Join us for an insightful conversation with our guest, Ian Cameron, as we explore the intriguing world of real estate investing from a tech worker's perspective. Listen in as Ian unravels his real estate journey, beginning with a single family home and growing to include 12 single family rentals, a 36-unit apartment building, and an industrial maintenance facility. Hear his experiences working for a startup and how it shaped his real estate investing strategy. This episode provides valuable insights into maximizing returns and minimizing hassle in the ever-evolving real estate market.
We further explore the importance of real estate partnerships and the power of leveraging in real estate investments. Ian shares his experience finding the right partner and how it led to his first real estate deal in Everdeen, South Dakota. We also discuss the various types of rental property management and the pros and cons associated with them. From understanding the intricacies of triple net leases to the operational load of multifamily properties and the potential high returns of industrial assets, this episode has it all.
Lastly, we tackle the risks and challenges of commercial real estate, the significance of property inspection in real estate investing, and the importance of taking calculated risks in investments. Hear from Ian as he shares his insights on underwriting, evaluating leases, and understanding the demand for commercial properties. He also highlights the essential role of having a partner who understands the industry. Wrap up this insightful episode as we discuss Ian's favorite book, "Barbarian Days" by William Finnegan, and why it's crucial to have passions outside of your career. Tune in for an episode filled with invaluable real estate investing wisdom.
- Establishing partnerships in real estate can be a lucrative step, opening doors to bigger deals. It is crucial to find the right partner who shares your goals and with whom you have a trusting relationship.
- Different types of rental property management have varying operational loads, complexities, and returns. For example, triple net leases have the potential for high returns, but also require a deep understanding of their intricacies.
- The commercial real estate sector has unique risks and challenges. Understanding property inspection, underwriting, and lease evaluation is critical. Knowing the demand for commercial properties and having an industry-knowledgeable partner is also vital.
- Transitioning from a solo investor to partnering can be a complex process with its own challenges. In the case of Ian, a key factor was understanding the demand for different asset classes in his market, building relationships with property managers, and dealing with unexpected maintenance costs.
0:00:00 - Vikas Gupta
This is the Hacking Real Estate Podcast, episode 17.
0:00:04 - Ian Cameron
Pick something that's small enough that if it goes wrong you'll be okay, but pull the trigger it's okay if you don't crush it. On number one, I think that there's a premium for learning and a price you might pay for learning to get into the first one, which then sets you up to actually make money on number two, three, four and beyond.
0:00:24 - Brandon Hall
Welcome to the Hacking Real Estate Podcast, where we dive into the stories of seasoned, hands-on and tech-savvy real estate investors. We'll learn the strategies and tools they use to maximize returns and minimize hassle, all while navigating the rapidly changing real estate market. I'm your co-host, brandon Hall, and managing partner of Hall CPA, and I'm sitting alongside my co-host, vikas Gupta, ceo of Azibo. With our combined 15 years of experience in real estate investing and entrepreneurship, we're here to help you up your real estate game. Let's get hacking.
0:00:55 - Vikas Gupta
Hi everyone, welcome to this week's episode of the Hacking Real Estate Podcast. Our guest today is Ian Cameron. Ian invests in and operates single family and multifamily residences in the upper Midwest. He previously served as a Marine Infantry Officer with operational deployments to the South Pacific and Afghanistan, and he has also worked for early-stage startups, including Azibo, to help them scale their operations. He is a graduate of the United States Naval Academy, was a Marshall Scholar at the University of Oxford and received his MBA from the University of California, berkeley. Ian, thank you for joining us today and welcome to the show.
0:01:34 - Ian Cameron
Thanks, vikas, it's good to be here, and, brandon, good to see you again as well, ian, in your own words, can you tell us about your real estate journey?
Sure, yeah, I started, like a lot of people, just by buying a single family home and, more specifically, my mother had been in the local market just kind of slowly buying residential single family rentals. So she'd been doing that really slowly. She maybe had five or six rentals that she had built up over a decade and she was the one who'd kind of encouraged me to, hey, you should buy a property. And at the time I was young, I was probably in my early 20s and I was in the Marine Corps, kind of really focused on that. So I think it was just good motherly advice that got me to buy the first one and didn't think much of it. I was lucky that I had somebody that I trusted that helped me kind of get into that first property. But I think when I started seeing those rent checks come into the bank account I was like, oh, this is what happens, okay, I like this and that's what got the bug. And obviously we've been expanding from there.
