Working Capital The Real Estate Podcast

Wealth Creation through Multifamily Real Estate with Darin Batchelder|EP26

Nov 4, 2020

In This Episode

Darin Batchelder started as a CPA with PriceWaterhouse and PepsiCo. He transitioned into sales selling software applications for several technology companies. He then transitioned to institutional loan trading with ABN AMRO, an international bank based in the Netherlands, with main focus on trading large jumbo residential portfolios and multifamily portfolios bank to bank. He then founded TZK Capital in 2007 focused on trading clean credit performing loans to include residential, multifamily and commercial real estate loans bank to bank. He has traded in excess of $4 billion in loans.

In this episode, we talked about his journey on how he got into real estate, multifamily deals, real estate syndications, partnering, raising capitals, how he got invested in over 4,000 multifamily units and much MORE!


Resources and Links:

https://darinbatchelder.com/

https://www.linkedin.com/in/darin-batchelder-8855b620

 

Transcript

Jesse (1s):

Welcome to the Working Capital The Real Estate Podcast. My name is Jesse Fragale. And on this show, we discuss all things real estate with investors and experts in a variety of industries that impact real estate. Whether you’re looking at your first investment or raising your first fund, join me and lets build that Portfolio one square foot at a time. All right. My Working capitalist friends today on the show we have Darren Batchelder, Darren’s the president and founder of T Z K. Capital a driven company that focuses on of efficient brokering of financial institution, loan portfolios. He has a measurable experience in developing and managing complicated sales transactions before TZK. Darren was responsible for the sale of residential and Multifamily loan pools of ABM AMRO mortgage capital markets group, and was involved in over 4 billion in loan portfolio transactions.

Jesse (52s):

Today we talked about real estate syndication, partnering, social media, all things, real estate. I think you’re really gonna enjoy the episode. Ladies and gentlemen, I have Darren Batchelder on the show today. Really excited to have you on the show today. Darin you know, after that, a quick bio that I did, I’d love to actually talk a bit about, you know, what your background is in terms of real estate as a, a, it looks like you’ve worn multiple hats over the years, but first of all, Hey, how are you doing?

Darin (1m 20s):

And Jesse, I appreciate you having me on looking forward to it.

Jesse (1m 23s):

Thanks for coming on. I’m really excited to, to go through this episode, you know, like I said, you know, Darren, we always ask the guests off the top, you know, what their background is in terms of real estate and what got them kicked off in this a great asset class that we all love, right?

Darin (1m 40s):

Oh, absolutely. So I’d been in the loan trading space since about 2002. I was with a, a large Dutch bank called an ABN AMRO from 2002 to 2006, 2007. I started my own business trading, presidential multifamily and commercial real estate. It’s a real estate loans to bank, to bank, a larger loan portfolios, and always wanted to get into the real estate side, but it was just focused on growing the business. And it was, it was about three years ago. I finally said, I’m going to take the dive in, get into real estate. I went and bought a new construction duplex, and you know, I was happy.

Darin (2m 21s):

I did that from a standpoint that it got me into the game, but once they sign the contract on that, I realized, you know, I really wanted to go bigger. It was going to take me a lot longer than I wanted to, just to, to go duplex, fourplex, et cetera. So I, at that point I decided to a focus on figuring out a way to go bigger.

Jesse (2m 41s):

That’s great. Oh, that’s good to hear. So, you know, we, we usually like to go over one of the deals and then it can be something, you know, that early deal like that duplex or something a, you know, this is just memorable for whatever reason. Is there a deal that a, you know, early on that really you cut your teeth on, that you think listeners would, would get some value to the hearing, some of the detail’s. Yeah,

Darin (3m 1s):

Absolutely. So, you know, when you say go bigger, that can mean a lot of different things to a lot of different people, right? So I went and looked for a way, you know, I’m a big believer in finding other people that have already done what you want to do and go and try to learn from them. So I went and joined a Multifamily mentorship group based here in Dallas. And then I met a bunch of syndicators that, you know, had done one, two, three, four, five deals and, and I networked with them and, you know, surrounding yourself with like-minded people is so critical because when I got, when I did the deal on the duplex, I didn’t know anybody else that was really investing in real estate.

Darin (3m 44s):

And now all of a sudden I was part of a group where are these people had done a 100 unit deal, 80 and a deal to 150 unit deal. And so it became something that I was like, if they can do it, I can do it right. But if I didn’t surround myself with those people, and I just surrounded myself with people that, you know, my friends and family who really weren’t focused in the real estate area, they may of been like, you’re crazy. How do you know, how can you go bigger? So I went from a duplex to a 76 unit townhome community. And so that was a pretty big jump Some I’ve seen some people will come in to the group with no real estate experience and then their first deal, they do a, a, a a hundred plus unit a deal, you know?

