Collecting Multifamily Real Estate with Stephen Pearse

Stephen Pearse grew up in upstate New York, and he went down to college in Tampa, Florida, did the four years undergrad, and then got a master’s in entrepreneurship. The following year, He worked down there and logistics sales following that. It was just a job paying the bills right out of school that needed something new, He wanted to go more into the entrepreneurial route. Eventually, He ended up moving back home during COVID to the upstate New York area, because it just made sense. At the time he saw a job posting for a real estate investor Posted by Bill Hamilton real estate. And that was about a year and a half ago. Over the past year and a half. I’ve been working on collecting real estate with Bill Hamill. He has 10 units at this point and looking to syndicate. Their closing on their first syndication as lead gen partners. Hopefully in about a week. It’s a smaller, smaller deal. 15 units, but putting us in the right direction to move forward.

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Collecting Multifamily Real Estate with Stephen Pearse

Brett:

Hello and welcome to the capital gains tax solutions podcast where we believe most, high net worth individuals and those who helped them struggled to clarify their capital gains tax deferral options not having a clear plan is the enemy. And using a proven tax deferral strategy such as the deferred sales trust is the best way for you to exit multifamily cryptocurrency businesses all tax-deferred for millions of tax so you can create and preserve more wealth I’m your host, Brett Swarts. And each episode I’m joined by some of the best real estate financial wealth, crypto, and leading minds in the world where they share their ideas, deal stories, and inspiration. So together we can make complex tax pro strategies simple and passive income plans achievable. Hey, we’re also streaming on expertcresecrets.com. As well as on our YouTube channel their capital gains tax solutions and expert care secrets. I’m excited about our next guest. He’s out of the great state upstate New York and he is focused on all things collecting multifamily real estate. He works alongside a gentleman named Bill Hamill, who is the founder and has a ton of experience. And now Stephen is coming up alongside him to find more deals in the Florida area as well as Upstate New York. Stephen is an active real estate entrepreneur with a professional background in sales and account management. And he’s here to share some knowledge with us about the multifamily markets and so much more. Please welcome show with me, Stephen Pearse,

Stephen:

Thank you for having me.

Brett:

Absolutely. For our listeners good to know for the first time would you give us a little bit more about your story and your current focus?

Stephen:

Yeah, so I grew up in upstate New York, and I went down to college in Tampa, Florida, did the four years undergrad, and then got a master’s in entrepreneurship. The following year, I worked down there and logistics sales following that. It was just a job paying the bills right out of school that needed something new, I wanted to go more into the entrepreneurial route. Eventually, I ended up moving back home during COVID to the upstate New York area, because it just made sense. At the time I saw a job posting for a real estate investor Posted by Bill Hamilton real estate. And that was about a year and a half ago. Over the past year and a half. I’ve been working on collecting real estate with Bill Hamill. I have 10 units at this point and we’re looking to syndicate moving forward. We’re closing on our first syndication as lead gen partners. Hopefully in about a week. It’s a smaller, smaller deal. 15 units, but putting us in the right direction to move forward.

Brett:

That’s awesome. That’s cool. I appreciate that a little bit of that background there. And before we get too deep into some of these deals about collecting real estate, what you’re seeing out there for deals and multifamily. I want to take one other step back. I believe we’ve all been given certain gifts in this life. Some people call me strengths when we become superpowers. But I’m curious Stephen, what are the one or two gifts that you believe you were given it? Has it helped you help and bless people today?

Stephen:

I think mentality is the first thing that comes to mind. starting this journey with Bill, I set a goal saying I’m going to acquire 10 apartments my first year. And I remember telling my mom that and she just kind of laughed like how are you going to do that? So and I’ll figure it out and had the mentality that I was going to do it and fast forward a year and I got those 10 units.

Brett:

So absolutely love that that’s fantastic mentality is super important. Because with setting any kind of goals, right? If we’re not saying them out loud, if we’re not setting the right mindset, it’s going to be difficult to achieve those. So it’s doing those things that that are been proven to do. So let’s dive right into the episode here. So collecting multifamily real estate. So what’s the biggest secret Stephen to collecting multifamily real estate upstate New York or Florida?

