Don’t Be The Best Thing On The Block

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Sometimes being the best asset on the market is not the best option Listen to this episode s guest to know why Alex Moore is the Founder and Principal at Greywhale Capital a private equity firm focused on commercial multifamily Graduate of University of Pennsylvania Alex has over 10 years of experience in medicine and has taken her keen attention to detail to her full-time focus on commercial multifamily Alex is a seasoned multifamily investor and is head of acquisitions and asset management at Greywhale Capital which has doubled in AUM year over year since its inception in 2019 She works with close partners nationwide to secure assets that are tax-advantaged stable and will bring consistent returns for Greywhale Capital s investors Her number one focus is acquiring assets that are the best opportunities to meet the investment goals of Greywhale Capital s investors Alex shares her journey into real estate investing starting with one duplex and now owning and managing large multifamily properties She emphasizes the importance of niche selection when starting out in real estate and the importance of understanding your investor base and cash flow play More than being the best Alex aims to be the affordable option in the market 00 01 – 06 52 Niching Down Alex on how she started on real estate Finding a niche in Multifamily Class B assets Why Class B is the most recession-resistant Looking for opportunities in markets within markets Focusing on a certain tenant class that could sustain additional amenities 06 53 – 16 15 Their Keys to Success Always ask more questions Don t over-renovate Improve turnaround time Make sure the rent comps are correct Hire team members who are aligned with the company s mission Shift your mindset when it comes to raising capital 16 16 – 17 06 Closing Segment Reach out to Alex Links Below Final Words Tweetable Quotes One of the keys to success has been improving our turnaround time on underwriting and getting really responsive with brokers Because I think that s the thing that is the easiest to let slip but it is one of the key differentiators to when you re putting in offers – Alex Moore Don t get the best product on the market I think you need to get something that s a little bit under that But don t be the best thing on the block Because we don t shoot for those tenants They totally exist But when the market gets harder to pay for things they re going to look for a more affordable option And I want to be that affordable option – Alex Moore I think you don t realize how powerful that is until you start reaching out I think also shifting from the mindset of I m asking for money to give me an opportunity for an investment is very helpful – Alex Moore —————————————————————————– Connect with Alex Visit the Greywhale Capital website or email her at alex greywhalecapital com Follow her on LinkedIn and Instagram Connect with me I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns Facebook LinkedIn Like subscribe and leave us a review on Apple Podcasts Spotify Google Podcasts or whatever platform you listen on Thank you for tuning in Email me sam brickeninvestmentgroup com Want to read the full show notes of the episode Check it out below Alex Moore 00 00 One of the keys to success has been improving our turnaround time on underwriting and getting really responsive with brokers Because I think that s the thing that is the easiest to let slip but it is one of the key differentiators to when you re putting in offers Intro 00 15 Welcome to the How to Scale Commercial Real Estate Show Whether you are an active or passive investor we ll teach you how to scale your real estate investing business into something big Sam Wilson 00 27 Alex Moore is the founder of Greywhale Capital a real estate private equity investment firm in San Francisco She was a nurse practitioner though I think she s still licensed But she started investing in real estate while working full time and now runs Greywhale Capital They acquire tax-advantaged multifamily assets in landlord-friendly states and help accredited investors place capital in those assets Alex that s a mouthful Welcome to the show Alex Moore 00 50 Thank you so much for having me I really appreciate it And yes that was a mouthful You did very well And I am still licensed but I do not currently practice Sam Wilson 00 59 Gotcha Three questions I ask every guest who comes to the show in 90 seconds or less can you tell me where did you start Where are you now And how did you get there Alex Moore 01 06 So I started with one duplex and got there by just starting in my hometown was remote investing at that time but I knew it really well And I wanted to get something for a future college fund So I decided hey I m gonna get and get this duplex I didn t have any kids at the time but I was like it ll be a great investment and you know some stability outside of the stock market And then now I do large multifamily So I just made my most recent close was on a 330-unit in Houston So big progress from there Sam Wilson 01 34 So wow that is a lot of progress What were some of the key iterations of your business along the way Alex Moore 01 41 Yeah took me a little bit to choose multifamily and niche down into it So I think this happens for a lot of people who like real estate and get into it you try a little bit of everything like a little potpourri So it took a little bit of time for me to find the thing that I liked the best So we did short-term rentals for a little bit I did a triple net industrial space And I also did retail for like a