# From Behind the Iron Curtain to $80M in Real Estate with Vessi Kapoulian > Episode 226 of The REI Agent podcast > > Hosted by Mattias Clymer, a Realtor with Funkhouser Real Estate Group who leads Valley Homes Team in Harrisonburg, Virginia (https://valleyhomesva.com/about/mattias-clymer/), and Erica Clymer, a licensed therapist and real estate investor. - **Published:** 2026-10-06 - **Duration:** 00:53:36 ## Summary Vessi Kapoulian is the founder of Dream, Believe, Achieve Capital Group in Los Angeles, a former commercial lender who now invests in multifamily properties across Florida, Tennessee, and Georgia, with about $80 million in assets under management. The episode teaches two lessons: verify the numbers before trusting a deal, and ask how money could be lost before asking how it could be made. ## Description Vessi Kapoulian grew up behind the Iron Curtain, in a Bulgaria where travel was almost impossible and every apartment belonged to the government. Her mother made her a promise with no obvious way to keep it: if you learn English, I'll send you abroad. Then the wall fell, and Vessi studied her way to ## Questions This Episode Answers **What does Vessi Kapoulian do in real estate investing?** Vessi Kapoulian runs Dream, Believe, Achieve Capital Group in Los Angeles, which invests in apartment properties in Florida, Tennessee, and Georgia. Kapoulian spent most of a career in commercial lending before moving into investing and now manages about $80 million in assets. **How did Vessi Kapoulian make the first real estate investment?** Kapoulian's first investment was a rental property in Memphis, Tennessee, found through an out-of-state investor met at a local meetup. A larger down payment was used to prioritize cash flow, and a refinance two years later recouped the initial investment. **What is the first question Vessi Kapoulian asks before investing in a deal?** Kapoulian asks how money could be lost on the deal, so the downside is understood first. Kapoulian also advises verifying the numbers before trusting them and protecting the downside, citing the Warren Buffett rule of never losing money. **Are syndication preferred returns guaranteed, according to Vessi Kapoulian?** Kapoulian says preferred returns are not guaranteed and not every deal offers one. A preferred return also does not always mean monthly cash flow, since results depend on the projections and how well the operator manages the property. Syndications typically run five to seven year holds, so that money should be set aside for the full period. **Why does Vessi Kapoulian think the next decade in multifamily favors operators?** Kapoulian argues that cap rates compressed from about 2011 until 2021 or early 2022, which lifted returns even for weaker operators. Kapoulian expects the next decade to depend on growing net operating income through operations, and says the next 24 months may be a strong time to invest. ## Show Notes Vessi Kapoulian grew up behind the Iron Curtain, in a Bulgaria where travel was almost impossible and every apartment belonged to the government. Her mother made her a promise with no obvious way to keep it: if you learn English, I'll send you abroad. Then the wall fell, and Vessi studied her way to a full scholarship in the United States. She did the conventional thing after that — school, job, corporate ladder, and most of a career in commercial lending, managing over a billion dollars in commercial credit portfolios. Then she walked into her office one morning with no notice and learned that 70% of her immediate team had been let go. "You're an employee, and you may think you're the greatest person in the world, but you're disposable, you're replaceable. And that's kind of harsh to say. It's also very harsh to hear, but that's the reality." She was spared, and is careful to say it was not because she was smarter. These are cost decisions. So she asked what she could actually control, and the answer was real estate: a turnkey rental in Memphis, then a duplex, then an 11-unit, and now 150-plus-unit apartment syndications. DBA Capital Group — Dream, Believe, Achieve — runs approximately $80 million in assets under management across Florida, Tennessee and Georgia. The second half of this conversation is a former commercial lender explaining, plainly, how syndications work and where they go wrong. Why a preferred return is not a promise of monthly cash flow. Why you should plan on your money being locked for five to seven years and not invest if you might need it. Why the bridge-debt extensions are running out. And why the 2011–2021 run, when falling cap rates bailed out even bad operators, is not coming back — the next decade, she says, belongs to the operator. Her golden nugget flips a famous line. Reagan said trust but verify. She says verify before you trust, and the first question she asks on any deal is not what it returns, but how she loses money on it. A holistic approach to life through real estate. ## Transcript **[0:00]** You're an employee and you may think you're the greatest person in the world, but you're disposable, you're replaceable. And that's kind of harsh to say. It's also very harsh to hear, but that's the reality. And when I walked into my office with no notice to find out that 70% of my colleagues were let go. And that's when it really hit me. Verify before you trust in the numbers. Protect the downside. And you probably remember the Warren Buffett number one and number two rule, never lose money. So when investing in deals, the first questions I like to ask is how do I lose money on the deal? **[0:44]** Welcome back to the REI Agent. My guest today is Vessi Kapulian, founder of Dream, Believe, Achieve Capital Group in Los Angeles and author of Mastering Multifamily Underwriting. Vessi immigrated to the United States from Bulgaria and built a career managing over a billion dollars in commercial credit portfolios before making the leap into multifamily investing on her own terms. Today, she runs DBA Capital Group with approximately $80 million in assets under management across Florida, Tennessee, and Georgia. And brings a level of underwriting discipline to this business that most operators simply do not have. Vessi, welcome to the REI Agent Podcast. It's a pleasure to be here, Matthias, and thanks for having me. **[1:25]** Absolutely. Yeah, so