Get ready to unlock the secrets to successful real estate investment with Ed Bailey, the managing partner of Vision Capital Partners and Chief Capital Officer at nectarflow™. Ed’s journey from Wyoming to New York and back to Utah is filled with invaluable lessons that shaped his approach to finance and business. He'll discuss how first impressions and having "skin in the game" are non-negotiable in his investment strategy, and provides a deep dive into his multifamily property ventures. From the importance of selecting the right third-party managers to his criteria for investment, Ed lays it all out.
Join us as we tackle property management best practices that can make or break an investment. Ed sheds light on why trusting your property management firm is key to maintaining quality and efficiency. We explore the critical roles these firms play, from vendor selection to ensuring maintenance staff stay focused on essential tasks. This segment offers both property owners and vendors actionable insights to help streamline operations and mitigate common pain points, such as tenant attraction and maintenance prioritization.
We'll also explore the art of collaboration and decision-making in real estate, right from securing funding to leveraging relationships. Ed shares his top strategies for navigating the financial landscape, emphasizing the importance of thorough due diligence and selecting the right management company. Plus, get a sneak peek into the future of multifamily real estate with the innovative nectarflow.com software. Whether you're an experienced investor or just getting started, this episode is packed with strategies and insights you won't want to miss.
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The Multifamily Innovation® Council is for Multifamily Business leaders who want to unlock value inside their organization so they can create better experiences and drive profitability inside their company.
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Welcome back to the Multifamily Innovation Podcast. Thank you for sharing time with us today. We are so excited about the guest that we have today, ed Bailey. He is the managing partner of Vision Capital Partners. He is also now the chief capital officer at Nectar Flow and he is a property owner in the multifamily space. He has some amazing advice for you today around how to win that business if you are a third-party manager, how to win that business if you are a third-party manager, how to win that business if you are a supplier and, if you are a supplier, how you set yourself up for success for funding in your future. And so I'm so excited to have you here today, ed.
Speaker 2:Happy to be here with you.
Speaker 1:So first off, let's start with your backstory how you got into investing, what interested you and how you got to where you're at today.
Speaker 2:Well, I've always been interested in business. To start with, my father owns businesses up in Jackson Hole, wyoming, and so I've always been working alongside him and had a real love and appreciation for business, understood that the costs and expenses and what you brought in, and just understood the whole accounting at a very young age due to the fact that I was by the side of my father, went to college and graduated out of the University of Utah and went out to New York and started working in the finance world and I just really enjoyed the finance world altogether and realized that New York really didn't want to have a love for lending or doing transactions. In the middle part of the United States. They like the outer perimeters and it's just frustrating because I saw Utah, colorado, wyoming, arizona, all being kind of left out of the funding world. And so I moved back to Utah, opened up an office there and it was Vision Capital Partners, established it 25 years ago and started getting smaller transactions and then I would take those small transactions to New York. So they understood if I had skin in the game then they would be interested in just putting the majority in.
Speaker 2:And so it all began and started getting to where it is doing 100, 200, $500,000 transactions. Then it started, we got money into it and we started building a fund up my own fund of Vision Capital Partners and we started looking at $2 to $5 million and became $10 to $25 million and it just kind of grew. And over the years we got to where we're also doing debt and equity. So we'd go into a transaction we'd look at how can we invest in it to where we could get the returns on a daily basis on the interest from a loan but then stack it with capital of the equity side and that way we got the opportunity to make a lot of money if it really won. And so we started just building it up more and more and it just became funner and funner and I enjoyed it.
Speaker 1:I can tell by the excitement in your eyes that this is something you're actually really. You get pumped up by this exact thing, and so how do you decide who you're going to invest in? What does that kind of sheet look like? List of questions.
Speaker 2:Yeah, the first thing is is who walks in the door. We look at individuals that have done something and been successful at whatever they're looking at doing, mm-hmm. And if they're not successful, they brought somebody in that was going to be a partner with them, that is successful in that category that they're trying to receive money for Right, whether it be real estate or corporate side. We're not just real estates. We expanded in several other areas of our buckets of funding. So the first thing was their appearance. It's amazing, but we always look at appearance. What do their shoes look like? What are they wearing? How are they dressed? Is it nice and neat? If you're coming in to ask for money, you better be dressed up to the nines.
