Elisa Zhang on Real Estate Investing & Syndication is on the show today.
Notes from the show
Joe is in Chicago, Elisa is hanging out in Nashville TN and eating chicken for breakfast, and Julie is in Seattle!
I’m at a real estate mastery event.
Born in Shanghai China.
Found Bigger Pockets and learned about multi family.
Asian type of investor…
* Save all you can
* Buy with cash free and clear
* Majority of real estate gain in China is appreciation so they don’t think about cash flow
What’s the hardest part of investing
* They are all hard.
* Finding the deals are the hardest.
Could be viewed as supercharged 1031.
Painting the National Parks
Read the full transcript of the show with Elisa Zhang below
Speaker 1: Welcome to the Seattle Investors Club podcast with Julie Clark and Joe Bauer, where we share the nuts and bolts of real estate investing from our 20 plus years in the industry. Sit back, relax, listen, and immediately take action. Are you ready? Here we go.
Joe Bauer: Welcome to the Seattle Investors Club podcast, where we talk about the nuts and bolts of real estate investing. My name is Joe Bauer and I’m here with my cohost Julie Clark. Julie, how are you doing today?
Julie Clark: I’m all good, Joe. I am good in the hood. Enjoying this lovely Seattle fall weather.
Joe Bauer: Oh, are you still getting good weather?
Julie Clark: You know, it’s changed a little bit but it’s still actually, yes. It’s still beautiful and nice here. It’s not pouring rain. I see blue skies. That’s all we can ask for. I get up at like 5:30 in the morning and Buddy and I go out and get a coffee at our favorite coffee drive-through over here in the Ballard area. I can tell what kind of day it’s going to be by how much frost or how wet my car is or whatever. It was dry as a bone today. I think it must be a little bit warmer here today. Where are you at?
Joe Bauer: I am outside of Chicago, Illinois. It’s been terrible weather except for yesterday, when I went into the city and it was like 85.
Julie Clark: Win.
Joe Bauer: Yeah. It was beautiful. Then today it’s back to the, I think, low 60s maybe. It’s really weird, really weird.
Julie Clark: What’s in Chicago? What parks are near Chicago on your National Park Tour?
Joe Bauer: Yeah, there aren’t any really in Chicago. We just have some good family friends that are in the area. So on our way to the next park, which is outside of Cleveland … Who would have thought there was a park right outside of Cleveland? But there is. We’re just stopping in, hanging out with some friends, and yeah. We’ll move on later this afternoon.
Julie Clark: Cleveland. So are you chasing weather at this point? Are you going to get to a point where you got to go to warmer weather, head south maybe, or what?
Joe Bauer: Yeah. We will head south but that’s not going to be until we have a camping reservation in Acadia National Park, which is in Maine.
Julie Clark: Ooh.
Joe Bauer: It’s like the 23rd of this month. We looked at when the fall colors were supposed to be, on average, the craziest or the peak, and we set a camping reservation for that. We’re working our way there. Then from there it’s racing for the sun because who knows what the East Coast is going to look like after October 23rd, or even on October 23rd.
Julie Clark: Nice. That is awesome. I’ve been to New York, New Jersey, Florida and out that way, but I’ve never been to Maine, or Vermont, or anything like that so I’m jealous. Once again, I’m jealous. I’m jealous so take a lot of pictures.
Joe Bauer: Well, just hop a plane and come on out.
Julie Clark: I would love to, but you know what, I am actually going for spring break because my girls are in fourth grade so we are slave to the schedule. We are going to Charleston, South Carolina, for spring break this year with three other families in a big beach house. Going to do some skim boarding. Shout out to Yan and some of my skim board friends. That should be super fun. Those beaches are ripe for that, so.
Joe Bauer: Heck yeah.
Julie Clark: Looking forward to that.
Joe Bauer: Yeah. I’ve never been down there. That will be fun.
Julie Clark: Right on, right on. Well, let’s jump in. Let’s jump in. Speaking of travel, our guest today is hanging out right now in Nashville, teasing me about some scrumptious chicken she’s about to have for lunch [crosstalk 00:03:45] today. I’m always looking for a good transition. I don’t know how travel, chicken, and multi-family investing go together but hey. Elisa Zhang, what’s up?
Elisa Zhang: Hi, Julie and Joe. How are you? I’m at the sunny Nashville. 85 degrees, sunshine out there. I had hot chicken for breakfast. Hot chicken biscuit.
Julie Clark: For breakfast?
Elisa Zhang: For breakfast.
Julie Clark: Nice.
Elisa Zhang: With gravy and biscuits.
Julie Clark: Ooh.
Elisa Zhang: I’m actually here in Nashville attending a real estate conference this weekend at Wheelbarrow Profits with Jake and Gino. It’s super awesome. That’s kind of how the whole food, weather, real estate all mixed up together.
Julie Clark: That’s right. That’s how we do it. So which conference are you at?
Elisa Zhang: I’m going to be at the MultiFamily Mastery number two conference, which is hosted by the Wheelbarrow Profit guys, Jake and Gino from Knoxville.
Julie Clark: Okay.
Elisa Zhang: Yeah, it’s their second annual conference over here. Yeah.
Julie Clark: Nice. Well, we can’t wait to hear about it when you get back.
Elisa Zhang: Yeah.
Julie Clark: No doubt. Always staying educated is the way to go.
Elisa Zhang: Yeah.
Julie Clark: Yeah. For sure. I haven’t been to a conference for a while. I have twin 10-year-old girls and all their soccer. I’m a real estate broker, just a traditional broker as well as an investor. All the touches on real estate that I do, and the podcast, and the club, and everything else, and it is hard. It’s hard for me to get even to like a Thursday afternoon meetup or something like that, let alone getting out-of-state these days. I’m living vicariously through you guys, fo’ sho’.
Elisa Zhang: Yeah. Well, yeah. You sound like you got a handful over there. Definitely. I would say the flying around, it’s definitely sounds glamorous but it certainly has its draws for families and all that stuff.
Julie Clark: That’s right. For the first, I’d say, first oh, 10 or 12 years of my career I did a lot of traveling as far as Florida and Dallas and West Coast for apartments. I worked for a big real estate investment company. Our primary bread and butter was value-add apartment deals. Big 150 to 500 unit projects that I’d pretty much get the keys dropped on my desk and run. So I’m excited to talk to you today. But I did a lot of traveling and yes, it sounds good for about the first year or two and then huh, I’m good to go after that. More power to you guys for getting out there. Thank God for webinars and you can buy some of that stuff these days. But let’s do it.
Elisa Zhang: Cool.
Julie Clark: Let’s jump into it.
Elisa Zhang: Yeah.
Julie Clark: Joe, kick us off.
Joe Bauer: Yeah, yeah. Lisa, one of the things that we always like to dig into at the start of our podcast is getting to know you better. We’d love it if you’d share with us how you grew up, where you grew up, what you did during that process, and how it led you to where you are today.
Elisa Zhang: Okay. Cool. How I grew up, I guess is that all the way back to childhood?
Joe Bauer: Yeah. Share.
Elisa Zhang: Awesome. I love that. Well, for listeners over here, I’m actually not a US citizen. I grew up in China. I was born in China, Shanghai and then I moved to Canada for high school. Then landed a job in Seattle, the tech city for the Northwest, after I graduated from college. That’s kind of how I land in Seattle. Very quickly in 2009, if we all remember what happened in 2008, some people may refuse to remember what happened there. But basically in 2009 we decided to start real estate investing. Really didn’t know what to do. We just bought location, location, location. We bought a A class condo in the A location Capitol Hill in Seattle, and then started from there. There’s a lot of things that I can tell you about not to buy a condo. We learned it that way.
Elisa Zhang: But because we bought it right we were able to accumulate a few single-families. Just doing the whole Asian thing, buying it, paying it off, and try to do cashflow maybe in 15 years or something like that. That’s when my daughter was born in 2015, so I got a lot of time to think about stuff. In 2014, pregnancy all the way lead up to her birth. We started digging around to see how we can actually accelerate this thing, to actually hit retirement as early as we can through passive investing. That’s when we stumbled upon Bigger Pockets and read all about the BRRRRs and we read all about the multifamily. Then I was like, “Hey, you know what, we’re doing all this wrong.”
Elisa Zhang: Very quickly we were lucky because the Asian strategy that we’re employ, that we actually had a lot of equity build up in these single-families that we bought. Then we were able to do 1031 exchange it into fourplexes and et cetera. Then from that-
Julie Clark: Let me ask you. When you said Asian strategy, just so everybody knows what you’re talking about, I’m actually hang my license at Home link International in Seattle, which is a direct Chinese brokerage firm. I don’t know if you’ve heard of [inaudible 00:09:42] in Beijing, Shanghai. Actually I went my first trip to China last year.
Elisa Zhang: Oh, nice.
Julie Clark: And visited your home city there. Totally awesome. It was kind of crazy. I felt like, “God, I feel like I’m sitting at University Village but I’m in Shanghai.”
Elisa Zhang: Yeah.
Julie Clark: I don’t think people realize that. But when you say the Asian type of investor, define. I know what you mean. Let everybody else know what that means.
Elisa Zhang: Yeah. I was brought up in the traditional Asian family. My grandma saved all her life. It’s all about saving, saving, saving. So my grandma saved all her life. At the end of when she passed away she basically had a saving of maybe $16,000 or so, which is not much because of inflation et cetera that happens. That’s the number one Asian mentality, which is saving all you can. Then the second part is if you bought something, you buy it in cash, or you try to pay it off as much as you can, so that eventually you own it free and clear. That’s the Asian mentality I was kind of talking about. It’s really about quickly paying it down or paying it off, or buying something in cash, and then just hold it forever.