Darin (4m 28s):

So it’s all kind of mindset what you believe you can achieve.

Jesse (4m 34s):

Yeah, for sure. I mean, that, that is quite the jump in terms of the geography, where was that property located?

Darin (4m 40s):

So I’m in the North Dallas area, I’m in a town called prosper is about 45 minutes North of, of Dallas, downtown Dallas. And this was in a town called Crowley, which is about 15 minutes South of Fort worth. So its about an hour and 15 minute drive from me.

Jesse (4m 57s):

So in terms of the deal, how did you structure it with, as you mentioned with, with other partners in the deal?

Darin (5m 4s):

Yeah. So I ended up, you know, as I was in the group, I started to develop relationships, both with experienced syndicators, who I reached out to and asked, you know, Hey, if I do find a deal that, you know, it looks like it’s a solid deal. Would you want a partner with me? And I kind of developed, you know, relationship with a bunch of people that had said yes. And then secondarily, I started developing relationships with a lot of passive investors that said, you know, when you get a deal, let me know if I may be interested in, in, in investing in that deal. So I ended up partnering with a gentleman by the name of Roger Ghouta is out of Chicago, a lot of Naperville and a very experienced real estate investor, met him through the Group, you know, we had prior discussions that, Hey, if you find the deal, I’d be open to it.

Darin (5m 56s):

And, and so I reached to him and he actually, I didn’t even know it, but he had another deal in the town next door. Eh, and so that was a very attractive because he knew the area already. And so we partnered together.

Jesse (6m 11s):

Oh, that’s incredible. So it’s just coincidence he had a deal, you know,

Darin (6m 14s):

It was just a coincidence. It was about five minutes away. Yeah. It was just a coincidence.

Jesse (6m 18s):

That’s great. So in terms of the deal itself, would it be considered a syndication deal? Were there, was there a sponsor with multiple limited partners?

Darin (6m 27s):

Yeah, so it w it was a syndication deal. It was a, myself and Raj were the two general partners and we syndicated the deal. We raised like two and a half million. It was a, it was about a $6 million purchase. And we had 40 For limited partners that invested in that deal.

Jesse (6m 47s):

So, you know, we’ve talked about a syndications on the show a few times, and I think one of the things for me, at least that I’m always curious about is what certain operators give themselves in terms of time to raise capital. And it looks like you just mentioned that, you know, you look for soft commits, you know, throughout a PR story prior to that deal. But when it actually comes down to the point where you, you know, you have it under contract, maybe you could walk us through a little bit of, you know, what the process is there because I’ve had a number of people reached out and ask about, you know, who is putting up deposits. At what point are you solidifying those deposits? What is the risk of the operator? If they can’t raise, maybe you could kind of a demystify it a little bit of that for the listeners.

Darin (7m 29s):

All great questions. You know, first of all, I would, I would S tell the listeners, you know, just to start getting a word out, right. When right when you start looking at deals, looking for deals and trying to learn, start telling people that know what you’re doing and start, you know, you can see you just used an Excel spreadsheet too, to start putting down potential investors, because you just don’t know who’s going to actually come through and who, who is not. And you don’t know when you’re going to get a deal, you might get a deal next month and maybe six months or 12 months from now. And all of those individuals, you know, they have different uses for their money. And they may have been an interested investor six months ago, but they may have allocated their capital someplace else.

Darin (8m 14s):

But to your point in terms of Okay now, Hey, we, we have been a lot of the deal. You know, we have to say typically, you know, if it’s a letter of intent, you go through the best and final. So we were awarded the deal. Maybe we have a week or two to negotiate. The contract were under contract. Now most contracts are a 60 day close. And then you maybe build in two or three 15 day extension’s. So you are trying to close it in 60 days. And so to your question, who fronts some of that money that the money is fronted by the sponsor is not a refundable hard money day one.

Darin (8m 56s):

So that comes from the sponsor. And secondly, then, then we have to hire an inspection team to come out and inspect the property. We have to pay for the application on the loan. We have to hire an attorney to do both the, the transaction and also the private placement memorandum. All of that is fronted by the general partnership. Now, 60 days later, or if we go into the extensions, whenever it closes the general partners that have been reimbursed for that money. Okay. So, you know, the legal fees and, and the inspection fees, all of that gets reimbursed at closing.

Darin (9m 40s):

But you know, some of them are some of the investor’s came to me and said, Hey, Darin, you know, I’m interested. And, you know, you need to raise two and a half million. What if I put up a a hundred grand and you don’t raise the whole two and a half million? Like what, so what happens then? And my reply was you get your money back and I’m stuck as the sponsor. I’m stuck with all the out of pocket costs. I lose that money. So the sponsor is putting a risk for that 60 day period.