that's a very interesting start, the intro. I kind of want to dig into it a little bit. When did you come to the United States? And was it to study? What brought you to the United States? It was always my dream to study in the U.S. And at the time, so I grew up behind the Iron Curtain. So very, not only a different place, but a very different time. And I will never forget the promise that my mom made to me many years ago. If you learn English, I'll send you abroad. And I'm not quite sure how she thought she would do that because, again, travel was almost impossible. But by the time that happened, the wall fell. She did send me abroad. My first trip was to London and shortly after, Japan. **[2:14]** I just saw a whole other world of possibilities. And at that time, I knew abroad is where I want to study. And there was only one way to make that happen. It was through academics. Financially, we were a poor family, but it would have been impossible to afford full cost of tuition here in the U.S. So I studied hard and I made that dream a reality. So I came to the U.S. on a full scholarship. So, again, that was many, many years ago. And life here was nothing I could have ever imagined. It was really a dream come true. And I'll stop here. I can keep going. But I'll keep going. I think it's really interesting. And I don't know how many of our listeners understand how recent those times were. And, you know, I mentioned to you before we got on the podcast that, you know, I lived in Germany for a year. **[3:16]** I actually did a tour of Europe before living in Germany for a year. And we went through Germany when the World Cup was there. And I remember later when I lived in Germany, first of all, I was with a family that had a grandfather that was, I think, in the Nazi party, first of all. And then second of all, there was, you know, I remember talking to one of the Germans and just hearing them say, like, you know, when the World Cup happened in Germany, and this was like 2005 or 2006, something around this time. It was the very first time that they as a nation felt like they could wave, had to have their flag displayed. And now, like, some sort of shame or, like, whatever this person teared up talking about even. **[4:12]** So, like, it's, I think, you know, we, a lot of people, depending on how old you are, have grown up hearing this history, but not, aren't really, like, aware of how recent it is and how much still impacts Europe in general. Absolutely. And it was definitely a different experience, but I'm very grateful for the environment I grew up in. It definitely taught me a lot of skills that I can apply today, but also equally grateful for the opportunities that this country afforded me to or has allowed me to expand into. So, definitely, when I reflect on my journey, it's with a lot of gratitude as well. Do you think that your perspective coming from a different culture and a different time when there maybe wouldn't have been as many opportunities available to the general person, does that perspective, do you feel like that fuels you? **[5:14]** Is that any kind of part of your motivation to achieve such great success? Absolutely. Absolutely. It's definitely shaped who I am today or how I operate, right? And in so many different ways. One is the abundance versus scarcity type of mindset. Yes, maybe you don't have as much physical or material belongings, but if you have your mindset and you really, truly desire the goals that you have, I firmly believe that you can accomplish those. And again, I mean, I didn't come from a family of means. I still remember even my parents saving gas money so you can go to the capitals if I could take the English language exams to apply for college. So, it was definitely a lot of hard work as well. It wasn't just dreaming and hoping. **[6:14]** You really have to, at the end of the day, you have to take action and do the work. And, of course, nothing is easy, but it doesn't mean that it's impossible. And even if you maybe fail the first time or don't accomplish the goal the first time, at least you know that you've tried. And looking back, you have no regrets. So, that's just one in many ways that it's shaped me. Yeah, no, honestly, I really am often, I love hearing stories about successful immigrants because I just feel like it's inspiring. I love to hear kind of where some of that motivation comes from or how the life was for them and kind of why that drive kind of exists. And I feel like it's probably, I can't say it's a higher percentage of very driven people that are coming from other countries. **[7:23]** And, I mean, maybe it's just simply like the act of being brave enough to come to a different country. That makes, I don't know, like there seems to be a high percentage of driven and successful people that come from other countries. So, yeah, thank you. I love hearing stories like this. Tell us about your studying and then kind of where that took you after university. Yeah, so when I came here, I pretty much followed what I would call the traditional path of going to school, getting good grades. And part of it was my contractual obligation, right? Being on a scholarship, you can't fail on the academics or else you lose the scholarship. I've always been a learner and hungry. Even today, the minute I feel I'm getting stagnant, I get anxious because I need to be always learning and growing. **[8:18]** But getting back on track with the question, I kind of started along the traditional path of going to school, getting a job. I remember at that time when I was graduating, it was early 2000s and everyone's definition of success was to be the CEO of a company. So you join a large corporate firm or a firm and you start climbing that corporate ladder. And that was the definition of success that was painted all around me. Which is funny. All right. Sorry to jump in here, but it's funny because I feel like what I've heard is it's very, very rare that you actually move up. It's more like the job gets – you have to move to different companies because they'll hire somebody else instead of moving you up. **[9:10]** You're doing a great job where you're at. We'll hire somebody. No, it's definitely. And it's – I mean, what you don't realize – and again, it's not good or bad, it just is, right? You're an employee