🎙 Passive Cash Flow Podcast EP.184 | Can’t Afford a Home Try Multifamily Investments
Meet the “Mad Scientist of Multifamily,” Neal Bawa, as he breaks down the private sector solution to the urgent housing affordability crisis.
As a data guru and CEO of Grocapitus, Neal treats his $250+ million-dollar multifamily portfolio as an ongoing experiment in efficiency, driven by the belief that “Data beats gut feel by a million miles.” Learn how this unique, data-driven approach to multifamily investment and asset repositioning is the blueprint for creating homes, addressing the affordability gap, and driving significant profit for his 300+ investors.
Learn more at: mission10k.com
🧠 Topics Covered:
00:00 — Housing crisis & affordability
05:20 — The origin of Mission 10K
10:00 — Forever renters and the homeownership decline
15:20 — Private enterprise as the housing solution
20:00 — Disrupting construction costs with smart land strategy
25:00 — Finding markets for middle-class housing
29:20 — Educational mission: Multifamily University
33:10 — Future of housing prices & affordability
36:30 — Closing thoughts and how to connect with Neil
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This is not a solicitation for funds, tax advice, or legal advice. This is not intended to be, and must not be construed to be in any form or manner a solicitation of investment funds or a securities offering. Peoples Capital Group LLC is NOT a United States Securities Dealer or Broker nor U. S. Investment Adviser is a Consultant/service provider and makes no warranties or representations as to the listener or viewer. All due diligence is the responsibility of the investor.
Transcript:
00:00:00:00 – 00:00:32:00
Speaker 1
Back in the 80s, people would buy a home. Fresh out of college. Today, like my son, you know, has a $100,000 salary and can’t afford to buy a home. I mean, somebody with no loans, he has no debt. He has $100,000 salary, and he can’t afford to buy the cheapest home in the San Francisco Bay area. But neither party makes as big of a deal out of this acute homelessness issue than it does out of, you know, the trans issue and the, you know, the fact that, you know, taxes, taxes have to be cut, you know, pick a party right there.
00:00:32:01 – 00:00:56:07
Speaker 1
Everybody has their their way of having elections. And none of it involves housing. Fundamentally, there are two things that people need to live, right? Food and shelter. Right. And I’m sad to see that neither one of them are political platforms for winning elections. And as a result, there is no known solution that the government is engaged in, whether it’s local, state or federal government.
00:00:56:13 – 00:01:03:16
Speaker 1
So the only kind of solution possible is private enterprise.
00:01:03:18 – 00:01:31:11
Speaker 2
All right, ladies and gentlemen, welcome back to the Passive Cash Flow podcast. I’m your host, Aaron Frank Nieto. And today we have the Mad Scientist, the original one of the original syndicators in the space, a man that’s made big waves in the multifamily syndication space, educating, leading and helping people build their wealth. We have Neil Bawa. How are we doing today, Neil?
00:01:31:13 – 00:01:34:15
Speaker 1
Fantastic. Aaron, thanks for having me on the podcast.
00:01:34:17 – 00:01:56:10
Speaker 2
Absolutely, absolutely. I enjoyed meeting you at the Best Ever conference there in Salt Lake City a few months ago. And, you know, I’ve been following you for many years. In fact, we always keep an eye on what you have going on there. I, I learn from your content as well, and I know many other people, some of which invest with us actually, also, you know, follow you and learn from your content also.
00:01:56:10 – 00:02:14:06
Speaker 2
And, so just, really glad to have you on the show here. You’re doing so many things. Let’s get started with, your mission ten K I know that’s kind of, your, one of your main focus is right now. So what is mission ten k? And, what’s the theory behind it?
00:02:14:08 – 00:02:47:12
Speaker 1
Sure. So I’ll, I’ll give you sort of a two minute overview. For the first, you know, six years, five years where I was a syndicator starting 2013, I tended to have a greater focus on buying multifamily and rehabbing it. I was doing development projects, but it wasn’t a primary focus. It was, you know, something that I was doing on the side, and, and at my first, development project was in 2015, 102 unit mix unit building in Provo, Utah, called Art City Center.
00:02:47:12 – 00:03:09:10
Speaker 1
So I enjoyed that, but it was still sort of a side activity. Think of it as a secondary business plan. But by 2018, I was becoming a little bit disillusioned with, with, that multifamily value. And because here was what my data suggested, I think multifamily value add is a valuable service. We’re taking older buildings where rehabbing them, they’re improving them.
00:03:09:12 – 00:03:37:23
Speaker 1
We’re building, you know, value and profit for our investors. So, you know, straightforward capitalist activity with some benefits for the country. The problem was when I rolled up the data to a national level and started looking at it, what was happening was 10,000 syndicators, and I’m one of those 10,000. We’re driving up the cost of rent in the United States at great speed, and we’re not adding any, any, you know, any new new product to the marketplace.
