RG 344 – What is Build-to-Rent and How Does it Work? with Ruben Greth

What is build-to-rent? How does it differ from traditional multifamily properties? And how exactly does it work? Ruben Greth, a seasoned BTR developer, is here with us this week to tell us everything we need to know about this unique space.

Ruben Greth is a multifamily build-to-rent syndicator, the Managing Partner of Legacy Acquisitions, and the Capital Raiser Show host. With Legacy Acquisitions, Ruben and his team provide investors with off-market BTR cash flow opportunities in the best submarkets and neighborhoods.

Ruben and I punch through a multitude of topics in this week’s interview—syndications, working with passive investors, development, build-to-rent, and more. Build-to-rent is a relatively new space, and Ruben explains how it differs from other niches, how he works with other partners (engineers, developers, etc.), and how these “horizontal multifamily” subdivisions came about.

Interested in becoming an Investor with Reed? Click here to join his Investor email list.

The build-to-rent space has a lot of potential, and we’re glad to have an expert on the show to discuss how it works. If you’re interested in finding new multifamily investment opportunities, you certainly don’t want to miss this episode.

Key Takeaways

• Syndication and joint ventures involve passive investors.
• Allowing people to invest directly in real estate empowers passive investors to learn more about direct investing instead of working through brokers.
• In the context of build-to-rent, development varies depending on the market’s location.
• If you want to have an A-class build-to-rent, you have to have attractive amenities.

LINKS

https://www.linkedin.com/in/rubengreth/
https://capitalraisershow.com/
https://legacyacquisitions.com/

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Reed Goossens (00:00):

Good day Good day guys. Now, before we dive into today’s show, I want you to let you know that some of you may be aware that over the past eight years, I have built a substantial multi-family real estate portfolio here in the US worth over half a billion dollars. And in that time, my passive investors have received fantastic double-digit returns. And now you too can invest directly into my deals for as little as $50,000. So if you’re an interested investor, head over to reedgoossens.com to find out more. That’s reedgoossens.com. Now, back into the show.

Ruben Greth (00:41):

You know, a couple of reasons why the housing market is frozen. One of them is people are not selling their houses because they know that if they sell their house and move into a new house, they’re gonna lose their phenomenal rate that they have on heir house that they live in. So they’re like, I’ll just wait. And then the people that wanna buy a house are like, see, seeing the cooling. It’s harder to qualify for a mortgage. They’re kind of on the sidelines too, saying, oh, I’m just gonna wait to see what happens in the six months. Hopefully the prices of houses will go down. And this cooling of the, you know, buy and sell market in the housing market is really allowing people, allowing us syndicators in the built to rent space to just basically sit here. And for anybody that wants to live in a house, they’re coming to our communities to rent.

Speaker 3 (01:36):

Welcome to investing in the US, a podcast for real estate investors, business owners, and aspiring entrepreneurs looking to break into the US market. Join Reed as he interviews, go-getters, risk takers, and the best in the business about their journey towards financial freedom and the sheer joy of creating something from nothing.

Reed Goossens (01:56):

Good day Good day, a ladies and gentlemen, and welcome to another cracking edition of investing in the US Podcast from Los Angeles. I’m your host, Reed Goossens. Good as always, Debbie with us on the show. Now, I’m glad that you’ve all tuned into it to learn from my incredible guests, and each and every one of them are the cream of the crop here in the United States when it comes to real estate investing, business investing, and entrepreneurship. Each show I try and tease out their incredible stories of how they have successfully created their businesses here in the us, how they’ve created financial freedom, massive amounts of cash flow, and ultimately created extraordinary lives for themselves and their families. Life by design, as I like to say. Hopefully these guests will inspire all of my cracking listeners, which are you guys, to get off the couch and go and take massive amounts of action.

Reed Goossens (02:43):

If these guys can do it, so can you. Now, as you know, I’m all about sharing the knowledge with my loyal listeners, which is you guys, and there’s absolutely no BS on this show, just straight into the nuts and bolts. Now, if you do like this show, the easiest way to give back is to give us a review on iTunes, and you can follow me on Facebook and Twitter by searching at Reed Goossens. You can find the show wherever your podcast on iTunes, SoundCloud, Stitcher, and Google Play. But you can also find these episodes up on my YouTube channel. So head over to reedgoossens.com, click on the video link, and it’ll take you to the video recordings of these podcasts where you can see my ugly mug, but the beautiful faces of my guests each and every week. All right, enough outta me. Let’s get cracking in into today’s show.