and you may think you're the greatest person in the world, but you're disposable, you're replaceable. And that's kind of harsh to say. It's also very harsh to hear, but that's the reality. And it took me a while to get that message, but there were a few events of adversity that happened along the way. Now we're probably warning signals. It just – again, it took me a little bit longer to pick those up. But probably the listeners remember the Enron crisis, right, that left a lot of people with decimated retirement portfolios, no jobs. **[10:04]** And the 08-09 crisis very similarly left people without jobs and decimated retirement portfolios. And then my own employer who went through a couple of restructures, and I clearly remember one of them because it impacted my media team. And when I walked into my office with no notice to find out that 70% of my colleagues were let go. And that's when it really hit me. I realized, look, I don't control – first of all, what if I'm next? And I was very grateful that I was spared, but I also wasn't kidding myself. It's not because I was any smarter or more talented. Maybe it was, but the reality is these are cost decisions. So I was probably getting paid less and now expected to do double the work. **[10:56]** But it really caused me to take a step back and think, well, what is it that I can control? I don't control the markets. I don't control corporate restructures. But what I can control is my decision on how I manage my retirement and income streams. And that's when I made the decision to start investing in real estate. Again, growing up in Bulgaria, at that time, there wasn't a developed stock market. Even today, capital markets are not as strong as here in the U.S. So often when people think about investments, they think about hard assets. So in that moment of crisis when I was considering what can I do that will give me at least a safety net and that I can start building towards and hopefully shield myself from the risk of another structure where I'm laid off, real estate is the path that I decided to go down on. **[12:00]** And I can definitely talk more about that. Yeah. Real quick question for you is what percentage of people do buy homes in Bulgaria? Maybe kind of what you're growing up versus now. And kind of what does – do you have any idea what that looks like? Because I think painting the picture about opportunities here I think is important. Because from my experience in Switzerland, it's a lot harder to buy. Is that true of Bulgaria? Yeah. No, it's definitely a different environment. First of all, when I was growing up, it was virtually impossible to own a home because everything was owned by the government. But there were programs where you could lease a home and then buy it back eventually. So there was a program that was implemented. **[12:50]** So I still remember when our family bought our apartment. That was like a historical day for us to own something. So nowadays it's easier but still not as common because here in the U.S. we're very blessed to have the 30-year fully amortizing fixed-rate mortgage. Such products don't exist in other countries, definitely not in Europe and certainly not in Bulgaria. So very often – now there are loan programs nowadays. I think like maybe you could get 15 years amortizing. With like 25% down, 20% down probably. With really high down payments. So even today it's not as easy to obtain. So most people when they buy it, they typically buy it. And how they accumulate properties also over time is they get passed on from generation to generation. **[13:52]** So not as easy for sure. And most of the time when they buy properties is to create wealth, not as much for cash flow. Whereas again in the U.S. we have that unique opportunity. I'm not suggesting every property out there cash flows. But if you structure it right, buy it right, you benefit not only from the long-term appreciation effect, but also the income streams as well, which again, not as common in other places. Yeah. I think of how many opportunities there are. And even if you don't have much resources now, it is a lot harder now than it was when I bought my first house. But 3.5% down or even 100% USDA financing, these are some pretty wild opportunities that just are unheard of in most places. **[14:53]** And so jumping into something and owning it long-term, maybe taking advantage of this kind of stuff and bouncing around a little bit, buying a couple houses to kind of get that started. And if you're young and hungry, I think it's just such an amazing opportunity that most places don't have. So building up a rental portfolio is so much easier here. And not that that's the path everybody needs to go towards. It's just look at what opportunities you have and take advantage of them because it's great. It's wonderful. So let's hear about your first investments and where that led you. Yeah. So when I made the decision to start creating optionality and shield myself and my retirement from some of these corporate restructures, I just for perspective, I spent most of my career in commercial lending. **[15:57]** So I definitely had the lender angle or lender perspective of how properties are evaluated. But I didn't necessarily have the investor angle, which is slightly different. And I can speak to some of the differences between the two. But any new venture that I started, I first doubled down on education so I can make an informed decision for myself versus trusting someone else's spreadsheet or thesis. And so I started reading a ton of books, attending local meetups. And during one of the meetups, one of the speakers or presenters would often, he was investing out of state. He would talk about investing out of state. Basically, at the end of each presentation, he would say, if you have questions, call me. **[16:47]** So I figured, OK, I'll call you. What else can I do? And so I called him and I asked, hey, like you always talk about investing out of state. Do you know someone who sells properties out of state? And sure enough, he did. So he had like a turnkey rental company. He has since sold that. But I basically asked him, hey, send me whatever properties you have available and I'll take a look. And that particular investment happened to be in Memphis, Tennessee. And I had lived in the South, traveled to