Stephen:

I don’t know if there’s a secret. I think there’s been a lot of successful real estate investors over the last couple of 100 years. And I think their success has left clues. So I think the secret goes back to that mentality and really dedicating yourself to it, I’d say also having a sense of urgency. It’s easy to just educate yourself and then analyze deals and go day to day without taking action. But if you have that sense of urgency, you can definitely move forward and get things done.

Brett:

Yeah, I think that makes a whole lot of sense, right? There’s a lot of analysis paralysis that people go through or, or false beliefs they put on themselves or false things that they have to achieve first, you know, to in order to maybe have to buy that single-family fix and flip first, or that four Plex or that 10. Or, you know, it’s like how can I do 100 units? Or am I ready for that? Or is it too big and these things can hold us back? So I like that partner say taking action, right? And then following the success of those who’ve already done that. So what’s been the best way that you and Bill had figured out a way to find deals right now maybe that’s maybe a better aspect of this. What are you guys doing to unlock opportunities in a very tight market?

Stephen:

Yeah, so Bill brought me on board. One of my biggest roles is gonna be to find deals. And that was a lot harder than I thought it was gonna be. You get a lot of people on the phone, you get a lot of people saying, Yeah, give me a number I’ll sell for the right price. But actually finding a good deal for a good quality asset is really hard to do. Our biggest secret has been a broker appraiser in the area who finds great deals, he’s been doing this for over 30 years, he has the connections. And I think knowing people is the secret to finding deals. Everyone, every building, every property is going to sell eventually. So if you’re the first person they call when they’re ready to sell, you’re going to be the first person to find that deal.

Brett:

I think that’s great, right? You can find that, you know, like that old saves, it’s connected with all the properties in some way, whether that be that lender, that title person that in your scenario, that appraiser, right? Sometimes it’s the property manager, but it’s goes always back to relationships, if we can build those relationships, nurture those relationships, and then be top of mind to unlock when the deals are unlocked, or coming up. That’s great. So so fantastic. So that’s fantastic. So how, how, how do you nurture those relationships with appraisers, and anything that you guys do to try to encourage, encourage opportunities for him to bring him to you?

Stephen:

Yeah, I think the most important thing is he knows what close he knows we’re serious investors. And if we say we’re interested in a property, we’re not going to waste his time, we’re not going to waste the seller’s time. But beyond that, it goes beyond real estate. Over the past year, I’ve gotten to know this gentleman, it goes beyond real estate, you treat him like a friend, you treat him like someone you’d hang out with on the weekend, you check in you call him, and ask how his vacation was, and you really mean it. You get to know the person. And you build that relationship, and they take it beyond real estate and the real estate will always be there.

Brett:

Yeah, it makes sense, right? If we overthink it, it’s, it’s no reason to. It’s just people are people. And Zig Ziglar says, Well, if you help enough people get what they want. You get everything you want. So you build that relationship. And I’m curious, so a lot of that’s with brokers too, right? So you don’t do with brokers you don’t do with appraisers, maybe escrow maybe lenders, those different folks? It’s interesting. You said appraiser because usually here it’s just what the broker. Right? So this is this may be one of your secrets, like what can break down? What does he get out of it? Right? Because there’s an appraiser. Of course, she wants it to close, right? Because, you know, he doesn’t want to I guess under over appraise it so that the loan goes through and the buyer closes, but walk us through maybe what I’m missing here, are you referring to a broker and appraiser here? And if the appraiser what’s in it for him really if it closes or doesn’t close.

Stephen:

So this is kind of a unique situation, you don’t hear a lot about appraisers being the deal finders, this particular appraiser is also a broker. So he does represent both parties on these transactions. But a big part of him knowing all of these owners is because of his appraising business. So he has a full Rolodex of investors who he’s appraised for in the past people he’s worked with as a broker and appraiser. And he can follow up with them whenever he needs to. And that’s really his secret sauce.