00:03:37:23 – 00:03:57:00
Speaker 1
We were taking existing product and essentially turning the product from sort of minus, you know, C minus product to like a, B minus product. Right? That’s the most common thing that people do. And while we were doing it, we were basically driving up the cost of rent in the United States by a huge number. But we weren’t increasing the United States apartment stock.
00:03:57:02 – 00:04:17:24
Speaker 1
And back then I foresaw that sometime in the 20s, we would have an incredible crisis where home buying would become almost impossible in the United States. And and I don’t want to say almost impossible would become much more difficult in the United States. That has happened in the last 14 months, that I have data specific to that.
00:04:17:24 – 00:04:37:08
Speaker 1
That’s very shocking. I don’t think it’s discussed enough on Multifamily Podcast how incredibly difficult it is to buy a single family home today, and what percentage of the United States can actually afford to buy it. So I saw that happening in 2018, and I decided that if I’m providing a solution to housing, it can’t be. One solution has to be two.
00:04:37:10 – 00:04:55:13
Speaker 1
On the one side, I have to continue buying, improving, building, doing what Aaron Frank Nieto does because it’s a great service and it is a great way to make profit for investors. But on the other hand, I have to actively add to stock if I’m going to raise rents to help my investors. I also need to add stock to the United States.
00:04:55:15 – 00:05:17:23
Speaker 1
And so I created a goal for myself, which was, you know, I’m going to build about 250 to 300 units a year. Just for those that know, building 300 units a year is the same as buying a thousand units in terms of effort. It takes about three and a half times the effort to build something that it takes to buy something, right?
00:05:17:23 – 00:05:51:12
Speaker 1
Because when you’re buying it, you’ve got a property manager, you’re in there on Monday, you’re beating up the property manager, making sure they’re doing their job. When you’re building it, you’re in 8 to 10 meetings per week for that property, right? Because there’s design, entitlement, architecture, city planning, permitting. You know, clubhouse design, unit design, building level design, city, you know, objection meetings, neighborhood planning, all of that is happening even before you put the first shovel in the ground.
00:05:51:14 – 00:06:20:11
Speaker 1
Right, right. So the amount of work is much larger. So I focused on 300 units and I pretty much achieve that goal, 300 units every year since 2018. Not had a lot of trouble with that. But then I realized that what I was doing was still a fraction of what really needed to be done in the country. And so I said, I think I need a goal that’s like so ridiculously difficult, so outrageously difficult that it forces me out of my comfort zone.
00:06:20:13 – 00:06:40:03
Speaker 1
And it forces other people to initially say, I think Neil Bala has gone mad, right? It has to be that level. It has to be so absurd. And then I have to basically see if I can figure out if I can do it, and if I can’t, maybe I’ll water it down. So I started doing a lot of research by doing surveys at my property.
00:06:40:03 – 00:07:00:12
Speaker 1
So as you know, Aaron, just like you have a lot of, you know, classic class B properties, class B properties. But I also have these classes that I’ve built myself. You know, brand new, new people. And so I, I hit a Trojan horse in those surveys. So the surveys seem to be about a bunch of things. And, you know, I’d give people $25 Amazon gift cards to fill out the survey, but there was a Trojan horse in there.
00:07:00:12 – 00:07:23:19
Speaker 1
That was a single question. That was the only question that I cared about. And the question was simple. It had four words. Is this your home? Is this your home? Right. And so I, I’ve built both townhome projects and apartment projects, and my apartment projects are generally fancier with the, you know, the infinity pools and the big gyms and the big clubhouses.
00:07:23:19 – 00:07:42:15
Speaker 1
And my townhome projects are sort of more modest. Where the townhome is the amenity. Right, right, right. You have a backyard, you have a garage, you have a front door of your own. And so my philosophy has been, you don’t need any amenities. I’m giving you the townhome. That’s the amenity, right? That’s the only way I can build it at a reasonable cost.
00:07:42:17 – 00:07:59:20
Speaker 1
So I was curious to see which way people would go. So in my class apartments, Erin, about 20 to 30% of the people would answer yes to the Trojan horse question. In my townhomes, more than 60% of my tenants answered yes.
00:07:59:22 – 00:08:02:01
Speaker 2
Oh okay. Interesting.
00:08:02:03 – 00:08:21:23
Speaker 1
What I realized was people in America don’t want to live in apartments. They live there because they really don’t have any choices. Right. So they can’t migrate to they, they either can’t afford a single family rental or a single family purchase. Then they live in apartments. But what they really want to do is to live in the next best thing, and the next best thing is a rental townhome.
00:08:22:00 – 00:08:44:11
Speaker 1
Right, right. So I said okay I’m going to continue building apartments because you know not everyone can afford these townhomes. Right. But I’m going to create a new company that is going to have an absurdly difficult goal a shockingly difficult goal. Yeah. And the goal of mission ten K and was created in 2022, was that by the date of its creation in 2032?