Memphis a few times. So I had some familiarity with the market. And at that time, I was really driven to make a decision. I wasn't necessarily looking for the perfect investment. But I really wanted to get started and see if that's even possible, see how that works out. **[17:40]** And I think that really helped me push through some of the analysis paralysis that analytical people like myself often get caught into. So he sent a few properties. I narrowed it down to a couple, went, met the team. The property management team was going to handle the day-to-day operations and finally made that investment. And what's unique is, again, my primary goal was cash flow. So at the time, getting a traditional 75% LTV loan wouldn't have worked. So I decided to put a little bit more down. And I'm so happy I did it versus kind of going through the traditional formula. If it doesn't work that way, pass on the deal and move on. I say that because just two years later, I was able to refinance when the property appreciated in value. **[18:37]** Thankfully, that happened when rates were still low. Again, this is pure luck. It wasn't anything that I knew would be happening. But I was able to recoup effectively my initial investment. And now at this point, that's turned into an infinite cash flow type of deal. But it proved me that, first of all, it's possible. It's not as scary as it seems. The first investment doesn't have to be in your backyard. So long as, one, you do your diligence. But two, you have a team of trusted advisors. The real estate agent, the property manager, your lender, your insurance broker. This is definitely not a solo operation. It's something you can do together with the team's guidance and make it happen. Yeah, I love that. **[19:34]** And people, analysis paralysis, for sure. That is such a common thing. And if you understand yourself enough that you know that you're going to be susceptible to that kind of thing, put goals. And maybe you can give advice on what to do for people that might be struggling with that. I mean, we'll start there. And then I'll have a thought. I would definitely dig deeper and find what's causing that, right? Because if it is, hey, there's something majorly wrong with the deal that's preventing me from moving forward. Okay, maybe what are those two or three points that are giving you a concern and dig deeper, right? But if it is truly, hey, I don't feel certain in myself. So in other words, it's fear that's driving it. **[20:22]** The only way to overcome fear in anything, whether it's investing or even like when you first start walking, right? You fall a few times and then you learn and you keep walking. And that's how you learn. The only way to overcome it is through action, not reckless action, but thoughtful, deliberate, inspired action. And I can completely understand that a lot of people go into it. And of course, there's the fear of financial loss as well, fear of failure, fear of financial loss. And if that's the case, again, start small. So I don't want to suggest that loss is ever okay to go through. I've gone through some financial losses as well in my investments. And for better or worse, the longer you invest at some point, some investments do better than others. **[21:12]** So you face that. But that's just, that's inherently comes with investing, right? I like to say that as a lender, I got paid to take calculated risk. And I think that saying very much for the investor world, we get paid to take risks. So you cannot really eliminate the risk that comes inherently with every deal. So if you're really that fearful, then don't invest, right? That's probably the only solution. So it's really like overcoming without analysis paralysis, figure out, is it fundamentally something wrong with the deal? And if so, dig deeper and pass on it, look at the next one? Or is it really fear? And if it's fear, the only way to overcome it is through thoughtful action and start small, right? **[22:03]** You don't have to invest $500,000 in your first deal. Start with a small, that's why I started with single family. Now most of my work is centered around commercial real estate and larger deals. But I started with a single family, eventually did a duplex. Then I did an 11 unit. Now I syndicate 150 plus unit apartment deals. So it was a very gradual journey for me. It didn't happen over time. Sorry, overnight. It happened slowly over time. So I will offer that as a forethought as well. Here's a hot take. I mean, I think a lot of people, their biggest investment loss in their lives is their college education. I don't fully, fully believe that. But what I mean by that is that most people that go to college, they don't actually end up doing what they study. **[23:03]** And that's really all I mean. And that's what's true for me. I value a lot more about my college education and that experience than just my degree. Teaching me to think, having strong bonds with people, those kind of things are all very important. So I'm not actually, I'm trying to be a little bit tongue in cheek here and a little bit extreme. But think about it that way. Like if you are investing in a property, you would pay money to have a career through college, right? So if you are going to lose some money in an investment, that can also be an education. And it can be a great step towards not having that happen again if it does happen. But often it doesn't. Often it works out. And then the other little point I wanted to make is, you know, you mentioned interest rates and being able to get your cash out, which is amazing. **[23:59]** And that obviously doesn't always happen. But a lot of people are probably stunted right now with interest rates being really high. I have a very good friend of mine who owned like 30 or 40 like single family type properties when interest rates went way down, right? You know, through COVID. He refinanced them all. And he chose what, you know, amount of time that they were all going to like come do. Like I think he wanted to, you know, set them up for retirement basically. So he didn't have them straight on 30 year fixed. But he greatly increased his cash flow. He could have pulled a ton of money tax free out as well. And the thing is, is that if he had waited until interest rates were that low, he would have never been able to buy 