Listen to Maureen Miles, one of the successful women leaders, share how she broke into the multifamily industry! She started with small multifamily while she was still working as a networking engineer. She then left to form her own company and has since closed on over 20 syndication deals for over 3,300 units! This girl is a go-getter and an inspiration to so many in the industry!
Table of Contents:
- Where To Listen To The Podcast
- Women Leaders in the Space
- The Secret Weapon of Women Leaders
- Life-Changing Dilemmas
- A Leader That Has No Fear Genes
- Stay Positive
- How to Reach Maureen Miles
- Join This Multifamily Conference In 2021
Women Leaders in the Space
Darin: Maureen Miles lives in the Nashville Tennessee area. She has two children in their 20s that both work with her in the business. Maureen has always been a go-getter and a hard worker. She's been around the contracting business since she was a child.
She started investing investing in small multifamily while she was still a networking engineer. And then left to form her own company and go after larger multifamily. Maureen and her team have closed on over 20 syndication deals with over 3,300 units. This girl has no fear and has a long runway in front of her.
Maureen and I have not met before, but I was given a referral to contact her from my business partner on my first syndication deal, Raj Gupta out of Chicago. He was the first guest on the podcast. Super guy, and he said, "You know who you should ask on the show? Maureen Miles. She'd be great."
So, I've seen Maureen from being on other podcasts and social media, and it's great to have her on. I'm looking forward to this. So, first question, how many properties, how many units have you been invested in?
Maureen: We just closed on our 20th property recently since I started buying the larger 100 plus unit properties. I should say 100 plus because we have a few that are 88 and some ones under that, but basically larger properties. Just closed out my 20th one back at the end of last year. So, that was good. And it's over 3,400 units right now.
A Huge Inspiration
Darin: That's huge for anybody in the multifamily space. And you're one of the kingpin women that I know in the space that is just going big time. So, how does that change anything, if anything, being a woman in the industry?
Maureen: Some people say it’s a disadvantage? And I say, I think it's an advantage. As we stick out, people remember us, I think. I don't know, I never really thought of it as being different. So I just went in and I was a hard worker, I went in and did what I needed to do. And, it's all about performing, and if the brokers think you can close and relate to owners if you're going after an off-market deal. I think as long as you're professional and represent yourself well it can be an advantage to doing that.
No offense to any guys, but I think a little less ego is in place. So, sometimes I've put deals together that they probably wouldn't have gotten together if there wasn't, to throw a little bit of female vibes. They're just like, "Come on guys, what do we all want to do? Let's all get along." Where we can do that, where I think sometimes guys ego kicks in a little bit.
Darin: One of the things though that I think that it gives you the opportunity for, and you probably don't even focus on it much is, you could be a huge inspiration to other women. Because I think that there are other women that are intimidated to try to get into the space, and having somebody like yourself, that's just blowing it out, and just looking at it.
It Can Be Done
Darin: Like, look, "I got a job to do, and I'm going to get it done." That provides not only inspiration to any investor, but also to women to get in the space.
Maureen: Thank you, Darin. And I have actually been thinking a lot about that. I know we don't know each other that well yet, but I've been thinking more and more about that. I need to spend some of my time on doing that. Because it really is life-changing when you can just get, whether it's a two-family or a three-family, or you can get one of those.
I started with no money. And I had zero money in this. I had an investor that kind of watched me renovate some other stuff. And I literally had no money when I started in the first, the smaller stuff. Then I didn't have money when I started in the larger stuff either, just living paycheck to paycheck. I was an IT corporate employee, and I just made the leap and figured it out.
And so, you don't need money to start. My friends and family didn't have money either, so it's not like I didn't have money, but my dad paid for it, that was not a thing. So, just starting out, and I mean for, I think, for a woman and for a female to make a difference in that, one of the reasons that kept me going is I wanted to show my kids that it could be done. I wanted them to know there's a better way than just being a slave to the grind and showing up nine to five, and going home and being in that zombie lifestyle. And I think so many people are in these days.
From a Real Estate Agent to Multifamily Owner
Maureen: But, if you work hard and you keep at it and you don't give up, you can really make yourself a good future. Again, even if you just buy a two-family, when you're 25 years old before you buy your first house, like what a life. Gee, how much different would your life be 20 years from then if you always had a place to go to. I joked around, I said, "Well, we'll never be homeless in this space. We have apartments to go live in. So, yes, I have all kinds of stories. Do you want some stories? We can talk about some stories.
Thank you for pointing that out. And I would like to put more energy into inspiring women and just people getting into families, it's just so important. This is a great business.
Darin: So, you mentioned getting more women involved, and maybe having more of a focus on that. It's not always the case, but a lot of women may get into the space by becoming a realtor after the kids grow up. And, some people get in as a realtor, they become full-time real estate professional. They don't have any clue that they could get massive bonus depreciation by being a full-time real estate professional, even if their spouse is a high-income earner on the W2 side. So just that alone could be a massive benefit to couples to take advantage of.
Maureen: And I think you really don't need to be a real estate agent. I was way back when my son was two or three, before he went to school, I was a real estate agent. And I also did taxes for a living. I used to do title work.
Developing Investor Relationship
Maureen: So, anything I wanted to learn about when I was younger, I would go get a job doing that. That's, I just taught myself all this stuff. And I really feel like my life is cumulative to get to this point. All the things I did in the past, I'm like, "Oh, I'm glad I know that." So, if you're just a multifamily like investor, owner, operator, whatever you want to call yourself, you can still be a real estate professional. You don't need to have that real estate agent license if you're earning money, especially if that's your only job. If you're earning money in multifamily, that should make you a real estate professional, even without that real estate license, realtor license, just showing the income.
Darin: Absolutely. And, you mentioned that you had an investor that helped you get started. How did that come about? And how did you develop the relationship with that investor?
Maureen: So, way back, was it 2006, is when I bought my first multifamily. We were replacing windows and somebody just saw somebody that lived around us we were friendly with. He saw what we were doing. And the reason why my husband and I were able to buy that is, kind of, the days of you just sign on the line. It's like, you didn't really meet a lot though. A lot of people got burned, but I happened to know that I wanted to make sure that the property we bought was actually cash-flowed.