Speaker 1:Yeah.
Speaker 2:Yeah, and not coming in and looking like a slob, and yet you want $50 million and you're looking like this.
Speaker 1:Are you pointing at me? No, I'm just kidding.
Speaker 2:I tried really hard for you. Would we look at that? And those are first impressions that you get. So you're always looking at first impressions. But then you move and you start looking at the experience of what they've done. How much are they asking for? How much money do they have in it? And I say skin the game when we first started. We're looking for skin in the game with them.
Speaker 1:Yeah.
Speaker 2:If they have no skin in the game and they're just saying, will you do this and we'll do the work, but you put in 100% of the money, that's a pretty high risk for us to even think about and the answer is always no.
Speaker 1:Right.
Speaker 2:Right, so you do have to have skin in the game.
Speaker 1:Be prepared to have something in there Anything, yeah, and that actually makes a lot of sense because, I mean, that would show you how dedicated they are and how much they actually believe in this concept, right, if they're actually putting their own investments towards it as well. So that makes a lot of sense. And so, um, so you do have real estate. How many properties have you or do you have investments in in real estate?
Speaker 2:Well, we've. We've been narrowing it down since the pandemic. We've really stayed away from a lot of investments and we haven't gotten back in um over the years, though it's. You know you're talking about a hundred. I don't know. You know investments into real estate and corporate side, not just real estate, so we can't just say that, but in all of our transactions together, you know a couple of hundred investments.
Speaker 1:Yeah, yeah, and you did have properties that were managed by in multifamily as well. Yes, yes, for sure. And so, in that world, how many times have you kind of vetted third-party managers and how do you go about making a decision on who's going to manage those assets? The million dollar question, great question.
Speaker 2:Yeah, we do not manage our own property when it's a multifamily. Yeah, we always believe in getting the best. Let them do what they do best. If we bought it, I want to make sure the best is overseeing it. So you know, our vetting process really is in that area, not just one company throughout the United States, but what company in that area is the strongest, has the best ties, the best in, you know, to the areas that you really want to make sure you're strong, represented in Right. So that's the first thing we're doing is looking at who's the biggest and best and then you're looking at what success they have. You know what their portfolio looks like and the other transactions. Are they competing directly with you in a, in a within a three to five mile geographical radius? We're looking at, you know, a lot of the. We don't want to compete against ourselves in some other transaction with that same property management firm.
Speaker 2:Yep, that makes a lot of sense, so we want to make sure that they're diversified enough and not close enough to us to where they said well, if you don't like this one, we got another one just over here.
Speaker 1:Yeah.
Speaker 2:Yeah, we are the ones if they come to a certain part of that town. We want to be the choice that they pick.
Speaker 1:And what in that pitch? Just because I'm curious for myself, because I've helped make some of those pitches where it's like, here's some branding we could do. What is it in that pitch that's really the meat that makes you say, yeah, this is the one. Is it the numbers? Does it really come down to just that?
Speaker 2:Well, I want to see the record of how many walk-ins they receive and what the closing ratio is.
Speaker 1:Right.
Speaker 2:I want to see that they were closing in that 30 plus range, not in the 15 to 20 range. I want to see that they're driving in traffic as high as anybody else in that area, whether it be 50 tenants a week or 40, 30 or 100. I want to see that they're in the top realm of that. I know their marketing works. Yes, that's a very important thing for any of the property management. If they're going to be your leasing agents, you've got to make sure they're driving people in the door and they're closing on those people who come in the door.
Speaker 1:Yeah, yeah. And from a marketing side, you're talking more like not so much branding, but more so. You know, how are you attracting the right residents and prospects for this property?