30 or 40 houses. **[24:48]** Yeah. And so you have opportunity with owning real estate over time. And so that's something I just wanted to bring in the picture. But let's go into the syndication a little bit more. That's something that's what your thing is now. So, yeah, you're investing through kind of the Sunbelt, right? Area, Florida, Tennessee, Georgia. Is that the main hubs that you focus on? Primarily Southeast, I would say. So Tennessee and Florida is where my single family portfolio is. And then Georgia is where the syndication portfolio is. But it happened to be in Georgia because the lead operators that I decided to invest with happened to be based in those markets. And that for me is key, especially because I'm based in California, right? **[25:42]** So when investing out of state, I like to find local partners. So in terms of geographic footprint, they happen to be there. But what I really follow is the operator. And then secondly, it has to be a business-friendly state. So I know I can actually run a business there versus some of the more tenant-friendly locations. So those I usually stay out of. Yeah, I mean, anybody listening to this, if you don't understand what she's talking about, a really good example is there. I interviewed somebody who had built up a rental portfolio in Oregon, I believe it was. And basically, in COVID, most of his properties, the tenants learned they could not pay rent and not be evicted. And basically had this catch-22 situation where it was almost impossible to sell. **[26:46]** He was going to be fixing foreclosure because tenants realized they just really didn't have to pay and there was no consequences. In fact, him cutting off cable when they weren't paying rent, I think he was taken to court over that. Cable was part of the rent agreement. They weren't paying it. He cut that off. And then he was told he had to turn that back on. So it does make a huge difference. That doesn't make any sense. I know we don't want to have homeless people. I know that COVID was a hard time, but there's definitely people gaming the system. And so it made him pivot. **[27:25]** When you went through, I mean, so you've been syndicating now. Tell us about some of the hardships right now. And then I want to get into kind of why syndications for realtors, syndications for real estate professionals are a smart win-win. Yeah. Yeah. So I mentioned earlier in our conversation, it's a team sport. And inherently, whether you choose to expand your single family portfolio or go into larger commercial buildings, which is the path I chose to go down with, you definitely need a team, right? And you either need people to help you with just the time involved in managing that and growing the portfolio as well as capital. And that's where syndications come into play. It effectively allows investors to partner together. **[28:17]** You have the active side, which is usually anywhere from two to five key operators known as general partners. These are the people who find the deal from local brokers. They underwrite it. They put the financing together, do the full due diligence, and then they run the day-to-day operations and eventually work through the exit or the sale process. And then you have the passive investors who join in on this deal. They are typically busy professionals, high-earning professionals who are looking to diversify their portfolio. They like real estate as a massive class, but they don't have the time or desire or both to do the day-to-day work involved with finding a property, negotiating, managing, basically everything that I just described. **[29:09]** So they join in more passively, but still have the benefit or the opportunity to benefit from the cash flow and appreciation if everything goes according to plan. So it's a great way for people, again, to come together. When I have conversations with investors, I always encourage them to think, is this the right vehicle for me? Because I love syndications, but they may not be right for everyone. Because inherently, when you join these partnerships, you give up control as a passive investor. Now, you don't have to manage the day-to-day, but because of that, you don't control the day-to-day operations. Because of that, you're also shielded from liability. So if a tenant slips and falls, they sue the management company, the syndicator, lead operator as an LPR, shielded from those types of litigation activities. **[30:12]** So there are definitely pros and cons, but because you give up control, it is extremely important to vet the operator, or sometimes known as the lead sponsor, the people who are effectively leading and managing the day-to-day operations of the deal. Because a lot of the risk then revolves around execution of the business plan. You may have a great property, and we're seeing this in the market today, and sometimes they are run down to the ground due to poor operations. And vice versa, you may have a poor-performing property, but a strong operator can turn it around. Or if properly structured and if they're well-capitalized, they're better positioned to weather the storm versus someone who is not. **[31:01]** Yeah. No, I mean, it's really good points. And I think one thing that people need to understand with this type of deal is it's really like you're buying, I mean, kind of like a stock in a business. And what's beautiful about it is that you are reviewing this business, this deal, this proposed opportunity that if you're introduced to it from something like yourself, a sponsor of a project. And you can kind of review that deal and try to understand, you know, I mean, you should try to understand, you know, what the risks are, what the business plan is, how you're going to get paid, all these different things, what the exit strategy is, what needs to happen to make the exit strategy actually be achievable. **[31:54]** But the beauty of it is, if you are a real estate agent, I mean, this is not, you know, talking like, you know, tech stock. It's not like you have to understand how SpaceX is going to be profitable or whatever. You're not having to understand an industry that is really foreign to you. So, like, you can understand rent costs and, you know, that kind of thing. And if you do understand commercial real estate, you might understand cap rates as