Reed Goossens (03:32):

Turn the show. I have the pleasure of chatting with Ruben Greth. Now Ruben is the host of the Capital Raiser Show and is also a build to rent syndicator and private equity shop. Now. He first got his start jv, uh, capital for quads and duplexes. During the crash of oh eight and oh nine, he moved into heavy lift syndication with some, uh, Phoenix partners, and now has moved up into fund management and development just over a year ago. I’m really pumped and excited to have him on the show with me to, to share his incredible knowledge and his insight. But enough outta me. Let’s get him out here. Good day Ruben, welcome to the show. How youdoing today, mate? I,

Ruben Greth (04:03):

I’m fantastic. How fun. Very excited to be here. Thanks for having me. This gonna be

Reed Goossens (04:07):

Best, mate. My pleasure, my pleasure. We’re talking in the Green room. I haven’t been on your show yet. The Capital Raiser Show. You know, I’ve, I’ve, I, I swear to God, I’ve seen the logo and for those people who are not looking or not hearing us through, uh, you know, Spotify or that, but if you’re on a YouTube channel, you actually see Ruben’s logo in the background. Really cool logo. I have seen it before. I just dunno, quite know where I’ve placed it. You said maybe through networking or something like that, right?

Ruben Greth (04:28):

Probably, yeah. So I always have it. I I, I do all my networking through my podcast office so that I have an animated logo with like designs and stuff that’s always moving in the background, so it stands out, it’s got really cool colors, etcetera, etcetera. But yeah, it, people remember it, it’s part of the brand, right? So yep. You can create something that, that, that people, that triggers people memory. That’s, that’s something that helps quite a bit. That’s

Reed Goossens (04:53):

Exactly right. Well mate, let’s get into it. Uh, rewind the clock and tell me how you made your first ever dollar as a kid.

Ruben Greth (05:00):

Probably. I was just thinking about that. You teed me up on that and I was just like, geez, I don’t wanna talk about the times that I did X, y, z . No. Um, give, give

Reed Goossens (05:09):

Us the most embarrassing thing, man. That’s what we want here. We want the juice. Don’t, don’t, don’t be, don’t be embarrassed.

Ruben Greth (05:13):

. No, it was mostly I would go around to do car washes in my neighborhood. That was pretty easy. Uh, never did lawn mowing or anything like that. I wish I would’ve started a business. I wasn’t too savvy. I mean, I would get a allowance from my parents, even though it was only like five or $10 or whatever. So I didn’t really work too hard when I was a kid, to be completely honest.

Reed Goossens (05:33):

. Well, walk us through the upbringing of your relationship with money and how you got into the space of real estate. And I mentioned in the intro, you, you sort of, I dunno if you stumbled across real estate back in oh 8, 0 0 9, but tell us how you got started. Was, was there a career before getting involved in the real estate world?

Ruben Greth (05:49):

So you, you guys have all heard of Rich Dad, poor Dad, where

Reed Goossens (05:53):

No, who’s that? Who’s

Ruben Greth (05:54):

That guy? So there’s the poor dad, which is Robert Kiyosaki’s dad, and then his friend’s dad, which is the rich dad. I actually had this dynamic within my own family where I had Rich Dad, poor mom, right? Mm-hmm. . So they were both from Mexico. My father was a doctor and politician and military colonel and a, and a bunch of other things. So he taught me real estate. We would go, I think we would go pick up rent from his, I think he had a portfolio of about 10 small, small houses here in Phoenix. So I always wanted to be like him. And then my mom, she came from poverty, right? So a a carpenter family with 12 kids. So all the kids, wow, were working at like age four, five, and six in Mexico, . So it was very two completely different dynamics. But my father died early and then I was like, I wanna be like him.

Ruben Greth (06:42):

So I think when I graduated college, I got into mortgages that didn’t help me get into real estate. So then I found a guru or a coaching program. They taught me about a bunch of strategies and one of them was multi-family. I started a small meetup here in Phoenix and somebody with a bankruptcy showed up in oh nine and was buying a fourplex every other week. So I was like, how are you doing this? I know that coming from mortgage, you can’t just finance these things. He’s like, I’m raising capital for them. I’m like, really? Let me follow you around to your projects. Maybe we can shoot some videos. I’ll post them on YouTube. He didn’t know anything about marketing. I did. And, you know, over about a year we raised $600,000 to take down, about four or five different, you know, fourplex threeplex with 12 plex.

Ruben Greth (07:26):

And then, so he and I eventually split up because we didn’t see eye to eye on some things. And I went crawling back to corporate America with my tail between my legs until about 2018 when I found out about this thing called syndication. So I was trying to get back into real estate thinking I’ll just buy a fourplex and then another fourplex and another fourplex. And that was gonna be a very challenging scale, you know, model to scale. So I did an apprenticeship with a local syndicator that was doing heavy lift. I learned the ropes through them, started the Capital Raiser Show. And then as I started learning about capital raising, I found out about this thing called funds. And then I was like, I want access to these deals all across the country, not just here in my backyard in Arizona. So I went off to go launch my own fund when I met my now partner who taught me about bill to rent and raising capital for other syndicators without actually being the operator.

Ruben Greth (08:20):

You just manage your own fund. So that was really cool. And learning about that was very mind altering where you don’t actually have to be the operator. You can just do the marketing and then run your own, you know, it’s essentially, it’s a security, right? Your own fund and then manager, your own investors in there, and then you can invest in other people’s deals. And now we do, the majority of what we do is, is build to rent subdivisions, syndications. And it’s kind of been a crazy journey, you know, going from not knowing anything to raising capital to then funds and now development, which is brand new to me too. I’ve only been doing developments for about a year and a half.