Jesse (10m 12s):

So when you do these raises, I I’ve heard other, you know, sponsors talk about raising more than a hundred percent a, you know, just in the event that there are people that end up dropping out, or maybe for whatever life circumstances are doing something different. Do you typically raise more than you need and then have some sort of mechanism and the event that you actually do raise too much, and you have to limit the, a, the sponsor side of the limited partners that are in the deal. Okay.

Darin (10m 38s):

You mean that’s on a case by case basis. Some some people will raise more and then give some back. Some people will raise more and then just keep more in that kind of in the reserves. And some, you know, a lot of it, a lot of people do is they’ll put people on waiting list, you know, so, you know, when they get too, you know, be fully committed, then they’ll, you know, there’s, there’s a time frame where people say, yeah, I’m in for a, a a hundred grand, but it may take a week or two before the, the money actually gets in the account. Right. And in that two week time frame, you may have somebody that drops out.

Darin (11m 18s):

And so at that point, you can go to somebody that’s on the, you know, on the waiting list. Yeah.

Jesse (11m 25s):

Okay. So some of the, a, I think it was you and another podcast, or some of the, just reading online, you mentioned the importance of investing passively in other people’s deals. Maybe you could talk a little bit about why you think that’s so important for investors, even if they, you know, eventually wanna be running their own deals.

Darin (11m 43s):

I think it’s important because people always want to know that you’ve been in their shoes. You know, so when I got into this space, you know, I have been trading multi-family loan portfolios for years, and, and I really love the asset class. And I saw that the performance was a very, very, very strong. And so that was a very attractive to me. So when I got into this space, I pulled a bunch of money out of the stock market. And I started to invest passively with other sponsors. And I invested in seven different spot, a passive deals with seven different sponsorship groups. Now I don’t, you know, advise that you have to do that to become a sponsor, but I think it’s a very wise to do that at least once.

Darin (12m 30s):

And this is the reason why is because, you know, everything you do for the first time can be, can be scary, you know? And so I had invested in, you know, lots of different stocks and ETFs and mutual funds and, and, you know, different wall street type co you know, investments. But I had never had invested in a private placement deal. So my first passive deal, you know, a few things, you know, caught my attention. One was it’s not like buying a IBM stop where you go on to your brokerage account and you, you know, you put in a, a hundred shares, click execute and boom that the tree is executed and it’s done it.

Darin (13m 15s):

You actually have to sign a bunch of paperwork. You know, that there’s like four documents that you have to sign. And, you know, some of them are F three or four pages, and some of them are, you know, 50, 60, 70 pages long. And so I wanted to understand what was in those documents, so that when I was raising money, I would be able to explain to my investors, you know, and be able to answer the questions and be able to have told them how I felt when I was in their shoes. So I read through all the documents. And I remember when I first wired my money to the F my first investment, it was a $75,000 investment.

Darin (13m 58s):

And I, you know, it was a wire and I hit send, and I sent an email to the sponsor, and I got no response. Ooh. Because in the, in the lone trading space, when we do these large portfolio trades, it’s, it’s handled by a wire, but, you know, whoever is sending the wire, then the, whoever is receiving, it will confirm it same day. Right. So I’m expecting the same thing that happened. Okay. Based on my experience in my mind industry. So when I say, Hey, I sent the wire, can you please confirm you received it?

Darin (14m 39s):

I get no response. I’m like, Oh, I know what’s going on. And so then I sent a text or no response. And so now all of a sudden I’m a little nervous. I’m like, did I just wire 75 K to never, never land. Right. And these are people that I had met before. I, you know, I talked to other passive investors who had invested multiple times with them. Like they had a great reputation, but I’m still nervous. It’s still my first time. I don’t care if they’ve done it two or three times a week. I’m still okay. So I called it a sponsor. He finally picks it up and says, Hey, Darin, here’s the deal. But bank that we use, I can see all the deposits coming in, but I don’t get the detail on who each deposit is from until the next morning.

Darin (15m 29s):

And so at that point, I’m like, Oh, okay, well, that makes sense. I’m still a little uneasy over tonight, but the next morning he sends me an email. Hey, just want to confirm I got your wire. And now I know. Right. And so I ended up using that same bank for our syndication. And what happened was when I went to all of my investors, I told them straight out, told them, they said, Hey, look, here’s how it’s going to work. You’re going to wire the money. And I am not going to be able to confirm it until tomorrow morning, but I will confirm it first thing tomorrow morning. And that set them at ease. They understood what the process was. So I think its very important to invest passively.

Darin (16m 10s):

’cause you, you understand the process from the investor standpoint.