0:02:45 - Brandon Hall
And what does your portfolio look like today?
0:02:47 - Ian Cameron
My current portfolio. So from that single family home so I grew up in Rochester Minnesota and that single family rental we bought 12 more of those over the next five or six years. So it's 12 single family rentals in Rochester Minnesota. But then more recently, just in the last year, they've gotten more into some of the commercial properties. So with a great partner actually from my hometown, he and I purchased a 36 unit apartment building in Aberdeen, south Dakota, which is a great market. I love that market as well as a larger industrial maintenance facility up in the back in oil fields in North Dakota. So that's a little bit different. That's a really interesting deal. You know very much outside of my, my wheelhouse, but I've been learning a lot on that one. So that's been fun.
0:03:31 - Brandon Hall
Well, I definitely want to circle back and touch on the industrial versus the single family versus the multifamily and kind of get your takes on, take on the different asset classes. But before we do, let's walk through your story a little bit more. So you were in the Marine Corps. Marine Corps, you picked up your first rental. How many rentals did you pick up while you're in the Marine Corps?
0:03:47 - Ian Cameron
My first job out of the Marine Corps was actually with a Z-Bot when we were maybe five people, so really early on and I think, and so at that time so that was about three years ago, maybe a little bit more now I might have had five or six single families, seven single family rentals somewhere in that neighborhood.
0:04:04 - Brandon Hall
Okay, and so then you joined the Z-Bot. How long did you work for a Z-Bot?
0:04:07 - Ian Cameron
I was with the Z-Bot for two years, so the cost was my boss.
0:04:11 - Brandon Hall
Oh, there you go. Very good, so it comes full circle here. I love it. Were you out in San Francisco, or?
0:04:18 - Ian Cameron
were you working remotely? That's right. No, in San Francisco, living in San Francisco in.
0:04:22 - Brandon Hall
San Francisco. Very cool, very cool. Okay, and so did the experience working at Ezebo help accelerate your real estate investing, or was that just always the path that you're kind of on and this just sort of aligned with it?
0:04:34 - Ian Cameron
Yeah, that's a good question. So yes and no to that kind of question is yes in terms of being at Ezebo helped me. Part of my role at Ezebo was I kind of helped lead the customer support team, and so I was talking to real estate investors every single day and by lead the customer support team, over time we built a real team and the team that's there today is phenomenal. But day one that meant Ian was picking up the phone. Day one, when Ezebo launched, it was me on the other end of the line and so I was talking to real estate investors every single day and some of our initial customers were really really interesting folks and you know, for a real estate investor, you know Ezebo is a really robust platform these days that you know anybody can hop on and drive.
But in the early days it took kind of a unique individual who wanted to try something new, who, you know, was experiencing a pain point elsewhere and wanted to try something new. I was talking to some really interesting folks who had all sorts of different stories. So to answer your question, brandon, I would say that it was definitely an accelerator in that I got exposed to a whole lot of different investors and just talking to people and hearing how they do business is always kind of plants new seeds in your mind. On the other side of things, it was very much, you know. I was working in the technology industry in San Francisco while my market was in Rochester, minnesota. So there's a dynamic there of being a remote real estate investor which is challenging, no matter what company you're working at, whether it's related to real estate or otherwise.
0:06:13 - Brandon Hall
So how do you think that a tech worker in San Francisco making pretty solid money could get involved in real estate? During your time at Ezebo, I'm sure that you met plenty of technologists, plenty of software engineers talked to me about, based on your experience, meeting them and understanding them and also investing in real estate, what do you feel is the simplest path for a tech worker to get into real estate?
0:06:37 - Ian Cameron
No, brandon, you're absolutely right, and I wouldn't even limit it to tech. I would just say, like the broader category and this is essentially kind of my friends, I would, in a very broad sense I would, describe them as high-income coastal millennials. There's a lot of the folks that I kind of hang out with in San Francisco or elsewhere and what's so interesting is like, kind of you talk to these folks and, okay, what do you do? I work at this tech company, that tech company, and I'm sure it's the same thing in New York. Oh, I do banking or whatever.