Reed Goossens (09:02):

I wanna get back into build for rent cause I wanna define that for people. But it’s interesting you said discover syndications in 2018. You technically, we were already doing it. I guess, and you maybe correct me if I’m wrong, back in oh 8, 0 9, like you were raising money, like the, what the, the word syndication? Mm-hmm. is just a sexy word. It’s, it’s, it’s, it’s the same thing. You’re raising money using other people’s money to buy housing here in the states. You can do it anywhere, but it is at, at its nucleus, pretty simple. And you were already doing it. So it’s maybe you rediscovered syndication, , uh, or someone gave it a sexier name and that’s what it, what it, what it, you came back, back across two.

Ruben Greth (09:37):

Well, there’s the key differences, right? Because when I was raising back then, I was, and some people wouldn’t even say that I was raising capital. They’ll say that I was creating partnerships. But from my perspective, if I’m managing and operating a small fourplex or a 12 plex, and I’m bringing a joint venture capital partner that’s bringing 100% of the money to take these things down with cash, and I’m not using any of my own cash in my brain that says that I’m capital raising mm-hmm. . Now, the difference between syndication and joint venture is that syndication involves passive investors, right? And joint ventures, everybody is active. So I was technically raising from active investors back for those fourplexes. And now, you know, since 2018 we’ve been raising from people that don’t have anything to do with the operations of the buildings. And that’s syndication.

Reed Goossens (10:25):

Yeah, no, and, and thank you for clarifying that. I just meant more high level. Someone else had money. How do we use it to buy this piece of dirt and or real estate? And there’s, there’s different ways, and thank you for explaining for those people active jv, you’re not selling a security passive, you’re selling security. People don’t have certain voting rights. There’s a whole different, you know, rigmarole of how you go about, you know, putting that legally together. That’s obviously the de the devils and the details. But high level opm, beauti, the beauty of it and, and the Jobs Act of 2012, which is post 2008 has com completely changed the landscape of how people invest in real estate today. The average Joe’s, the average deals. And I think it’s been a incredible powering, empowering, I should say, um, change in the legislation to help investors invest directly into real estate. Um,

Ruben Greth (11:10):

All of that is true.

Reed Goossens (11:11):

Yeah. Well, the, yes, in Australia we don’t have, it’s starting to come, you know, obviously Australia looks at America and America is sort of the lead in, in, in across the western world of how, you know, things are done across a lot of spectrums. But, you know, coming as an Australian to see, you know, and I did, I moved here in 2012, I didn’t know anything about the jobs act, found out about the jobs Act, and it was just like such a big empowerment to the passive investors in this space and has been, uh, part of the reason why commercial real estate has got so frothy in the last sort of eight to 10 years, right? And, um, but it also, I think in, in in, in the, the larger scheme of things, it repowers the passive investor to learn more and then to be a decision maker rather than going through a stockbroker or, you know, a financial advisor where, you know, they, they’re just incentivized to put your money wherever the hell, you know, that they’re trying to sell a product. So, um,

Ruben Greth (12:01):

That’s cool.

Reed Goossens (12:03):

Ranch over .

Ruben Greth (12:03):

So, well, well hold on. Because one of the things that is very highly underrated is that we live in the information age mm-hmm. , and there’s all of these people podcasting with the moral imperative to share about passive investing, right? And it’s gaining a lot of traction. A lot of people are finding about the fact that you don’t have to be a millionaire to take down a commercial real estate syndication that’s, or participate in it. So That’s right. I really love this space that we’re in, in this time because people are getting access to these deals

Reed Goossens (12:31):

And you know, you, and you and I are both products of this wave, right? Like, I, I, I was not an accredited investor, but sitting on millions and millions of dollars, I went out and started and hustled and raised money from, uh, the passive investors, found deals, you know, had skill sets that I could bring up, you know, back very similar to your story and just sort of taking bits and pieces and putting ’em together and creating a business out of it. And here we are all these years later, so, so awesome stuff. I wanna pivot and get into the build for rent, right? Can you just define what that is? I actually have not had anyone on the show to date. We’ve done four, have 400 episodes, still haven’t talked about build for rent. It’s, it’s, it’s a relatively new, a new space. So let’s, let’s, let’s break it down for those folks who don’t know what a BFR is.

Ruben Greth (13:13):

Ooh. Okay. So let’s just talk about development to start with and then we’ll get into Bill Tourette. So development requires a lot of skill sets, including working with the city, making sure the neighbors are happy, providing something that the government wants, trying to create affordable and, or a-class buildings, whether they’re vertical, multi-family, podium style, garden style, etcetera, etcetera. Or in some cases you’re a house builder. So there’s all these developments and styles of development and they change depending on the market that you’re in because some markets are full of bureaucracy and the city planners have all kinds of stuff on their plate, and it takes a while to even see and get in front of them. Whereas in other cities, like in the southeast land is incredibly cheap. The cities are in growth mode. They want affordable housing, whether that’s multi-family apartments or single family affordable houses.