Jesse (16m 16s):

Yeah. And you probably put multiple people at at least a 24 hours of a, of EAs that, that you did not experience. Right? Exactly. Exactly. So from the, that point, so as a limited partner, your experience probably was not limited to that. You, you know, you probably saw a formal webinar or you saw how that process of raising capital and then you probably saw are, had to have scene how they handle their limited partners from an investor relation point of view. Did you learn anything through that, that you took to the investments that you did you do today? Some things that you liked or didn’t like about maybe the first couple deals that you were a sponsor and the way that they communicated everything to the limited part.

Darin (16m 59s):

Yeah. That’s a great point. Now that that was one of the, the strategic decisions I made in terms of kind of spreading it out amongst a different sponsors was that I wanted to see the different styles for a communication from the different sponsors. So, you know, I was able to look at seven different, you know, invest investment webinars and see what I liked and what I didn’t like and for my own style. And then in addition, every month we get an email from each of the sponsors giving us an update as to how the deal is going. And you know, some of the sponsors are like, everything is good.

Darin (17m 42s):

Tach, the reports talk to you next month. Right. And then other ones like put a lot more detail it and everybody has a different style. Right? So for me, I, I don’t want to open the reports. Like, you know, I I’m busy with other stuff and that’s why I’m passive. That’s why I have them running the deal. So I want them to tell me the good, the bad and the ugly, like in a written, you know, a few paragraphs email that I could just read and I don’t have to open up the balance sheet in the P and L and analyze it. But everybody handles that differently because I want that, that’s the way I communicate to my investors because, and, and I’ve had a lot of investors come back and say, Darin, I love how transparent you are now at the end of the day, you know, three years down the road, five years down the road, when the deals are either have a Capital event in either the refi or sell or, you know, I may have a deal that I love the communication style, but the end result wasn’t that strong.

Darin (18m 56s):

And then I may have another deal where, you know, I didn’t love the communication style all the way through, but boy at the end, man, the guy sold the deal For, you know, and it gave me an awesome return. So I, I probably, you know, will judge them at the end based on returns. But along the way, I feel so much better being an invested in a deal where they wear the sponsor is transparent.

Jesse (19m 25s):

Yeah. And I guess ideally having both those things would be, that would be that the best.

Darin (19m 30s):

Oh. If I had a sponsor who was extremely transparent. Yeah. And he had an awesome return. He or she is. Yeah. Yep.

Jesse (19m 37s):

So you mentioned something, there are Capital events and, you know, taking this from, you know, acquisition, raising the money and investor relations through the deal. I, I think it’s, you know, there are still some questions I often get from people that talk about, you know, when do I get my money back? Why, you know, is it, is it a return? Have my Capital, is it a results of a refinance? Let’s talk a little bit about you, you know, what constitutes a Capital event. And then in addition to that, you know, what is the general, the general rule or the most common rule when it comes to actually getting out of the deal in terms of time horizon?

Darin (20m 12s):

Yeah. So I would say that from my experience from, you know, the deals that we put together and also all the deals that I’ve invested in, and that I see come through my email box, most deals are underwritten to be like a five, five year business plan. Sometimes now they are moving to six years, but lets just say a five-year business plan for most deals. And so people ask will, you know, kind of get my money out. Is it it’s a very illiquid investment. So basically yes there’s, there is language in the M LLC agreement that discusses how you can get out.

Darin (20m 57s):

But it’s very difficult and, and I don’t see any, I don’t see many people do it. So you basically, you know, if you wanna invest in these types of deals, you’ve kind of have to take, you know, your chunk of money, 50, 7,500 grand and then, you know, give it to the end of the deal and just kind of, you are not going to see it. You’re not going to see it for five, six, seven years now if you’re in a really good Market, you know, I have met, I met people in the group that, you know, started investing in 2012, 13, 14, 15. And they, you know, it was a five-year business plan, but they were getting their money back plus a a hundred percent or plus 200% back in, you know, year and a half to two and a half years.

Darin (21m 47s):

But today’s, Market, you know, we just don’t expect that to happen. So, you know, the kind of the mindset is a plan on your money being illiquid in the deal for five years, it could be as soon as three years, it could be as long as, you know, seven years.

Jesse (22m 6s):

And in those deals where you had that, Market appreciating quickly that one or two years was that a result of a cash out refinance where they, they started distributing some of those returns back to the partners. And a lot of those we’re actually sales, just souls, the sales rep,

Darin (22m 21s):

People that we’re, you know, they were buying and DFW and there were buying it 30 or 40,000 a door and they were, their business plan was two or 3% annual growth and rent. And all of a sudden the DFW market was like, you know, 7%, you know, rent growth. And so they blew their, an NOI numbers out of the water. And so they were able to, to, you know, to flip the deal quickly, in addition to that. So you had that happening and you also had an interest rates going down. So cap rates were compressing, so you have a higher end OOI and then lower cap rates.