00:08:44:12 – 00:09:31:08
Speaker 1
That’s exactly ten years, right. Mission ten K would build 10,000 rental townhomes, with a total budget of 2.5 billion and total equity of 1 billion. So I need $1 billion in equity. And $2.5 billion total construction budget to build 10,000 rental townhomes. Okay. I’m well on my way. And, you know, three years into the journey, I’m about to raise and rename the company to mission 100 K, because at this point, I’m far beyond the run rate needed for ten for 10,000 rental townhomes, thanks to the help of three billionaire families that have that have participated in my mission.
00:09:31:10 – 00:09:35:21
Speaker 1
So sometime next year, we will rename the company to mission 100 K.
00:09:35:23 – 00:09:43:23
Speaker 2
Oh my gosh, how hundred K? Now are you going to keep that same timeline for 100,000 units, or is.
00:09:43:23 – 00:10:02:20
Speaker 1
That yes and no. We will reset the timeline to the day that we hit the that day that we rename it. So we rename it in 2026. Then we’ll give ourselves ten years from 2026 because it’s very difficult to do these scaled projects. I mean, right now we have support from Goldman Sachs and, you know, Commerce Bank and equity Bank.
00:10:03:01 – 00:10:22:17
Speaker 1
We have, you know, equity from three billionaire families, but it’s still a truckload of equity. I mean, we’ve only raised maybe 150, $200 million for this particular mission. And we need a billion. So we’re not on the way there. But our momentum is very fast. So this year we’ve already raised about $100 million for mission ten K, right.
00:10:22:17 – 00:10:39:12
Speaker 1
So we’re halfway through the year. We raised 100 million. So we’re definitely on track for our mission. Ten K. And now now it feels like if you just create a plan and grow 30% a year from here, we we hit our ten K. So we’re like, that’s not enough. We need to basically, you know, make it more aggressive.
00:10:39:12 – 00:10:43:16
Speaker 1
So we’re thinking of switching to 100 K.
00:10:43:18 – 00:11:06:06
Speaker 2
I love the ambition Neil. I love it when it would a true entrepreneur there. I love the way you, work with your your growth mindset is just phenomenal. And really solving a problem that we have here in this country. I mean, that that’s the absolute truth. You know, housing costs are out of control. And, the dream to own a home has gotten more and more difficult.
00:11:06:06 – 00:11:19:03
Speaker 2
You know, I mean, my parents and and their 60s and 70s, you know, when they were, you know, my age and mid mid 30s trying to buy a home or what? I mean, you could buy a home and, and you’re, like, fresh out of college back then. Yeah.
00:11:19:05 – 00:11:41:20
Speaker 1
You could I mean, back in the 80s, people would buy a home, fresh out of college. Yeah. And today, like, I, my son, you know, interviewed with Accenture, on college campus in his last year, in his final year, they hired him, you know, has a $100,000 salary. And can’t afford to buy a home. I mean, somebody with no loans, he has no doubt.
00:11:41:20 – 00:12:00:00
Speaker 1
You know, I, we gifted him a car when, when he graduated. He has no doubt he has $100,000 salary and he can’t afford to buy the cheapest home in the San Francisco Bay area. So he goes and lives in Seattle, which is slightly cheaper. Can’t afford to buy a home there either. Right. It’s kind of bizarre right.
00:12:00:00 – 00:12:23:22
Speaker 1
It’s not a down payment issue. He simply does not make enough money to qualify for the loan. Right. Because the minimum loan needed to qualify for a old starter home in Seattle is about 160,000. In the San Francisco Bay area it’s more like 195,000. So $100,000 income which is unusual for somebody who was 23 years old.
00:12:24:01 – 00:12:24:09
Speaker 2
Sure.
00:12:24:14 – 00:12:27:01
Speaker 1
Yeah. He he’s a forever renter.
00:12:27:03 – 00:12:27:13
Speaker 2
Yeah.
00:12:27:17 – 00:12:53:19
Speaker 1
Yeah. And I’m just stunned at that. Right. It’s it’s stunning. You know the statistics in the last two years it’s gotten so impossible because of, you know, the rise in interest rates that 52 million Americans can only afford a $200,000 home today to qualify for the mortgage. Average homes in the US are somewhere around $416,000, right? Right.
00:12:53:20 – 00:13:21:20
Speaker 1
Those 52 million Americans don’t know it. They don’t fully understand it, but they are forever renters. Maybe 1% of those 52 million will get extraordinary increases in their salaries and be able to get to catch up the gap between where their salaries are around 76,000 and where they need to be around 116,000. This is a national number. That $40,000 gap, less than 1% of those people will jump that gap.
00:13:21:22 – 00:13:47:06
Speaker 1
The remaining 99% 52 million people. Right. And they have jobs. Many of them have two jobs. Right. So there’s there’s I’m talking not just about individuals. I’m talking about families. The 2 million people are forever renters, and they don’t understand that. They don’t they don’t get it because the American dream is so built into our DNA as Americans that we actually cannot conceive of the fact that it doesn’t exist anymore.