Totally different way back when, but it needed to cash-flow. So, even though we got caught in that recession, all of our properties survived because the cash flowed when we bought them. But he just saw us putting windows in one day and he just worked.
Leaders Help Educate People
Maureen: Like, I have a lot of investors now, they just work, they're in IT or they're doctors. They work all the time, and so they kind of live vicariously through real estate investing. He's like, "I'd love to do this, but I don't have time." And I'm like, "Well, as the market crashed, there are some really good deals out there."
We were buying two and three families for 40, 50 grand. They were disgusting and needed to be renovated, but we were able to do that then. And so, I said, "Why don't we get together?" And that's actually what started me on my journey of the larger syndicated deals that I do. I wanted to seek out the rules for taking investor money. And I didn't understand what it took. So, I started looking at private lending seminars and things like that so I understood, because I didn't want to break a rule that I didn't even know was a rule, right?
So, I didn't know what I didn't know. I sought that out and I just happened to stumble upon somebody that taught about buying 100 plus complexes in his seminar for raising money. And that was really my first seat. Like, it never even occurred to me that this was an option ever that you could actually own these complexes and buy them.
Darin: I agree. That's one of the reasons why I started the podcast. I want to get the word out and let people know. I was one of those people that you talked about. So I just got into the real estate world three years ago, and before I was a high-income earner, and I wish somebody had presented me with these types of opportunities, but I had no idea they existed.
The Secret Weapon of Women Leaders
Darin: I mean, it's crazy to me. So, what were you doing before you ended up getting into space? Were you in the real estate world before you started buying assets?
Maureen: Well, I grew up helping contractors and a contracting team with renovation. So, from a young age, I was literally like a teenager. I learned how to install windows, and I'd clean up job sites, and I knew how to paint and put roofs up.
Darin: You don't look like somebody that would be doing all of that type of stuff.
Maureen: It's like a secret weapon. Now, when the contractor will tell them what a job entails on this commercial side, I'm like, "Oh, really? Okay." And then what about that? What I just see if they know what they're doing or not. So, yes, I have more stories about that as well. But, now I can pull the house from the ground up myself.
I went to school for electrical. My kids were raised replacing windows and putting Pergo flooring in and stuff like that. So, I actually love that part of the business. It's not the money. Well, I shouldn't say that, it is what makes a good deal even better when you add the right renovations to it, and spend the money correctly. So, I do think it's key to what we do, and how well we've done. But I love seeing the change of the properties and the apartments and things, and what we can do to these projects like that, fills my soul. Like I love that part of it.
Darin: That's cool. I can see that you got a lot of passion, you're smiling when you're talking about that.
How Maureen Got Started With Real Estate
Darin: You liked both what you're doing to the property. So from the tenant's perspective, you like the investor returns and you like when somebody overlooks that you don't know what you're doing, and you can prove them wrong.
Maureen: Well, I just thought if it's a secret weapon, I just kind of keep that in my pocket. When I first started the larger stuff, I worked with a gentleman who's a little bit older than me. The contractors always look at him and explain what they're doing. And then you look at me, he goes, "Are they right?" Is that what they should be doing? And I'm like, "Get them out of here now. He doesn't know what he's doing."
But anyway, it's a lot of fun. And I don't flaunt it, I'd rather let people show me how they would, but we save a lot of money by, I think, me having that skill. It's definitely been a benefit to the business.
Darin: Absolutely. So, you started the company back in 2008. Talk about why you started the company, and what it's grown into. Before we got on, you also mentioned that you guys are taking your third party. You're taking your property management company and starting to offer third-party property management. So, let's talk about all that.
Maureen: Yes. So, 2006 is when I bought my first multifamily. Just my family and I did it. I was in IT full-time. I'm a computer engineer or network engineer. I was trained for my corporate role. And on the side, my husband didn't have the greatest retirement. So, on the side, we just started buying some multifamilies to get cashflow.
Think of Cash Flows
Maureen: We were just thinking that we may never be able to quit our jobs, but maybe our kids would have a chance. If we can understand it and teach it to them, that they may have a chance of getting out of the, well, kind of the rat race thing.
And really if you find a decent property, and you can keep it full, not only will it produce cash flow for you, but it'll pay for itself.
So, really our goal at that time was just in one year, 30 years, we have tenants basically pay off these properties for us. When we want to retire, we have something to sell. That's originally how I started out into this business with that goal.
And so, fast forward I ended up leaving my job in 2013. 2014 is when I started 4M Capital, which is the company that we operate for the larger properties. And I bought my first syndication deal in 2014. Before that, I was doing smaller properties. So, I was doing two to four units. While I was working full-time, I think the most I had was about 30 units at the time, but you get burnt out after a while. And we were buying them, renovating them ourselves.
We had some contractors come in to help with some stuff, but it was basically me and my family that were renovating all the units, and then we'd operate it. We'd run them, we'd sell some depending on the deal, put some singles in there as well. But just anything, just making money, just hustling, as I say, just keep trying to build it. But I really hit a max, a ceiling as far as the smaller properties on what I could maintain. And this was in Connecticut.
Maureen: There weren't a lot of great property managers.
Darin: You were living in Connecticut?
Maureen: Yes. I'm from Connecticut. Eastern Connecticut, right near Uconn.
Darin: Okay. I'm originally from Connecticut, also from Brookfield, Connecticut near Danbury.
Maureen: Oh, Brookfield. I grew up in Berlin, Kensington, Connecticut.
Darin: Okay. I actually saw something about Connecticut, and I'm like, "Why are you on these associations from Connecticut when you're down in Georgia?" Now in Nashville, but that explains it. You were talking about getting going on the syndication side and started growing into larger deals. And then you were going to get into talking about property management?