Ruben Greth (14:12):

So they’ll help you get across the finish line very quickly and get engineering and approvals way faster than in an Atlanta or metroplex like Dallas or Phoenix. So depending on where you do it, and if there’s rent control, the whole building and development model changes completely. So you wanna be very careful about that. But one thing that’s really important to understand is, me as a Capital Raiser, I don’t have to be the developer, I don’t have to be managing the contractors. All I have to do is focus on the marketing, the national exposure, the bringing attention to this. And then my partners who are very good at acquisitions and working with the city and building vertical infrastructure, they handle that side. So if you were to ask me something like, how thick is the insulation in your building, I wouldn’t be able to answer, but I have the guys that know how to answer that.

Ruben Greth (15:06):

So there’s, there’s a couple of different distinctions, but bill to rent even within itself is very different depending on what market you are doing and what your, well I should say, development of houses not built to rent. Cuz some developers build a subdivision and then they sell the houses to individual retail buyers. That’s a completely different business model than if you build a subdivision with the intent to rent the entire thing, treat it like one commercial real estate project that’s valued based off of the net operating income, just like any other commercial real estate building. And it’s valued in a completely different way. So, and then we sell, typically in the built to rent model, in our business model, we build the subdivision 10 houses, 20 houses at a time. We rent them as we’re building the next 10 or 20. And then when the entire thing is built out, it’s what we call stabilize.

Ruben Greth (16:03):

So it’s 90% occupied or better. And then at that point, we sell the entire thing to the next investor or institution typically is the kind of guys that are very interested in purchasing these products. But we build these houses, they’re very similar, two apartments. They’re about the same size as a two bedroom apartment, so like two or three bedroom, 1200 square feet. The major difference between this is that it’s not attached. So you don’t have a neighbor above you, below you to the left of you, to the right of you, across from you. And you’re not stuck with a tiny balcony as your backyard. You actually get a side yard on both sides, a backyard, a privacy fence, a driveway. So it’s, it feels more like a house and the renters treat it more like a house. And, and a lot of times in syndication, one of the big flaws and dangers of it is that there’s a lot of turnover. And if you can lower that turnover, it keeps your cash flow more steady. So in these built to rent subdivisions and in these developments, the renters, they feel like residents and they stay there for 40 months on average instead of 24 months on average or however long the apartment investors in. But that’s kind of like the general parts of it. If there’s specific nuances about it, we can definitely go into that. Let me just stop here and see if you have any

Reed Goossens (17:23):

Questions. Yeah, no, this, you know, good, good overview. And I, I think the, the big thing as you’ve, you’ve mentioned, and for those people listening, think of a subdivision single family, how, you know, the, the, the, the urban sprawl, right? And historically that would be, I’m a developer, I’m gonna go put in the horizontal street work, drainage, lights, and then I’m gonna sell these lands to first home own not owners. Right Now I’m gonna come along with me and my family. I wanna build a three bedroom, two bath house. And that’s been your historical, how suburbs have been built over the years. Do you know, Ruben, it seems build for rent’s a relatively new concept. It’s sort of taking what you just said or taking an apartment building and just putting it over a horizontal surface, right? We, we

Ruben Greth (18:06):

Call it horizontal multi-family, actually

Reed Goossens (18:08):

Horizonal exactly.

Ruben Greth (18:09):

Treated like a multifamily. Do

Reed Goossens (18:09):

You know, do you know any history, history of when the first BTR came out?

Ruben Greth (18:15):

So the rumors that I’ve heard indicate the city that I live in has been the first place for bill to rent subdivision. So in 2008 and nine, the city of Phoenix, their major economic business, you know what their gross domestic product or whatever that is, it was all construction, right? Mm-hmm. . So people were building subdivisions in the North Valley, the West Valley, the South Valley, so like Maricopa and, you know, Peoria and, you know, new parts of like New River and Anthem and North Phoenix. And then what is it like Tolleson, Buckeye? There were subdivisions going up all over the place, even on the east side and Mesa and some places. And a lot of times those models were what I mentioned earlier, people were building houses or what we used to call back then speculation homes or spec homes. And they would build them because the appreciation was going up so fast during 06708 until, you know, the mortgage meltdown.