well, which is really a lot of how these deals are structured is to take advantage of cap rates and basically increase the profitability of this deal so that it's worth more through the power of cap rates. And that's where it really starts. Once you understand how drastic of a difference, you know, raising rents over, you know, 150 units by $25 or whatever it is, once you understand how drastic of a difference that makes the valuation, then you start really understanding the power of how these deals all work. **[32:57]** Another point I wanted to make quick is that when you're buying into these, like the limited partners are typically getting a preferred return along the way. Is that accurate? Is that usually how you structure things? In most deals today, yes. It's not guaranteed, meaning not all deals offer that type of structure, but most deals today offer a preferred return. So what that basically means is like you're buying a business that has cash flow already. There is money coming in. And so they're saying that you as an investor will get more of that cost in the beginning so that you're getting a return on your investment. It makes sense for you to invest your money in this way, which might be more than what you would get if you just bought a rental, right? **[33:49]** Depending on the deal. Yeah. And you're not having to do anything, right? And then, so it sounds like you're basically flipping, I mean, you're turning property to sell, right? You're not doing like refinance and holds. Is that true? Not in the current environment. And refinances were very common when rates were low, but probably by year two or year three, but not any longer. But yeah, definitely there is something to be said about the power of scale. And I'll give you an example. I mean, I still have some of my single family portfolio, but I just had to replace not the full HVAC, just the condenser unit. And that was like $4,400. And my cash flow was wiped out for the next six, seven months. **[34:35]** Just one HVAC. On the single family home, obviously with an apartment, especially when you start getting into the 70 plus units, that's where you can really realize how these economies of scale and scope. And if one or two units go dark, you still have the other 98, right? That pay the rent. But I also want to emphasize something really important, kind of getting to where we are at in the market today with multifamily. And that's where the importance of getting educated on how to analyze or how to read those deals is extremely important. Because I review many and get presented a lot of deals. And many of them do look amazing on paper. But how those returns are derived and how those returns are projected ultimately determines if this deal is really going to cash flow or not. **[35:36]** And I feel that often investors, again, I like the preferred return type of structure. But often I feel investors interpret that, oh, if a deal has that 7% or 8% preferred return, I'm going to be getting that cash flow on a monthly basis. And that's not necessarily always the case, especially if the deal is not managed right or if market forces intervene, right? And you're no longer performing according to projections. So I always encourage investors, especially with real estate, right? First of all, you have to be patient. You have to have a long-term outlook. But it's inherently an illiquid investment, right? Unlike the stock market where you go online or call your broker and within a day you can liquidate the stock. **[36:27]** But that doesn't necessarily happen in real estate. So you really have to, first of all, set that money aside. And very similar for syndications. Typically they have five to seven year holds. So I always advise people just plan on that money being blocked for the next five to seven years. And if you have to access it, then don't invest. If you think you have to access it, don't invest. Because it doesn't function like a stock market where you can call your lead sponsor and say, well, now I want out of the deal. That's just virtually impossible. And it's very rare to find a situation where someone else would buy out your share. So I think it's important to also keep that in mind that the illiquidity component and secondly that the cash flow is as good as the, one, the projections that went into it and how realistic they are. **[37:20]** And two, the ability of the operator to execute and navigate through some of the market stores. Sure. Which, yeah, I mean, you've definitely, the industry has definitely gone through. I mean, if people have been paying attention on the apartment, industry has definitely been, there's been a lot of blood on the streets. And I guess, can you talk to that a little bit and kind of what that has looked like? Yeah, absolutely. Yeah, basically just taking a step back, what happened, right? We had the COVID timing, historically low rates. A lot of people were moving across the country, especially the Sunbelt markets had an influx of population coming in, which resulted in a tremendous amount of household formation, therefore housing demand. **[38:11]** So when rates were low, right, a lot of new developments started in those areas. Now we all know what happened March of 2022 when the Fed started raising rates. And I think before they paused in month 18, they had raised rates about 12 times. So pretty steep, pretty fast. And unfortunately, that killed, I would say, the commercial real estate, but especially the multifamily market, especially in areas where a lot of people started developing, thinking that that demand will continue, that maybe even if rates rise, they won't rise, they won't double effectively, which is what happened. And so between the high cost of capital, meaning the higher rates, higher, maybe not historical standards, but higher relative to where they used to be, coupled with the oversupply in a lot of these markets has resulted in severe cash flow compression, right? **[39:12]** Rents are no longer, in some markets like in Florida, there were two, three years in a row, rents growing at 20, 30%, which is, again, first of all, very unusual, historically unusual. But deals were canceling out, even at really low cap rates, because the cost of financing at that time was low, and then rent growth was exponential. That's unfortunately