Speaker 2:A lot of it comes back to anymore is social medias, and how are they driving that in? Are they also, you know, sponsoring different, like a football event, and they have a booth there and therefore they're attracting all these people coming to it, the booth, and they're able to talk to them and tell them the benefits of just down the road is property? I love that so any amusements that are around in that area attractions you want to make sure they're involved in those attractions and being able to bring people from those into your facilities.
Speaker 1:I think that's really smart, like one of the conversations that we were having was you know what the amenities are now just rinse and repeat and you might have one or two more innovative amenity at your property. But really the amenity can be the location and how close in proximity you are to X, y or Z and how you get to come home and have comfort after you go to that football game, right? So we don't always think about the amenity as like the surrounding area. But I think it's really fascinating that you mentioned that, because I believe the same thing that we don't focus hard enough on those pieces for sure.
Speaker 2:So you've got to have the nicest amenities on your facility. But we would never buy or really invest too heavy into a facility that did not have nice amenities around it. Yeah, that is your attraction. Is it the work, play, concerts, shopping about where the grocery stores are? How close is it for them to conveniently be able to live there and enjoy it and have fun? This is your home. Yeah, so let's make home fun.
Speaker 1:Yeah, exactly, I love that. And so, from the third party management side, there are also the suppliers in our industry who are trying to bring new technology to these properties or new amenities, whatever it is service that they provide. I know I've been a supplier before. More on, like the data side of things, I bet a lot of our listeners would want to know how a lot of them think they need to access the use. Who are the ones that are maybe writing the check for this software, writing the check for whatever is going to roll out? So are you making those decisions? Are you letting the manager kind of make those decisions? What process do you go through when a supplier wants to roll out a new tool or something at your property?
Speaker 2:Well, we went after and done our due diligence and we went after the best, and the best got there by having the best surround them. So we're counting on them being the property manager, bringing in the best suppliers Right, and, as an owner, I don't want to be involved in that. That's why we paid them. And they get paid handsomely for it, but that's what they're doing is bringing those vendors in.
Speaker 1:Yeah.
Speaker 2:So we're allowing them to. Now we do have to write the checks, yeah, but at the same time, we know that that check is going to the right person for the right purpose. Situation and they come. Property manager will come to us and I'm always looking for the pros and cons. Why is this the best and what is the downside of it? Is there one better and between us we can work it out pretty quickly of why they picked that and why they chose it, and I'm comfortable with that.
Speaker 1:Yeah, but for the most part you do trust the decisions that that manager, that management company, has made for you.
Speaker 2:Yes, they didn't get there for no reason at all.
Speaker 1:They got there because the best decisions were made Right. That's really good information, I think, for a lot of our listeners because, again, I've been on the supplier side where I was like you know, how do we get after those investors, owners and the people that are really making those decisions? And truly I do think that when you trust the management company that you've chosen, that is something that you should trust them with as well. So I think that makes a lot of sense.
Speaker 2:It's amazing how many vendors train, circumvent property manager and call me. And I get phone calls and they'll be like hey, I'm XYZ and I do this. And I said, well, did you talk to my property manager? No, you know, we just I said no, no, no, that doesn't work that way. You got to go down and talk to XYZ property management firm at the site and let them, let them see it and then, if they like it, then they can come talk to me on it.
Speaker 1:And is that? Is that the answer you normally give Always?
Speaker 2:give.
Speaker 1:Every time You're like talk to here's, do you give them their email and just say here go.
Speaker 2:Yes, direct phone number. Here you go Absolutely. Always the office number, so let them talk to them yeah.
Speaker 1:And do you imagine that that's the case for most people who do own properties?
Speaker 2:I mean, there's probably some that are a little more hands-on, but there's hands-on and I think the smaller individuals are hands-on, but they generally don't have a property management firm. They are managing the property True, I talked to a fair amount of them and obviously have over the years because we've lent to them for so many years. Yeah, and you know they do say that they get a fair amount of phone calls from these vendors who are constantly trying to sell them on something. Yes, the property management. They're always referring back over there. So if you're a vendor and you're trying to call the owner, it's the wrong move.