Ruben Greth (19:18):

And then everything just stopped under construction. But their intention was to build these subdivisions and then basically sell them to individual retail buyers. And when that crash happened, they had no choice because nobody was buying but to put for rent signs up. Mm. So that’s like when the, the concepts started to form and develop and they started building more and more of these subdivisions with the intent to rent them sometimes, maybe even by accident, because I think some of these guys, they wanted to sell the individual retail homes and probably partnered with certain, like mortgage companies and or realtors to sell these things in a package, right? You just, the, the here’s the house, it comes with the mortgage and we can, you know, the realtor’s already in place, so you don’t even have to do anything. You just go there and sign paperwork and you, it’s all completed. But that model failed in the middle of the crash, right? And,

Reed Goossens (20:11):

And it failed because there’s so many steps along the way from spec homes to relying on a buying group that will consistently show up and qualify to purchase the house. Right? When you don’t have, you now remove that equation and say, Mr. Bank, I’m actually gonna build a hundred of these, but they’re all for rent and you know, we’re sort of spending the same dollars and all that sort of stuff. It’s becomes a little bit more safer model when you think about it from an underwriting point of view at the bank. It’s, it, it does becomes a way safer. Cause you’ve taken out that middle person, the individual retail person who, who, you know, when, when recessions hit, people spook like cockroaches, right? So it, it’s, um, but, but, but on the, the probably the biggest interesting thing and, and I’m, I’m a structural engineer by trade, that’s what I went to school for. Um, and I practice a lot is, is sort of the, the, the micro micro isation. I don’t, I’ve just made that word up where you, you sort of start to squeeze the dimensions of these houses because you ought to think back in the day, back in oh 809, the 2000 maybe 3000 square foot homes, these are big bloody homes. Mm-hmm. , you don’t need to build that much. You can, you can get away with the 12, 1300. It’s a nice size for a small family and, and you’re more efficient.

Ruben Greth (21:23):

Yeah. That’s a the other thing too is like in Arizona we don’t typically grow up or grow vertical. We grow horizontal horizon, right? Mm-hmm. . So like in cities like Vancouver, you’re going straight up, right? But LA and York in the desert, there’s so much space that, you know, you have big backyards. And then I think the first subdivision developers are just like, Hey, let’s squeeze a bunch of these houses into one, you know, lot how many, if we buy 10 acres, how many houses can we squeeze in here? And then, you know, make the, the backyards smaller and smaller and smaller and smaller. And that was kind of like the cookie cutter model of just, you know, high density subdivisions. And I don’t really like that. But you’re also talking about something else, which is like the subdivisions of really beautiful or big homes with big backyards.

Ruben Greth (22:16):

And that’s a whole different model as well. Right. I did wanna mention this though, because in 0 9 10, and 11 there was, because the, the banks bought back, or I should say foreclosed on so many properties across the country, they had these things called bulk REO packages. Each bank has a real estate owned department, and they would have like hundreds or thousands or maybe tens of thousands of homes, and they would just sell the entire package of homes to one individual institution who would buy like, I don’t know, let’s say 600 houses in the state of Arizona, Utah, and New Mexico. And they loved purchasing these houses at a discount. But what they found out was that they were very hard to property manage because they were scattered what they call scatter sites. So people wanted at a, at a high level to purchase lots of houses, but they could never figure out a model where they could own all of these houses in one place so that they could have the efficiency of scale and property manage the, the whole thing efficiently.

Ruben Greth (23:18):

And what they, they came to realize what a lot of people, or a lot of institutions came to realize that if they could have all of their houses in one place with one property manager, with one leasing agent, that would be ideal. And thus, the demand for bill to rent subdivisions started to explode right around then. So when you start to hearing about the beginning days of, of Bill to rent subdivisions, we’re talking about that moment in history in, in 0 9 10 11, 12, right When people started buying these packages to houses and realizing that it was very challenging to have them all over the place and they wanted them all in

Speaker 4 (23:56):

One place.

Reed Goossens (23:59):

For those of you who are interested in staying up to date with all the latest happenings in my business, or to learn more about passively investing directly into my multi-family value add deals, then head over to reedgoossens.com And sign up for my monthly newsletter. By signing up, you’ll automatically be notified about my new up and coming investment opportunities. You’ll be able to stay up to date with all the latest real estate news here in the United States and much, much more. So head over to reedgoossens.com and sign up today. Now back into the show. No, it’s, you bring up a very good point. So how have you guys handled that management play, and do you do any of that in-house with the, the, the, the developments that you partake in?

Ruben Greth (24:45):

So we work with a lot of capital razors. And the Capital Raiser always have to have some kind of ongoing duty. So we typically like to find people that are into asset management. So we basically just give them that duty and then they can, if we build a subdivision, they’re in charge of managing the property managers and managing the asset management and then being a liaison between the equity, the investors and the builders. So all of those kind of roles, we, we hand that off to the most appropriate person when in, when it’s, um, necessary.

Reed Goossens (25:17):

Gotcha, gotcha. Um, tell me about what projects you currently got going on right now. What, where, where, where are you seeing, and I do know that there’s been a little bit of a pullback in the BTR space, uh, BTR, like slight like swipe, but I think that’s across most asset classes. I don’t think there’s anyone’s immune to it right now, but what are you seeing any headwinds in this space coming into 2023 and beyond?