00:13:47:08 – 00:14:05:10
Speaker 1
Right. So we simply ignore it and so do the politicians, because as far as the politicians are concerned, the politicians can point to the fact that 1 million homes are purchased in the United States every year. Right. And that’s a typical politician sort of misleading statement. Well firstly please look at the the number year over year and see the decline.
00:14:05:11 – 00:14:23:20
Speaker 1
Right. The fact that best homes are being purchased every year. Second, you realize that the United States has a population 50 million people more than in the 80s. But in the 80s you were building twice as many homes. Wow. Really? You’re building 2 million homes, and we’re building a little bit less than a million homes as of the 2025 run rate.
00:14:24:01 – 00:14:46:06
Speaker 1
What about 900,000 home run rate, right. Wow. And we were 2 million cities and we’ve got 50 million more people, right? Right. But neither party makes as big of a deal out of this acute homelessness issue. Yeah. Than it does out of, you know, the trans issue and the, you know, the the fact that, you know, taxes, taxes have to be cut.
00:14:46:06 – 00:15:13:00
Speaker 1
You know, pick a party right there. Everybody has their their way of handling elections. None of it involves housing. Fundamentally, there are two things that people need to live, right? Food and shelter. Right. And I’m sad to see that neither one of them are political platforms for winning elections. And as a result, there is no known solution that the government is engaged in, whether it’s local, state or federal government.
00:15:13:02 – 00:15:33:00
Speaker 1
So the only kind of solution possible is private enterprise. Right. Because we, we don’t have we used to the nation used to have a healthy affordable housing budget until 1999 when when Clinton got it right. So we would build a 100,000 affordable housing units in in a year. Last year we built 17,000. Wow. Come on. 17,000 units.
00:15:33:00 – 00:15:34:18
Speaker 1
We have 330 million people.
00:15:34:20 – 00:15:35:20
Speaker 2
Right? Right. That’s not.
00:15:35:24 – 00:15:59:00
Speaker 1
Right. I mean, it’s just it’s ridiculous. There is no affordable housing being built in the United States. 17,000 is a rounding error, right? Right. So what we have to do as a country is we have to innovate. My my path is I, I’m using artificial intelligence, but at a thousand, Neil Bowers have to come up with a thousand different ways to fix this crisis or we become Europe.
00:15:59:02 – 00:16:22:11
Speaker 1
In 25 years, the United States is going to have the same homeownership rate as the as Europe, where rich people live in apartments. Rich people like I go to Europe every, every summer for vacation. And while I love Europe, they don’t have the equity building machine that the United States has. Yeah, right. Yes. We have built trillions of dollars of equity in the last two decades in America because we own our own homes.
00:16:22:13 – 00:16:43:18
Speaker 1
We’re in Europe, basically some some big company owns the homes and people are living in them. Losing this is frightening. So I have I’m building townhomes for rent, but I’m also building townhomes where people can actually buy them. And then they can actually they can do, you know, build to rent to buy. So I have two different models.
00:16:43:20 – 00:16:45:01
Speaker 2
Yeah, I was going to.
00:16:45:03 – 00:17:01:01
Speaker 1
That’s my passion. But I mean this I’m, I’m an immigrant. I was very lucky to come in and buy my home in the, in the 90s. Right. I mean, the home that first home that I bought, I don’t live in that home anymore. It is currently, I mean, worth about six times more than what I paid for it.
00:17:01:03 – 00:17:21:24
Speaker 1
Right? In the 90s. Six times more. It’s just bizarre, right? Yeah. Right. There’s no way, I mean, that incomes have increased six times. I mean, they haven’t even three times since then. So you have a real problem. We have a real crisis. And this is reflected in the absurdly high absorption numbers, again, not something discussed on multifamily podcasts in the last six months.
00:17:21:24 – 00:17:29:11
Speaker 1
Absorption in the United States for rental stock is a shockingly high all time high. Yeah, it’s not reflected in the rents.
00:17:29:13 – 00:17:48:24
Speaker 2
Yeah. Yeah. Right. Well it’s it’s crazy. Yeah. Because everyone’s renting because it’s even here in new Jersey where we focus on it’s 30% more expensive to own a home than rent. And, it’s just become a generation of renters, you know, and, I, I love your model also for the, the build to rent to buy because that’s a great model.
00:17:48:24 – 00:18:23:07
Speaker 2
You know, people that can rent for a period of time, kind of perhaps save up their down payment, increase their income, try to qualify for a loan and then buy that property a certain point. And ultimately also on the business side of for your information 10-K, soon to be 100. Okay, if you did seller financing and you held the notes for those buyers, that’s an interesting model as well, because you could essentially become the bank over time for a lot of these properties, you know, which is a just a phenomenal position to be, especially as the housing stock that you’re building ages, it becomes more expensive to manage and own.