Elisa Zhang: I have put a lot of thoughts around that thinking. I think it largely has to do with how real estate works in China. It’s mostly through appreciating. There’s no rent income. The income to purchase ratio is just ridiculous. It’s like one percent cashflow if you were to buy a property in Shanghai and try to rent it out. To them, a majority of that gain is coming from appreciation. Part of that Asian mentality is thinking it’s also connected with that, what they see it’s like, “Oh, appreciation is how you make money,” instead of thinking about cash flow because it’s just not possible with cashflow.
Elisa Zhang: I think that kind of sum it up in terms of the Asian mentality. Just like, “Okay, buy something in cash, hold it forever. Or buy something and then pay it down as soon as you can.” To that point, we got 15-year mortgages on all these single-families that we had. Then we were just aggressively paying them down at that point, yeah.
Julie Clark: Just out of, that’s how you grew up thinking you needed to do it.
Elisa Zhang: Yes. That’s kind of how I grew up thinking like, “Oh, that’s the way to do it.” Our goal was to buy seven single-families and just pay them all down. Then we can cashflow and basically quit out jobs. But that’s going too slowly. That strategy was really slow, yeah.
Julie Clark: Right.
Elisa Zhang: That’s the point, yeah.
Julie Clark: So you got into Bigger Pockets and you learned about BRRRR and multifamily and then what happened?
Elisa Zhang: Yeah. Then about leverage as well. That’s when it kind of start open my mind up in terms of the financial education. We become more knowledgeable about okay, not all leverages are bad. In order to grow bigger, we’re able to kind of using leverage strategy as well as having our tenant basically pay down the mortgage for us and still cash flowing. That’s the mentality shift for me, which is like, “Hey, we need to focus on more the cashflow because that’s money that you have now which can help us quit our job.”
Elisa Zhang: We did a lot of 1031s. We moved all these single-families into 1031, exchanged them into fourplexes. Then basically from there, two years later I then was ready to do a commercial multifamily. Because we’ve done a couple of the fourplexes with value add strategies. We’d go in then we’d renovate the units and then up the rent. In some cases we were able to double the rent in Seattle. Because between 2014 and ’16 it was kind of a crazy time.
Elisa Zhang: We were ready to do a commercial building a commercial multifamily. So I found that at this 12 unit … And actually I had a three goes when first deal with that project was, one is I want to get a commercial loan, because that’s for [leaseners 00:14:11] who has never had a commercial experience. Getting into commercial world, it’s like a big boy’s clubs, where it’s like, “Hey, oh, you don’t have this badge. You don’t have a multifamily already nobody is going to lend to you.” So that experience was really important. So that was goal number one, which is getting a commercial loan. I would [crosstalk 00:14:35]
Julie Clark: Let me ask you did you feel that, when you went to go for your commercial loan, which means five units are larger. For those of you who are, newer one to four units is still under a residential loans. Once you get to five or larger, you’re looking at a different type of loan, which we’re calling a commercial loan. Did you feel that, because you had only had experiences with the smaller fourplexes and stuff like that, that that was checking the box for that commercial lender?
Julie Clark: Do you think that’s a required stepping stone to go to buy like a 10 unit that you should own the smaller properties on the residential side first simply because it’s checking the box for the lenders or?
Elisa Zhang: No, I don’t think that that is required. But I think what is required is that building that relationship and demonstrate that you understand how to run a multifamily building, whether it’s being triplex, fourplex or something bigger, to the lender. So, I mean [crosstalk 00:15:41]
Julie Clark: How do you demonstrate that though if you first purchase as a 10 unit, you partner with somebody?
Elisa Zhang: Yeah. So I think there’s a couple way to go about it. One is to partner with somebody and two is you could have five, six single families and you self manage them. And can show them to say, “Hey, I actually self manage these.” And then showing them the resumes. All like you understand how to manage tenants, you understand how to manage the contractors et cetera. For remodeling, et Cetera. And then sometimes I hate to say this is like also talking in a lingo. Being able to kind of tell them like, “Hey, in the conversation like the bankers size you up pretty quickly.”
Elisa Zhang: If they would say like, “Oh, the DSCR like they always have these like banker terms[crosstalk 00:16:31]
Julie Clark: Like know your glossary is what we’re saying?
Elisa Zhang: Yeah, know your grocery I think really helps. And the other part is also, I’ve actually never done that, but I do know friends who has kind of gone leap the frog, that single family to multifamily space just from one to like 10 or 11. They basically kind of create a portfolio for themselves and just showing like, these are the single family I own. These are experience I had managing them and they give it to the bank.
Julie Clark: Let’s highlight on that for a second because property management, as we all know, is the worst, least thankful, least rewarding part of owning real estate, right?
Elisa Zhang: Yes.
Julie Clark: It’s not fun.
Elisa Zhang: Yes.
Julie Clark: Some people may love it, but what I’m hearing you say is there might be a strategy for people getting started to who might be more of a push towards you thinking about managing your own properties even for a little while, just to get that onto your resume.
Elisa Zhang: Right.
Julie Clark: If you are looking to step up into the bigger properties. As almost like a strategy in order to build a faster path and an easier path to get there. That you don’t be so quick to hire that property manager simply for the reason of building your own … You thinking forward, right?
Julie Clark: People tend to think this is … I’m talking about this mirror I said, Mark and Albert and I are having discussions and love to loop you in. We were talking about some of our local investor friends and really wanting to focus on how to assess your current borrowing position and how to strategically and forecast how you’re going to get into the next lane is a borrower.
Elisa Zhang: Right. [crosstalk 00:18:24]
Julie Clark: And to think, people don’t think about stuff like you just mentioned, like manage your own properties. If you’ve never bought a fourplex and you only have single families manage them for a little bit yourself to help build your resume for the future of when you’re going to want to step up into the next level.
Elisa Zhang: And the other part that was very important is the build that relationship. And your first commercial loan is likely going to be a credit union sponsored loan or what they call, portfolio loan. Because credit union knows the local market the best and sometimes they can be a little bit more generous in the inexperience part. So building that relationship, it was really important. For me was building that relationship. We bought the place in beginning of 2017 but we start negotiate at the end of 2016.
Elisa Zhang: But we being kind of in touch, I been in touch with this guy from BCU commercial lender, since the beginning of 2016. So that’s been a year of buildup of that relationship. I can [crosstalk 00:19:35]
Julie Clark: How do you start that relationship?
Elisa Zhang: I actually just coat code in this case like believe or not. And I was connected with [Thess 00:19:47]. And then he’s a young man that like really helpful. So over the time, because we’re looking at the property already and I’ve been telling him, hey, here’s are my financial situations. This is what we want to do next and we’re looking for property to buy. And then along the way, that was not the first property that we put an offer on. We had him assessed couple of the properties before like basically sizing the property, just estimate what kind of terms that we can get before. So over that we kind of build a relationship.
Elisa Zhang: Also taking him out for lunch, chatting, just kind of like a friends. So, your broker or your lender is now become kind of your friend. And really that is one of the best relationship you can build with [crosstalk 00:20:38]
Julie Clark: And second that whole heartedly and another great relationship is that everybody should have a relationship like that with their title Rep.
Elisa Zhang: Right.
Julie Clark: As a side note, while we’re talking about you describing my relationship with some of the other team members that we have. But what’s important about what you’re saying is that, you essentially opened your file, I’ll say to speak with BECU, which is a local like we’ll say credit union and can do the portfolio loans on the commercial side.
Elisa Zhang: Right.
Julie Clark: Because you need to know everybody.
Elisa Zhang: Right.
Julie Clark: You need to know you’re borrowing position and your borrowing capacity before you go out deal hunting or ideally right? You know what to look for. Because you got to be able or you know who to look for as a partner to fill the gap that you can’t fill on your own. Right?
Elisa Zhang: Right. [crosstalk 00:21:30]
Julie Clark: And people forget to talk and start just as importantly as anything else to let you know lending seems to be a secondary conversation. And one of my big pushes for 2019 is to turn that around.
Elisa Zhang: Right.
Julie Clark: And kind of learning how to flip a house or do both. I’m trying to push, understand borrowing. Understand where you fit in and let’s make a plan for you to forecast out how you’re going to get into the next lane, right? And let’s figure out who you need to go meet in your networking directly to partner with, to fill the gaps that you can’t fill and start from that perspective. And so-
Elisa Zhang: That is very important. I think like looking back at that single relationship, which is a key factor for us to land the property. And actually just to kind of go back a little bit in terms of how can you actually going for a single family to multi … There’s other methods to do it as well. I just want to finish that answer as well. You could partner with someone who has a lot more experience by giving out a portion of your deal so that you partner together.
Elisa Zhang: So that is a easy way to kind of get to the next level. So you’re kind of writing someone else’s shoulder to the next level. And the second part of is it like if you don’t want to do that, is also to hire a professional PMs believe it or not, on your next venture with the multifamily.
Julie Clark: What doe that mean?
Elisa Zhang: So it means that for example, if we have a 12 unit lined up, the banks will ask you what experience do you have to manage? Now, if you have a vendor like the PNs for your single family before, don’t panic. You can always find a professional PMs. And then just basically, obviously that’s another relationship you should build to say, “Hey, this is the professional PMs that we’re going to put on this building.”
Elisa Zhang: So [crosstalk 00:23:34]
Julie Clark: Can you define that for everybody? Because your PMs?
Elisa Zhang: Oh yes. Property managers. So, in the commercial world you could manage it yourself if you had like 10 to 20 units. That’s almost a full time job to be honest. Or in order to scale, you should hire a property manager. But basically, by partnering with your Property Manager, like by hiring them essentially. You can tell the bank, “Hey, I actually do have a professional property manager lineup for this property and this is our business plan.” Right?