retail center where you have fun to triple net leases So we learned the ins and outs of that explored mobile home park storage units but realize my risk tolerance really fits with multifamily And I also realized that what type of multifamily is my favorite That also takes a little bit to niche down on as well Sam Wilson 02 17 Type of multifamily Alex Moore 02 18 Yeah you think a lot of people think okay apartment buildings you know you can get an apartment building and that crosses the box But when you start digging in there there are a bunch of different vantages There s a bunch of different business plans you do on those and the returns look different based on what your plans are And is this a cash flow play Or is this something where you re just making huge alpha and then gonna go into the next asset So you track different investors for each play And you find that there s advantages to some and disadvantages to others And so that s what took some time to find that as well My focus primarily on Class B the reason why I do Class B rather than Class C or Class A is because that has I think the most recession-resistant tenant base because they can afford rent they can afford their payments are good at doing both of those and they will pay for the extras So when you do a value add program that s the tenant class that really will pay for those Sam Wilson 03 13 Now Class B multifamily is like plain vanilla for the real estate multifamily investor Everybody there s no disagreements on everybody can handle it Everybody wants it How are you finding opportunity in that Alex Moore 03 29 Yes I think when you hear people they re like this is what I want Class B I want it to be an Sam Wilson 03 34 Plus value add multifamily more than 150 doors I m like you and the rest of America So how are you finding deals Alex Moore 03 43 So submarkets so I get really specific on what my market is within the market So a lot of people say general areas or they say I will buy anywhere in the Sunbelt or I ll buy anywhere in Texas You re not gonna get deal flow that way And you re not going to be able to get really competitive on your pricing or on your rent projections So find the submarket within your market and really know that zip code and then know your supply chain One of the big things is folks will purchase and not realize where new developments coming in I m finding new development I actually think it s really helpful if it s already in place But if you re going to be supplied ou t if there s going to be a bunch of new build coming in and you re putting in a value add program and there s Class A coming in the market and then you re not gonna be able to hit your mark projections Sam Wilson 04 28 Right That s a really valuable point there Tell me about the term resiliency What does that mean to you Alex Moore 04 35 For an asset or for myself Sam Wilson 04 38 Whatever Alex Moore 04 39 Yeah I think when we re talking about an asset I think it s important that your asset is resilient to the market changes because especially right now and we re dealing with debt going up we re dealing with inflation and we re not sure if wages are going to keep up with that Your asset needs to be not the best thing Don t get the best product on the market I think you need to get something that s a little bit under that I mean it s been performing as well as it could have Maybe it s an operational issue maybe it s management on site And then you look at where can I get that asset to be better and perform better but not be the best thing on the block Because we don t shoot for those tenants They totally exist But when the market gets harder to pay for things they re gonna look for a more affordable option And I want to be that affordable option Sam Wilson 05 25 Right absolutely We ve talked about all the time here on this show is when wage growth does not keep up with inflation And even maybe if there s a market correction and people start doubling up and then you know rent projections can t be met And all those things start to compound what are you doing to protect yourself and your investments right now Alex Moore 05 46 Yep exactly One of the things that I focus on is is it a tenant class that could sustain some additional amenities So when you re in class C they re not going to really sustain additional amenities like valet trash type packages or adding an A backslash they d like it But it s really not something they re going to pay for it s going to be something that is assumed to be lumped in with your rent So you can pull in those extra things because you re in a good market where that is a demand it s not always a given But if you provide that that would be an extra lever What I love about that is you can add those in but it doesn t have to be part of your normal project plan You re gonna go in have your interior next year upgrade plan we have these additional things you can also add in that provide you more levers to pull Another one that I really love which I think is discounted people don t really think about it but as a tenant storage is always an issue And so if you provide competitive storage on-site that s a huge thing If you don t have to go down the street and pay 90 a unit and you can offer something on site for 50 to 60 That s awesome And then I ve got another revenue stream for really an affordable build cost Sam Wilson 06 52 Yeah absolutely Tell us about when I say to you that messing up is okay What does that mean to you Alex Moore 06 58 So I think I m leaning towards I m an analyst and I also lean towards perfectionist So if I don t have the answer or if I don t have a plan for it it makes me