00:18:23:13 – 00:18:40:12
Speaker 2
But, you know, and you give that dream of owner homeownership to, those tenants, and they allow them to build the wealth over time. And, some tenants will take advantage of that, become homeowners. Others won’t. But, I mean, it’s it’s a great it’s a great model. It’s a great service back to, the country as well.
00:18:40:14 – 00:18:53:10
Speaker 2
And, is that ultimately perhaps one of the goals of mission 10-K, soon to be 100 K, is that you might be able to hold a note for some of these rent, renters to ultimately buy these properties.
00:18:53:12 – 00:19:15:19
Speaker 1
It’s a lucrative business model, but it doesn’t match our mission. Our mission is to take the risk of building as opposed to take the non risk of being a lender. Being a lender is an extraordinarily cushy, very low risk situation, especially if it’s a new property. Right. Because you can always foreclose and take the property back. But that is the avoidance of risk.
00:19:15:24 – 00:19:37:05
Speaker 1
What mission 10-K is goal is to take the risk to build something and to do something which frankly, is impossible, right. So what mission 10-K is doing? Most people, when I describe it to them without fully describing the process, they tell me that a either I’m lying or b I’m delusional, right? So I get both of those about 5050.
00:19:37:05 – 00:20:01:06
Speaker 1
So the first rule basically says you’re lying. These numbers are impossible. And the second group says you’re delusional, meaning you simply don’t know what you’re talking about. And the reason for that is very simple. It is not possible in most parts of the United States today to build a rental townhome for the middle class. You can only build a rental townhome for people that make 110, 100 and 2030 thousand, right?
00:20:01:08 – 00:20:23:07
Speaker 1
Well, if they make 110, 120, 130, they’re only renters by choice. Right. Because they can always they have enough income to buy a home. So how do you build a rental townhome for the middle class. And I define the middle class as people that earn a little more than the people that are, that are in apartments because they have, you know, a higher aspiration.
00:20:23:07 – 00:20:44:23
Speaker 1
They want their backyard in the yard. And you know, they don’t want anybody above or below them. That’s what you get in a townhome. So it starts at 60 K and goes up to 85 K for most of the US. I’m not counting the coasts in California. Yeah Boston you got to put those aside. But in other markets I define them as people that make 60 to $85,000 a year.
00:20:45:00 – 00:21:11:01
Speaker 1
When I started my research into ten K, the first year was extremely disappointing because the answer was, no matter what I did, I couldn’t build it for that cohort because my rents needed to be so high that people, you know, needed to have an income over $100,000 to qualify for those townhomes. So what we decided to do was that we would basically figure out how to disrupt the market.
00:21:11:01 – 00:21:35:08
Speaker 1
We basically said, what are the top 20 or 30 things that prevent us from building for the 60 to 85 K people, right? Right. What are those things? Measure them. Figure out which ones were the 800 pound gorilla, and then go around like dumb people asking dumb questions to everyone saying, what is the way to get this cost down by at least 30 or 40%.
00:21:35:10 – 00:21:54:07
Speaker 1
Right. And we spent an entire year doing that talking to people. Everyone thought we were mad. And then what we did was we basically figured out those cost components. And we were able to get the cost down more than 30%. So there were about a dozen buckets. And we went through and disrupted every single bucket.
00:21:54:09 – 00:22:20:11
Speaker 1
The first thing we have to do is to create a company that had a lot of money. So mission 10-K has 350 patient investors. They’ve invested for the long haul. They know what we’re doing. They know that we’re disrupting the real estate market, which requires a lot of time. So it starts with land, right. So 99% of the land selling in the United States for development is absurdly expensive, like really, really absurdly expensive.
00:22:20:13 – 00:22:47:11
Speaker 1
So what we did was we realized that to build 10,000 rental townhomes in ten years, we needed a massive pipeline. Right? You’re talking about a thousand units a year. Call it, you know, eight projects for eight projects. We needed to pass at least 5000 pieces of land. Wow. So what we did was we built an absurdly large pipeline with a large team that travels 5 to 6 days a week.
00:22:47:13 – 00:22:52:00
Speaker 1
We go to all of the best markets in the US. As you know, I’m a data scientist, so I pick the markets.
00:22:52:02 – 00:22:52:23
Speaker 2
Yeah.
00:22:53:00 – 00:23:17:02
Speaker 1
And what we do is we make roughly 300 f u offers, right, directly to buyers. So we don’t work with any brokers. We work only with landowners. And we use a variety of ways to figure out if those landowners are behind on their, on their property taxes, which shows us that there’s some stress. We contact them directly.
00:23:17:04 – 00:23:37:02
Speaker 1
If the land’s worth 2 million, we offer 800,000, in other words, and f you offer, our goal is to have 300 refusals per year and no acceptances. We don’t want any acceptances. We want everyone to turn us down. And then after a month our system is designed so that we go back to those 300 people and we raise our price by 5%.