But as soon as you mentioned, oh, I got a few, you know, single family rentals in Rochester, minnesota, people want to hear about that. So there is this, and I think this is true kind of all over the place there's something about real estate I think it's because it's an asset class that's so tangible that everybody can kind of grok and wrap their heads around that is attractive to folks who aren't, you know, kind of actively managing their finances and their personal wealth. So there's something really attractive about real estate and I think you hinted at this as well, brandon that there is a gap. Like getting in is is tough, and so if somebody has a personal connection and if that happens to be me, they really want to hear about it and there's a lot of interest there. And so to answer your question, brandon, like what advice? I would say like, how do you get into it?
You know, I was really fortunate that I had somebody a family member in a market. That made sense. Like I don't recommend to a tech worker working in San Francisco to try to buy something in San Francisco. I don't recommend getting into a market like that is really tough. But if you maybe have a family member in another market, that makes more sense, that's a great way. That's how I did it. If you don't have that, I think that investing as a limited partner on a real estate deal really helps you, as you're kind of consuming those reports from the general partners. It really kind of helps you understand what's going on. And that's not the path that I took, but I've heard a lot of great stories of folks who started as a limited partner, established relationships with either other limited partners or or those general partners and were able to move into a more active role.
0:08:31 - Vikas Gupta
So let's say that I wanted to start through the, the LP way that you mentioned. Like how would one go about doing that? The thing that people talk about in tech is, if you're not an active tech investor and a deal gets to you, there's a reason it got to you and that's because no one else wanted. So if I'm not in the game, how do I get into the game and make sure that I'm not just seeing the stuff that the, the pros don't want?
0:08:57 - Ian Cameron
It might be a little bit different from your analogy, because I think I think there's some truth there, certainly but it might be a little different in that there can be a lot of equity raised on each individual deal from smaller check sizes. It's harder to do that with, you know, for example, a venture investment, and so I would say some of the deals that are floating out there are solid, that there are good teams putting together good deals that are just looking to take on more capital and they aren't necessarily, you know, picky about where that capital comes from. I would say, if you can look at the general partners and they have a track record, that it still might be a good opportunity. You're not necessarily getting the leftovers, but I would say it's vetting the general partners and establishing that they really do have a track record is kind of the most important piece of kind of evaluating that, because there's a lot of stuff out there too.
0:09:45 - Vikas Gupta
There's no doubt about that, you know yeah yeah, um, a friend of mine was general counsel, or I guess he went in after the firm went into bankruptcy, but for a real estate company that was illegally selling securities to raise money to fund their real estate investments. So that can happen, yeah. But going back to your story, ian, so you started as an individual investor and now you've partnered, and we talked about partnering. So I guess you know what led you to switch from being a solo investor to partnering with someone, and how did you meet your partner and tell us that story?
0:10:18 - Brandon Hall
Actually, if you don't mind, before you jump into that, because I've got like a leading question, I think, for that piece of this yeah, when you transitioned, when you're at Zibo and even when you're in the Marine Corps, was your view and I'm asking this from the context that I have of working with all of our clients and them being at various phases of their life and their journeys it was your view of real estate more of like wealth preservation, and now that you are doing it full time, it's like wealth creation. Does that make sense? It's kind of like Zebo's the main job or the Marine Corps is the main job. That's my cash cow. I'm gonna take the cash and put it into real estate. The view is I don't want to lose it and then when I go into it full time now, I can like tighten up operations and I can try to make some real money at this, and maybe then that goes into Vikas' question about partnerships. What?
0:11:05 - Ian Cameron
are your thoughts on that? When I first kind of started, I definitely wouldn't use the term wealth preservation. I was in my early 20s. There wasn't much wealth to preserve, but I would say that it was. You know it was, hey, how can I invest in something that isn't the S&P 500?
It took my mom to really get me to do my first deal, but as I was doing number two and number three, I think what I appreciated from seeing the first one was, I think the thing that really attracted me from continuing to go down the real estate route even though it wasn't what I was doing full time was just kind of the power of leverage. And so I saw kind of what the returns looked like in real estate and I saw that you know it was really easy, and especially at the time, you know the financing was really really easy, and so I saw it as a safe way to lever. And so it's you know, somebody in their 20s who's starting without a ton of wealth that leverage really matters. So I think that's kind of how I first viewed it. And then, Vikas, getting to your question of you know starting solo, moving to a partner, I would first push back and say that I, nor anybody, is truly solo, and so for me it was an important partner my mom on the ground, who was managing the properties, and so, yes, financially I was the 100% owner of everything. But having somebody that I trusted on the ground to not only was she finding the deals, but then she was managing them, that's important and that's something that every real estate investor needs to find. I was lucky that my mom was able to do that and serve many different roles, but every single real estate investor, especially somebody who's investing remotely, needs to find deal flow, needs to find somebody to manage the properties, and so that's a partnership that's just as important as a financial partnership, Kind of moving forward, as I did partner on the ownership side.