Maureen: Yes. So, I hit that ceiling with the 30 units. I just figured I didn't feel responsible. And I didn't feel it was responsible for me to take investors' money, while I was just doing it part-time. So, after I left my job, I decided to jump into syndication or raise a couple of million dollars for a deal and put it into place. So, I left my job in 2013. 2014, I bought my first 100 plus units. And after firing four management companies during that time. It's bad because we have accounts and vendor accounts and it's a beast.
So, after we fired the fourth one I almost feel like I wish I didn't know so much because I see all these things and I'd be going through their logs, and I'd be pulling up like, "Why?" I don't know, I just had a ton of questions all the time. I didn't understand how they, or why they operated things the way they did. And so, I decided to start my own after going through four, because I know I never got into this.
Teaming up With Other Women Leaders
Maureen: The day-to-day management is not the lucrative part of the business. It's not the fun part of the business, but it's a necessary part of the business. Like, that running right, is going to make or break your property and your portfolio. And I have a great team, by then I had some really awesome people that we were all in this together, kind of thing as far as my manager.
Actually my very first manager Shaquita, she's still with me now, which is awesome. But you really need people that you can depend on and the way they handle things right. They treat the tenants right, and those people are just gold to this whole process.
So, anyway, we started a new property management company. And during COVID I ended up, not closing that down because we were operating about 2,000 units right now. It wasn't enough where we could get that corporate feel that we needed. Like, when you have somebody in charge of marketing, having somebody in charge of purchasing. At that size, you don't really have that capability.
So, me and then I have a business partner now, William, we were both going crazy. Our team was getting just overburdened with everything. So, during COVID we took a serious look at that, how we can be better. We ended up doing a joint venture with a woman. What we're doing is, I still have control over my property. But she had a great corporate team that she brought on. And what we were able to do now is to offer that corporate structure to smaller operators like myself, where we're managing 2,000 units.
Strive to Be Better
Maureen: Somebody may have 500 units, they can come in and then have those corporate people that can be in charge, watch the purchasing, watch marketing, and things like that. So, that was probably a really long explanation.
Darin: No, it's actually very interesting to me, because I've talked to a lot of syndicators, and the benchmark that I've heard from people is 1,000 units. When you get over that 1,000 units and you start looking at the property management fees across all the properties and could we, one, save money on the property management fees and also, two, just manage the properties better if we were managing it in-house. But, you were double that size. You were 2,000 units, and you still felt like it was too small that you were missing some components to a larger company.
Maureen: Yes. I'm always looking at, how can we run this better? How can we be more efficient? And how can we get things tighter constantly? There are always leaks, there's so much stuff going on. There are always little bleeders here and there that you're always trying to prioritize.
With that corporate structure, it's taken a lot of the burden off my main team. So we can drill back down into those cost-saving things. Like, we buy appliances in 25,000 dollar chunks, and we get them so cheap. It's certain things like that, finding those programs. So, we'll buy a bulk of appliances, and then we'll distribute it out to the properties as needed. And, it's getting those types of programs in place that really save you a ton of money.
Darin: Absolutely, that makes sense.
Different Markets for Different Investors
Darin: You've done a lot of deals, some deals are singles, doubles, some are home runs, some you've got the wind at your back with cap rate compression, and interest rates falling. What's a single or double in your world, and what's a home run return-wise for the investors?
Maureen: Yes. We had a couple of good deals. I do a bunch of different structures too. So, some people will say, how do you structure your syndications? And I'll be like, "Oh, it's 25/75 or 60/40, or whatever you do." I have different investors that I put into different, I would call them different buckets, sort of, and the type of investor.
So, I have some that hate cash flow, they don't want to see ordinary income on anything. They want everything saved for capital gains in the end. I have other investors that are maybe retired, they don't really want to touch their basis, their principal amount, they want to just earn money off that. And they like these nice steady checks.
So, again, different markets and different types of projects for different investors. But I'll say we just had one really good property. We bought it in 2017 for 16.25 million as a 250 unit property. And we just refi’d it and the valuation was 30 million. We just returned half of the investors' capital, but they're still going to get cashflow on that. And, happy investors, we're going to put another three and a half million back into the property. With the rates there, one of the great markets in Atlanta, and it's just taken off that area. That was good from 2017 till now it was was literally a double.
Women Leaders Bagging 280-Unit at 40% Occupancy
Maureen: We had another property in another suburb of Atlanta that we bought. This one was my biggest project, it's a 280-unit we bought at 40% occupied. And man, it was a beast. I tell people I'm really 20 but that one deal aged me 20 years.
Darin: You don't look it.
Maureen: Thank you.
Darin: So, 280 units, 40% occupied. It definitely wasn't an agency loan. So, what type of loan did you put on it? And what was the term on that?
Maureen: Yes. That was a bridge loan that we had for two years. We had a 12-month extension on that two years if we needed it. And, it was non-recourse, but it was written like a recourse. You have completion guarantees and everything else. That's a good thing for listeners, even though you hear this non-recourse magical term. Like if you dig down how things really are, they’ll get you.
Darin: Right. They just look for one mistake to come to get you.
Maureen: But that one, we bought that for 9.4 million, and we ended up selling that for 21 million. We put five and a half into it. So, that was a good deal as well. That one we did well. My first two deals were the best for the investors; we've doubled the money in 24 months. If you gave me 100,000 the first deal, I would have given you back your 100,000 plus 122,000. The second deal, I think was 27 months but we more than doubled the investor money on that as well. What I found out about that, it seems so great, like the investors should be so happy and like, it actually ruins investors.
Maureen: You have to keep things within a parameter or else they keep thinking like, "Is this going to be another double?" And, we're like, "Well, no, but it's a 40% IRR." And like, "Well, we want to double, and I'm like, it was fascinating to me that you, like, literally lost investors, because you did too well. So, it's weird. It's just an odd understanding.
Darin: They have that expectation that we're going to do it on every deal. Well, it's still a good problem to have.
Maureen: For me, it was really life-changing. My husband was able to retire after we bought the second deal with the amount of cash flow. So, we quickly had enough to cover all of our expenses. I bought my first one. It was June of 2014, the second one was in September of 2014. And we were able to cover all of our expenses on the cash flow. That's after all the investors get paid after all that. So, this is really an awesome business, if you could figure it out.