00:23:37:04 – 00:23:58:11
Speaker 1
So if it’s, it was 800,000 on a $2 million piece of land, we’re now at 880. And then we get almost 100%, decline again. Or most people actually don’t respond to us. And then we go back three months later and raise it by another 5%. So now on a $2 million piece of land, we’re at 1 million.
00:23:58:13 – 00:24:04:03
Speaker 1
And based on that the 300 refusals usually turn into eight yeses.
00:24:04:05 – 00:24:05:14
Speaker 2
Wow. Okay.
00:24:05:16 – 00:24:35:11
Speaker 1
Those ads mean that we’ve started with a $1 million saving. But but better than that when they say yes. We then write a contract where we have 21 months to buy the land, six months for investigation, 12 months for government approvals and 245 day extensions. That gives us 21 months to zone entitle permit. Get equity get that.
00:24:35:13 – 00:25:02:15
Speaker 1
So to date we have not purchased any piece of land. We have basically bought the land only at the time when we’re closing the construction loan. So our holding cost is $0. Okay. Right. Right. So by doing this we reduced our holding costs by about half a million. They reduced our land costs by a million. And that gave us a start in the, in the land acquisition piece we have 12 disruptions.
00:25:02:15 – 00:25:03:23
Speaker 1
This is one of them.
00:25:04:00 – 00:25:31:11
Speaker 2
At People’s Capital Group we help you invest in real estate, build your wealth by owning professionally managed apartment buildings in the northern new Jersey market. We want to show you how owning real estate is attainable, even for the busy professionals that don’t have the time or experience investing in real estate. Now, we only work with select people who are serious about building wealth, so find out if you qualify at People’s Capital group.com.
00:25:31:13 – 00:25:51:01
Speaker 2
Right? Right. Wow. That’s incredible. I mean yeah and that’s the way to do development. Obviously we make you money when you buy in real estate acquiring at a great price. It is a numbers game as well. You know we’ll look at about 100 deals to buy one. And you know I try not to make too many few offers because the brokers tend to get annoyed.
00:25:51:01 – 00:25:52:09
Speaker 2
But we do buy a lot of deals.
00:25:52:11 – 00:26:03:03
Speaker 1
We don’t work with brokers. So, so, you know, we have to give up the brokers for this model. If we, we if we do a few offers to brokers, we would never be able to close anything.
00:26:03:05 – 00:26:20:10
Speaker 2
Yeah, yeah, yeah. They don’t like you there. Well brokers job is to get the top dollar. You know anything also on the market you’re not going to get a good price on we we buy kind of pocket deals. But it’s different when you’re buying existing assets in a high demand North Jersey market here. Right. So and what are some areas that you’re focused on.
00:26:20:10 – 00:26:25:15
Speaker 2
What are some cities that you’re focused on investing, properties around land around.
00:26:25:17 – 00:26:47:07
Speaker 1
Anything over 2 million people. We found that the mathematics are so absurd that we would never be able to help the middle class. So remember, we are a mission driven company. We’re trying to help people who are 60 to 85 K and give them a beautiful townhome, brand new nine foot ceilings, granite countertops, backyard garage, front door, nobody above and below them.
00:26:47:09 – 00:27:11:21
Speaker 1
To achieve that, we could only achieve in in mid-market metros. So we don’t have any metros that we are investing in. There are over 2 million people. We have a lot between 1 and 2 million. So Indianapolis, Raleigh, Kansas City, and then we have a lot of metros that are 500,000 people, like Northwest Arkansas. So that’s Bentonville, Reno, which is our which is my favorite market, and markets like that.
00:27:11:21 – 00:27:35:16
Speaker 1
So we basically got that kind of market. We’ve got some very small markets, like Burlington, Vermont, which is the largest city in Vermont with 250,000 people. Right. And a few few other cities like that. So some of it comes from the likes and dislikes of our billionaire patrons who are investing into our projects. So some of them have basically indicated their favorite cities, and in the mathematics of those cities are good.
00:27:35:16 – 00:27:56:19
Speaker 1
Then we then we go into those cities for those patrons. Because there are a lot of these billionaires are are, you know, that they they want to improve the city that they were born in or the city that they went to school in? And, and if the if the city’s metrics and mathematics work, then we, you know, we humor them.
00:27:56:19 – 00:28:17:07
Speaker 1
Yeah. You know, is there equity that we’re using to build this? Sure. And so, you know, markets like that. So in my mind, Reno is one of the best markets in the United States right now. So is Northwest Arkansas. There’s, you know, there’s, there’s pros and cons to every market we do, ranked all 323 markets every month.
00:28:17:07 – 00:28:39:08
Speaker 1
There’s 323 MSAs or metros in the US. We rank them every every month. And once a year we publish our rankings, in in late January, early February each year, we publish our rankings. About 14,000 people use our data. We don’t hold anything back. Our goal is not to basically have any kind of subscription. It’s it’s given away freely.