very uncomfortable So I create a plan that s A B and C And that gives you a way where if plan A doesn t work you got Plan B and C So it s okay if plan A doesn t work out because you got it back up And also you know real estate in general is pretty resilient as an asset to invest in because we ve got ideally so many ways that you can make it profitable And you can hold longer if you need to if you ve got good financing terms So you know there s ways to mitigate it you have to have a good plan and a good operator who s made sure that those contingencies are in place But I think a lot of folks say I m not gonna invest in real estate because there s too many unknowns And I m too concerned about X Y Z things And I think it s better to jump in and do it than to avoid it as an entire thing So one of the best things to mitigate that anxiety is to like ask more questions and more knowledge that you know but then at some point you got to jump in and do it Sam Wilson 08 03 What are some things you feel like you have messed up But yeah it turned out all right in the end Alex Moore 08 09 Yeah one of the things that and that s part of why I chose Class B as I started in class C and I found it so easy to over-renovate so you can spend more on these assets because they need it And there s a lot of skeletons in the closet for deferred maintenance And that goes very quickly when it comes to CapEx and then on top of it then you need to get your interiors updated so that you can get better rents but it s very easy to over-renovate those units and then you won t get those rents there Sam Wilson 08 38 Right yeah no that s absolutely true It s very easy to over-renovate And it s also very easy to blow your budget just bringing them up to something habitable Alex Moore 08 47 Exactly something that meets good Sam Wilson 08 50 Right It s not even maybe that you re putting in granite countertops and stainless steel appliances it just gonna take you more money than what you budgeted for That s a really good point And how many of those Class C properties did you buy before you said maybe I m in the wrong spot Alex Moore 09 04 One Sam Wilson 09 08 Good for you Yeah you stuck strictly you ve done a whole bunch of different you said you ve done short term rentals you ve done triple net leases But now you re solely multifamily Is that right Alex Moore 09 18 That s correct Yep And part of the reason for that is I think industrial has a great play there If you re in the market you know you re leasing brokers because it s all about those leases getting the right tenants in And when you re locked into a lease it s a five to 10-year term So you need to make sure that your rent bumps are in there and if they don t pay your values down so I think there s a little bit for me more concern If you get an anchor tenant and you re dealing with a national tenant certainly they have you know they re accredited so they will pay but they also are really competitive on the lease renewals So you re not going to make as much on your returns So that s one of the reasons why I pivoted out of industrial I know a lot of people are playing in that space more power to the because I think it is a good space if you can be the person who can take a building and lease it up to market And you know the people on you know the tenants to put in there Sam Wilson 10 08 What has been one of the keys to success for you and for your team Alex Moore 10 12 So one of the keys to success has been improving our turnaround time on underwriting and getting really responsive with brokers because I think that s the thing that is the easiest to let slip but it is one of the key differentiators to when you re putting an offer So we do a turnaround time and we re getting faster at it or doing a turnaround time in under a week And I think you can get there the big guys are doing it in a day That s where my goal is is that we ll get there in a day But I think if you re able to say you put in a verbal and then you put in an LOI within that week timeframe that s a big differentiator Sam Wilson 10 47 When you think about that you re compressing timeline what do you think some of the things you guys are gonna have to implement that will make that possible Alex Moore 10 56 The biggest linchpin is making sure your rent comps are correct because I think it all comes down to that Everything else is gravy it s great that you need to make sure that your rents are 100 accurate So having a really good property management partner who can verify your rents and turn that around quickly is important And then also having enough people to be able to call and verify rents on the ground And it s just manpower and it s just getting it done So picking up the phone making sure that your rents are accurate I mean you can use Yardi and CoStar as well But I want to make sure that mine is the best for right now what s happening Sam Wilson 11 30 Right so it sounds like you use you already in CoStar initially as a kind of a soft pass But then yeah you re gonna actually get out there boots on the ground and hit the phones and find out what other rent comps are in the area Alex Moore 11 42 That s correct Yep And so that time spent is valuable But that is you know sometimes people don t pick X sometimes you don t need an answering machine And those are actually good indicators to have how well are those managed in the area So I like it as a soft check to for Hey what s the competition You re here Alright hey folks that are hungry to get people into units or are they fall and it doesn t really matter So maybe they re not pushing rent or maybe the demands in that area are so high that