Elisa Zhang: Because the mentality shift from residential to a commercial is now I’m running this as a business. You should always run everything as a business, but let’s face it, in the residential world you can get away without having like a super clear business plan or et Cetera for a little bit. But in the commercial world, imagine you’re going to the bank, going looking at the interviews and whatnot and then basically you will present them a well thought out business plan.
Elisa Zhang: Like here’s a building that we’re running. This is our strategy. We want to take the rent to this way and here’s a professional property manager that we hired to help us to execute this. And then know that when you lend the money to me, I’m not the person who was going to be like a really like managing this professionally because I have someone who’s an expert on this as well. So kind of leveraging that the property manager experience and their portfolio also helps you in terms of lending that commercial loan.
Julie Clark: Right. And you know what the truth is for those have been around, is that managing a 20 unit building is actually harder than managing like 125 unit building. Because the efficiencies and the economies of scale are not there. It’s difficult. Believe me, I’ve done both. So, or own both and would much rather, like I said, it’s just those inefficiencies at that size on the management and the payroll and the this and that are tougher. So [crosstalk 00:25:46]
Elisa Zhang: Yeah. Oh, absolutely. I couldn’t agree with you more Julie on that because now, I’m actually doing larger apartment buildings about syndication and partnering. We’re now doing like 150 units to 215 unit buildings. And for sure these actually costs me way less time than the small apartment that I still own. That I don’t self manage them. I have property manager manager.
Julie Clark: Right.
Elisa Zhang: The level of professionalism, these property management that was able to manage these buildings are just not the same and there’s no systematization a lot of time.
Julie Clark: Well, it’s hard to find and other people really need to work full time or part time. And even the employee thing it gets complicated to properly compensate them and incentivize them on those size buildings. But [crosstalk 00:26:35]
Elisa Zhang: Absolutely.
Julie Clark: … definitely if you can grab yourself a 20 unit building, you need to do that. But you’ll see, if you can grab 20, you can grab 100. That’s the thing once you get to that point. So 1031 out of all your smaller properties into the fourplexes and stuff. Do you still own your fourplex? I know you’ve got a 12 unit [inaudible 00:27:02].
Elisa Zhang: Yeah. So I still own the fourplexes. I think at the fourplex later on just become a chess piece where we use it as a piggy bag. So, just give some numbers stats like one of our fourplexes is cash flowing $2,700 right now. Right. So, we’re actually just getting ready to do a refile on that one to pull out some capitals out of it. So that’s what I mean. Like I use them kind of like a piggy bank.
Julie Clark: Mm-hmm (affirmative).
Elisa Zhang: Once we did a refile, we still beat a cash flow of about $1,800 per month of which is just plenty of cash flow. But it allows us to have the extra 150k or 180k of extra capital to be deployed them.
Julie Clark: Do you have any rules for yourself on loan to value then? Are you like 50% or what do you just try and stick to? What are your rules on that?
Elisa Zhang: I look more at the cash flow. So like with the [DTI 00:28:00] dept to income ratio. So I look at like how much can I pay mortgage [inaudible 00:28:07] just for? What is my cash flow look like and what’s the vacancy I can take it down to? So that’s one way I look at it. And how do I evaluate if I should do a refile on the property as I look at the return on the equity? So which is the cashflow that generating for the building and then divide that by the equity of the building that’s still in there.
Julie Clark: Right.
Elisa Zhang: If that makes sense. And usually that’s a more stricter rule. Usually most of these buildings were only able to kind of generate a five or 6%, even though if they’re cash flowing like 10 to 12%. Because the equity buildup has been so drastic, that’s when you know you have some lazy equity that is not doing their jobs.
Elisa Zhang: That’s kind of what I focus on and I tried to do the ratio the equity part is like if I look at the property, that also helps me inform when they are to buy or sell. So whether to hold or sell the property. So if I I’m looking at a return on the equity ability for less than 5%, that is definitely a sale. Sometimes even less than 6%. Now if return on equity is some of my fourplexes are still at a eight to 10%, then it’s good to hold.
Julie Clark: Right.
Elisa Zhang: But the thought processes is if you have equity just sitting there not working, you could. Because I have opportunities to invest it [inaudible 00:29:37] with other basically apartment investors and the be able to return back and doing nothing. And be able to get these capital working on eight to 10%. Then why am I sticking that equity in that.
Julie Clark: That brings me to a question. So, what are your return requirements that you shoot for a reasonably right? I mean, people say all over the board, you get there … Like you said, the Chinese investors that are happy to get like 4%. They’re like, “What 4%?” They’re used to getting one or nothing. But for you being around the block and knowing what’s reasonable and what’s not, because you’re looking at deals all the time, probably across the country. What type of stabilize returns are you, and I mean stabilized, right? Because there’s a lot of numbers in between. Once you get stabilized, where are you looking to sit? As far as your returns go?
Elisa Zhang: So, I kind of more tend to look at the average because I also take the ramp up period into calculation because I don’t want to be in a property that is ever negative cash flow, if that makes sense. So you wouldn’t see me doing a lot of like a d class, like basically differ maintenance, huge differ maintenance buildings. So it has to be something that already cashflow right now.
Elisa Zhang: So when I look at the average returns or destabilized returns, I’m looking at the eight to 10% of cash flow. Again the expectation has been readjusted because the market where we at. So the eight to 10% cash flow annually is what I’m looking at. And then a total investor return, like basically total return back to me is that I can double my money in five years. Either get 80 to 100% of profit in five years for the span of the project.
Elisa Zhang: That’s what I look for when I invest passively into a property.
Julie Clark: Nice. That seems reasonable to me.
Elisa Zhang: And then so what it kind of combined to be is like, if we’re only going to be your little nerdy over here is, I hate to bust out the IRR because it’s really hard to explain it. But really it was the equity gap at the time of sale and then the cash flow together, the combined average return is usually around 14 to 15% annual.
Julie Clark: Right.
Elisa Zhang: The reason that is that it definitely beats the stock market.
Julie Clark: Yes. Right. No doubt. And currently you own both in Washington and outside of Washington state?
Elisa Zhang: Yeah. So, all my portfolios in Washington are pretty much owned 100% by me. And that you don’t want to talk to my bookkeeper they should tell you I’m a nightmare to work with [crosstalk 00:32:39]. I am getting a bookkeeper. I have just hired a new bookkeeper, so I really glad I was able to do that. And so all my local portfolios are basically owned majority are owned by me or 100% owned by me. And all my out of state portfolio, when I actually jumped, did the jump springboard to start investing out of state, the scalability, the stuff that Julie you were talking about. The scalability, all that stuff come to my mind because I want to diversify my money in different projects. Right.
Elisa Zhang: And then be able to kind of manage that more systematically. So that’s how I started investing passively and actively participating in syndication, which is pull people’s money together to buy larger apartment. So [crosstalk 00:33:34]
Julie Clark: Right. Let’s talk about that. So you have two things going on. You are an investor yourself in other people’s?
Elisa Zhang: Yeah.
Julie Clark: Would that be other people’s syndications then I guess?
Elisa Zhang: Yes.
Julie Clark: Right.
Elisa Zhang: So far I’ve been focusing on … So syndication just, with the best definition of that is a hot word that gets thrown around quite often, but really simple. It’s polling people’s money, raising capital, pulling people’s money together to buy something. It could be large multifamily, which is what I specialize in and what I invested in. It could be mobile home parks, self storage, new development projects and et cetera based off the risk difference. Like there’s different risk involved in different types of projects obviously.
Elisa Zhang: Could also be a startup like a tech startups and whatnot. But basically that’s what syndication is. And so I specialize and I invest in so far only multifamily, but I am thinking about branching out doing mobile home parks as well.
Julie Clark: Right. I think everybody is sort of spreading their wings. I think everybody’s boring with flipping and realize it’s kind of still just another day job and all the stress and everything. People are definitely coming out of the woodwork, which is interesting, right?
Elisa Zhang: Mm-hmm (affirmative).
Julie Clark: In regards to multifamily and other things like you said, mobile homes and self storage and we’re looking forward to hearing more about those types of investments. We actually have Ryan Gibson that we’re going to get on here on the podcast pretty soon.
Elisa Zhang: Yeah, Ryan is awesome.
Julie Clark: Yeah, he is.
Elisa Zhang: Ryan is awesome there.
Julie Clark: Looking into that. So when you’re doing your out of state investing, is that through … How are you meeting these other syndicators or other investors or is it kind of guru level type participation that some of these gurus now offer the ability to sign up and get in maybe their deals or how do you about networking out of state?
Elisa Zhang: Yeah. So that’s actually when we decided going out of state, that’s when I start doing the researching. And I think one of the really good venue to meet other people is through national conferences. They’re educational. And I know, again, it goes back to the Asian rule, the Asian mentality is always like, “Are you scheming me on something?” I’ve never signed up for any guru program before so to me it was kind of like, no. Like everything, you can do it yourself.
Elisa Zhang: That was the mentality when I walk in. But then I start listening to these podcasts just like you guys, your podcast. There’s also other podcasts out there. For example, Joe Fearless has a podcast there. I kind of really liked the well bear profit podcast. That’s kind of like how I found these guys. Jake and Gino, they basically own their own portfolio. I think the portfolio must be like $50 million already or so. But they really talk about the day to day, how to operate multifamily.
Elisa Zhang: Given that I have a multifamily, I was kind of focusing on it. And that podcast was really a [inaudible 00:36:55]. So then I attended, a couple of the conference they put it on nationally. And that’s my kind of first experience, like traveling for conference, et cetera. Actually also shout out to our local event maker Tarro Yarber from Fixated. They put in an awesome, badass, I can’t never remember the name, but it’s really long that.