00:28:39:10 – 00:28:58:06
Speaker 1
Anyone can have access to it and figure out where your metro is. And we and in that we do a presentation. It’s it’s an hour long. And in that we actually slice and dice the data. And we usually discuss about 40, maybe 50 metros sort of deeper than the other, you know, because it’s 323, you can discuss all of them.
00:28:58:10 – 00:29:17:23
Speaker 1
So we discuss about 40 or 50 and then, we pick two best up and coming best market in the US. So so that is a process that we follow every year for the last ten years, I think altogether 140,000 people cumulative have seen this presentation over the last ten years that we’ve been holding it.
00:29:18:00 – 00:29:34:23
Speaker 2
That’s amazing. That’s amazing. And then you have grow cannabis, which is that educational, branch. Right. Or that educational company you work with and that basically educates investors on syndication development. Right. And it’s talk about that for a second. What’s the value with that company?
00:29:34:23 – 00:29:38:16
Speaker 1
So so the education company is actually called Multifamily University.
00:29:38:18 – 00:29:39:19
Speaker 2
Okay. Okay.
00:29:39:21 – 00:30:05:22
Speaker 1
And so you can just type in the word multifamily university or multifamily university. Neil Bawa I’m the only neoliberal on the web. And that’ll take you to the multifamily university website. That’s our educational arm. We have no educational packages. We do not charge money for education, and we never will. Our goal to educate is to basically establish our brand of being a data driven data science and AI based company.
00:30:05:22 – 00:30:28:02
Speaker 1
We are first and foremost an AI first company. But before I existed, we were a data science company for the last ten years. So we we just want to establish our brand by giving away the data and findings that we have. So Multi-family University is free. It gathers data on multifamily, self-storage, industrial hotels, Airbnbs. These are all presentations.
00:30:28:02 – 00:30:51:13
Speaker 1
We do them. They’re bespoke presentations with 70 plus slides. They’re an hour long. We typically get about 2000 people registering for each webinar, and we hold them eight times a year. There is no paid product. You can’t pay even if you want to. It’s it’s a it’s a Wikipedia model, right? It’s the Wikipedia of real estate data science told in an entertaining way.
00:30:51:15 – 00:31:13:10
Speaker 1
Grow kappa. This actually does what mission 10-K does, but it is not mission driven. It’s for profit and does apartments. It does not build townhomes. It builds apartments and buys apartments. Now we very rarely buy apartments. So you know, I could say that even three years ago, Aaron, you and I were competitors. Now, I don’t buy apartments.
00:31:13:14 – 00:31:35:21
Speaker 1
The only time we buy apartments is when there is extreme distress. So we are currently buying a brand new, completely empty building in Los Angeles downtown. Right. It’s on Hope Street and that building has never had a tenant. The developer ran out of money, and so we’re helping him finish it and buy it for about 5 million less than its market value.
00:31:36:02 – 00:31:57:19
Speaker 1
They’re doing it because their loan is due. And and they’re about to go from an 11% interest rate to 24% interest rate. And they just don’t have the money to pay their monthly amount. So we’re basically just helping them finish with our money. And then we will buy it from them for $5 million below market. Those are those are typically the kind of properties that we buy.
00:31:57:21 – 00:32:15:22
Speaker 1
And we often buy in cash. So we can buy in cash up to 50 million. Which means that sometimes when you know, you’re 20 days from in default in your bank asset, we will default you we will take your property back. Then people come to folks like us because we can close in 20 days with cash and then go back and refinance later.
00:32:15:24 – 00:32:34:09
Speaker 2
Sure. Of course. Absolutely. That’s amazing. I didn’t realize you didn’t charge for education. I just assumed there was a cost to it. And, you know, that’s incredible, you know? And, so that is really, really neat. I need to, take a look at some more of your content out there. It’s I, I have watched a few of your webinars.
00:32:34:09 – 00:32:54:14
Speaker 2
They’re extremely in-depth, and, I rarely have the time to, a lot for an entire when I should. I should take more time and, and dig into that content. So that’s amazing. Dr.. It’s so amazing to hear what you have going on. You know, I could probably talk to you for three more hours about, your visions here, your mindsets.
00:32:54:16 – 00:33:12:23
Speaker 2
And, I, we do have to jump here in a minute. But, you know, real quick before I let you go, What is what where are we headed? Here. You know, we’re not building an inn fast enough. Everyone’s renting home. Prices are through the roof. I mean, new Jersey here, you know, you’re talking 80. If you make $80,000 in new Jersey, you’re in trouble.