That was a relationship actually that I had established years previously Through a family connection. I met his name's Aaron. I met Aaron and you know we hit it off and we talked about real estate and said, hey, we'd really like to work together and it took us 2 or 3 years actually to find the right deal. So really it was just kind of finding somebody that I trusted, that had a similar mindset to what I had and, additionally, he had some experience in some larger properties, both on the multifamily side and also, I think, on the office side, that I found really interesting, and so not only did I trust and respect him, but I also there was things that I wanted to learn from him. That, for me, was an interesting opportunity. I knew I wanted to part with him, and it took us a while to find the right deals, but we were able to do our first deal together in 2021.
0:13:37 - Vikas Gupta
And was that deal? The multifamily and what was it? Everdeen, south Dakota.
0:13:42 - Ian Cameron
That's right. Yeah, that was the first one we did together, but we had looked at several other similar deals I mean similar kind of deal, size, multifamily, similar types of markets together previously and for one reason or another those didn't work out. But yeah, that was the first time that we actually were able to close the 36 units in Everdeen, South Dakota.
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0:14:41 - Brandon Hall
Talk to us about the difference between operating single-family homes, multifamily properties and your new industrial asset.
0:14:48 - Ian Cameron
Yeah, that's an interesting one. So industrial is really different. So let me just start with that, because it's just so different. So that's a triple net lease. What we do as partners on that is close to absolutely nothing. We have one of our partners has an administrative assistant for another business that he has. She maybe spent like an hour or two a month just kind of updating quick books and then we cut quarterly distributions.
So triple net lease means that the tenant is paying all the taxes, all the insurance, and really there's nothing that we're responsible for. The tenant is a subsidiary of Marathon Oil, so it's just this large corporation. I guess the downside of that is that we don't have being able to talk to our tenant is we don't have necessarily like a direct relationship. We can kind of send an email that we may or may not get a response back, and so as we're looking at the lease coming up, I think in 2028, that's a huge deal for us hey, are you going to renew or not? And we don't necessarily have a personal relationship there that you can hear back, but there's kind of a check that comes back every month and there's nothing really that you have to do with that property. So that's really it's just a very, very kind of different game on the difference between managing kind of a multifamily property versus the single family.
Multifamily is more involved and I think maybe this is A way that I think about multifamily versus single family.
That maybe is a little bit different than I think most investors I think single family is in certain instances is actually easier to manage. If you can keep your single family in a tight geography, if you can buy the right types of assets, in some ways managing that can be easier than managing multifamily. Why is that? Is because just in single family there's a lot that the tenant is responsible for. The tenant is responsible for cutting their own lawn, the tenant is responsible for mowing and for maintaining everything. Especially for somebody who starts on the single family side and is moving over to multifamily, you kind of forget about all of the things that now fall to you all of the common spaces, all of the snowing and mowing and so forth. So there's just a lot of more expenses on the multifamily side and I think that that was something as I was kind of moving from single to multi. Obviously I knew that looking at the P&L but not something I like internalized until I actually owned an asset, how you're responsible for a lot more.
0:17:11 - Vikas Gupta
So, beyond the cost aspect of all the additional items, how do you're managing the additional operational load?
0:17:18 - Ian Cameron
The multifamily property has a full-time property manager traditional property manager we pay an 8% of rents, which is high, but it's kind of a higher touch property and so that's what we had to pay to get the right person to manage that property. But yeah, short answer, the cost is that there's full-time property managers working all of the residential properties.
0:17:41 - Brandon Hall
What made you get into industrial? How do you even identify that as a potential asset class and how did you underwrite it?
0:17:46 - Ian Cameron
In terms of getting into it. That was all my part. I don't know how he ended up on that one, but I'm really focused on residential. He was the one who was kind of looking at those types of properties and kind of brought me into the deal. He's really the lead on that one. I'm more of a minority partner on that one, but in terms of me evaluating that opportunity, what's really interesting about this opportunity is that it's just a very different risk profile and return profile than kind of most of the residential stuff that I do. So, for example, I don't have exact numbers here, but the cash on cash return on this is in the ballpark of like 50% annually. It's just huge cash that comes off of this property.