Speaker 1:What do you think? And this question is actually prompted by one of our viewers who pre-submitted this question. I know Well, we've already been kind of talking about his questions, but because he's very Paul Bergeron, he wanted to know what the process is or what's the worst thing that a vendor can do when trying to get your business, or something along those lines too.
Speaker 2:Well, again, I don't deal with the vendors, so the worst thing they can do is call me.
Speaker 1:Yeah, and if they call you every single night, you know, don't call me.
Speaker 2:I mean then yeah, you see that they're calling on bases and you hit. You know, hit, delete or voicemail. So best Don't want to be bonded with it.
Speaker 1:Yeah, yeah, exactly, that makes a lot of sense. Ok, and then we have another user submitted question from Todd Thorpe. What are your top three pain points right now, and I would say more in the area of owning a property that you're having managed? What are three pain points that you've hit along the way that just are like, oh, if only we could solve for this.
Speaker 2:Well, I think number one is just getting people in the door. It's amazing that different property management firms that we've used can take the same budget and actually drive people in and close them, whereas the other one will use the same amount of funds and can't seem to get people in.
Speaker 1:Yeah, why.
Speaker 2:So it's a pain point. I got one right now. That's been a big pain point and that's the one right there.
Speaker 1:It's like, oh, just totally.
Speaker 2:The second one is on a property when I have a manager for a maintenance individual that is not prioritizing the highest quality of things he needs to do.
Speaker 1:Right. So having more of that self-starter attitude where it's, you know, I see a problem, I'm going to fix it, even though someone hasn't necessarily told me that is my top priority. To take the initiative and say, hey, here's my top priority, yeah, I think that makes a lot of sense. And I don't know, you know, that could be a training thing, that could be just a priorities situation, or maybe, you know, a lack of access.
Speaker 2:Yeah, I just went back to the manager of that property and said listen, please work with each one of your individuals in each department and make sure they show you what the highest priority is right now. And make sure they get it done. Follow up on them to get it done.
Speaker 1:Yes, I think that makes a lot of sense and I will say I worked on site before and the mentality when someone like you or we knew you were coming to visit, it would be okay, do all the things. And it's almost like why weren't we doing that to begin with? Why are we all in a frenzy right now Because Ed's coming? So I think that makes a lot of sense and that's not to knock anything that people are doing on site.
Speaker 1:I will say that it's a tremendously difficult job in that you're being pulled in so many different directions at all times and you're not always being told exactly what that top priority item would be. So I will say I have a lot of empathy for that, for that position, because in that way it's the same thing. But at the same time, you know we can all hold ourselves to a higher standard of saying you know, we should maybe operate as if Ed's always coming to visit, right, and not just for you, for our residents. That's the kind of place that they should be living and calling home, right. So I think that makes a lot of sense.
Speaker 2:It is their home. Let's take care of it and get it the most comfortable for them. So at the end of one year, they're renewing. Instead of that sucked. I want to move on, yeah exactly so I hear down the road. They really are great, it's a great units and you know they take care of them and it's fun to be at. I don't want that. I want that to be ours, so let's make it.
Speaker 1:Yeah, oh, I think that's really smart and then so so, speaking of the going back to the suppliers in our industry, so I've watched you now kind of. So we're you know, Patrick is rolling out the software Nectar Flow, and you're kind of helping out to raise some of the capital for that. You are chief capital officer for Nectar Flow, actually, so this might be great advice for suppliers in this industry as to how to fund their businesses, right? So having someone like you who can help raise capital, what does that look like? What's the process? What are you going through now for that? Without mentioning, you know, any of the nitty gritty details, but definitely, if you had to give advice to someone who's setting up a business within this industry, what's your advice there?
Speaker 2:Well, no matter what business you're going into let's just say you want to go buy a multifamily or a rental property be smart and do it the right way. Get a great foundation to your company and I always talk about the foundation. You've got to lay down the best. You've got to make sure the corporation is set up properly. You've got to make sure your operating agreement is there and that everybody understands that operating agreement and is very well aware of it, and pay a little money to get it done right.