Darin: It's crazy after two deals. So, you talked about different investors, different deals. I have syndicators where because different investors have different needs and wants. They'll come out with different classes of investors in the same deal. So, maybe one is geared, it's got higher cash on cash component, but they get no upside on the back end. Then a different class that they get lower cash on cash, but then they share in the upside, in the end. Is yours the same way, or you're saying that certain deals are more geared towards this section of your investor database, and you're going to go to them for that? And other deals you're going to go to other people?
Women Leaders Choose Their Deals Wisely
Maureen: I kind of look at the deal and see where it's going to go, and what I can do with it and where it would fit. Right now, Atlanta is a market that we typically get in and prices just go. We're able to just increase NOI so quickly. They are quicker deals, three to five years.
Where I may go into a slower market. We have some properties in Indiana that, that's a little bit of a slower market, but man, they just produce cash-flow. Those deals are slow and steady. I, kind of, look at it, it's like driving a tank or a Ferrari. So, a Ferrari is quick and like, boom, and then the other one's just a tank. That is going to produce cash flows. So, I've put my retired investors and the people that just want that steady check all the time into those markets.
And then the ones that we're doing bridge loans. Those are usually my kind of younger doctors and IT guys. They want to get in, get that money out in 24 months, and sometimes, depending on the deal what they’ll earn, but, typically it's mid-teens at the very minimum.
They just want to get in, they kind of get their money back in, say, 18 to 36 months, and then they're looking for the next one. So, it just seems to be like a rhythm everybody got in. Usually we ask investors, kind of, what are you looking for? And by then I could put them into whatever range like we typically deal with. And that's really key.
It's All About the Investors
Maureen: I think some of the people when they're starting this, the syndicators say, "Okay, I need this, and I need this and I need this."
And it takes a little while for them to realize it's not about you at all, it's about the investor. You have to do what they want, and you put them in the correct order, you protect them. It's all about the investor.
And when I look at a deal, it's all targeted towards them too. I know if I perform well, I'll make money, but most deals, I couldn't tell you exactly what amount I'd make. It's more about, okay, the investors are covered, they're safe, forward, backward. And I look at any risks I think we might run into. Can we accept those? How can we reduce those risks? Maybe we need a little bit more capital raised, or for say capital projects things like that. Just make sure the investment is safe for the investor.
Then if we go in and really crush it, and like you say, the wind at your back with cap rates still shrinking and low rates on an exit as far as lender rates and the price of capital that stays low. Then sometimes we can really crush these deals and that's where we make money. So, that's our mindset.
Darin: That's fantastic. So, let's go back a little bit. How'd you grow up? Like, how are you such a go-getter? Did you grow up with your brothers, sisters, parents, entrepreneurs? How did you grow up?
Maureen: That's funny. And nobody's ever asked me that, Darin. That's interesting. I'm a middle child.
Darin: Well, hopefully, you didn't forget how you grew up, right? You still have it in your brain somewhere.
Women Leaders' Mindset Start Young
Maureen: I used to be this little person, you're right, I remember that. So, I have a brother. I'm really close to my younger brother and I have an older sister as well. But no, not really an entrepreneurial family. I do credit my mom. My mom used to tell us all the time, she's like, "Boy, if you can ever find out how to get out of the nine to five rat race."
She was a single mom raising us, but I always hustled. I like to be independent. When I was 10 years old, I had a paper route with like half our little town. I figured out, every time I dropped the paper, I made seven cents, I remember. So, I wanted to, like, how many papers I have to drop per day to do that.
But, no, I was always trying to make money from when I was a young kid, and I always figured it out. But it's not like because I liked the stuff, I guess I like to have the choices. I like to be able to go out with my friends and get pizza if I wanted to, or whatever the young kids did. So I never really wanted to depend on it. And, our mom never really provided extra money. We grew up pretty broke.
Darin: Where'd you grow up?
Maureen: Well, I did grow up in Connecticut. Just south of Hartford, Berlin. But, we used to get our snow pants and snow boots. I remember when I was in elementary school, that's one of the things that stick in your head, these weird things that you got to get over. But we used to go to the Salvation Army to get our snowshoes, and snow boots and stuff like that.
Growing Up Before Being a Leader
Maureen: And I remember being hard if I go to school, I'm like, "What if somebody sees those are the ones I donated? Like, those are my snow boots." I was like, that's what used to freak me out when I was a kid. It was funny, but I don't know. I was a tomboy growing up, I wasn't much of a girly girl.
Darin: Did you ever think when you were younger growing up that way, like, "I'm going to be different, I'm going to be successful."? What did that look like if you did think that?
Maureen: Yes. I just remember asking my mom when I was a kid. Because somebody was saying, "Oh, so-and-so was rich." And I'm like, "What does that mean?" I just didn't know. And I didn't understand what it meant. I knew sometimes they would be able to go do certain things we never did. Some of our friends had a lake house, or they would do different things. I was curious why we were never able to do that. But, I knew stuff like that was possible.
And I remember one of the neighbors. One of the houses in our neighborhood was a rental house. And they said, "Yes, it's not his house, he rents it." And I do remember being a little fascinated with that. So, I'm thinking, "Wow, that's interesting." But I was little. So, I guess there were little things that caught my attention growing up. I was just willful, man. And I was not an easy kid to raise, I feel bad about my mom.
Darin: You sounded like you're easy or independent, now you gave your mom some grief?
Maureen: I gave my mom grief because I wanted to do what I wanted to do.
Giving Credit to Women Leaders
Darin: That hasn't stopped, right? But now you put yourself in a position where you can do that. Now you're still responsible and accountable to all the investors, but you have the flexibility of your own time. You choose what deals you want to go after and how fast you want to grow. And, that means a lot. I know there's a lot of people out there that don't have that opportunity, or they do have that opportunity, but they are not willing to take the risk to try to get there.