Darin (23m 2s):

And so valuation is just kind of exploded.

Jesse (23m 6s):

Yeah. That’s, it’s kind of a credible, some of those markets in terms of the actual upside on these deals, do you find as a sponsor yourself that, you know, well, I guess just point blank in terms of how much Capitol the sponsor puts in the deal as a percentage and then what their percentage of the upside is, how do you typically deal with that?

Darin (23m 26s):

What do you mean by how do I deal with that? How does it, how is it structured or

Jesse (23m 29s):

Yeah. How was it structured? Like if you put two, 10% in as a sponsor, but in the end, in terms of the outside of the deal, yeah. Maybe you get 20% or is it, or is it prorated?

Darin (23m 39s):

And so I, I explained it to like some of my buddies that are not in the real estate world or are there kind of me, well, what’s in it for you for doing that all this work, you know? And so in a way I tried to explain it to them. And as you know, our deal was a 76 unit let’s just round up and say it was an 80 unit deal to me to make the numbers a little easier. So, you know, on the duplex that I bought my wife and I put in it, it was like a $300,000 purchase, 290,000. And we put in, I don’t know, 50 grand and we signed a personal guarantee with the bank and the, the 76 unit we put in a a hundred thousand Okay and then we were the general, one of the general partners to meet the lead sponsor.

Darin (24m 29s):

And it was an 80 20 split. Okay. So 80% went to the limited partners and 20% went to the general partners, the general partners and myself and Raj Group out of Chicago. So, you know, the a a hundred thousand would be part of that 80%. Okay. It would be that’s the My limited partner share. And then the GP percentage is 20% now is the way I would explain that to two other people is like, okay, now between my partner and I were basically getting the cashflow and the back end capital gain off of the 20% of the deals.

Darin (25m 14s):

So let’s say it was a 80 unit deal, 16 units. We basically are getting the cashflow and the capital gain for free. It’s not free because we’re, you know, we’re having to find the deal is structured, the deal And front the money and putting it all together. But you know, when I compare what we did with the duplex, right, the duplex, we had to put down 50 grand and here we put it on a a hundred grand an hour. I’m getting, I’m getting a return on that a a hundred grand plus I’m getting a cashflow and the capital gains on another eight units. <inaudible> so that is very attractive.

Jesse (25m 57s):

Yeah. That makes sense. And clearly it has to be a win-win for the limited partners, as well as the general partner. But we are, I was talking with the colleague today and he asks actually the same question. Do you know what I, what am I getting And? And usually my first answer is, well, first of all, why are you having somebody find a deal? So, you know, it’s not that, you know, there’s, The, I’m asking you for money or I am a showing you an opportunity, right?

Darin (26m 20s):

Yeah. And I’m in the latter camp, you know, like My, my wife said to me like, Hey, don’t go to a friends and family on this first deal. And I’m like, why, well, what if it doesn’t work out? You know? And I’m like, I’m just not wired that way. Like, I’m, I’m excited about the deal. I, I’m gonna do everything in my power to make it successful. So why would, I only want people that I’ve just met and the Multifamily group to benefit from that, you know, what all I’m doing is presenting an opportunity. And if people are not interested, then no, no, no harm, no foul. I just go on to the next guy.

Darin (26m 60s):

But I had some people that were in my personal network that were like, Holy cow, Darrin, thank you so much for bringing us opportunity to me. And some of those people where people that didn’t think we would invest. And so it, it, it did, it, it surprised me that, you know, there are certain, certain people we’re just really thankful And. And I could say that that’s part of the reason why I started a podcast and I want to get the word out. Is that in my life, you know, 47 years before that I’m 50 now, but I didn’t have one person give me an opportunity to invest in more in a deal like that. You know? And so I think its like for some, when you are in this world, you know, you get opportunities left and right.

Darin (27m 47s):

But if you are not in this world, Like being introduced to us an opportunity. Like this is amazing to me. I mean I’m so glad I found it.

Jesse (27m 57s):

Yeah, for sure. And it ties into what you were saying before of, of putting yourself out there and, and just letting people know, because I think a lot of sponsors and even, or even just JVs or people investing with a few friends, I think how often do people say, you know, I didn’t even know that you were doing this. I didn’t even know that you, you raised money for real estate or you were buying real estate and you get people that once they find out yeah. You know, they reached out to you and it’s a little bit nerve racking in the beginning. You were putting your face out there and you’re putting content out there. And, and I wanted to talk to you a little bit about that. So, so you, you, you’ve got the Podcast you connected with you on social media. Like almost everything these days, you know, I’m 31 years old.