Speaker 2:Don't take the little templates off the internet. Get it done right. You can take that template but hand it to a great attorney that can then mold it to you. Yeah, yeah. And then from there you want to make sure that if you're going to raise some capital, that you are getting what's called a private placement memorandum or some legal document that really lays it out. Don't just get another template off the shelf. If you're going to raise money, do it properly, Otherwise that can get you in.
Speaker 2:The most trouble in the legal system is the capital side. Yeah, when somebody's got money in the game, they're expecting X, Y or Z, and if you're not performing on X, Y and Z, they are coming after you and just do it smart yeah. And again, I've been in this for 25 years where people have come with us, come to us with very inadequate documentation and you're looking at it and going, wow, okay, if you go visit ex-attorney and get these things all straightened up, your property looks great. But let's get the foundation done first, let's get it done right and then let's go after and we can look at investing in your property.
Speaker 1:Yeah.
Speaker 2:Yeah, so from an investing standpoint, we really look at those documents and make sure they are tight and buttoned up and everybody's covered and everybody understands the the players in the game that you're playing.
Speaker 1:Yeah.
Speaker 2:If you don't understand them and you don't know who's doing what and what's what's who's confusing. Yes, it ends up a mess. Yeah, it just does, absolutely. So just do it right. Yeah, take a little extra time, a little extra money and do it right. So that's the first thing. The second thing we always look for is where have they? Have they really researched the area and found this location is the best location? Yeah, or is it just because they happen to have a friend who sold them some property that was a great deal and they picked this up for next to nothing, but it's next to the dump or a power station.
Speaker 1:Yeah, yeah.
Speaker 2:How big it won't fly. Yeah, you can put a first class times 10 facility in there. If it's under a power station and a dump's right next door to that, it's not going to work.
Speaker 1:Yeah, yeah.
Speaker 2:So get your ducks lined up with the right location. And they keep saying location, location, location, and it's so true. Yeah, get somewhere where it's just an attraction to employment, shopping, playing, something that really is a magnet for that area. Look for that.
Speaker 1:Yeah.
Speaker 2:And make sure you have enough size of property. A lot of times they'll you know. I'm trying to put 300 units on two and a half acres. It's like wow.
Speaker 1:That's pretty, can you do that?
Speaker 2:Yeah, go straight up units on two and a half acres like, wow, can you do that Straight up? You know I understand what the parking is for, that it's underground now and you're counting on an extra $25, $30 million just for the parking, yeah, yeah. So just be smart about laying it out. Make sure that you have your numbers together, you understand the numbers and you can move forward with those.
Speaker 1:That makes sense, sense, and then the the supplier side would be the same. So if I were to roll out a software like nectar flow, what are the ducks in a row I would want to have in place for something like that? Well since I'm without again, without giving away too much you know I'm so involved with that. Yeah, yeah.
Speaker 2:You know, being on this side of the table now and we will be raising some capital for it, I do what I'm preaching others to do. Yeah Is we're getting a strong, strong foundation. The software is done, it's there. You can go out and run with it right now. But we got to make sure that everything is really solid on our side and we're making sure that it is really really solid.
Speaker 1:Yeah, so from the standpoint of raising capital for nectar flow and the technology side, it's been a lot of fun yeah again, this is what I do I know I see you light up about joy and and my comfort is in this arena yeah and I feel I can do a very good job for the company.
Speaker 2:But I know that there's certain truths to raising capital and I'm trying to follow all the truths that I've been saying for years and years and years for everybody else to do.
Speaker 1:Yeah, I'm doing. Everyone right now is like how do I get an ed, how do I get an ed behind me? Yeah, ed, how do I get an ed behind me? Yeah, I think it's just. I think it's really brilliant to have someone like you as of. You know not, you know not that someone couldn't do it without, but again, could they do it right and could they make sure it has longevity. And I think that's where having you backing this and backing you know, someone like you backing any type of software or rollout or venture anything.
Speaker 1:Right, it just makes sense.
Speaker 2:Because you know who to go to for money too.
Speaker 1:Yeah.