Julie Clark: When it was badass?
Elisa Zhang: Yeah, the badass. The northwest badass real estate investor conference. Who? Multiple. So that really got me connected with people who are from California, East Coast, everywhere. Right? And the unique thing about these conferences, you have to pay for these to go to. So, and also the airfare sometimes. So if someone has actually pay for the airfare to get there, then they’re more focused.
Julie Clark: Right.
Elisa Zhang: They wanted this more and they’re at a different level, possibly. So instead of going to your local meetups, the caliber of people that you meet in these conferences a little higher, I feel, are the more focused towards like the multifamily stuff.
Julie Clark: [crosstalk 00:38:13].
Elisa Zhang: Yeah. So, that’s kind of how I met some of my partners and it actually also how I met my investors per se.
Julie Clark: And is that how you got interested in doing syndication yourself? Is that you have been a part of other people’s syndication. You’re like, “Hey, I can do this too.” Right?
Elisa Zhang: Yeah. Well, yes and no. So we kind of stumbled on the syndication like an accident. Or so [crosstalk 00:38:40] not so active, but it wasn’t like a … Yeah. It wasn’t a deliberate choice. So what happened is we were actually looking to purchase a property out of state by herself, or maybe just was an apartment. So I met my partner [Krista 00:38:53] and she lives in Mississippi. So wheelbarrow profits like national conference that happened last year.
Elisa Zhang: And we just got along really well. It’s kind of funny too, like going to these conferences and you got 400 attendees sitting there and only like a handful are women. And then you filter all the wives that were just there involuntarily. Then you only ended up with a handful of girls that were kind of interested in talking about real estate. So that’s how me and Krista met. And we just hit it off right away. Within the first 20 minutes, we just knew that we’re going to be partners.
Elisa Zhang: We are very complementary in skills and is she also got more time because she’s a stay home mom and I still had a full time job. So she was able to do some of the groundwork and I was able to kind of give her distracting just thinking like this is where we go after, check out this, try this blah. Shortly after she actually landed a 40 unit [inaudible 00:40:01] in Mississippi, and so we decided to partner and then at the time she kind of decided she wanted to do syndication due to personal reasons and whatnot.
Elisa Zhang: so I just tagged along like, “Whoa, I guess we will learn about syndication, so let’s do it, you know?” So it was a small deal could be done by us 100% just by ourselves, but she wanted to do this and I see it as a learning opportunity so that’s where we kind of spearheaded it. Start doing syndication.
Julie Clark: Excellent. And so, do you have funds available right now? You’re just looking for a deal or how many are you guys focused on investing out of state because it’s so expensive over here? Or are you just purely opportunistic on whatever comes across your desk and makes sense?
Elisa Zhang: Yeah, so locally, to be honest, I’m not really looking for any deals anymore. In fact, most the time I’m just doing the refiling or actually selling some of my property. And I know, like a lot of people know me local as a multifamily person. I still own two single families. One of them is my mom’s property really, so I don’t really have the liberty to sell it. But, I still have a single family or so we’re planning on selling.
Elisa Zhang: So most activity locally is now selling and then buying activity is mostly out of state. Shortly after that, we were also doing some deals in Texas. Met my other partners there. So we closed 170 units deals about two months ago in July.
Julie Clark: Nice.
Elisa Zhang: And then we’re currently working on something similar size and possibly that in two RV parks, several local parks.
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Julie Clark: Excellent. And so are you guys, as far as that goes, what are your favorite states that you’re investing in right now?
Elisa Zhang: Yeah. I think Texas, for sure. So, kind of rewind back a little bit. Remember I said I was not subscribed to the gurus, so I ended up getting [inaudible 00:43:12] Wayne a guru group per se. But just like anything else I was doing, I was betting. Who can be that mentor that takes me to the next level, right? So after we did the 48 unit deal, there’s a lot of challenges in syndication. So we didn’t have existing database before we did that projects. Gladly, it was a smaller deal, we were able to raise the firm.
Elisa Zhang: But after the whole experience, everything just took a really long and that I wrote down my 2018 goal and I was like, you know what, we gotta do this better in the way and then what are we lacking off? And then it turns out to be investor database and a couple other things. So that’s when I become seriously shopping for a mentor per se. So looking for people who is doing what they’re preaching and then who has like a really, not so much the mentor themselves, but the network that they created, that we could potentially take our business to the next level.
Elisa Zhang: And that’s when I joined Brat Sommers group as Brat Sommers [inaudible 00:44:22]. And they’re kind of based on the Dallas, which is also another reason we picked at that group because we did all the market research. We liked the Texas market, we love Florida market. So these two are the markets that we really see up trend. It feels like it Seattle 2014 or Seattle 2015 time, when there’s still some up room. And then the rent to purchase ratio just makes sense in this market.
Julie Clark: Right.
Elisa Zhang: So, [crosstalk 00:44:53]
Julie Clark: Will you explain to our listeners, what the rent to purchase ratio means, so they know what you’re focused on there as an important component of that market?
Elisa Zhang: Mm-hmm (affirmative). Yeah. So, in the residential world, we always use the like people always talk about the 1% rule, right? What that is, is basically a month of rent to buy like the purchase price. If that is 1%, then it’s roughly probably a seven or eight cap building. And it’s worth buying so that you’re able to pay off all your mortgages, repairs and et cetera. And still cashflow a little bit.
Elisa Zhang: So that’s kind of like the rule of thumbs, but once you moved to multifamily because repairs and et cetera is much bigger compared to a single family. We use the almost 60% of the expense ratios over there. Then you’re actually looking at, for us, that 1% rule is that a 1.4, 1.5. To them we feel like, okay, this is good enough projects or entry.
Elisa Zhang: So, in Dallas, giving an example, the property that we just purchased last time was 61k a door and then the rents we were seeing them at $900 to a thousand. Right? So, there’s a little bit more room to kind of play over there. Instead if we follow the 1% rule, it would it be like 61k a unit and you’re getting like $600 or $620 a month per unit. Which is really not leaving you a lot of rooms to operate in these larger multifamily. [crosstalk 00:46:41] So in Dallas we were able to take these papers.
Julie Clark: I hear you. What is kind of like your quick and dirty benchmark? When somebody sends you a deal once especially as you start gaining more attention. And of course I know you’re going on other podcasts and you’re doing great at your networking and so forth.
Elisa Zhang: Mm-hmm (affirmative).
Julie Clark: Which is a huge part of any investor’s life is some serious big time networking. You’re going to get started, people are going to start sending you a lot of deals. So you have a stack of 10 deals on your desk. Tell us what is your quick benchmark to decide which of the top get to the top of the pile? Do you do a quick 1% rule? What’s your quick and dirty?
Elisa Zhang: So, actually sadly, there’s not really a quick and dirty, but yes, there’s a couple of rules that we do over here. So a couple of things that we first look at are, it is the rent to purchase ratio but often times due to vacancies. So because the buildings that we look for are a lot of value out buildings, so whether they’re mismanaged or they just haven’t been physically updated. So they’re going to be a little bit more below the market.
Elisa Zhang: So, we definitely do a quick dirty, the 1% rule calculation. Of course our numbers are 1.3 or 1.4, but if it doesn’t even meet 1% rule, there is no need to look at it. Because it\s just not going to work. And then the other things that we look is the per unit cost. We do a lot of extensive market researches in these markets. So that’s why a lot of folks will ask me, “Hey, why are you not like in more markets? Why is it just Texas and Mississippi?”
Elisa Zhang: Well, these are two areas, not only I have foot on the ground partner, but also we did extensive research on these sub markets. So if you gave me a sub market, I can reasonably give you a quick highlight of like, oh yeah, okay. I know in the back of my mind, just like you drive down in your app, you’re like looking at all different neighborhoods. You’re like, yeah, this area is about a 200k a door. This area is about this. Right?
Elisa Zhang: So you kind of have a gauge going on. So the price per unit is a one of the other measure that we kind of look. And we know that neighborhood wouldn’t be selling it at 75k a door, but it’s selling a 61k a door. That’s a good deal. Right.
Julie Clark: Right. So you’ve done a deep dive into your sub markets you’re interested in. So you can do a quick assessment if something seems like it’s worth deep diving deeper on when it first crosses at your desk based on what it’s priced at and [inaudible 00:49:30] and things like that. Anything else besides those two things?
Elisa Zhang: Usually just these two things and then it’s the spreadsheet. So we have a under writing spreadsheet where I have a quick light version that I’ve created on top of the more complicated version. So the quick light thing that I’ve put in, is basically has an estimation based on per market, which per unit expense is going to be roughly [inaudible 00:49:59]. So that’s already pre-entered. So you all only have to enter it really quickly.
Elisa Zhang: It’s like a two to five minutes. You just enter the price, purchase price, the current rent on per unit, and then what the rent that you think you can push it to. Right? And then we look at the percentage of the rent increases for a little bit. And if that spits out not huge negative number, then we’ll get into the next stage of other [inaudible 00:50:24]. If that’s [crosstalk 00:50:25]
Julie Clark: What do you use for your expenses? When you don’t have the details, do you thrown on 50%, 60%? What do you [crosstalk 00:50:32]
Elisa Zhang: We used to do the 50 and 60%. And actually is very inaccurate way to do it because that’s also … If you do the percentage wise, it really kind of hinges on your revenue. So in a value add opportunity, you could have be just counting the expenses because the incomes were lower than they supposed to be, but the expenses don’t really reduce. Right? So, we found that to be not super accurate. So what we right now do is that post up market. We work with our property manager very closely. So after you underwrite a couple of deals carefully, you have a really good gauge on the range of expenses in the units of 100 per unit, right?