not happening any longer, and we're even seeing decline in rents in many markets. Again, it's very hyper-local, but you have the top-line compression, and you have inflation, right? Now it's subsided to about, what, 3%, but at one point it was 9%, 10%. So there's been severe expense inflation, when coupled with the high cost of debt or the high cost of capital, and a lot of markets are not, a lot of properties are not cash flowing. **[40:10]** And also what happened at the time, there was voracious, it felt like the Gatsby, the great Gatsby party at the time. And then, I just, I still remember, and the only way, people had voracious appetite to get deals done. And basically what was happening is people let the dead tail wag the deal, as I like to say, where they were getting, very much like in the single-family space in 08-09, where we have this high leverage variable rate deals. The same was happening in multifamily. And so a lot of operators got into these deals thinking, well, rates will stay low forever. So they got into the variable high leverage debt trade, because that was the only way for the deal to pencil out, and the only way to make returns somewhat appealing to passive investors. **[41:05]** Unfortunately, when rates started rising, and they didn't mitigate that interest rate risk exposure, pretty quickly they found themselves underwater. And so there's been a fair amount of foreclosures already. But what's been happening over the past couple of years is those short-term loans, known as bridge debt, they've been getting extended. Now, they typically have a three-year term plus two-year extension. So a lot of the loans maturing today, which is about $800 or $900 billion, so almost a trillion, the majority of those loans is actually extensions from the last two or three years. And a lot of lenders are coming now and saying, OK, we're done, we're tapped out, we're going to start foreclosing. **[41:54]** So it's definitely an inflection point for the space. Definitely doesn't feel like the right time to invest because of all the blood on the streets, default, lack of cash flow and all of that. But at the same time, I will also say the market's going through a repricing that it had to go through. And if anything, I would say between now and the next maybe 24 months would be the best time to invest. And I can speak to some of the tailwinds as well. But so I'm not going to sugarcoat things. You know, it's definitely the industry is going specifically in multifamily going through winter season, right? The down cycle. But spring always comes after winter. It's a lot of way to think about it. Yeah, yeah. **[42:44]** I mean, like, that's what I was just going to point out is, you know, it was so overhyped. It was so exciting. I mean, there are people, there are operators out there that, you know, there is typically a fee in these syndications for the operators to kind of operate from, right? So there's often, and I'm not using the right term here. What is that fee? The acquisition fee and the asset management fee. Yeah. Yeah. Yeah. So basically to put the deal together, there's a, and it's transparent. It's in there. You can see, you can read it. Right. But there, but there are definitely, there were operators or operators that, that likely were just picking up deals that didn't necessarily work that great to keep the lights on, to keep going. **[43:29]** And when things are so, everything's working, the interest rates are so great. Everything's working. Everything's going up. You know, that's ultimate hype. That's, you know, that's the whole tulip craze thing. You know, this is when you need to be fearful. This is when you need to be suspicious. And the inverse is true is when there's the most fear in the market. When, you know, this is probably one of the best deals are going to work out. And if you have a really good operator who can make a deal work out in this type of environment with really high rates and the declining rents and all that kind of stuff, when it's all doom and gloom, that is, you know, probably a, I mean, probably a way better deal than, you know, depends. **[44:11]** Obviously, probably a way better than anything you would have gotten when the party was happening, right? Exactly. No, I really think like, if you really think about it, so multifamily bottomed out and probably about 2010, 2011. And from there on, that particular segment, frankly, even for commercial real estate has been on an up swing because rates were going down, cap rates were compressing. And so that decade between 2011 and 2021, which is probably around early 2022 is where the peak of the market was. That was really the decade, I would call it, of the cap rates. So even if you were a bad operator, you got bailed out by declining cap rates, which for better or worse, I mean, nowadays it's for worse. **[44:58]** I have a multiplier effect on the valuation of the property. I think the next decade is really going to be the decade of the operator. For a lot of the reasons that I shared, I do think rents will come back around and start growing, but probably not at the exponential rates that we saw in the prior decade. Definitely, I talked about expense inflation. So it will really come down to how cap rates may compress, they may not. It's very hard for me to see that or say that right now. I don't know if they ever will get as low as they did, but it will really, being able to profit from these deals will really come down to the ability to grow NOI substantially. And the only way to do that is through operations, either that or find a deal that you buy at a really strong basis. **[45:58]** So those opportunities are still out there. So if you buy at a really low basis, then you're mitigating a lot of the risk that can come along the way. But yeah, I really think the next decade will be uniquely different from what we experienced the last 10 years for the reasons I shared. Yeah, I wanted to make one quick point when you're comparing it to stocks again. And we probably need to get into the golden nuggets. But when you were talking about the stocks, I think it's probably more similar to like, I kind of called them, you know, the realtors 401k, right? So like this is money that you're setting and forgetting and ideally kind of recirculating. So like if you're