Maureen: It's funny at my corporate job, there was one guy that everybody went to if there was a problem you couldn't solve. If there was something that needed to be done, you'd go to this one guy. The most responsible guy, and just the awesome, awesome wicked smart guy.
I remember the day I was leaving, and I used to sit on the other side of the cubicle with him and he said to me, he's like, "Maureen, I give you a lot of credit for." Because they knew I had been in multifamily on the side. He said, "I’m going to give you a lot of credit." And he's like, "I just never had the balls to do it." As he goes, "I've always wanted to do that."
He was good with construction and he was great with numbers and a great project manager. And he would be good at it, but he said, "My wife would never allow me to take that chance." And he's like, "I just don't have the courage to do it." And he's like, "I give you a lot of credit."
A Leader That Has No Fear Genes
Maureen: I just remember that, because I always looked up to him. He was a great guy. I was like, "Wow." And meeting people too that I was like, "Oh, I wish I did it. And I knew I'd be good at it." People will say, "Oh, you bought X number of units, and I only have four units." But, man, those four units, that's opening some doors that some people are too afraid to ever open. So, I think sometimes people undervalue just getting that start is just so key.
Darin: I agree. Talking about having the balls to do it, whenever you buy these deals, you think that it's going to be a success, but there's always some fear or like, "Am I at the top of the market? And am I looking at this right? Is it something I'm not seeing?" So, how do you push past that and still take action even though there is some fear? Or maybe you're not afraid of anything.
Maureen: One of my first partners I had, he's like, "Maureen, you don't have a fear gene. I don't know what's wrong with you." And I'm just like, I take it, and I always ask myself, like, "What's the worst thing that can happen? How can we protect ourselves against that? What can I do to balance that risk out? And am I willing to take that risk?"
So, let’s say we have 250 units. Chances are that it isn't going to empty overnight. Whereas if you're in, maybe, retail or office and you have one tenant that can empty overnight, something can happen.
Monitor the Market & Be Prepared
Maureen: So, with multifamily you have all these little chunks, 250 variables of people's lives moving in and out families living there. To me, that's a plus, that's a safety thing. So, it's not going to clear out overnight, the property. I don't have control necessarily of what the market does, the political environment. But, if the market is accelerating or decelerating, so for that, we watch the jobs, because, in multifamily, we live and die by jobs. The markets that do well have people coming in and the markets that don't do so well, have people leaving, it's just very simple.
So, we look at that, and if you're paying attention to it, you can watch that. Markets change all the time, but we're very tuned in to all of those analytical things. We have Costar and some kind of analytics thing and we have everything. So, we're watching the movement of people. To me that that hedges the risk.
And also, I shouldn't say hedge the risk, but it minimizes the risk. And I think it's the more educated you are and your network. Things can happen to the property. There may be an underground issue that you couldn't have seen and didn't know, but we always raise a little bit more capital than what we think we're going to need. Like every property will have at least another $250,000 raised just for those kinds of mistakes.
So, to me, that keeps investors safe, that keeps me safe. I'm trying to think about what else we do. We do watch things in multifamily happen slowly too. Like stocks, I don't play around in stock so much anymore.
Having the Right Team Is Key
Maureen: I remember trying to log in, as one of my stocks was falling off a cliff. I logged into my phone, fast enough to sell it. Well, they tell me it doesn't usually run like that like it's slower.
If you're paying attention to the market, you can see what's coming. How many days, you talk to the brokers too. Right now, it's still a crazy seller's market. There's just not a lot of product out there, and so we're still safe for right now. Who knows what's coming, but right now we're still in a pretty good spot. As long as our properties are performing well, we're safe.
So, anyway, those are all the things we constantly look at. I don't think it's risky if you have the right team paying attention to the right things, it's not as risky. Or know who to reach out if you have a question.
Darin: Absolutely. So, a few things on that note. One, if you think back to March. I took a lot of capital out of the stock market and invested in a lot of deals, both passively and in three syndication deals that I'm part of the GP. But, when the market tanked with COVID for that two weeks where everybody was completely panicking, you don't have ticker symbols for these multifamily investments. You don't have that panic like, "Oh, it just dropped in value by 40% or 50% overnight." It's just, "Hey, as long as you can continue the cash flow, and you can continue to make the mortgage payments, eventually, these deals will come out the other side. You have to plan to make sure that you have the capital to get you through that other side.
Darin: I talked to one guy who is a passive investor in over 40 syndication deals. And I asked him, "Have you ever had one deal go bad?" And he told me, "No, not one deal out of the 40 plus deals." I was shocked. He said, "Look, I've had two or three instances where the sponsor for one reason or another. Maybe they got into the business and then they didn't do so well. They, kind of, got sidetracked and we had to change out the manager, and maybe the plan was to turn it around in four or five years.
And we had to wait until you're six or seven, but they didn't lose on one deal. I mean, that says a lot right there. The other piece that you've done some bridge loans and some shorter duration stuff too. And I think that those lenders look at things a little differently. Sometimes they may even want you to lose the property.
On the bridge side, they lend to own. But the agencies are the largest lenders in the country. They have the most data than anybody, and I saw a chart where during normal times, like up until the great recession, their delinquency, 60 or 90-day delinquency was like 25 or 35 basis points. I mean, less than 1%.
Then even during the great recession, it grew to be like 80 or 90 basis points. Still less than 1% delinquency, not defaults. So, if you underwrite a deal and you're investing in a deal and they're getting an agency loan, they have so much data. They're not going to provide that much loan proceeds if they don't feel secure that the property can produce the cash flow. So, that's just another comfort factor in my mind.
The Difference Between Small & Large Stuff
Maureen: One of the things too, I want to add for people out there, the difference between the smaller stuff and the larger stuff on the lender side, just as you stated that. One of the biggest differences for me was when you're trying to buy the two families, the four families and you're ramping up yourself. You hit this ceiling where lenders don't want to talk to you after you own so much.