Jesse (28m 38s):

I like to say I’m I’m in the, the later stages on the millennial’s, but probably in the younger end or you just mentioned a, you were 47 when you started the podcast or no,

Darin (28m 47s):

M, I’m 50, I’m 50 now I just started the podcast a few months ago. So I got an, a real estate three 47, three years ago.

Jesse (28m 54s):

Okay. So, so that, I mean, that’s a perfect example for people that think it’s too early, too late, you know, not the right time, you know? W how was that for you and, and, you know, how did you get a start making a, the dial move on social media at 50 or so?

Darin (29m 10s):

Yeah, that, that, that’s a funny one. Mmm. Yeah. So there’s pluses and minuses. So I, you know, we met on, on social media. I met a lot of people through social media and, you know, the younger ones that I talked to in their twenties and early thirties, I say for them, you know, the, the, the challenge is you don’t have like a long track record in business. And so the credit credibility factors a little bit, you know, it was just a little bit more challenging and you are most likely don’t have a ton of Capital like, you know, it’s, you just haven’t gotten into your, your big earning years yet.

Darin (29m 53s):

So, but what the young people have is that hustle factor, the hustle factor So and social media, you guys grew up with social media. So you, you know, you have a lot of connections in there and the ability to put yourself out there. So what I talked to you, when I talk to the younger people, I’m like, you, you have to partner with some more senior people, and then you do the legwork, and then you, you bring on them as their rest on the resume and the experience guy. And it’s a win-win for me getting in at, at a later stage, I’m, you know, the benefit for me was I was able to put a lot of money in the stock market, and I was able to invest in other people’s deals.

Darin (30m 39s):

And I have the capital to go out and, you know, front the money for these deals. And, you know, not everybody had isn’t that has that opportunity. And I also had another business and still do have that are the business that is bringing in a positive cashflow. That gives me freedom of time. And, you know, I’m not under the gun where there’s other, other people that are, you know, having to do this on nights and weekends and that sort of thing. But social media was uncomfortable. I was not on Facebook. I was not on Instagram when I got involved three years ago. And then they told me when I joined the multi-family mentorship Group they said, Hey, you got to join Facebook just so you can get into is a private Facebook group.

Darin (31m 28s):

So I did, and I was always against Facebook because I just felt like it was a time-waster for people. Like if people just get on their own and then, you know, you can spend hours and, and not got anything done, but all of a sudden I’m connecting with people all over the country that are just focused on Multifamily. I was like, wow, there’s something here. And so I, I go to a lot of conferences, not just real estate, but also entrepreneurial conferences. And I kept hearing from people and not necessarily in real estate, but in all these different facets businesses. And they were saying, if you’re not on Instagram, you’re just M.

Darin (32m 9s):

And seriously, they were sick. And I was like, I can’t shake in my head. Really, you know, this is something my kids is, you know, played with when they’re like in middle school. And so I went to a conference and I told my wife, I’m going to go to a conference. I’m going to find somebody that knows what the heck they’re doing about Instagram. And I’m going to hire them in and figure out what to do. I had no followers. I was not on Instagram. You know? So I hired a guy, I met somebody, he had like 300,000 followers. I hired him as a consultant. And I said, what do I do? And they were literally, I didn’t know how to create a profile. Like I had to have him like, show me where the icons were like, that’s super, super green.

Darin (32m 53s):

It’s super, super, super green. Right. And, and then I got to tell you, like, he told me, you have to post every day. And I was uncomfortable. Like, what am I going to do? It feels braggadocious like that.

Jesse (33m 7s):

Who cares? Who, who, who wants to hear my content? Yeah

Darin (33m 10s):

Exactly all that. And, and, you know, are people going to judge you and say, what is he doing? And, but, you know, as time went on, you know, the first month or two was uncomfortable and then it just becomes a habit. And then all of a sudden I’m getting a call, you know, somebody private messaging me from Las Vegas, Chicago, you know, Spain. And we get on these calls and I’m like, that’s what it’s for. It’s not four of those people that are judging you. It’s for the people that you wouldn’t have talked to. Otherwise, look, we wouldn’t be here on this. Podcast otherwise, you know, I have met some incredibly great people through social media is still, is a little braggadocious.

Darin (33m 54s):

I mean, you know, there’s people up that are taking pictures next to Ferrari’s and Lamborghini’s, and for sure. And, you know, like it, it has that MIS you know, thing to do it, but it’s a great way to connect with, with like-minded people.

Jesse (34m 11s):

Yeah. And I’m sure it’s refreshing for any listener that has ha has been in this situation, just to hear somebody a little bit older and talking about how it’s uncomfortable, you know, you can have somebody with a 30, 35 years of experience be a head of their industry and then create their first Instagram page and have the same feeling that a lot of other people have.