the all area buildings they don t have anything available These are all great things to pick up while you re doing that calls Sam Wilson 12 12 Right Yeah getting your rent comps figured out in a shorter fashion You feel like otherwise you could get this turned around in the day yourself No big deal Alex Moore 12 21 Yes if we can get the rent comps verified that night usually that s like you know 24 or 48 hour and then making sure our PM does a pass on it too So then it turns into like three days And that part is like oh man would love to speed that up Sam Wilson 12 35 Right Tell me about your team What is it been like to build a team And then also tell me about your experience raising money Alex Moore 12 44 Yeah so building a team takes time I think it s easy to hire quickly But what I ve learned is to hire slow do multiple phases of interviews And then to have an onboarding process I think a lot of folks you know as an entrepreneur you expect folks to just pick it up and learn it But you do need to have an onboarding process need to have regular check-ins regular meetings and we do three rounds for the interview So we ve got a first initial screen a lot of folks drop off after that And then we have basically a first pass assessment So you do whatever the task is or whatever the job is you do like homework and then we have a real interview And then after that we make a final decision And that really helps because you re not gonna have to do a lot of interviews Because a lot of people don t make it through those first couple of hoops And then with building a team it s creating a culture of who want to show up and are excited to be here So people who are eager to learn folks who are not just there to clock in and clock out but people who are there for the mission of the firm And I think that s a real big thing So communicating that making sure folks are excited about that And people will join in when they excited about something challenging and something they also believe in Sam Wilson 13 49 Right Yeah that s been one of the interesting shifts I think that we ve seen the workplace environment as a whole not that I ve ever really been very active in it I guess I kind of read it You know I hear they re talking about it is just defining that mission and getting team members like people more now more than ever want mission behind what they do as much as they want you know a good steady job and a good paycheck So I think that s really intriguing Tell me about capital raising getting capital raise for your deals Yeah walk us throught that journey Alex Moore 14 17 Yeah So for capital raising it s all been through family friends and extended network I think you don t realize how powerful that is until you start reaching out I think also shifting from the mindset of I m asking for money to give me an opportunity for an investment is very helpful Because then it reframes for me and it also reframes for the folks that we have as investors We re providing them an awesome opportunity I mean they don t get access to this on last year a multi-millionaire or billionaire family that can direct buy apartment buildings like that s pretty bonkers The barrier to entry for that is huge So me myself do I you know love the capital raising part Probably not I love finding the deals and sourcing them and I love going to market and walking properties like those are my favorite things to do But I can always talk to an investor and explain all the metrics because that s what I m doing all the time And I think that s I love those calls Like if someone has a bunch of questions about it hit me up I got it Sam Wilson 15 19 That s awesome Yeah And I think that s a great mindset shift that a lot of us would do well myself included to commonly remember That it is amazing opportunity I m bringing double-digit sometimes in returns to people you can get lucky you can find it But it s not every day that you get such a stable opportunity to get returns on a risk-adjusted basis It s like Wait this is bonkers Use your word So yeah that s really cool I love it Alex thank you for taking the time today to come on the show You can kind of pull back the curtains on what it is you guys are doing submarkets within the market specializing in that knowing your supply chain talking a little bit about debt and inflation just talking a little bit but also you know how messing up is okay in this business because generally it s fairly resilient There are mistakes you can make that are probably pretty bad ones But by and large it s a pretty forgiving industry So thank you for taking the time to come on If our listeners want to get in touch with you or learn more about you what is the best way to do that Alex Moore 16 18 Best way is through my website or email so great greywhalecapital com so grey spelled with an E and then alex greywhalecapital com Or I am on Instagram though I am not a great Instagrammer Alex more in bass would love to connect with anyone who wants to touch base Sam Wilson 16 36 Awesome Thanks Alex Appreciate your time Have a great rest of your day Alex Moore 16 39 You too Thanks so much for having me Sam Wilson 16 40 Hey thanks for listening to the How to Scale Commercial Real Estate Podcast If you can do me a favor and subscribe and leave us a review on Apple Podcasts Spotify Google Podcasts whatever platform it is you use to listen if you can do that for us that would be a fantastic help to the show It helps us both attract new listeners as well as rank higher on those directories so appreciate you listening Thanks so much and hope to catch you on the next episode Click here to visit this podcast episode