Now the risk is that there's lease that comes up in 2028. And the value of that property? This is in the back and oil fields of North Dakota, which I don't know anything about the oil industry. I'm not going to sit here and try to underwrite the viability of those oil fields nearby. And if that tenant chooses not to release, the value of the property is somewhere between zero and maybe a third of what we paid for it. So there's a huge risk on the value of the property on the back end. So it's really you're underwriting the lease and thinking about if you can release it or not.
So really how the risk profile works out here is what I looked at. It is I wasn't able to like determine the likelihood of somebody releasing or not. I just don't have that industry experience. But what I looked at it and said, hey, there's enough cash coming off of this thing that we essentially are back to our cost basis Just in cash returns at the end of that lease. So worst case scenario here is we make back our cost as we make zero money, we don't lose anything. And then if they release, then this is a home run, very different kind of risk return profile than you're looking at on the residential side, which is you're just looking at cap rates. Hey, can I, what improvements can I make to increase rents here?
0:19:48 - Vikas Gupta
And then was there any difference on the financing for industrial versus residential? Like, walk us through that. Yeah, not really.
0:19:54 - Ian Cameron
It was actually surprising. To me anyways, it was really very similar. Yeah, that's surprising to me too.
0:20:01 - Vikas Gupta
I would have expected that industrial underwriting to be very different than residential different lenders, different standards, but that's it's good to know. It's different, or the same rather.
0:20:10 - Ian Cameron
I think the fact that it's the same speaks to really how to think about a commercial. I mean, obviously, single families is different, but in terms of underwriting a multifamily property and underwriting this industrial property, at the end of the day, both of the underwriters are just looking at income and operating income. It's kind of the main thing that they're underwriting. So, yeah, looking, I mean the same kind of risk profile on the back end of hey, in the future, can you release this? It's pretty obvious and a thriving kind of residential economy that you're going to be able to get new renters in once the old ones go out. It's a little bit more, you have to make a little bit more of an assessment on the industrial property. But at the end of the day, they're looking at the leases that you have and they're looking at the operating income and they're underwriting based on that.
0:20:57 - Brandon Hall
You kind of have a pretty good handle on the demand for those asset classes in the markets that you're investing in, I feel like, because it's not. As I'm probably naive, I pick up on things as I talk to my clients. So if you're listening to this and you're in commercial real estate and you're about to shake your head at what I say, I'm sorry I don't know what I'm talking about because I don't own a commercial real estate myself yet. But the one thing that keeps me from buying commercial real estate is not understanding the demand for the asset class and I've tried to talk to brokers and stuff locally and that's been very helpful.
But for multifamily, I know how to rehab a unit and add value to it and I know what that's going to do roughly for rents, because that's relatively easy to ballpark based on just rental comps that are in the area. And so I know when I do this rehab and I get renters in at this higher rate renting this nicer property, that the entire property value has increased. How does that work with industrial Is it kind of the same thing I know with, like, commercial property in triple net, it's really all about that tenant quality in terms of pushing that value up. So how do you increase the tenant quality? How do you make your property very attractive to commercial tenants?
0:22:11 - Ian Cameron
Yeah, no, that's. That's a great question, brandon. I don't think I have a great answer for you. I can tell you how I underwrote. That was kind of coming from your perspective as well, as I don't know how to do that and so I don't know how to drive that value. I do know how to do that on a single family home. I do know how to do that on a multifamily.
So when I was underwriting that asset, I had to look at it and look at the lease and say, and really discount that and say, okay, I know that this lease is good until this date. What do my returns look like if I just hold it as is? And then what's my risk, kind of moving forward? And so I agree with you, brandon, that that's definitely something that I don't necessarily understand how you drive that value. But for me it was just kind of looking at the lease and looking at the return profile and the risk profile and underwriting that myself.
Now a big piece of this is is just getting those tenants placed and can you get a new tenant placed? A big thing that helped me is getting another minority partner on board to this deal who is he's essentially a broker in that area. So he knows the industry, he feels confident that this tenant is going to release and if they don't, that he would be able to find another tenant. So that helps me a little bit, just having another partner in the deal who does know what they're doing in terms of actually leasing these assets. But in terms of like driving that desirability of that property vis-a-vis other properties, yeah, I don't quite fully understand that as well as I do on the multifamily side.