Ruben Greth (25:39):

So it depends on where you are investing, right? Because BTR is experiencing much bigger slowdowns in certain markets, like where I live, like in Phoenix than it is in other places. But you also have to pay attention to migrate migratory patterns and migration patterns because Florida, there’s, you know, insane migration. Same thing with Texas. And in places where we’re building the land is cheap, the model is very effective, but there is a net exodus of migration. So people are actually leaving Louisiana for other places. Hmm. But you know, when we put everything together, we basically, here’s what I would recommend or invite people to consider if you’re getting into build to rent development, follow somebody like a Dr. Horton or DSLD and copy their model and do it in the same places that they’re doing it, which is what we’re doing in Louisiana.

Ruben Greth (26:32):

So we have three projects, a 98 unit, what we call cottage style, built to rent development, closed gated community, 90 homes in the back, and then eight in the front. So we have the first eight of them built and we’re putting an infrastructure in the back part where it’s gonna be gated. And then we plan to build about 10 ha 10 houses a month. That should be finished probably by the end of 20, uh, middle of 2024. We also just acquired the land and secured the loan for the infrastructure on 158 unit in 50 in, uh, Foley, Alabama. So we’re gonna build 158 houses in the gate, community community, two bedrooms, three bedrooms, and four bedrooms. And then the most recent one that we acquired, we’re just barely taking down the land. It’s 30 acres in Brard, Louisiana. They’re all 506. So I wanna, you wanna be careful about talking about your products or projects that are said unless you have filed for a regulation D 506 exemption, which allows you to advertise and talk about this publicly. But all of our stuff is 506 C and this last project is a piece of dirt that we just bought. It’s 30 acres and we are barely just getting engineering done on it. So that way we’ll put an infrastructure in about six months and then start vertically putting up houses in about 12 months.

Reed Goossens (27:59):

Nice. Nice. That’s awesome. Are you putting amenities with any of this stuff? Cause I know mm-hmm. , that’s what is being

Ruben Greth (28:05):

Blocking trails, dog parks. Um, in some of them we might put in a pool, a clubhouse for sure. Yep.

Reed Goossens (28:13):

Gym a small gym or something. We,

Ruben Greth (28:15):

We might, I don’t think we’ve explored the gym too much, but those, depending on what you’re trying to build and for what kind of resident you’re doing, particularly if you’re doing an A class built to rent, you wanna have some nice things that attract, I’ve heard of some people, they even put restaurants or wellness centers. Wow. Um, like if you have a 55 year old community, they have like naturopathic doctors and all kinds of things that are designed to attract people that are like in the golfing stage of their life or whatnot. Mm-hmm. . But for, we’re pretty much targeting younger audiences. You, uh, or residents I should say. You know, new families or people that are downgrading from a big house to a little house. So we’re not going too crazy. And especially considering that we’re doing affordable housing, we’re providing some amenities like dog parks. I think we’re adding some technology, you know, like Bluetooth outlets or I should say, um, USB outlets and whatnot. But nothing too crazy, you know, maybe a couple of buttons that, that lock your door or turn off the air conditioning if you’re at work or whatever, but

Reed Goossens (29:18):

Right. Are are you seeing any sort of, or, or actually the better question is, when you look at the metrics of what the rent is, do you look at like what the average PR property price, if you were to get a mortgage in the area? Cause I’m sure that we do have to, you know, if you’re, I could imagine a four bedroom in Alabama, I dunno what that rents for, but you’d have to be pushing up against, why don’t you just go out and buy your own house?

Ruben Greth (29:40):

Yeah. Which right. Is very challenging because mortgage rates have created, right. Uh, you know, a couple of reasons why the housing market is frozen. One of them is people are not selling their houses because they know that if they sell their house and move into a new house, they’re gonna lose their phenomenal rate that they have on their house mm-hmm. that they live in. So they’re like, I’ll just wait. And then the people that wanna buy a house are like, see, seeing the cooling, it’s harder to qualify for a mortgage. They’re kind of on the sidelines too, saying, oh, I’m just gonna wait to see what happens in the six months. Hopefully the prices of houses will go down. And this cooling of the, you know, buy and sell market in the housing market is really allowing people, allowing us syndicators in the built to rent space to just basically sit here.

Ruben Greth (30:25):

And for anybody that wants to live in a house, they’re coming to our communities to rent. So we look at good schools, we look at the neighboring properties, uh, neighborhood comparables and see what things in that area are renting for. And we do design our rents, or I should say we, we pick our rents based off of what the, what the comparable neighborhood rents are in, in houses too. But, you know, we do provide some things that maybe some of the neighboring houses, if they’re individual houses, don’t get like a gated community and amenities, dog parks, etcetera.