Darin (34m 29s):

Oh, absolutely. So my kids My, I’ve got a sophomore in college and a senior in high school. Sophomore college is that my son, my daughter was a senior in high school. So when I got an Instagram who it was maybe two years ago, and I said, Oh, I’m going to get on Instagram. And they started laughing at me like, Oh, you are going to get out of his skin. What are you going to do? Like how who’s going to follow you. Right. And, and so then I just listen to the other guy that told me, you know, what to do. And, and then little by little, I started developing relationships and, you know, I’m not friends, don’t connect with the same people that my kids do.

Darin (35m 11s):

Right. I’m connecting with people that are in the Multifamily space that are interested in growing their wealth, you know, and, and Multifamily, but it, it was an eye-opener, but I’m so thankful that I did it. Yeah.

Jesse (35m 23s):

Yup. For sure. And, and what I have found with people that are, have been successful in other areas is that once you do get online and you start realizing that so many of those skills are transferable consistency, putting effort into it, you know, you made a good point that, you know, if, if a, a gentleman or, or, or a lady’s younger, she can put the time and effort into actually creating the page where you’re at a point in your career where you can say, Hey, I can hire an expert, helped me out, figure out what I need to do. And then again, like for me, the, the, the magic word for social media, whether you post once a day, once a week is consistency that you just in Podcast too, that you just, once you have a fan base or listeners or viewers, they expect that once a week that, you know, don’t, don’t, short-change them.

Jesse (36m 5s):

And, and if you were expecting to keep them in and grow that, grow that following or audience.

Darin (36m 10s):

Yeah, absolutely. Absolutely. You know, I, I ended up before implementing a podcast or read the book, what, what is it called to start with? Why you can start with why. Yeah. That’s it. And it was a great book to, you know, make me think through like all the way in. And so I did a lot of thinking in my mind to wise where one I’m, I’m looking for financial freedom, just like a lot of other people. Now, my number might be a little bigger than, than some, some people that are younger, but, you know, I, I have a number And and then secondly, I want to inspire others, you know, I mean, look, and that just brings me joy to help somebody else.

Darin (36m 58s):

Like, people are a ton of people who have helped me along the way, and if I could help somebody and they come back and tell me that, you know, a podcast or a conversation or something, you know, help them. And that just gives me a lot of joy. And that’s part of being a human, you know? Yeah,

Jesse (37m 15s):

Absolutely. So just, you know, where are you are today right now with, with real estate and, you know, we’re in a crazy time right now, what is your general philosophy right now for your investments? Whether that’s a value add, whether that’s turn-key and how do you, how are you navigating through 2020? And, you know, it’s just, at this point, it seems like this is going to be with us until 20, 21. How are you handling all that?

Darin (37m 40s):

It’s a good question. So a few things, one was, I was, I was locked and loaded on February on a 210 unit deal about an hour South of Dallas. And I thought I was gonna, when the deal, and I ended up coming runner up and, you know, I spend a lot of time on that deal. I thought I was going to when it, but when I lost it, you know, I looked it up to the big man upstairs. And he said, okay, well, you know what, next to him, just go off to the next one. Or, you know, pivot. And, you know, I felt like you put it in my mind and they, you know, all the podcast. And so I looked online, found there was a Podcast conference in Orlando, the following week, I got on a plane and went down and you met a bunch of people in podcasting, not real estate related.

Darin (38m 30s):

And he said, I have no idea what I’m doing, you know, help me out. And so learned a ton and, and went off in that direction. So started the podcast and, and that’s been, been great because I’ve been able to meet, you know, fantastic people and build relationships and, and whatnot. I’m still looking at deals, but, you know, I don’t know, there’s, there’s people that are in a race, you know, to get as many units as they can get. And look, I believe that the more units you have, the more opportunity you have to grow your wealth. I do believe that, but this COVID situation, I am a little bit more suspect than a lot of other people that I, I talked to M I’m of the belief that, you know, the stimulus really has kept the economy going.

Darin (39m 28s):

And I think there’ll be another stimulus package that will come out either before or after the election. And then once that stimulus starts to run out, I think we’re going to start seeing some trouble. I think we’re gonna start seeing more businesses go under if they don’t have that stimulus, I’m going to, I think we’re going to have MORE on employed that, you know, now that we, we already have like 10, 11 million an employee, but you know, people who are still thinking they’re gonna be getting checks, right. Ah, from the government. And when that starts to run out, I think there’s going to be, you know, more bankruptcies, more foreclosures on residential homes, more people that can’t pay their rent, more people are losing their jobs.