0:23:41 - Brandon Hall
What is one thing that you've learned getting into the industrial space that maybe you didn't realize or were unaware of previously?
0:23:51 - Ian Cameron
Well, yeah, the fact that the value of a property could be zero. I guess I theoretically understood that, but when I was underwriting this property really underwriting it on the basis of a worst case scenario the value of a we purchased it for three and a half million bucks that it could be. The value could be zero if the right tenant doesn't come along. And so just kind of like really wrapping my head around that that property values are, it's not just a building sitting there isn't valuable in and of itself. That, like, somebody has to use that building and be willing to pay for the use of that real estate, that's what drives values.
0:24:32 - Brandon Hall
So, switching back to your journey from single family to the 36 unit property that you have, what have been some of the challenges? Or maybe the unexpected things? Things is a bad word, but you know what I'm trying to say the unexpected stuff that pops up. You had 12 single family assets. You knew how to operate single family pretty well. You knew what you're getting into every time, so you made the jump. I love making a big jump rather than buying like a duplex and dipping my toes in. I love just going for it because you do get that scale. But I'm sure that you made mistakes and learned some things along the way. So what would you say are the like? If you had a chance to tell yourself, maybe while you were doing the due diligence on this 36 unit, some things to watch out for or what you learned? What would those things be?
0:25:18 - Ian Cameron
Deferred maintenance, like just really kind of and I guess I'll just say that and I guess that's not too different from the single family piece of it, but you know it's just a different product that you're maybe a little less familiar with. So spend the money on the inspection, spend the money on somebody that you trust, who's local, who can really kind of walk through with you and point out where you're going to need to spend money. But I think the other piece of it for me, brandon and it wasn't necessarily moving asset classes but it was just getting into a new market was working with a new property manager and so that was probably the big and I've spent a lot of time in the last few months really. You know, when we went into this purchase we found a property manager and, okay, great, you know he's really smart, hardworking guy, younger guy, but really smart and hardworking. Okay, do your thing, property manager, go.
It took me a while to realize that, just like any relationship, you really have to kind of establish expectations, what you need from that property manager, what you're expecting to have happen with this property, and so after maybe 4 or 5 months of really not having that communication, coming back in and establishing kind of a cadence with that property manager, and so now we have kind of a monthly check in where there's you know items that, and before the check in there's a report that's generated. During that check in there's like a specific agenda that the property manager covers Before we kind of get into any kind of free flowing discussion. So instituting that over the last few months has really helped us get a get a gain on that asset and also establish a good working relationship with the property manager.
0:26:56 - Vikas Gupta
I want to go back to the comments you made on deferred maintenance. I mean, is there, is there a specific Item or a specific experience you had with this property with respect to deferred maintenance, a story to tell behind that?
0:27:08 - Ian Cameron
You know we paid $17,000 for a new water heater on New Year's Day. I'm still not sure why we paid $17,000 for a water heater. So this isn't water heaters and furnaces in my book are. You know they're old when you're going into them and they can go tomorrow. They could go 10 years from now. So it's hard to necessarily predict that, and that's okay. And and you know I'm not saying that I should have predicted that the water heater was going to go out immediately.
But on the operational side, was having kind of having had established a relationship, a better relationship with the property manager and clear expectations on how to handle large cap X items, I think we could have avoided paying. You know what we ended up paying for an item like that. So I guess I would just go back to the operational piece of it and your relationship with your property manager to work through things like that. $17,000 for a water heater was more than I was expecting to pay. But you know, on a 36 unit building in you know South Dakota, that really cuts into your annual, you know operating income for the year.
0:28:15 - Vikas Gupta
Like what was that con recession conversation or lack thereof? Like what, how did you get to $17,000 for a water heater? And then, how has whether it's the monthly check in or some other process that you've put into place with respect to catbacks like what have you done to change to mitigate against that?
0:28:32 - Ian Cameron
So I mean on that one, I think there's a few mistakes that were made, but basically, kind of moving beyond that, I think that I think a lot of those mistakes could have been mitigated by just having a more, better lines of communication and the fact that we were being very much Remote landlords, property owners, that didn't have that constant communication.
I think that, you know, we could have Intervened in that situation now that we have these monthly check ins. These monthly check ins aren't necessarily going to prevent something like a water heater going out, but what they do establish is that relationship and an ongoing conversation Of the kind of the top items that are happening in the property and so when something unexpected comes up, like a water heater for example, that there's kind of just better, open lines of communication. So I don't have a good answer to how do you prevent a water heater from going out? I don't think there is an answer to that, but I do think, just kind of coming back to having a good working relationship with the property manager, we didn't have that before that and then we started investing in that afterwards.