And they're looking at your debt to income ratio and all that kind of stuff, and how many credit cards and what's your car loan. But in this world, I was buying a 15 and a half million dollar property in Atlanta, and at the same time, I was trying to refi a four-family I had in Connecticut.
And I ended up selling the four family because it was just too difficult. Like, they wanted so much stuff, they didn't understand my income. And at 15.5 million, it went through no problems at all. So, they don't look at those details, they do look at the project, and all they care about is the sponsorship. Its liquidity, net worth, and then your operational experience. Those are the three things they want the legs of the table, basically for you to get alone and be a good operator.
Darin: From the sponsorship. And then they look at the cash flow of the existing operations, right?
Maureen: Yes. And the property itself has to meet a DSCR, which is the Debt Service Coverage Ratio. But the more cushion you have in that, the better terms you get on the loan. And, then the story too. So, we have good performance.
Leaders Seize Opportunities
Maureen: I've bought deals at zero cap rate because the story there was just great. And I could see the opportunity. Now that we have a track record, the lenders see that too, so they trust. I have some lenders that we've dealt with before. They know that if we're bringing the deal, there's a story they'll have waivers for us and stuff because they know we understand the game. And I tell people a good deal for me may not be a good deal for you. But I know what my team is good at improving and operating what type of projects.
Darin: You brought up a really good point. You said you bought a zero cap rate. So, I've had people reach out to me and say, "Hey Darin, what cap rates are you buying at right now?" Or, "What's the cap rate in your market?" I said, "Look, I just don't look at it that way." And they're like, "Well, what do you mean you don't look at it that way?" I'm like, "Look, I could buy and I could look at two different deals." One deal is a six cap. Everything in the property looks fantastic. So, the prior ownership group completely renovated the exterior, the interiors are all upgraded.
I buy that deal, I'm not going to have to do anything. That deal I buy it at a six cap and is probably going to stay a six cap. I'm going to just go to get that kind of return. And I have another deal that's maybe four and a half or five cap, but man, this thing is in a good area, but it's ugly.
Focus on the Opportunities Not Cap Rates
Darin: The rents are so far below market, but if we bring in extra capital and improve that property, then maybe after a year that'll be like a seven, seven, and a half. What deal is better?
So, I think there are some people out there that just preach, "Buy at a certain cap rate no matter what. You have to buy on the existing operations." I don't think that that is the way to look at deals. You have to look at the opportunity, and know what you're good at. So, you have a team that you know what you're good at, and you know where you can take it.
Maureen: Absolutely. And, a good example of this story that I use sometimes as we bought a property again. We started in Atlanta. A lot of the stories were from Atlanta, but we bought this property in Atlanta and there was a multifamily next door that was a little, not seriously rundown looking, but it was a little rough around the edges.
And so, we went to our broker and said, "Hey, can we find out who owns that? Maybe we could buy that one as well," because you can just run them both together. And so, he did some digging and he's like, "Oh, we tried to sell it before, but nobody would buy it, because the numbers are at like a three cap." And I'm like, "Well, send me the numbers over. Let me take a look."
And I noticed that there it was 150 units. So, we should be running that at like 1,100 a door per unit is our numbers. So, the payroll should be about 175,000 a year and ballpark.
Experiences Shape Leaders
Maureen: This thing was over $350,000 a year, and I'm like, "Well, there's our big gaping hole. Where are all these expenses for payroll going?"
So then I looked at it closer, and I had a conversation come to find out what it was and not only was his property. It was a private family that owned it. So, the daughter's college expenses were being routed through there as payroll. And it also paid for the father who was at the time, gosh, I think that guy was about 92-years-old, and he paid for his payroll and payroll for his driver. And I'm like, "Well, what do they do?"
So, basically, they had about 2,600 units in Atlanta, and the older guy, the dad, had a driver to go around and collect all the quarters from all the laundry machines, the vending machines.
He had these Home Depot, five-gallon buckets of quarters in his vehicle with a driver. That's why payroll is so expensive. It was basically to entertain this guy to go out of all the properties. A little joke, I'll call them Scrooge picked up because of the buckets of quarters. But, you can't even, ever in your mind would you ever think that's where the payroll leak is. Like, it's what's happening. So, anyway, if the numbers are out of whack, that's just opportunity.
Darin: And that's education, right? So, you've done enough deals in that market that it stuck out to you like a sore thumb, like, "What? That's not right." If we bring that back to industry standard, we can make a lot of money on this deal. A lot of other people may have passed.
Going From 2-Units to 150-Units
Maureen: Yes, people did pass. They couldn't sell it running before, because they probably said, "Hey, I need to buy at least that six cap or whatever." I know God, this is a three. Sorry, it never even probably got put onto that. They never got put onto the deal. So, I always tell them deals that make money. When brokers ask me, "What do you want to buy?" I'm like, "Deals that make money."
Darin: Nice. So, what markets are you focused on?
Maureen: Right now we are in South Texas. We're doing some building now. During this, with what we're buying things for we've hit this tipping point in our markets. So, where we can build for not much more expensive than what we'd be able to buy and do a value add a project for. We are in Indiana, we're still in Georgia and Nashville. So, we've done some smaller projects in Nashville looking for a larger project, but it's just, it's hard right now. It's a hot market.
Darin: Awesome. I think that I could talk to you for hours. I mean, look, you're a lot of fun, and you know a lot, and you're very just approachable. And so, mindset-wise, what do you think changed in you being able to go from two units, four-unit to 150 units?
Maureen: I think I've always just been such a hard worker, and I don't like to fail. Like, when I was in school, I used to have a 4.0. I go for the details, I don't like to leave opportunity on the table. Sometimes the story sells for more than what the property fixed up would be like. You gotta leave a little bit of meat on the bone for these deals.
Gaining Trust From Investors
Maureen: I think one of the reasons I was successful is understanding what investors want and how to protect them. Like, to me, knock on wood, if I've not made money on a deal, but even if it ever came to that, as long as my investors were safe, that's number one.