Elisa Zhang: So like we know in Houston, it’s range between 5,000, $800 per unit to 6,000, 300 per unit expenses [crosstalk 00:51:29]
Julie Clark: Right.
Elisa Zhang: … in a particular neighborhood. And we know in Fort Worth it could go down to 5,000 to 5,000, $400 per unit. And that [crosstalk 00:51:40]
Julie Clark: That could be related to property taxes. Right? It can be related to, I mean [crosstalk 00:51:44]
Elisa Zhang: Correct.
Julie Clark: So I hear you, right? So like I’m looking as a percentage of income on expenses. It’s more you get to know, again, it’s part of your research to know in certain what sub markets the expense per unit seems to run, including … Do you include capital expenses in that number or is that in addition [crosstalk 00:52:08]?
Elisa Zhang: Oh, so capital expenditure is not included in the repair or the expenses because that’s the annual reoccurring expenses. But the capital expenditure, there’s a separate budget for it. So usually it would require us to take a look at what are we gonna do with this building? How many units are classic unit? Among these, how many do we want to actually upgrade? Is there any common amenities we want to put in and improve? Right? Like adding a playground or a pet park.
Julie Clark: How about know what your lender might require underwriting for cap x per unit.
Elisa Zhang: So these ones are what they call the replacement costs, I think is what you’re talking about. So in the lender, sizing exercise, they have one line item that would, they call it the replacement costs. What it is, is basically it is capital expenditure in the general sense, but it’s actually a reoccurring cost they [crosstalk 00:53:07]
Julie Clark: Like carpets and plants [crosstalk 00:53:09]
Elisa Zhang: Yeah, the largest stuff. Like water heaters and all that stuff. So usually these, we just use a quick rule. It depends on the age of the property. We put it anywhere between 250 to like $300 per unit. And that usually certifies that.
Julie Clark: Right.
Elisa Zhang: And the lender will usually ask for about at least $200 per door.
Julie Clark: Right. What about on the lender side? Are they using in those markets? Are they using for underwriting vacancy? Right. Do you always use like a rule of thumb that you’re going to use 5% for your underwriting on vacancy? Or is it seven or what do you do to protect yourself?
Elisa Zhang: So, the underwriting that we use to project our investor returns in our project returns are very conservative. These market though they add the vacancy around five to 6%. Right now, we look at the historical. So historical, we pull cost of report for example, and then they will give us a historical vacancy. So in our underwriting projection, we use 10. So in the market stabilized, they can see we use 10 instead of the five or six that the market is producing.
Julie Clark: That’s good.
Elisa Zhang: And then also the cap rate, Dallas Fort Worth right now is a 5.5 to 6.5 market more lower six. Not quite 6.5 yet. So our exit cap rate, the reversion cap rate, is the cap rate where we anticipating when we’re selling the property, is usually set to 7.5. So that’s at least a one point off the market, above the market if not two. At some 7.5 or 7.75 depends on [crosstalk 00:55:07]
Julie Clark: So you mean you’re purchasing at a five and a half to six and a half and you’re selling it at seven and a half score?
Elisa Zhang: Yes.
Julie Clark: That is such an important, I mean for people to understand that when they buy something, they’re buying off actual numbers which are lower hopefully with the value add. And so the cap rate that you might be having to buy on his is lower because there’s room to add value to the property. But once you’re in a stabilized and you’ve created that stable value on the project, you’re off your new pro forma numbers, your cap rate actually would probably be higher. Right?
Elisa Zhang: Mm-hmm (affirmative).
Julie Clark: And that is a function of actuals versus, we’ll call it stabilized or proforma values. And we have too much to talk about today in regards to dive all into that. But you guys all need to understand the difference of when you’re buying on actuals and you’re selling on stabilized numbers because there’s a difference.
Elisa Zhang: And also [crosstalk 00:56:13]
Julie Clark: It is not intuitive.
Elisa Zhang: And then it’s also to predicting the market, right? Because the market is really great right now in that market still, it’s a really great, but you could be exiting not at the optimal time. So you have to sell at a higher cap rates. So that’s another reason [crosstalk 00:56:33]
Julie Clark: Right. And when you go to refinance and let’s say you want to hold onto it long term, you need to get an appraisal to get your loan. And maybe using a cap rate on that as well. So let me ask you, from your perspective, what is the hardest part about multifamily? The most challenging that you find about multifamily investing? Is it finding the deal or, I don’t think it’s raising the money, once you know what you’re doing. I don’t even think it’s doing the necessarily the rehab. What do you think is the hardest part?
Elisa Zhang: Actually Julie, to be honest, all three parts are hard in my personal opinion. I think, certainly for me and individually, everybody has different skill levels and what they like to do. Individually for me was to find the deals. It’s a lot harder to kind of get kick the off and establishing yourself and earning the trust of the brokers where you don’t live in a state where you don’t live. That becomes really challenging. Operation wise, I feel like I got that figured out because I do have experience, but I also partner. For me is I would not do a project if there isn’t a foot on the ground partner.
Elisa Zhang: So that person will kind of serve as a eyes on the ground. A person who can drive to the property if needed on a daily basis.
Julie Clark: And we’re not even talking about your property manager, right? Or is that the property manager we’re talking [crosstalk 00:57:59]
Elisa Zhang: No, we’re not talking about property manager.
Julie Clark: … about partner, right?
Elisa Zhang: We are talking about partner who actually also put their own money. Like so for [crosstalk 00:58:06]
Julie Clark: [inaudible 00:58:06].
Elisa Zhang: So, all the properties that we syndicate, we all put our own money in there as well. Right? So is a partner who has invested interest in the project. Part of the general partner and so their job is, they’re kind of doing the more eyes on the ground activities. So checking all your PMs locally. If we’re doing value add, the remodels, so checking on the project in progress or did they really say what they installed? Taking pictures and et cetera.
Elisa Zhang: So I feel like that is very important and the property manager obviously will hire … We only work with property managers that are … The property manager for example, we work with in Dallas, has more than 20,000 units that they’re managing right now in that local area only. And that they’re kind of focused on that local area. They’re not really nationwide. They focus on that area. So for each market, we have a different property manager in that caliber who helps us manage that.
Elisa Zhang: So then they help hire payrolls and et cetera and helping manage the property. They also help doing some accounting as well as coordinating contractors to do rehabs and et cetera.
Julie Clark: So the property management team that you hire is actually managing the rehab from the day to day basis, right? And you guys are as an ownership team, you’re overseeing that, but you’re hiring your property management company to actually execute your rehab plan. Is that correct?
Elisa Zhang: Yep, that’s right. Yep. That’s right.
Julie Clark: Okay. That’s important for people to understand how important the property management team is in the execution of the value add part. Right?
Elisa Zhang: Yep.
Julie Clark: So how do you compensate them? Do you compensate your property management team? Because they’re not partners. Do you compensate them like upon a successful refinance, let’s say, which is probably the goal on the value add? If not a sale, do they get a bonus for that or how do you do that?
Elisa Zhang: Yeah, so it really kind of depends on the deals. So if the deal actually requires pretty run on the mill, like just interior upgrades, they got all that system down. There’s really not much more incentive aside from the property management fee that you paid them, the payrolls and et Cetera. Like [crosstalk 01:00:36]
Julie Clark: They receive bonuses, right?
Elisa Zhang: Right.
Julie Clark: They’re obviously going renovate and they’re going to lease it up. They’re using bonuses, that’s the reward?
Elisa Zhang: Well because the property management income is based off the revenue they generate. So there’s already incentive build in in terms of the percentage of the tape that they’re taking. Now we do have leasing bonuses on project that are particularly tough to manage. For example, while we’re turning tenants, so we are taking over that like building and that they may have crimes possible way on the property or like tenants that we don’t want to be on the property. And we have to kind of going through a massive [inaudible 01:01:12] effort.
Elisa Zhang: There, we do put incentives in there basically every month we’ll say, “If you hit this small market, you get the extra bonus this month of this amount.”
Julie Clark: Right.
Elisa Zhang: And then usually we incentivize, not the property manager, but more the payroll. The people who they hire to work on the property or the regional managers who is going to be more direct impact to that.
Julie Clark: Exactly. So how do you structure your syndication deals or is each deal different or do you have sort of a platform where you guys are going to put 20% in and you’re going to raise the other 80%? And do you offer guaranteed returns or when do you start paying cash flow? Or is each deal totally different or are you going for … What are you going for? How do you offer up your syndications?
Elisa Zhang: Yeah, so actually, the answer is each deal is different. So, but they’re kind of similar. So typically what we do is we have a cashflow elements which is basically, we typically do a straight up profit share of … So the general partner who’s putting the labor in, putting the deal together et cetera, will get up to a 20% sponsorship equity share. And equity partners will get an 80%. So yes, we will invest our own money too, but our money actually goes into the equity partner pot. So where our money is earning the same as our investors are.
Elisa Zhang: So that’s kind of usually how we structure that the split or per se, but it really depends on the projects, right? Like projects to project. If I’m doing a mobile home park, it requires a lot more intensive property management because there was no professional property managers out there for these. Then the sponsorship cut will be a lot more. So, but with multi families we’ve got a system down, so usually it’s about 20%, 20, 80 split.
Elisa Zhang: And then the cashflow elements is that basically whatever cash flow that we get, our equity partner will get a share of it. Basically, it’s also 20, 80, split, straight up split. So our equity partners will basically get 80% of the cash flow and based on the portion that they invested, whatever more share it calculates to be is however the amount their cashflow will be.