Brett:

Got it? It’s its cocktail property management strategy, right? There’s a broker who is the property manager, and they manage the properties. And then their goal is to either buy the properties themselves off-market and or broker the deals when it comes up because they built a long-term relationship with the client. Right? Sometimes it could be, you know, it could be a little sensitive there. So that’s really interesting. I don’t know if ever heard that way. And maybe different states have different rules, right? I’m in California, here in New York. But I don’t, I don’t think I’ve ever heard that appraiser. And I also will I will clarify this as well. He’s probably not appraising the deals that are closing, right? Because maybe there’s interest there, right. So he’s just he’s using his appraisal business to serve the community of multifamily owners, and correct me if I’m wrong, and then if and when he kind of has a pulse on it. He says, Look, I’m not gonna participate as an appraiser on this one. But I’d love to broker the deals. Is that what he’s doing,

Stephen:

Stephen? Exactly. I mean, you’ve been doing it for so long. There are properties that he appraised 20 years ago, got to know the owner checks in with them every year. And now 20 years later, they’re ready to sell and he can put his broker hat on and work that side of it.

Brett:

So smart, I love that. I love It’s creative, right? It’s kind of you know, they especially appraisers, because everyone wants to be the appraisers, friend, right? Because if an owner wants to refinance your property, you want to maximize the loan dollars. So you want it you’re there when he prays, you’re showing up you’re, you know, you’re trying to highlight all the all of the really great things about the property, you’re saying, Hey, why this property is worth more than the one that sold down the street for x because of XY and Z. And so you’re trying to maximize the value of an appraisal so you can maximize either refinance dollars and or the ability for someone to buy it. So I like that a lot. That’s really cool, Stephen,

Stephen:

it just goes back to relationships once again.

Brett:

Yeah, right on. So I’m actually So let’s shift a little bit into capital gains tax, or actually, before we go there, let’s talk about where you’re buying properties, right? And why you’re buying them there. And kind of, you know, the ideal partner investor that’s looking maybe to start to invest passively with someone like yourself.

Stephen:

Yeah, so I’ll start with the purchases that I have completed, up until now. First, I got a duplex up in the upstate New York area. And that was out of needing a place to live. I was a renter, when I lived down in Tampa, I moved back with my parents to save on that renting when I could work remotely. And I needed a place to live. I knew I wanted to be an owner, occupier, I liked that method. It made sense to me. Next was the unit that was in the same area upstate New York. But now that Bill and I are looking to grow and scale and go more into this syndication model. I think that’s what you’re referring to with who would be the passive investor looking to partner up with us. And that’s anyone that’s interested in multifamily real estate, but doesn’t have the time to be an active investor themselves. It’s been a great 1012 year run for the real estate market. People are interested in multifamily real estate, they want to be a part of this industry. But it takes a lot of time. It’s a lot of work. And having this syndication model gives people that opportunity. We’re also interested in the Tampa, Florida market Bill has a 44 unit, a 16 unit, and a five-unit in that area. I know the streets very well living there for over six years. And we believe in that market. So other people want to put their money there, and we can be that vehicle for them to invest passively.

Brett:

That’s awesome. And so you guys buying deals that are 50 units 25 100 150. What’s kind of your sweet spot value add B or C? Maybe give us the last deal you guys did in Tampa? What did that look like cap rate cash on cash projected returns?

Stephen:

Yeah, so it’s a secret spa-like 20 to 200 units anywhere in their value add is great if we can refi and pay the investors back or add enough value and completely exit the transaction, if that makes sense for the investors at the time, I’ll run through a deal that we’re working on right now will be closing hopefully next week. So I think we’re close enough to be talking about it on a podcast. It’s a little bit smaller. It’s 15 units. It’s here in the upstate New York market. But there’s a lot of meat on the bone, there’s a lot of room to raise rents to improve the common areas. And it’s a growing area here in upstate New York. It’s in Troy, New York across from a community college. And we’re starting off as being lead gen partners and a little bit of a smaller transaction. It’s a 15 unit, a little over a million dollars. But that gives us the opportunity to be the lead gen partner raised from our investor network and go through this process with a syndication attorney and really master it on a great property that we know is going to have great returns before we go into that 50 100 unit as a lead gen partner.