Reed Goossens (31:00):

Gotcha. No, it’s, it’s a, it’s such a interesting, you know, you’re still buying good dirt, right? You still wanna be in good school districts, you still wanna be you as close to good hospitals and infrastructure. So it all, it all and

Ruben Greth (31:11):

Stores, you know, and

Reed Goossens (31:11):

Stores. And

Ruben Greth (31:12):

Two, you don’t wanna be like 10 miles away from Walmart,

Reed Goossens (31:15):

, you don’t wanna be in a food desert. Um, but, you know, I think that is, it all bodes well for, for good investing, right? Regardless of what product you’re investing in, you’re still looking at migration growth, you’re still looking at jobs, you’re still looking at what household income is, the demographics, what people can pay. That all makes, you know, it all adds to what if it’s gonna be a good investment or, or not over the long term, you know, regardless of what’s happening in say, the immediate term, which is, you know, we’re coming to potentially some rougher waters. Um, so with that, I’m gonna, you know, pivot, what are your thoughts on where are we happening globally? You know, the feds came out yesterday, we were recording this at the beginning of February that just raised their rates and other 25 basis points. What’s your crystal ball saying?

Ruben Greth (31:54):

Oh wow, I can’t predict the future . Um, I’ve, I’ve, I’ve heard both right, that the rates were starting to cool down and then at the same time I just got another notification that the rates just went up. So I have no idea. Some people are guessing that the rates won’t go above 7%, but I really have no clue. All I can really, you know, address is how I do business. And if we are basically underwriting and stress testing, knowing that in the future if we lock into a rate, we’ll at least have that for however long we lock it for, hopefully for five to seven years. And we’ll try and base our underwriting and stress test around exiting within our ex, you know, particular timeframe. We do feel internally within our organization that we can build these houses relatively quickly. So we don’t typically raise money or syndicate once we, you know, at the beginning when we’re acquiring the land, we actually purchase that with our own money, and then we put an infrastructure with our own money, and then we syndicate when the houses are ready to be built mm-hmm.

Ruben Greth (33:00):

. And from the time that we take people’s money to the time that the whole subdivision is built out, it can happen relatively quickly, like within about 18 to 24 months and then, you know, tack on another six months. So internally we believe that we can sell we can sell, lease up and sell our entire subdivision in 30 months, although we’re underwriting and stress testing as if we had to hold this subdivision for five to seven years. So that helps a lot, you know, comp investors where we, where we reduce and take on the majority of the risk, which is the early phases of development and just give them the, you know, less risky. It’s about to be built and then sold relatively quickly portion of the syndication or portion of the development for the syndication. Better said. Yep. So the crazy economic market with the interest rates, it’s really affecting people’s syndicators, I should say multi-family value add, syndicators ability to find deals at pencil.

Ruben Greth (33:59):

So we’re kind of staying away from that. And we like developments because there’s very little competition, so nobody’s bidding on the same piece of land, but if you have a, you know, existing multi-family property, there’s probably like 20 people bidding on that and driving the price up, you know, and in this market it’s very hard to make things pencil, so mm-hmm. , we’re gonna keep an eye on, we love multi-family, we’re gonna keep an eye on the market and hopefully we can get some clarity on what’s gonna happen in the future and what kind of rates there’s gonna be some new guys. Here’s the interesting thing that I just recently heard on my podcast is that when, when there is financial stress on the economic market, new lending products are created. So back in oh six, they came out with no doc loans and creative financing loans, be expecting a lot of these new products to come out, you know, 10 year fixed, um, am you know, arms or adjustable rate mortgages on commercial loans and all kinds of unusual products that will help syndicators make deals, pencil, all kinds of new products, um, are gonna be created.

Ruben Greth (35:08):

And they haven’t needed to create any of these products because it’s been so profitable over the 10 years, but right now is the time you’re gonna see some new products come to the market.

Reed Goossens (35:17):

That is very, very interesting. And, and, and I’m actually getting a, a fixed rate Fannie Mae loan for five years, buying it down to sub 5%, you know, which, uh, makes, makes a lot of sense when you’re buying, you know, in the, in the, in the money cap rates. Yeah.

Ruben Greth (35:31):

Those products didn’t exist, you know, a couple years ago.

Reed Goossens (35:33):

Exactly. Ruben, at the end of every show, we love to dive into the, the top five investing tips. You ready to get into it? Let’s

Ruben Greth (35:39):

Do it

Reed Goossens (35:40):

Mate. Question number one is what’s the habit you practice to keep on track towards your daily goals?

Ruben Greth (35:45):

So a lot of, um, reading and then planning the day, right? So I think those are the two big keys. And then the Miracle Morning for Entrepreneurs has been a great book to help me kind of plan the entire formation of the day, including exercise and affirmations and journaling and everything else.

Reed Goossens (36:03):

Awesome stuff. Question number two is, who’s been the biggest influence in your career to date?

Ruben Greth (36:09):

The biggest influence has probably been my real estate partner. He’s a fund manager. His name’s Andy McMullen. He’s the one that got me into development and understanding how to run funds.

Reed Goossens (36:20):

Awesome. Andy, if you’re listening, you are , you’re Ruben’s most influential person in his career. So

Ruben Greth (36:26):

Well your partner typically should be Ray or else why would you be partners with them?

Reed Goossens (36:29):

Well, yeah, you get people who put you on a mentor puts you on a good path earlier in your career. So depends,

Ruben Greth (36:35):

Mentors are great guys. Get mentors and coaches for sure.