Elisa Zhang: At the end of the day, we try to strive our investor return between eight to 10% cashflow though annually. So usually on the first year we tell our investor first or second year, that’s when you’re seeing a ramp up. So even though we will say, eight to 10% average, the first year, second year we do a projection. Usually the first year you’re not going to get to 80% all because of we’re doing a lot of value add, but then the second year it catches up.
Julie Clark: Right.
Elisa Zhang: So you may be able to do nine or 10 to compensate for that first year. And we kind of try to keep it simple. Some deals depends on who we’re doing the deal with and where the deal is and how much amount of work is put into acquisition. We may charge an acquisition fee, but a lot of our offers, we don’t even do acquisition fee. So no additional fee involved there.
Julie Clark: Wow, that’s unique.
Elisa Zhang: Yeah. And then because we really believe in performing for the deal. So then, your payout is tied with your incentives. Basically how you perform.
Julie Clark: Do you guys charge asset management fee?
Elisa Zhang: Yeah. So there is asset management fee involved and usually it’s about 2% asset management fee. And that’s off the revenue. That’s off the revenue. And usually it’s kind of the change. And also by the way, all these travel that we’re doing to see the property, I go to Dallas at least once a month, all these are just covered by our own personal expenses. They’re not part of the deal because it’s getting hard to say which project you’re going to assign these travel too.
Julie Clark: Right.
Elisa Zhang: So we usually just cover that personally as well. So the asset management kind of help, asset management fee helps to ease that a little bit.
Julie Clark: Do you limit the percent one investor can purchase on the investors side?
Elisa Zhang: We do. There is a maximum invest amount and the projects that we do are typically more than $10 million though. So in order to get a substantial share, someone has to be like investing $1 million into the deal, right? So if we have a partner who is doing $1 million into the deal, we may want to open up the consideration to see if there’s special structures we can structure for them so that they can take advantage of 10 31 exchange programs and whatnot.
Elisa Zhang: But again, so far we don’t have any of the standardized investing such a big amount because one thing I keep on teaching my investor is, you may want to diversify your investment. So one of the beauty about investing in syndication deal passively, is that you’re able to diversify your investment. If you have $1 million, you can invest in 20 projects which will give you a much more stabilized portfolio versus putting all that into one project. So far we haven’t run into the Max number, but we do have an max number and they’re usually, it’s no more than 50%. But [crosstalk 01:06:56]
Julie Clark: Well it changes when you go to put your permanent loan on, assuming you’re going to do a longterm hold, right? Or what is your investment strategy are you holding … You have like a five year look or 10 year look out there?
Elisa Zhang: Yeah, we do a five year projection. We are tarting to see maybe a longer projection because of where the cycle is right now.
Julie Clark: Right. Exactly.
Elisa Zhang: So it really kinda depends on the deal. But typically what we do wrong on the meal is that we project a sale. So our goal is not to hold it and buy our investor out for most of the multifamily stuff, our go is generating that equity and then sell it. Because here’s the thing, right, Juliet, like if I’m telling you, “Hey, I can generate eight to 10% cash flow every year, but if we sell it in two years, we can double the equity, double your money. Or we can hold it for five years and continue cash flowing forever. Which one would you choose?”
Julie Clark: You’re asking me?
Elisa Zhang: Like if it was me [crosstalk 01:08:00]. Yeah, which one would you choose?
Julie Clark: I think it depends on everybody’s personal situation because the problem with selling is now you’ve got to replace the investment, right?
Elisa Zhang: Yeah. And the thing that’s the beauty of it is the way that we build up our deal pipeline, we were pretty confident that when we exited a deal within that year, we can buy it on the deal. So that a lot of the [crosstalk 01:08:20]
Julie Clark: Does that mean when everybody has the opportunity to exchange with you because, you know?
Elisa Zhang: Yeah. So not exchange and I want to kind of clarify that’s a misnomer. So for a syndication deal like ours we typically have between 20 to 50 investors. So doing a 10 31 exchange, basically the entity has to roll to the next property and also the share has to be somewhat stabilized at the time of sale to move to the next property. So there is a lot of people that you got to manage, right? So one way to kind of do that exchange is be able to put in a tenant in common structure, but then a tenant in common is on the books is basically each individual view his attendance in common which doesn’t have a manager.
Elisa Zhang: So you’re kind of in this hodgepodge of 20 to 50 people attend to in common, as you can imagine everybody that has a say. That kind of defeats the purpose of our syndicating which we want to be efficiently operating a property and not having everybody have a say over too many cooks in the kitchen essentially. So when we wait, see the pros and cons, we decided that no, we’re going to actually forego the paths for 10 31 exchange. It would just be per project. And we buy it, we sell it, we get the profit, pay the capital gains and move on to the next one.
Elisa Zhang: However, when we do these projects, we do cost segregation on every single of our projects. So the cost segregation and the accelerated depreciation gives you a huge discount on capitol losses essentially that you can claim for the next projects that you’re really into. You’re going to get a negative or a huge discount on that. So it offsets your current projects capital. So that’s one way by not doing 10 31 but still be able to potentially offs at the taxes that way.
Julie Clark: Who are you using for your cost segregation studies? Or are you having a CPA?
Elisa Zhang: No, we use this company called The Madison Title. And to be honest, in every state we use a different, potentially a different team member. We do like to use Madison Title because they’re nationwide and they’re very cost efficient and they also withstand at least 24 audits already. So, they have never lost a battle with IRS. So that’s kind of what we look for. And Madison Title is based off Dallas, like Dallas, Texas. So, every time I go over there, I get to see the the owner of the, basically the firms and whatnot.
Elisa Zhang: So they have CPAs and the cost Seg study people in the same roof, under the same roof. So there’s a lot of bouncing ideas around and making sure that the study, buy your sign it’s all done properly.
Julie Clark: That sounds good. We would love to have a cost segregation campaign come on our podcast here.
Elisa Zhang: Oh yeah, I can talk to Quinten about that.
Julie Clark: That’d be great. That’d be awesome. That’d be great. So, I mean as far as like, do you have any short and quick tax tips for multifamily investors?
Elisa Zhang: Yeah.
Julie Clark: And that’s a whole nother podcast, you know? That’s a whole [crosstalk 01:11:53]
Elisa Zhang: Yeah. There’s so much there. Absolutely. I think one of the reason why some of our investors invested in our project is sometimes it’s not even for profit. It was for tax saving strategies. So we have a lot of investors who are doctors and lawyers, actually yes they’re professions like agents and brokers, right? Because they made a lot during the up cycle and they’re like, “Where do I put the money yet?”
Julie Clark: Right.
Elisa Zhang: So multifamily is one of the best vehicle in terms of basically kind of the tax strategies there. So like one of the things that happened last year is in September, Trump has announced a new tax law which is what they call accelerated the depreciation. Which basically pretty much all your interior improvements can now be segregated, that can be cost segregated or depreciate at the 10 year speed. A usual depreciation speed is about 27 and a half years. So that’s almost triple right? Triple the speed and triple depreciation there are possibly.
Elisa Zhang: So definitely if you own a property, it doesn’t even have to be multifamily it can be single family. If you have put in substantial capital expenditure, it’s worthwhile to have a cost segregation person come in and do like a quick quote. Whether or not it makes sense to do a cost segregation and then accelerated depreciation. And then the kind of the sweet spot, it really depends because these things cost money, but with Madison Title because their cost was so reasonable, we were looking at the property that’s worth more than 750. It may make the cut. 750k, it may make the cut.
Julie Clark: Sorry?
Elisa Zhang: So if you have a property that’s over 750k you did substantial capital expenditure to it, it may make sense if you plan a hold up longer, like more than three or five years to do a cost segregation on that. Or just simply get a quote, the quote is kind of like free to get.
Julie Clark: And how do they charge for the cost segregation? Is it based off of kind of like tax appeal of the savings or is it a flat fee or what is it?
Elisa Zhang: I think it’s a flat fee, but it’s not a flat fee, but they evaluate like, I think it’s the number of … Basically how much of work that they have to do. I think it’s probably like based off a hourly rate or so and the project rate. So it’s a combination of the two. I mean we did most of the projects, they’re all pretty similar in cost, but a certainly 168 unit is different than like 84 unit. And do [crosstalk 01:14:46]
Julie Clark: Have you heard of anywhere that has a cost segregation? Does bigger pockets or something have a cost segregation worksheet that people can download to help them understand, where they’re spending their money and what might be available for that accelerated depreciation? So what is important guys and girls out there is that depreciation when you own multifamily properties, is a non cash balance sheet we’ll say expense, right?
Julie Clark: So you could cash flow off your properties and be putting money in your bank account every month, every year, and you could still have a tax loss due to depreciation and amortization. Right? And, no, it’s a beautiful thing. You’re like, “What? You know, I’m not having to pay any taxes because I’m getting all this money.” But the thing that everybody needs to keep in mind that Mark, Anton and I were trying to remind everybody of is, when you go to sell a property, you have to recapture that depreciation write off, right?
Elisa Zhang: Yup. And it’s recaptured at the 25%.
Julie Clark: At a 25% tax rate.
Elisa Zhang: Yes.
Julie Clark: So, you need to make sure that you’re selling your properties at a profit where you’re going to get cash out and money in your pocket. Because there’s what I’ll call phantom taxable income, which is this recapture of your depreciation, write off tax at a 25% rate that you’ll need to pay when you go to sell your property. And people don’t realize that because they don’t … They get excited and they don’t get fully versed in what apartment investing means and you could get caught there.