0:29:33 - Vikas Gupta
Yeah, no, I wasn't expecting you to. Well, if you could tell us.
0:29:37 - Ian Cameron
0:29:38 - Vikas Gupta
How to prevent the water heater from going out. Yeah, I think that would be fantastic, but no, I think that's really helpful. It's more the ops of right, like what you did. I think that monthly check in process and not only the process itself, but like what it does to your point on building a relationship between the two people that that that's a good tip for the audience.
0:29:57 - Ian Cameron
And you know I mean that's kind of on the positive and fuzzy side, but also just on a property managers have. You know there's always an incentive alignment issue between Property managers and property owners. There always is there, always. You know, if somebody can solve that, let me know. And so just you know a property manager, knowing that you're kind of watching what's going on and and you have kind of your pulse on the property Is is important, especially when they're making decisions on on New Year's Day and that's maybe not their top priority.
0:30:27 - Vikas Gupta
Did you purchase at sight and seen?
0:30:30 - Ian Cameron
Me personally. Yeah, I didn't. I didn't see the property physically. My partner did go for a physical inspection of the property. I don't think I've seen a single for the single family stuff. I hadn't seen any of those as well, so I was comfortable with that.
0:30:42 - Vikas Gupta
Do you go visit the property, especially post water heater, or does your partner?
0:30:48 - Ian Cameron
I did. I actually, yeah, I actually swung through and again, this was part of the relationship building thing. It was an opera. I happened to be kind of driving through that area, so it was an opportunity for me to meet the property manager, see the property, and it was more important to meet the property manager in person than it was to physically see the property.
0:31:06 - Vikas Gupta
Yeah, I think Brandon, your partner. When we had him on the show he said that he quarterly goes and drives his properties and checks to make sure the lawns are taken care of and all the vendors are doing their work. Some most curious to hear about other folks do it.
0:31:21 - Brandon Hall
Yeah, I think he learned to do that because people weren't quite necessarily meeting his expectations, to put it politely. Now he goes down there quarterly, pops in randomly. Property managers know it's coming, but they don't know when it's coming. So he is a large portion of one property managers like revenue essentially, so he gets a little bit more attention, I think. But, ian, I kind of want to talk about partnering. I don't think it's actually something we've really talked about before. So how do you pick a partner? How do you know that your partner is a good partner?
0:31:53 - Ian Cameron
Actually, here's the full story. So I got connected to Aaron via my younger sister. My sister is actually my sister worked for a Zibo as well for about a year, and so she's a decade younger than I am and at the time she was a college student working at a YMCA camp up in northern Minnesota. Aaron's family goes for family camp every year I think his wife's on the board and so she was assigned to his family every year to make sure to take care of his family, so she got to know their family. He mentioned he was in real estate. My sister, who is maybe a teenager at the time, says oh, my brother does real estate, you should talk to my brother. But that's actually how we made the connection was through my sister being a family camp counselor. So anyways, that's all to say that that kind of like mutual trust, mutual background is really, really important, and so I think that's why you see a lot of friends going into or you know people who have previous relationships or kind of family connections, and the reason for that isn't just because they don't know anybody else, it's because there's really important trust that's established through those types of connections. And so we started there and and we talked about real estate and we talked about, I realized that what he wanted to do in real estate, that he was very much in a growth mode, so was I, so we were aligned there and then he also had done, you know, deals in real estate that I thought I could learn from. So there was a piece of it that I wanted to learn from him. I trusted him and we had similar goals. Those were kind of really what drove that decision to do something together and it was just a question of finding the right deal.
I think that you know you hear a lot of horror.
I've, luckily, haven't experienced this but you hear a lot of horror stories of and I think right now, especially in this market, the only deal you're going to find In this market is pretty much when there's partnership issues, and I think a lot of those happen when there's an asset that needs to be purchased and people come together to try to purchase that asset.
If you don't have that preexisting relationship, I think there's a lot higher risk of having kind of partner issues and where that's translated in this asset, for example, this asset has not performed to what we had hoped it to in the first 12 years of operation, and that's okay. Like him and I have been able to work through that the whole time I'm confident we'll be able to turn that asset around. But even if we weren't and this, you know, this thing turns out to be a dud I would still do another deal with this partner, and in fact I already have. So I think that that's really important and I think the fact that he and I are going to continue to work together means that we'll be able to make this particular asset a win for us.