Darin (40m 14s):

And then, you know, I think that the stock market in the real estate market are impacting. So what I saw happened in the multi-family space is when COVID hit for about two months, it just went on hold. Nobody was buying, nobody was selling. But then when it opened back up, I’m telling you that people are these deals or trading at the same levels, they were pre COVID. And I don’t understand it. Like the, the predictability of the cashflows is not the same as it was before, you know? Yeah. And now markets like Texas, you know, that one thing that could save a Market like Texas, you know, Tennessee, the Carolina is Florida, is that COVID is actually a forcing, not forcing, but it’s, it’s causing a population shift from some higher costs, a metropolitan markets.

Darin (41m 15s):

So, you know, people in New York and Chicago in California are moving to a lower cost areas, especially if they can keep their job and work remote and have a much lower cost of living. Why wouldn’t you do that? Right. Yeah. So that could help sustain the market in these markets. Like we are in Dallas and, and you know, some of those other markets that are mentioned, and, but I’m still a little cautious, so I’m, I’m looking at deals, but the deal has to be good.

Jesse (41m 53s):

Yup. For sure. And I think, yeah, I think I, I share that, you know, that I’m optimistic, eh, you know, cautiousness, because I do think similarly that a, you know, a stimulus starts running out in the next year. It remains to be seen what type of market we come into. And you know, what part of the market was artificially inflated by low interest rates and government government assistance. So yeah. I mean, well, I guess we’ll see, you know.

Darin (42m 20s):

Yeah. Well, so we’ll see you, you know, I hope I’m wrong, you know? So I, I I’ll say this back in, what, what year would you say is it was the great recession.

Jesse (42m 32s):

Oh man. I think it was a Oh seven to Oh nine

Darin (42m 35s):

Oh seven Oh nine. Well, yeah. So you’re lower than, than most, most people that I ask that question to you, they say 2008, 2009 And. And I was working for ABN AMRO trading, large, large portfolio as a loans. And I saw it in 2006. Hm. So I told my wife, I said, let’s sell it. We were living in South Florida. And I said, let’s sell our home. This cannot continue. Mmm. This is going to end badly now the real estate market as Dunbar. Well now, but it’s how we didn’t run up. Like I did back then. So, and you know, I don’t anticipate a huge crash, like, like it was back then, but it took a year and a half, two years from the point that I said that for it to come to fruition.

Darin (43m 22s):

And she had said, well, Darren, well, what are we going to do? If we sell the house? I said, well, move into an apartment. She said, well for how long, you know? And I said, I don’t know if it’s a year or if it’s five years, but this is going to end badly. And she said, well, if we’ve got two little kids, I don’t want to live in an apartment of five years. You know? And, and so we kept our house and our house, we bought it three 60 something. It, it went up to 70 and 70 and then it dropped down and we sold it for, for 30. So, Hey, we still made money on it. And we didn’t lose like a lot of people did in the, in the great recession. But I think that sometimes these big shifts, there’s a time lag before, you know, it actually happens, but there’s been other markets where it’s gone up and it never came back down.

Darin (44m 17s):

So who knows?

Jesse (44m 18s):

Yeah, for sure. While it’s like the, a, the old quote, you know, don’t time the market, not timing the market time in the market. And I think for real estate that is especially true in, and, you know, you keep trying to find, like you said, good deals, right. And I think any time there’s a, there’s no concern about the economy. My philosophy has always been go back to fundamentals and make sure even more so that your deal is make sense and that you’re following, you know, the principal’s that, that you follow in your investment philosophy were coming up to the end of time here, Darren. I mean, this is, I feel like we’ve only scratched the surface here, but what, you know, I normally tell our listeners to check a check your social media, social media, and I go to your podcast, where can people reach you?

Jesse (45m 6s):

And what’s the best way to get in touch?

Darin (45m 8s):

Yeah, I think the best way is to go to my website@darinbatchelder.com. It’s D a R I S N B a T C H E L D E r.com. And there you can, you can sign up and then, you know, you’ll start getting updates on, on the podcast. And I also put out a weekly blog posts with some learning lessons that I’ve gone through. And I think that’s probably the best, the best way of, for you to reach me. And I’m also out of all the social media I’m on Facebook, Instagram, LinkedIn, et cetera. But Instagram is probably where I spend most of my time. So if you find me at Batchelder do

Jesse (45m 50s):

My guest today has been Darren Batchelder. Darren. Thanks for coming on the show. Jesse really appreciate it. My friend, thank you for listening to the work in Capital podcast. My goal is to help individuals break into real estate investing as well as educate experience in investors. If you enjoy the show, please share it with a friend, subscribe and give us a rating on iTunes. It really helps us. If you have any questions, I want to learn more or less me to cover a specific topic on the show. Please reach out to me via instagram@jforgalsorheadtowwwdotjessefragale.com. My name is Jesse Fragale and I’ll see you back here for the next episode or the Working Capital The Real Estate Podcast.