shake!

@leo_szac Lender here. All across the Midwest.

Anyone else operating in Ohio multifamily? Cleveland, Toledo, Columbus, Dayton — doesn't matter. Looking to connect with operators, brokers, and people doing real work in Midwest markets. Drop your market below.