getting, you know, one of these plans is executed and you get the money back and, you know, it could be that you get, you know, I don't want to say how much more, you know, how much profit you get. **[46:56]** But, you know, when I was presented some of these deals a few years back, it was often projected that you might double your money, that kind of thing. Right. So, but anyway, so like if you are getting money back, then you can roll that back into another deal and let that, or multiple deals and let that kind of keep growing. And I call it, you know, like a retirement plan because, A, you're kind of setting it, forgetting it. You're not really, you're not worried about it. You're not actively participating in it necessarily. You're just kind of letting that grow on its own. And this is like to help you kind of grow your wealth, grow your portfolio. But also there are the tax benefits that can come with it as well. **[47:35]** If you do accelerated depreciation, if you do the cost seg studies, there can be a pretty good tax write-off that for real estate professionals that if you're listening to this and you're a realtor that, you know, is full-time, you are likely a real estate professional. Talk to your accountant and talk about how this could be beneficial to you. And I'll just quickly say that I invested in the syndication, mobile home park. You know, all of them are different. All of them are projected to probably have different kind of tax write-offs versus cash flow, all these kind of different things. But, you know, invested $50,000. First year, I was able to write off like $66,000 off my taxes. And then the next year was like $18,000 or something to that extent. **[48:19]** So this is obviously very beneficial to be a real estate professional. And then the beauty of it is like if you have a life circumstance change and that, you know, the capital that happens and the money comes back to you, you don't have to roll it into the next deal. You could just use it. You could buy your Porsche you've been dreaming about. I mean, there's options. You're not stuck in a retirement plan. That's why I think it's such a powerful possibility for real estate professionals. But I do want to move in. There's a lot more. A lot more. We just scratched the surface. There's all sorts of different things that we could be talking about here. But I do want to move into the golden nugget section. **[49:03]** So I was curious what golden nuggets you have for our listeners today. Oh, boy. There's several that come to mind that would really center around those that I've learned through my experience as an allocator of capital as well as a former commercial lender. One is you've heard the Ronald Reagan phrase trust but verify. I would flip that slightly and say verify before you trust in the numbers. Protect the downside. And you probably remember the Warren Buffett number one and number two rule never lose money. So when investing in deals, the first questions I like to ask is how do I lose money on the deal so I can really understand the downside. And then the last piece is more motivational. But that's how the name of my company originated. **[49:59]** To be a capital group, Dream, Believe, Achieve. Dream is to have dreams and high goals and aspirations. Believe is believing in yourself but also surrounding yourself with positive, like-minded individuals. And Achieve is taking action because none of these goals will materialize. None of these investments will materialize unless you take thoughtful and determined actions. So I would stick to those three. I love it. That's awesome. What about a favorite book, a fundamental book you think everybody should read or just one you're currently enjoying? I have several that come to mind. I would say with mindset, actually. I like Napoleon Hill, Think and Grow Rich. He also published another book out, Tweeting the Devil. **[50:48]** And a lot of it is about mindset, effectively managing your mind, your thoughts, positivity and such. So those were most definitely shaped me profoundly. And then in terms of real estate, there are so many that come to mind. **[51:13]** There's a lot. Like Deducted is one that I read recently. It's more of an accounting book. But it really, for me, was very helpful, especially as a business owner. Really understanding the accounting aspect of it. Tax strategies for real estate investors by Amanda Hamm. That's another one that's been really helpful. I can keep going on and on. But I'll start with these four. It's definitely, I think, a good thing if you don't have a great accountant, find one. If they don't know what accelerated depreciation is and you're a real estate professional, find a different one. And then also understand that sometimes accountants aren't strategists. So like a tax strategist can be super valuable. So just take that and maybe read these books as well or find something that knows you're good that can save you a lot of money. **[52:10]** And then finally, where can people find you? Like there is your book on Amazon. Do you have a website, social media, et cetera? Yeah, absolutely. On social media, I'm mostly active on LinkedIn. Although I do have a Facebook, Instagram and X profile as well. My YouTube channel as well has a ton of educational content. And for all things passive investing, dbacapitalgroup.com. D as in dream, B as in believe, A as in achieve. And then masteringmultifamilyunderwriting.com for those who want to do a deeper dive into deal analysis. And both of the books that you kindly mentioned, they're available on Amazon. Mastering multifamily underwriting is one. And then the Busy Professionals Guide to Passive Apartment Investing is the second one that I most recently released. **[53:06]** So definitely not hard to find or reach online. Bless you. Thank you so much for being on the show. It's been a lot of fun talking to you. Absolutely. Thank you so much for having me, Matthias. Thanks for listening to the REI Agent. If you enjoyed this episode, hit subscribe to catch new shows every week. Visit REIAgent.com for more content. Until next time, keep building the life you want. All content in the show is not investment advice or mental health therapy. It is intended for entertainment purposes only. Thank you. 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