0:34:28 - Vikas Gupta
Did you pay your sister a matchmaking fee?
0:34:33 - Ian Cameron
No, but I should. Yeah, I forgot about that, yeah.
0:34:38 - Vikas Gupta
Cool. Well, ian, this has been fantastic. Thank you so much. Before we let you go, we have three closing questions that we like to ask all of our guests. So question number one is what is your favorite book, and it does not have to be real estate related.
0:34:52 - Ian Cameron
So it's hard to say favorite, but the one that I recommend the most frequently to folks. It's called Barbarian days by William Finnegan. So it's a surfing memoir. I'm not a surfer, but it's just a really well written book. The guy is a staff writer for the New Yorker, so he's a professional writer, but he happens to be a great amateur surfer and he just writes a story about his life, as you know, how he's been surfing his whole life, and so you get these cool portraits of what Ocean Beach was like in San Francisco in the 90s and then what it's you know. Then he's in New York at the New Yorker and he's, you know, taking the train out to Long Island when the right swell comes in. So anyways, I think it's just cool. Somebody who has their own career but you know, wants to tell you about this, this surfing thing that they do as well. So I think that's important to have kind of passions outside of your, your career.
0:35:41 - Vikas Gupta
Nice, I like it A different one. It's good to hear Question number two. Normally we touch on this in the conversation, but I'm not sure we actually got into it much on this and in this conversation, what is more important to you in your real estate investing cash flow or appreciation?
0:35:56 - Ian Cameron
All right. So I'll say the thing that's most important is total return, and so if I can get a higher total return from appreciation or if I can get that from cash flow, that's either a fine for me. Now, total return being same, I'll say that cash flow is better than appreciation. Why it's easier. Or I should say, appreciation is never a sure thing. Number one and number two it always comes later. It's hard to actually I'm tapping into appreciation right now on a lot of the single-family stuff and it takes a while to get the appraisals and to get the bank and everything and to actually be able to tap into that before a sale and kind of refinance, especially in a market right now where banks are less willing to kind of do lending deals that they previously would have had no problem doing. Cash flow gives you more optionality, all else being equal. But I'll still take the total return and if that comes from appreciation, that's okay too.
0:36:57 - Vikas Gupta
Has your perspective on the relative weight between cash flow and appreciation changed since you went from having a full-time job and investing in real estate on the side to being full-time in real estate? Oh, that's a good question.
0:37:10 - Ian Cameron
I don't think it has. I think well, I think that it really just depends on the strategy that you're employing, and so I think it's so if I have a definite kind of end date, then I'm really looking at, then I can kind of count on that appreciation a bit more, Whereas previously I didn't have kind of an exit strategy. I've never I've actually never sold a property up to this point, and in that case, so I think that's just kind of having an exit strategy versus not having an exit strategy, or maybe the strategy is buy and hold forever, Kind of changes that a little bit.
0:37:42 - Vikas Gupta
Cool. Well, our final question that we'll let you go is is there any final piece of advice that you have for our audience that we didn't get a chance to touch on in the conversation so far?
0:37:52 - Ian Cameron
My piece of advice is just is pull the trigger and pick something that's small enough that if it goes wrong you'll be okay. But pull the trigger and you know I'll say that that applies to different. Whether it's the first single family home that you're buying, it's okay. If you you know, if you don't crush it on number one, I think that there's a premium for learning and a price you might pay for learning to get into the first one, which then sets you up to actually make money on number two, three, four and beyond. I think that also applies as you're moving into different asset classes.
So, as I mentioned before, you know everything hasn't been according to plan on as I've transitioned from a single family portfolio to a multi-family portfolio. I would still, you know if, given what I knew at the time, I would still do it again and learn along the way, and I think we'll be able to turn figure that one out. But even if that isn't a huge win, I know what we've learned in the process. It positions us much better to win on the next one. So I'd say, just pull the trigger, get in, but get into something that's small enough where you're not going to get wiped out if things don't go according to plan and live to apply those lessons to the next lesson.
0:39:08 - Vikas Gupta
Fantastic. Thank you very much, ian, so it was great having you on the show.
0:39:12 - Ian Cameron
Awesome. Thank you, Vikas, Thanks Brandon.
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