I learned early on that they depend on you. My investors in IT and doctors are pretty much my primary two largest investor pools. But they don't know about real estate, they trust me. They know that I'm looking out for them, and we'll do everything to protect them. And when I see a deal and I tell them I have a deal coming, it raises like before they even know what state it's in. They're just like, "Put me in for three. Put me in for four, I'll do 250."
And, it gets raised before they even know. But I think people that are in this field, you have to take that seriously, and you have to understand that you're between the deals. Like, you're protecting them, and you have to carry that on your shoulder. So, that's always been a big weight that I carry, and not wanting to screw up. And I probably could have been a lot more aggressive. I lost out on opportunity by being more conservative, but I've always taken that seriously, what you have to do to be successful.
Darin: Sure. That'll probably give you longevity in the business too, where if you got too aggressive, you could start ruining your reputation.
Maureen: I remember things in Atlanta, like 50 a door, I'm like, "You're crazy the brokers think I should buy us for 50K dollars. It's probably selling for a buck 30 a door."
Maureen: I was like, "I wish I'd bought more way back then." But, I always fell asleep at night. You got to go to sleep at night, you can't be too worried. So, deals worked forward and backward.
But as far as mindset goes, some people say like, "Oh, why did you fail?" I'm like, I never really feel like I ever fail. Sometimes things don't turn out exactly like you think they will, but just knowing it's okay to duck and weave is what I always tell the team. Mindset is just gotta stay positive too, and look at the bright side, all the things. Trust, but verify and all that. But, one of the things is my investors, my people, I work with my team if anybody, if I don't trust them, I don't work with them. Because I hate any kind of effort going like this, as opposed to everybody lining up and in the same direction.
In the beginning, when you're trying to get this business working, when I hear about people that steal other people's deals and, you might send someone to look at your numbers and check it out and people steal it. That always seems so, just so short-sighted, but I try to tell people like, "That's a gift." I said, if somebody's going to screw you if they do it right up front, it's saving you a lot of time. But you know not to work with them anymore.
I think that's been part of the reason we're successful, is just not wasting time and energy worrying about the inner workings of the team. A positive team environment and listening to people, and making them feel as they are part of the team.
Maureen Outside of Real Estate
Maureen: If anybody is a naysayer, you get these kinds of people that just like to create havoc. Getting them out as soon as possible is big. I think all my years in IT I worked with some people that were pretty miserable sometimes. So, it's so important to me that nobody's like that in the team.
Darin: And you could do it with a smile on your face.
Maureen: Yes. I was rough sometimes.
Darin: So, you have a family, you said. Married with how many kids?
Maureen: I am married. I was married for 28 years. I am going through a divorce right now.
Darin: I'm sorry.
Maureen: It's okay. We just want different things. I want to keep going and traveling and I enjoy the business. And I think my husband just wants to be quiet and retire on a farm somewhere. That's good, everything is. We get along okay, and everything. And my kids are grown up. They're 25 and 27 now. They're both in the business. And my son is on the Indiana portfolio, my daughter watches over the Georgia portfolio.
Darin: Awesome. So, what do you like to do outside of work for fun?
Maureen: But is there another life for fun?
Darin: Yes, there is. Come on, girl.
Maureen: I probably need to do more of that.
Darin: Well, you said travel. So, do you travel?
Maureen: A little bit. I joined a group to travel. They do a lot of cool international travel. I joined them in February of 2020. So, just as I joined them the world shut down. I haven't been able to do it. And I tell people the only reason I have a passport is that I went to Vancouver once to raise money when I first started.
Women Leaders Meeting Like-Minded People
Maureen: I'm looking forward to doing some more traveling. But I do have a great bunch of friends.
Darin: Travel without the multifamily conferences.
Maureen: Yes. That's not a thing.
Darin: We're not including that piece in it.
Maureen: Well, no, I love it.
Darin: I know you do. I can tell you do. But we gotta get you out there though, doing some stuff outside of multifamily.
Maureen: I do need to do that. It's kind of sad, but it's awesome at the same time. I've met some wonderful people in this business too. Like successful people, a lot of them are just so awesome, and they come from so many different walks of life, and we think alike. Like, we're a little bit, outside-the-box thinkers.
I think, to be successful and to enjoy this business, we're not like everybody else. And it's cool we get together. I do enjoy the people in this business that not I work with, but just my friends, just like your partner there that recommended he's awesome. And just great people full of life.
Darin: And willing to give back. I've been in several different industries, this is the only industry I've been in that is super successful they're open to telling you how to do it and encouraging you, and helping the next guy. And, when I got into the business, I was a little skeptical. Once I start talking to these people, they're going to clam up because it's competition, but they're like, "You know what? It's not." Like, "Okay. Well, I'm going after 200 unit deals and Darin, you're going to go after 60 to 100 units for your first deal."
It's Easy to Give Back in Multifamily Space
Darin: And then who knows, maybe we partnered together down the road, and there's all this collaboration that happens. I've seen it where people just help each other. I don't come from the single family world, but I have heard that the single family world is a little bit more cutthroat, and people don't help each other as much. But in multifamily, you could get five or six sponsors that all come together to do a deal together. And then the next deal they're doing it with different people. It's bizarre and it's fantastic in all the same boat.
Maureen: I think, to get to the upper level of the syndication world, and when you're dealing with the larger portfolios, they're like, nobody. I tell people all the time like we're not born knowing this. And I can't say I have a master's degree, I went to school for six years, and blah, blah, blah. Like, we all learn this out there.
I think that's one of the reasons that we don't mind giving back because people have helped me along the way, or just called me out of the blue, "Hey, I know you're looking at this deal, but there's this and this behind it." I tell people like in Atlanta, I probably know the deal or one of my managers knows about the deal. So, they used to run stuff by me all the time, and I just flat out tell them.
And, I think to be successful in this business, you do like, we do all give back. Like, we don't mind getting together, and the masterminds are great. We love getting together and just sharing information because I don't know. Yes, you're right, it's not as cutthroat as the single or the smaller duplex stuff.