Reed Goossens (36:39):

Question number three, what is the most influential tool in your business? When I say tool, it could be a physical tool like a hone or a journal that you just can’t run the business without. Or it could be, he’s a software, what is it?

Ruben Greth (36:49):

The podcast is my greatest tool. It’s, it creates the, it creates the exposure, right? Yeah. So now instead of being in front of 10 people, I’m in front of a thousand people a day, even while I’m sleeping, right? Mm-hmm. and my, and my voice is in their ears. So this has been the most phenomenal tool. Easily

Reed Goossens (37:07):

100% agree. I’ve been doing this since 2014, met some incredible people doors have, you know, so, uh, awesome stuff. Definitely love that. The,

Ruben Greth (37:15):

The creation of relationships is a big part of podcasting for it is. Sure. And, and life in general. And business of course is a relationship based deal.

Reed Goossens (37:24):

Yep. 100% agree. Question number four is in one sentence, what’s been the biggest failure in your career and what did you learn from that failure?

Ruben Greth (37:31):

Man. So , we had this back in oh nine. We had this deal that was a, just a fix and flip, and then we bought it and we had the wrong insurance and somebody came and vandalized it. And the property insurance did not cover vandalism because it was a non non-owner occupied insurance and we had the wrong insurance. So basically lost like $45,000. And I had like my partners, my capital partners, they wanted to beat me up and like chase me down to my house for a long time. So that was kind of a freaky experience. But one of the things that I realized is that like, you really need to have good relationships with people that you trust that know how to do their business model and have a track record of doing it. And you know, in this particular case, the fix and flip partner that I had, he’d done a couple of flips in one part of town and it was, they’re all great. And then we went into another part of town and he thought he could do the same thing and he couldn’t. And we just failed miserably on that.

Reed Goossens (38:34):

Mm. Lessons learned from, from, from those skinned knees back in the day. Are, you’re still here to tell the story. You’ve still got your shirt on your back, so that’s all good. Uh, last question is, where can people reach you to continue the conversation that’ll be in your sphere? Where do they go? Yeah,

Ruben Greth (38:47):

If they want to learn about Capital Raiser, I definitely recommend the show, capitalraisershow.com or if they want to find out about Built to Rent or hang out with us, or even attend some of our development and capital raising webinars, that would be legacyacquisitions.com for you to, to hook up us up there. And then of course find us, find me on LinkedIn. I love hanging out on LinkedIn.

Reed Goossens (39:06):

Awesome, awesome stuff man. We’re going to thank you so much for jumping on the show today, blast. I want to just reflect some of the things that I took away from today’s show. I think, you know, your ability to break down the history of Build for Rent, I think is such an interesting space. And as you think about the evolution of density and people growing and, you know, suburbs growing and cities growing, there just becomes, you have to figure out different products. I’m not saying you figured that, that that build for rent for yourself, but you’re seeing other trends coming on online where people don’t necessarily wanna live next to a neighbor and have a neighbor above them or below them or, you know, have a very small, tiny balcony. They want that sort of single family feel, but they may not necessarily be in a space to go and acquire that, but they’ll definitely wanna rent from that.

Reed Goossens (39:47):

So I think that’s been such a massive shift in what I’ve seen in the last sort of five to eight years in this space. You know, doing ho uh, horizontal multi-family. Um, so that’s been definitely some of the things I took away from the Today Show. And then obviously your ability to pivot, you know, you you’ve had such a incredible growth in your career and, and change picking up things that will help you continue moving the, the, the, the ball down the fairway in terms of, you know, back in oh 809, you’re doing JV loans now, you know, develop syndication models, uh, around other sorts of JVs with different partners who are certain experts and, you know, you mentioned you didn’t know the insulation size, we’re gonna go find a partner who knows what that is all about. And so partnering up with people who really know their stuff, I think is also really, really important. Did I, did I leave anything out?

Ruben Greth (40:31):

No, that’s, that’s pretty much it in a gist. So you gotta be able to pivot, adapt, and evolve as you go because real estate is a every evolving business and you just gotta be prepared for things to change. Including the interest rates.

Reed Goossens (40:45):

Including the interest rates, my friend. Well look, Anna, thank you again for jumping on today’s show. Enjoy the rest of your week and we’ll catch up very, very soon.

Ruben Greth (40:52):

Thank you. That was blast.

Reed Goossens (40:53):

Well then you have another cracking episode, jampacked, some incredible stuff from Ruben. If you do wanna check out Ruben, head over to LinkedIn, you can check him out. It’s Ruben Greth, it’s Greth. Um, he is over there and check out the Capital Raiser Up podcast show. You can just Google that wherever you podcast. Um, I wanna thank you all again for taking some time outta your day to tune in, to continue to grow your financial iq, because that’s what we do on this show each and every week. If you do like this show, the easiest way to give back is to give it a five star review on our iTunes, and we’re gonna do it all again next week. So remember, be bold, be brave, and go give life a crack.