Speaker 2:I mean, you can go to a very, very high interest rate quick loan company, then get $2, $5 million to do all your soft costs and then remember you've got to come after more money and this guy over here is charging you a very high interest rate over here. It's eating you up, yeah. So don't get caught in that little gamble of getting eaten up by the shark over here.
Speaker 1:Well, and they're not advising right. They're not necessarily going to provide you with advice like you would right on how to navigate a certain situation or a certain, you know, financial hiccup that comes up. Whatever it is, you'd be the first person to be able to step in and give that sound advice on how to navigate that.
Speaker 2:Yeah, we work. When we loan money or invest debt or equity. We're bringing in top-notch players for them. We're bringing in top-notch players for them. We're bringing in our experiences and if we're investing in a certain area, we have pretty strong experience in there.
Speaker 1:Yeah.
Speaker 2:And a knowledge of it and contacts. A Rolodex is very, very important. So we have the Rolodex. I've got a Rolodex of all the funders, yeah, so I've been in it for 25 years. I've been on that side of joint venture and we've, you know, done so much on the funding that, um, do I go after the large institutional today? No, but I know the smaller institutionals and those who want to invest in smaller sizes and then when we really get rolling, then we go after the big institutionals. You're not calling a New York big hedge fund when you only need two million bucks or a small amount. They're laughing you out of the place.
Speaker 1:Yep.
Speaker 2:They're sending you down to the small guys and if you don't know them or don't have an experience with them, they're not too interested really in you.
Speaker 1:Yep.
Speaker 2:Unless it's a very, very high interest rate. Edgy guy, that's not the best to deal with.
Speaker 1:Yeah, yeah, that makes a lot of sense. Well, I'm sure everybody is going to hit you up after this. No, really, I think what you're doing is incredible and I think you have a really amazing story behind all of it to give the credibility for you to just skyrocket anything that you back. So I think it's really exciting that you're here and I'm excited to know you because I, full transparency, know very little about what you do, very little about your side of it, and I think I probably resonate a lot more with our audience when I'm asking these questions around. Wow, I really thought that you would have a lot stronger views on who we're using and all these things. So it's really nice to know that you pick a management company and you trust them and to make those choices, and that's why I picked you and I hand that to you. I think that's important knowledge for our audience to have, for sure.
Speaker 2:Yeah, I'm not looking for that management company to know all about the finance side. That's my side, but I don't know all about their side.
Speaker 1:I'm trusting on them.
Speaker 2:And if you can't trust who you picked, you better have done your due diligence and been smart about it and pick the best, and then you're relying on them with that, I think that's. I can't emphasize that enough. You're relying on them to make those best decisions. If there's some major issue or something that comes up, they will come talk to you and then you get to discuss it with them and work out a good solution for it and who do you communicate with the most?
Speaker 1:Is it your regional? Your community manager, like, who on the team do you? Do you on that team do you and you don't have to name names, but which what positions do you interact with the most at a third party?
Speaker 2:to name names. But what positions do you interact with the most at a third party? It depends on what property, but generally it's the property manager I discuss any issues with. If there's any major issues, it's always the regional manager will come with the property manager and say, Ed, we have this situation, and then they lay it out and then we discuss it and come up with the right answer.
Speaker 1:Right.
Speaker 2:With the pros and cons and understanding it. I want them to understand the problem and bring me the pros and cons. I don't want them to. Here's the problem. What do we do? They need to come with the solutions and lay it out to me.
Speaker 1:That makes a lot of sense. Wow, I'm really excited and I think this was a really amazing wealth of knowledge that you brought to the audience today. And I know you're going to be on a couple more and you're probably going to be talking more strategic detail about the rollout of software and a rollout of Nectar Flow specifically. So I will leave that for that podcast, but I want to thank you for sharing time with us today and answering a lot of these questions. It's great to be here.
Speaker 2:It's a lot of fun.
Speaker 1:Thanks, ed, and thank you for tuning in to the Multifamily Innovation Podcast. Visit us at multifamilyleadershipcom and be sure to register for our AI Summit in December, and we will see you on the next episode.