Brett:

Goddess, it makes sense. So 15 units, curious on the cap rate cash on cash, and then how much from rent if you renovate a unit? What’s the cost to renovate on average? And what’s the average increase in rent?

Stephen:

Yes, we’re purchasing it around a six-seven cap, there’s a lot of room to add to the rent. So it’s going to be up to 1112 cap. I know that sounds unbelievable people that are used to some of the more competitive markets here in upstate New York, you can get away with purchasing a 1011 cat. Hopefully, we can exit it sell it more around a seven cap as far as cash on cash, it’ll be at least 20%. It’s a really solid deal. If we exit in two years, we’re hoping to almost double our investor’s money.

Brett:

Excellent. Fantastic. That sounds great. And by the way, you can learn more about Stephen Pierce by going to hamillrealestate.com. That’s hamelrealestate.com. And so let’s shift into the biggest frustration with the 1031 exchange. So I’m curious, Stephen, you know, friends, family clients, you know, maybe you’ve experienced this. What do you feel like is the biggest frustration when it comes to a 1031 exchange? Or lack thereof options for capital gains tax deferral for stuff like cryptocurrency or business sales, or an exiting, highly appreciated general partnerships?

Stephen:

Yeah, so I haven’t been to the point in my career yet where I’ve sold a property I haven’t exited yet. And sticking with the collecting real estate theme, I like to collect and hold on to things. I think that’s a part of who I am. When I was younger, I collected baseball cards in middle school, and never wanted to sell them. I wanted to keep collecting, keep collecting. And I feel that way about real estate I think you collect and you hold on to it and there’s a lot of power in your time in the market. But what the biggest frustration is with 1030 ones that I’ve observed over the last year and a half is definitely the short period of time that you’re given to identify a property I see a lot of frustration with investors who feel like they have to park this cash into an asset that they know they’re not getting the best deal on because even though it’s not the best deal, it still makes sense financially with a tax.

Brett:

Yeah, that’s exactly what we call the shotgun wedding, right? You got to get engaged in 45 days, you got to get married and 180. And sometimes it’s that sell high, buy higher 180 days, which is the most painful, right, and a property that’s maybe not cash flowing very well or doesn’t have a lot of upsides, a lot of the juice has been squeezed out. Maybe at the top of the market in this you know, 13-year bull market run highest real estate values ever. That’s why we offer the deferred sales trust we call the Netflix exit planning strategy versus the old blockbuster 1031 where you never have to feel trapped by a 1031 exchange ever again, you can save a failed 1031 Exchange. It works for cryptocurrency works for businesses or for primary homes, whereas 1031 doesn’t work for any of those assets except for an investment real estate property. And by the way, go to capital gains tax solutions calm it’s capital gains tax solution.com To escape feeling trapped by the 10 to ruin forever. Check us out capital gains tax which is calm but that being said, Stephen, are you ready for lightning round? I am. Alright, so knowing what you know now if you can go back to your let’s call it your 20-year-old self, what’s the one golden nugget make sure to tell yourself to do?

Stephen:

Buy a house in Tampa? stop renting, buy a house and rent that out to your friends.

Brett:

Excellent. Second question. What’s the number one book you’ve recommended or gifted the most in the past year?

Stephen:

in the past year is tough. In the past year, I’d probably say Shoe Dog by Phil Knight.

Brett:

Excellent. Question number three. What’s number one? What’s the number one leadership quote or theme that you strive to live by?

Stephen:

I’m not sure about a leadership quote. But when you say quote, and I’m thinking real estate, the first thing that comes to mind was the pace. Morbi, who’s a very good direction to seller investor as a quote, that is fine the bunny’s and that goes back to his first transaction his first purchase. So if you look into pace Morbi and you can look into finding the bunnies.