Julie Clark: That’s why you got to have a great CPA on your team that you keep in touch with that you understand what the numbers are going to look like when you go to sell. Before you go to sell a property, you need to run it by your CPA to make sure that you’re making enough to cover your recapture taxes and stuff like that as well.
Elisa Zhang: Yeah. Definitely. And to that point too is which is why, it’s great to ask Madison Title what’s the similar cost segregation a company for a free estimate, right? Like you tell them your strategy and they will tell because these guys are very experienced off their top of the head, “No, this doesn’t make sense to do one.” Like just using an example of a 12 unit, it was purchased that over like a million or two. But we purchased it before, first of all, before September last year.
Elisa Zhang: So that kind of given a huge disadvantage. We can’t really qualify for a celebrated depreciation for use, but we can still evaluate whether or not make sense to do a cost seg. But we’re actually exiting a year and a half after making possible 80% of the profit there. But like I asked the Madison Title, they looked at a project and they’ll be like, “No, you know what? It doesn’t really make sense to do a cost seg on this one, even though you guys pumped a lot of money in it.”
Julie Clark: Right.
Elisa Zhang: So that’s where asking and engaging a company like that, now only engage a company that will maybe give you a free estimation, that will be really great. Because then you can decide whether or not you want to proceed, whether or not it makes sense for you to proceed is that [crosstalk 01:18:17].
Julie Clark: And remember everybody, so we’re talking about stuff here that might seem complicated to you or not, but you know what the keys are, the keys are having the right people on your team. You don’t have to be an expert at all this stuff, right? You have to be an expert at knowing who to put on your team, right? So who’s on your team? Who are the important people on your team? You got, of course an attorney, a CPA. For me that’s also a title rep is important to me. Property management company, cost segregated company right? [inaudible 01:18:46] on the ground locally, partners who are local. [inaudible 01:18:50]? Who else is important to have on a team that you can [crosstalk 01:18:56]?
Elisa Zhang: So for us, because we’re doing syndication, we also have obviously the security lawyers on our team too. [crosstalk 01:19:02]
Julie Clark: Do you use security lawyers that are local or do you use local to the market or what do you do for that?
Elisa Zhang: No, because our goal was to invest out of state and because I know my goal was to be in more markets. So I’m honestly seeking team members that can do national-
Julie Clark: Exactly.
Elisa Zhang: … the national stuff. So most of my security lawyer, actually he’s in Maryland. And then my title company is obviously has to be local to Texas, local to Mississippi or different. And in Dallas actually, it was so convenient. The title company there’s also have a security law firm, so they actually do both. So my Maryland guy actually doesn’t do Texas and stuff because it’s just a lot easier when you have the title guy and the security lawyer do the same thing. They can look at stuff more holistically. Who else would it be on my team? I think a mentor is quite important in my opinion because that’s someone that can take you further and help you seeing stuff that you’re not seeing.
Julie Clark: True.
Elisa Zhang: Take you to the next level. So for me, I have a couple of these mentors. So that is very important for me. And I think lastly, your spouse is actually a very important people on your team. Whether they can say, “No, I’m not interested in what you’re doing, don’t bother me with any of that. But I’m also not complaining to you about all the times you spend on it.” Or you’re actually very active partners working together on a business. I think that’s actually often a missed a member that people don’t think about. If I didn’t have the support of my partner that, her, him watching our children, like him watching our kid and all that stuff then it wouldn’t happen.
Elisa Zhang: So I think that’s who I can think on top of my head. Oh, the very important person I forgot is the lender of course.
Julie Clark: Right.
Elisa Zhang: The lender is like one of the most important relationship that you have. Because it’s important when you submit the offer, it’s important throughout the whole acquisition process. It’s even important somewhere down the line when you do the a refinancing for. So that’s very important. And a broker, broker is another very important relationships that to build.
Julie Clark: Excellent. Where are you getting most of your deals these days? Are you getting from networking and through these events or are you getting them from brokers in those markets?
Elisa Zhang: In Texas, especially with the larger multifamily, we’ve actually tried both ways. Like try to source our own deal by contacting owner before. What we found is with these bigger multifamily, you can still find deals that are on the pop for under 100 unit. So maybe sometimes you can find gyms between 50 to 100 units. But really when it comes to the bigger units, like 150 to 250, which is the range that we’re doing now, brokers are your best source. I’ve had wholesalers send deals to me, they’re usually always it does not work out because there’s a lot more education that goes in training, essentially wholesalers to understand how to evaluate a deal.
Julie Clark: Right.
Elisa Zhang: So the brokers are the best source for our deals. And then also because as you start having track records, the lending becomes easier. The broker knows who you are that they start sending you better deals because they know you can close. So that’s kind of like the slow or building up your repertoire. Slowly get a better, better deals. I think that’s the part. So I would just say like broker are the best source so far for us.
Julie Clark: It’s all good stuff. We’ll tell us us about, as we wind down here, we’ve been long on this one, which is awesome because it’s just so interesting. Before I start super winding down, what do you think is the hottest topic right now in your community of who you hang with in your network? What’s the hot topic right now? I mean we could say [crosstalk 01:23:38]
Elisa Zhang: There’s a lot of hot topics. I think there’s a couple of new topics and new topics is always hot. I think the hottest topic is always like, “Hey, when is the next downturn?” Right. So like full folks get really nerdy, start interpreting oil barrel prices, [crosstalk 01:23:58], … are there rate prices? How they related when [inaudible 01:24:04] with downturns et cetera.
Elisa Zhang: But at the end of the day, like people ask like not do any more deals because it’s at the top market. Like there’s always a deal somewhere.
Julie Clark: Right.
Elisa Zhang: You just have to look harder for it and also be conservative of all your underwriting. And be not afraid to pass on a deal that doesn’t look like that’s maybe on the fence. Like your job is to shoot down to deal if it’s a … I feel like after you dissected multiple ways and it still works, then go for it. So I think, the word economic cycle are when this next downturn is always a hot topic.
Julie Clark: What’s your favorite resource to review current market conditions? Or is that hyper local for you in each market? Or do you look macro sort of, or what do you use as a resource for that?
Elisa Zhang: I don’t do too much macro, it’s more the local. So looking at, and it’s multiple sources, for underwriting how to fine tune out data sheets, we use costar reports which costs money too to pull. And the for also the brokage actually gave some really good forecasts as summary of what happened last quarter and that the trend going forward. So, the SVN, Marcus Millichap, all publish quarterly reports on how multifamily is doing. You can kind of drill down to a sub market as well.
Elisa Zhang: For a hot market like Dallas and Fort Worth, there’s data’s on it. And Houston, there’s data’s on it, right? So Seattle, there’s data’s on this. So we use a lot of these free reports. It’s free, but you have to provide your information to them. So that’s kind of where I get most of the readings from aside from just driving around the neighborhood.
Julie Clark: How about besides economic forecasting, what other topics you think cost segregation really?
Elisa Zhang: Yes. Tax Strategies. That’s a huge thing because when you hand out with multifamily investors, look like some of these deals we have to put in up to 400K of heart money down like just up in the front. So people who you are handing out are people who has a little bit wealth. So of course for wealthy people, the hottest topics always taxing. So tax saving strategies. So cost segregation, actually the newest topic was about opportunities zone.
Julie Clark: [inaudible 01:26:33].
Elisa Zhang: So it’s really funny the property I’m selling is opportunities zone, the property I’m buying is in opportunities zone so I’m on opportunities build up. So that’s a new tax policy that was in for last December. Mark actually mentioned to me the beginning of this year, earlier this year when I was planning on selling my property, and he mentioned to me and said, “Hey, your property maybe in opportunities zone so that’s when I’d kind of dived into a little bit deeper.
Julie Clark: Is that cross state lines or is that just … The opportunity zone, is that a Washington thing or is that a national thing?
Elisa Zhang: It’s a national thing. It’s one of the other rules that Trump administrator has put into that sweeten the pie for real estate investor. Really.
Julie Clark: Right.
Elisa Zhang: And it’s, don’t quote me on this because even the CPA’s are still wrangled their head around this new policy, because not enough guidelines are given by the senators is so far. But essentially people are getting a little bit more familiar with it, but most people still don’t know what it is. So what it is, it could be viewed as a supercharged 10 31, but without the exchange part. So you could be selling any type of asset like stocks or whatever, and it actually rolled the capital. Again, if you invest it in a opportunity zoned property or your opportunity zone, you could potentially defer to tax until the time you sell that property or December of 2026.
Elisa Zhang: And there’s another clause that was in there, that one, I wouldn’t call it, but basically if you hold a property to for more than 10 years, you can potentially pay no tax on that property. But then the law expires in 2026 which is eight years from now.
Julie Clark: Right.
Elisa Zhang: So you can see that kind of, it’s not a sure bet. But I think that it does have a step up position. So like if you sold in five years, you may get, don’t quote me on this, you may get a portion of it that could be, the base can be stepped up. So you’re saving maybe 10 to 20, like 10% or so of that capital again. And then if you hold it for seven years, then it steps up a little bit more, like maybe 17% or 20%, something like that. Don’t quote me on that again, like check with your CPA on this.
Elisa Zhang: There’s still a lot of more unsureness about it. And controversial because it typically in affordable housing sector, there are these tax credits and laying around but in order to qualify, usually when you purchase a property, you have to put equal or more amount of money into capital expenditure in repairs, oh, sorry. In capital expenditure value ad in order to qualify for these tax credits.
Julie Clark: Right.
Elisa Zhang: We don’t know if that will actually applies to them. That’s the one I’m not sure because in the IRS rule didn’t mention anything about it. The senators [inaudible 01:29:38] give more guidance on it. So far, didn’t seems to be that has that.