The Next Big Stretch for One of the Women Leaders
Maureen: Good people rise, and there are still people that come through, they say real estate has a low barrier to entry. You do have to watch who you're dealing with, what their intentions are, what their motivations are. But we also noticed that there's a pretty tight-knit group, so they get weeded out fast too. If there's somebody and they're not doing the right thing or trying to take the shortcut to something.
Darin: That's true. You get into this world and it becomes a pretty small world, all of a sudden. It seems like it's so big, but you see some of the same players over and over again. That's why I said the one and only Maureen Miles. I've heard about you over and over again, so it was nice to spend some time together today. So, what's next? What's the next big stretch goal for you?
Maureen: The next big stretch. Right now I'm putting some deals together to build. We're doing some development. That's a new thing I partnered with a really good developer. A great guy I trust. So, we're doing that and then creating a fund. Rather than doing the individual syndications or small portfolios and syndicating them, I'm creating a fund, and I have some ideas on where I want to go.
Right now it's a pretty high number on the fund and we're just kind of giving a straight cash flow sort of with the fund. But I just have a lot of investors that would be happy with a steady return. And, they get mad at me when I sell stuff. It's like, they're making money, but they're like, "Where am I going to put it in?", "Where's the next one?" Then they get demanding.
Fund & Syndication
Maureen: I think a fund structure would work for them, and it would give me the flexibility to jump in and out of different types of deals. Because I've done everything from, I've bought tax sale leins, and foreclosures. I've done short sales. I mean, I've just, I've done it all. Because if I didn't do something like, "Well, I want to go do one of those."
It would give me more flexibility where if I know I just have to meet a certain level for a return for them, and I knew I could do it mostly I'd even preload that fund for a while. So, anyway, I have all kinds of ideas.
Darin: I think the fund, I want to speak on both those topics. The fund is your fund, do you think it'd be like per transaction fund or you buy into the fund and then you could buy and sell assets along the way and they're still in the fund? Because there are two different ways to set it up.
Maureen: It's different from syndication where you have everything very structured. You still have your PPM and all that kind of stuff. I'm trying to make it more fluid, I guess. But, do I have investors be able to raise their hands after say 24 months if they need out or want out? Or, I don't know, we're just trying to still get those parameters and all.
Darin: The thing I like about the fund in this market right now, and who knows where the market's going to go. But, if you think back to what happened when COVID first happened, there were two weeks of panic. And then the stock market tanked, and then it steadily rose. Now it's crazy.
Women Leaders Supporting Diversification
Darin: In those two weeks, it would have been very difficult to raise a bunch of money, because everyone's in a wait and see, hold their arms around what they've got. So, there are going to be down cycles, and who knows if that down cycle comes two months from now or two years from now. But, it would be nice to raise the money when people are feeling confident, and then the market goes down, and now you have the capital to go out and buy very attractive deals.
Maureen: But you do have to support that. We have to support that. So, what you said is like that. I usually have a lot of investors, they use this more of the diversification. Those still play in their stock market. But when stocks are high, they're like, "Oh, I want to take some cash off the table. And a lot of them thanked me, we had just closed on some deals right before everything tanked. And they were grateful that they got into those deals because their stocks didn't fall off the cliff like a lot of people did. I think it's a good diversification tool.
Darin: Fantastic. On the development side, I've talked to a lot of syndicators that with the whole COVID thing it just seems like, over the last year, more and more syndicators are trading up. They're going from if they were buying C assets, they're focused more on B plus and even A assets or getting into development. So, the COVID situation impacted the lower-level tenants more so than the A tenants. So, do you see that being part of the reason why syndicators have been trading up?
Some Reasons for Syndicators Trading Up
Maureen: I think some of the value add, like, I use Nashville as an example. When we were looking at a B asset in Nashville, it was like 100 and maybe 70,000 a door. And I'd have to go in and de-brass it, get rid of all the brass, do upgrades. Where if I can buy a new asset and get into something for maybe 210 a door or like where would that extra money be spent with a brand new asset built-in 2021 or whatever, and watching that.
I do think that the top of the AA or, if you're going in with granite and stainless steel appliances, those people are more apt to go out and buy a house after, or they have flexibility if they're paying $2,400 a month for a one-bedroom, and things like that. Those people have options.
I like that B&C space because I learned this with my smaller portfolio. And I'm not trying to downplay anybody or judge anybody or whatever but I found that a lot of those tenants, they're just not programmed to go save your money, buy a house that or that. They just want to go to work, they want to go home to their apartment. They don't want to be bothered with, even millennials, I know they're saying it's a big thing, things they just want to rent.
I had a three family that had the grandmother and a nephew living on one floor. And I had a mom with her two kids on the third floor, and the uncle was up on the third floor, and it was all one family. I was just feeling generous. And I was making probably about 1,200 bucks a month off this three family in cash flow.
Helping People in the Space
Maureen: I told him like, "You guys can get your money together and buy something like this, and you could probably live for half the rent that it's costing you." And they looked at me and said, "You’re so crazy. We can’t buy a house." And I’m like, "No, you guys really can buy a house. "Knock it off." Like, they just laughed it off. They just had no desire. I just realized at that point, nobody told them they could buy a house. They're just not triggered.
They rented, I say their parents rented, their grandparents rented, and their kids are going to rent. Like, just because that's just the mentality. So, if you can get in that B and C range and just keep everything tight. Maintenance is a huge thing. You make people feel safe, make sure your lighting is good. Make sure you keep troubled tenants out of there. You're going to be full. If two people can work at Home Depot or Walmart and afford that rent, or you have a single, she's a nurse, a teacher, they can afford that rent, that's your safe zone in this world of multifamily, in my opinion.
Darin: What's the best way to get in touch with you?
Maureen: Our website. There's a contact page. We do sponsorships, we look to buy things. And we have ways of helping if your property is stuck with the property management company right now, we're looking at due diligence services, and then also going in and finding what's wrong with your property. Because sometimes people get in there and they get pulled around by their management company. They don't know what's happening, why they're losing money, but they can reach out. We have just started to do some programs like that. We're kind of fixing or advising.
How to Reach Maureen Miles
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