Brett:

Excellent. Next question. What are you most curious about right now?

Stephen:

What I’m most curious about is how I can find a way to split time between Tampa and New York. I’m really trying to build a big enough portfolio that supports that kind of a lifestyle.

Brett:

Aren’t we all trying to figure out how to split that lifestyle? Right? It’s like, if, if you’re in a cold, cold place like New York, right? If you need to Florida, or if you’re in a cold place like Colorado, can you get to Hawaii spend some time there and stuff. That’s pretty cool. In fact, my family and I were looking at different places to maybe split some time out of California and Florida is actually one of the places.

Stephen:

I love it up here in the summer. And when you live in Florida, you miss that New York, it’s different. But being a period Miss Florida, so be able to split, like you said is the big deal.

Brett:

Awesome, awesome. That being said, the last question is, how do you stay centered in your values? And what are the habits that you’re practicing to do that? And then how do you stay encouraged to charge to reach new goals?

Stephen:

staying centered, I think working out was the biggest thing for me if I can be consistent with that. I started a little over three years ago, I didn’t work out much in undergrad. And when I started doing that it really helped me focus on other things because that seemed like the hardest part of the day. And when I got that out of the way, it lets me feel like I could do anything else for the rest of the day. As far as staying focused on moving forward. I have to at this point, Bill and I are all in on this on this syndicating journey that we’re on. So if I don’t know, keep finding deals, keep raising money. The ball stops there.

Brett:

It makes perfect sense when you burn the ships and go all in. Hey, Steve, I want to thank you for being on the show. I want to encourage you to keep using the gifts and have the mentality of never giving up and figuring out a way to make it happen. Right especially in this multifamily syndication game, which is very, very competitive, and prices are all-time highs. But continue to look for that diamond in the rough in Tampa Bay, Florida, upstate New York. And I want to encourage our listeners to get with Stephen if you’re looking to potentially invest in those areas and connect with him. Stephen for those who do want to reach out to and connect with you what’s the best place for them to find you?

Stephen:

Yeah, Brett, thank you so much for having me. I love the capital gains tax solutions show. You can text me Call me anytime. 518606430 I’m also on Instagram, Stephen purse, three on LinkedIn pretty active on there. Even first collecting real estate demo reels.

Brett:

Awesome. Thanks for being on the show and also want to thank our listeners for listening to the episode of the capital gains tax solutions podcast, where we believe the highest net worth individuals and those who helped them struggled to clarify their capital gains tax deferral options not having a clear plan is an enemy. And using a proven tax deferral strategy such as the deferred sales trust, the best way to defer millions of dollars of capital gains tax on the sale of businesses real estate can save a failed 1031 Exchange cryptocurrency public-private stock, high-end primary homes, anything that you have that has at least $1 million net proceeds $1 million gain that’s big enough to qualify for a minimum qualifying transaction. We would love the opportunity to connect with you by going to capitalgainstaxsolutions.com It’s capitalgainstaxsolutions.com. I also want to shout out two other things real fast. We have a mastermind that happens every Friday at 10 am. Pacific Standard Time. 1 pm. Eastern totally free. If you go to capital gains tax, which is calm. We’re breaking down the deferred sales trust and making it very simple, very digestible, and an open forum where everyone’s invited to ask questions, bring in their CPA, bring in their financial advisor, whatever, right and everyone broker to figure this thing out so that you never have to feel trapped by 1031. Again, or capital gains tax. That is the deferred sales trust mastermind that goes to capitalgainstaxes.com. And the last thing is I’m speaking at the Joe Fairless. Ashcroft capital best ever real estate conference coming up in Colorado, on February 24. Through the 26th. You don’t want to miss this if you’re in the commercial real estate syndication space, multifamily space. There is a discount code that you can get by going to capital gains taxes.com And that’ll save 15% off the ticket. If you’re interested in seeing me there. Meet me in person. It’d be a pleasure to connect with all of the audience who are part of the capital gains tax solutions, nation. So thank you so much for listening. We appreciate everybody please rate review, subscribe.