00:33:12:23 – 00:33:36:21
Speaker 2
You gotta be making about 150,000 just to put food on your plate. And, you know, if you want to have a family of two and a half kids, I mean, it’s, it’s crazy. I mean, 150,000. You’re scraping by, right? So, and, so where do where are we headed? Here. What do you see the next, you know, five years of housing prices, people say, oh, I’m waiting for houses price, housing prices to come down to buy a house.
00:33:36:21 – 00:33:46:02
Speaker 2
And I just laugh. I’m like you. It’s a complete misunderstanding of economics in the housing market. So what do you see in the next five, ten years? Here in our market.
00:33:46:05 – 00:34:01:05
Speaker 1
We don’t see home prices in the US going up over the next five years, but we also don’t see them going down. So what we’ll say is this we don’t have the ability to know where home prices are going to be in six months or 12 months, but we think five years from now, home prices will be the same as they are today.
00:34:01:07 – 00:34:28:19
Speaker 1
Okay, so there’s some slight moderation because with 2% inflation over the next five years, people’s salaries will go up roughly 10%. So we might have some small change in the affordability crisis in the favor of buyers. But it’s still remember the average American, those 52 million people, they’re $40,000 off. If they’re $5,000 closer, they’re still forever renters. So the total number of renters in the US will continue to increase.
00:34:28:21 – 00:34:50:02
Speaker 1
Absorption is at all time highs. Rent rents are not going up because we’ve also had the biggest glut since the 1980s of properties about 600,000 units a year, hitting the market in the last two years. And that glut is now ending. But while the glut spin around, some markets, especially in the northeast like new Jersey, have been able to raise rents, you know, pretty fast.
00:34:50:02 – 00:35:10:24
Speaker 1
You know, 3% or so southeast markets have had negative rent growth for two consecutive years, because that’s where most of the the delivery happened. Now the glut is ending. So I expect rent growth in the United States to be pretty strong, around 3% on average for the next three years, because it’ll take another three years for another glut to develop because that will happen.
00:35:10:24 – 00:35:35:04
Speaker 1
You know, let’s just they’re cyclical. They’re sooner or later we will overbuild again. But until that time happens, we should see strong rent growth. I don’t I don’t forecast housing prices going up for the next 4 to 5 years, because affordability is at an all time low, and the number of people that can finance them has dropped so much that I think that they’re just going to be at that, you know, million a year sort of level for the next five years.
00:35:35:06 – 00:35:47:14
Speaker 2
Right? Right. Interesting. All right. Great, great. And Neil, so where can people learn more about your missions and your companies here? I know that you have that website for the education. What are some other places they can get in touch with your groups here.
00:35:47:16 – 00:36:15:04
Speaker 1
Sure. Mission ten k.com is a place to check out our mission to build 10,000 townhomes, grow capital, grow, capitalize. A.com is where we, you know, buy properties. We we build apartments and multifamily University is the place to check out all of our education. That’s probably the best place to start. Most people that you know work with us, we we currently do not have, you know, options for retail investors to invest.
00:36:15:06 – 00:36:33:01
Speaker 1
We mostly work with family offices. But, you know, the right place to start is multifamily university, because maybe once in a year we do have something for retail investors to invest in. And the place to start is multifamily university. Connect with us, be informed. And sooner or later they will have an offer for you.
00:36:33:03 – 00:36:50:20
Speaker 2
Amazing, amazing. Thank you so much, Neil, for joining here. And to our listeners, check out Neil’s content. It is really professionally done, very in-depth, data driven, and one of the leaders in this space. So, so glad to have you on here, Neil. And you know, to our listeners, share this episode with a friend or a colleague.
00:36:50:22 – 00:37:13:20
Speaker 2
And follow Neil. He’s a great guy to, be following in the space and, be sure to like and subscribe if you’re watching us on YouTube. We have hundreds of videos out on YouTube. There are people’s capital Group. You can subscribe on YouTube and also, follow us on Spotify, Apple iTunes. Our podcast, the Passive Cash Flow Podcast is out on all major platforms, and we come out with a new episode every two weeks.
00:37:13:20 – 00:37:30:14
Speaker 2
As you know, I’m, the owner of People’s Capital Group here. We’ve helped people build and preserve their wealth in new Jersey. Multifamily. We’ve done this about 11 years here, and we’re focused on repositioning assets here. We are looking to get into the development space, though. We’re actually working on a 99 unit development in northern new Jersey here.
00:37:30:14 – 00:37:50:16
Speaker 2
And we’re looking at buying a, a vacant, distressed, luxury apartment building in downtown Newark as well. So, you know, some of those builders that ran into some challenges, we might be scooping up some opportunities there. So, I definitely, hear, you know, I think it’s great strategy to be getting into the development space and supplying our markets with more quality housing.
00:37:50:16 – 00:38:04:24
Speaker 2
And if you can create it for an affordable price for, tenants, that’s that’s even better. So such a beautiful thing. So thank you to our listeners. Please be sure to like and subscribe and share this with a friend. If you’re finding value for the Passive Cash Flow podcast, have a great day.