Julie Clark: We’ll have you back and you can give us a little more detail on that because there’s so much to talk about here. So, of course [inaudible 01:29:51] before we touched down here, tell us about Northwest apartment investors, your Facebook community that’s totally awesome and gaining some steam. Again speaking of like going to these conferences where the people show up that have more levels of experience and stuff. I think that your apartment investor, a Facebook community there is something that is awesome. What’s your plans for that? Why did you start that? And tell us a little bit about that before we sign off.
Elisa Zhang: Yeah, sure. So I started the Northwest apartment investors a Facebook group like late last year, December last year or so. I was tired going to … The reads are also for people who wants to kind of just get in but I started noticing not a lot of folks that are talking about the larger apartments stuff like, how do you become more sophisticated investors? It just was, you get into the larger apartment game, you realize people who you hang out with actually have other financial strategies, right? Like you’ve never heard of, that is not even apartment related.
Elisa Zhang: So, I wanted to kind of create a community that helps bring that knowledge from just the wealthy’s that to people who are working two jobs and they’re looking to reach their FI sooner to bring that into the mix. So I wanted also the quality of our topics, we’re talking about bigger things, because once you think that that’s possible, then you start doing it and it becomes as possible. So that was kind of the thought of creating the Northwest Apartment Investors. It’s actually apartments, not like just small fourplex that we’re talking about.
Julie Clark: Right.
Elisa Zhang: And then so then we cobbled that also is our new meetups series about apartment mastery, which I kind of work was brought on basically to kind of bring case studies of actual people buying more than a hundred units through different strategies. Case studies of these to Seattle. Because in Seattle, a lot of folks kind of talk about the small plexes, but it’s like, then what? What’s the next level? Right?
Julie Clark: Right.
Elisa Zhang: So a lot of folks has kind of reached out to me about it. Um, so that was the part [crosstalk 01:32:18]
Julie Clark: What’s the meetup series? Is that local or is that?
Elisa Zhang: Its local. So it’s a local. So we meet typically first Friday in Capitol Hill Library and then we will present. We have guest speakers or what not, that professional present a case study typically about someone acquiring a larger property, either in state or out of state. And the strategy they use to go about it. Right? Sometimes we’ll invite professionals such as, in our next meetup is actually a little bit out of whack with the calendar because I’m traveling for three weeks in October. So we’re going to be holding it on October 24 at Capitol Hill Library from one to three on Friday.
Elisa Zhang: And then I will actually advise my super awesome CPA and tax strategist, Thomas Jones, to talk about the tax benefit for multifamily. So the topics that we kind of briefly discussed over here, the cost Seg, the opportunities zone, how do you strategize you hope portfolio, so that taking full advantage of investing in multifamily. He’s going to be covering that topic in there.
Julie Clark: If the people are interested in joining that meetup or attending that meetup, where do they find the information about it?
Elisa Zhang: So meetup.com, is probably the best way to find us. Aside from that join us on Facebook because we usually do an announcement there.
Julie Clark: Is it called Northwest Apartment Investors on on meetup.com?
Elisa Zhang: It’s not unfortunately because we are doing this. It’s called Apartment Investor and Mastery.
Julie Clark: Okay. Apartment Investor Mastery?
Elisa Zhang: Yeah, it’s very hard to find it.
Joe Bauer: I’ll make sure and grab a link and put it on the shots.
Elisa Zhang: Yeah, I was going to suggest, I think it’s better for me to give you a direct link on this.
Julie Clark: All right guys look for that in the show notes if you’re interested in learning more about that. As well as taking a glance and checking out Elisa’s Facebook community called Northwest Department Investors, it’s a good place to also start. You’re probably always looking for investors for your projects, so I encourage you guys to reach out to her directly to learn more about how to maybe get involved as an investor in one her syndication deals. I know I’ll be doing so. For sure. So, let’s wrap this up by, if you saying something a little bit off topic, if you are not going to be a real estate investor, what would you do?
Elisa Zhang: Well, there’s two tasks I think, Joe is going across country doing 50 states, but one of my dream is to go across all the 50 national parks, like what Joe is doing right now and then paint the parks outside. And auction off these paintings to a donate back to the states. So that’s one of the things that want to do. So painting, I would say painting and traveling is what I want to do. And the other part I feel really passionate about is creating a financial education system for youth to really create a channel to learn financial education for our kids. Even starting from preschool age.
Julie Clark: I’m on board with that. If you start to pull on something together on that, count me in and put my name on the list.
Elisa Zhang: Awesome.
Julie Clark: I’m talking about doing that at school where my kids go to school, creating around there.
Elisa Zhang: Would definitely love to know more. I probably started the process for all like interviewing people like you and it kind of start gathering these stories that way. Because my daughter is still very young. Three and a half. Right. So, I don’t have a lot of experience there.
Julie Clark: Give me a call any time. All right, so wrap it up. Tell us lastly, do you have any good books that you want to recommend to anybody? While we wrap this up and then we’ll sign off.
Elisa Zhang: Yeah. So, there’s a couple books. Lot of people ask me, “Where do I start if I want to start doing investing in the apartment?” I would say one of the classic is David Lindale’s How I Invested In Emerging Markets. So that’s, that’s a very great book to get learned glossaries that know how the basic calculation works and et cetera. And the other book personally I’ve being kind of listening to reasonably every day is the Grant Cardone. So I think that there’s a book called Sell Or Be Sold.
Elisa Zhang: That’s a great book for folks out there who are just kind of hustling. If your wholesaler or obviously brokers, agents et cetera. If your job has to do anything with selling, even if your job’s not the always selling apartments but there are some sell elements to it, that’s a great book getting motivated on.
Julie Clark: Where do you look for your apartment rents? What do you use for that? For looking at current market rents? I know you’re talking to the local property management company, but do you have a resource for research on apartment rents?
Elisa Zhang: So, Costar is where we kind of take a look at the general stuff, but we don’t really trust Costar. So apartment.com are heavily what we use to kind of source some of the rents.
Julie Clark: Mm-hmm (affirmative).
Elisa Zhang: Initially before we do a drive by and zillow.com like the Zillow rental Porto’s is also a good way to kind of know your market get. And then we get into the third level of vetting, property that we put offers on. We definitely have our local partners drive by actually going into the office and actually asking what the rent does it include utility, all that detail usually it’s not available in an apartment.com.
Julie Clark: Right. I used to do a lot of shopping of competition and stuff like that back in the day. I spent a lot of time in the multifamily world and I would go in. One of my tricks was if I wanted to find out what the true rents were on the comps, I go in as a renter and I’d say, “Oh, I’m interested in, I’m not if I want a one bedroom or a two bedroom.” Trying to determine what their rents were and what their true vacancy was. And I’d say, “Yeah, so maybe one or maybe a two.”
Julie Clark: And they would show me like this and I said, “Well, what locations are there on the property that I can choose from?” They literally break out a map and mark off the different locations. So I could simply count up how many vacancies are. I said, “Well, I might be moving in the next 30 days. Do you have anything coming up next month?” Innocently asking these questions where I’m literally just calculating what their vacancies are.
Elisa Zhang: Yeah. I mean, we do some of that. We also do phone calls because sometimes some of the neighborhood, we’re clearly not the demographic there. So we try not to make it so obvious. And sometimes we just walk in an office and tell the office manager very straight we’re thinking about buying some property in neighborhoods. Not your property, so you don’t have to worry about that. Is it possible that you can give us some information on the rent stuff? And then sometimes it works. It really depends on the neighborhood, that target demographic.
Julie Clark: I hear Ya. Well, awesome stuff. I mean, so I can talk to you forever. I think this has been one of our longest podcast just because it’s such a hot topic. And this is where everybody wants to be. I mean, if you’re currently flipping homes and all that stuff, that’s great to build up a pot of cash, but you’ll realize soon that you’re going to want to get into the cash flow game. And obviously, ideally some value add to gain that equity and grow your wealth instead of just growing your fees. You want to grow your wealth.
Julie Clark: And I’m an apartment investor myself. It completely allowed me to have an awesome lifestyle even during the downturn didn’t really even affect me because I owned apartments that carried me through. So hopefully you guys all understand that you can open your eyes and you can get started sooner than you think. If you just educate yourself about how to get involved and that can be through partnerships.
Julie Clark: We are a simple way to get started doing that and just learning about the business so you can contribute something. But thank you so much. I look forward to having a one on one lunch with you so we can talk more and definitely want to get on your investor lists myself.
Elisa Zhang: Perfect.
Julie Clark: I got some money than I need to place also. So, awesome stuff. Have Fun in Nashville. Eat a bunch of chicken and a bunch of yummy stuff for me.
Elisa Zhang: I will.
Julie Clark: I’ll make Joe do all the pushups for me to burn off all that stuff break own.
Elisa Zhang: All my hot chicken’s, yes.
Julie Clark: Exactly. So Joe, where can they find us? Where can everybody find us and find a way to connect with Elisa offline here and get involved more in some of her communities that she’s involved in and continue to be educated?
Joe Bauer: Yeah. So we’ve got all the show notes at seattleinvestorsclub.com/52. That’s seattleinvestorsclub.com/52, where you can find all the links to all the things we’ve talked about today. And if you guys like the podcast, we would love it if you’d give us a five or give us a review on iTunes. Every five star review that we get, helps us to get our podcast out to more people, so we would love you for that if he could do it.
Julie Clark: Thanks guys. Great. Thanks Elisa.
Elisa Zhang: Thank you Julie.
Julie Clark: And we’ll see you when come back to town. Okay?
Elisa Zhang: That’s good. All right.
Julie Clark: All right over and out.
Joe Bauer: Bye.
Elisa Zhang: Bye.