Have you ever gone in a room and thought that people who get PAID the MOST aren’t sitting in the room you’re in? Whether it’s a college classroom or the office floor where you’re toiling for a 9 to 5, chances are, “The Big Boys” don’t stay there. It’s never a mistake to follow your passions but what if that passion involved getting paid BIG? Would you reconsider where you’re at and where you ought to be? People like Nick Earls and Eric DiNicola have always known they weren’t meant to work for anybody, doing the same things over and over, trapped in a 9 to 5. But it wasn’t until 2015 when they realized what they had to do. Nick has over a decade of experience in all phases of commercial real estate, including asset management, sales, new construction development, and property management. He is the author of “Making Millions through Multi-Family Development”, a book that highlights his expertise on multifamily condominium development, underwriting, and asset management in the multifamily space. Eric has a strong financial background spanning over a decade. He began working in public equity in 2010 and moved into the private equity markets where he worked on valuations and capital raising. Joining forces with Nick in 2015, he leveraged his investment experience and expertise to accelerate the growth of Winterspring's real estate business. Together, they are Co-Founders and Managing Principals of Winterspring Capitals. They purchase/syndicate large multifamily properties in the Southeast and develop luxury multifamily condominiums in the Boston market. They also develop affordable housing and have experience with land entitlement. In realizing their dreams through real estate investing, Nick and Eric have decided to share their knowledge so that others who wish to walk their path can share in their success. What are some challenges in multifamily investing? What are the costs? How do you find the best deals and how do you make these come to you? What are Nick and Eric bringing to the table, making their offers irresistible to investors? Tune in to learn more about the hottest and most relevant information on Real Estate Investing! Thank you all for listening and I will see you on the next episode. When you are ready head on over to https://billyalvaro.com or go grab your tools to help you at https://billyssecrets.com
Have you ever gone in a room and thought that people who get PAID the MOST aren’t sitting in the room you’re in?
Whether it’s a college classroom or the office floor where you’re toiling for a 9 to 5, chances are, “The Big Boys” don’t stay there.
It’s never a mistake to follow your passions but what if that passion involved getting paid BIG? Would you reconsider where you’re at and where you ought to be?
People like Nick Earls and Eric DiNicola have always known they weren’t meant to work for anybody, doing the same things over and over, trapped in a 9 to 5. But it wasn’t until 2015 when they realized what they had to do.
Nick has over a decade of experience in all phases of commercial real estate, including asset management, sales, new construction development, and property management. He is the author of “Making Millions through Multi-Family Development”, a book that highlights his expertise on multifamily condominium development, underwriting, and asset management in the multifamily space.
Eric has a strong financial background spanning over a decade. He began working in public equity in 2010 and moved into the private equity markets where he worked on valuations and capital raising. Joining forces with Nick in 2015, he leveraged his investment experience and expertise to accelerate the growth of Winterspring's real estate business.
Together, they are Co-Founders and Managing Principals of Winterspring Capitals. They purchase/syndicate large multifamily properties in the Southeast and develop luxury multifamily condominiums in the Boston market. They also develop affordable housing and have experience with land entitlement.
In realizing their dreams through real estate investing, Nick and Eric have decided to share their knowledge so that others who wish to walk their path can share in their success.
What are some challenges in multifamily investing? What are the costs? How do you find the best deals and how do you make these come to you? What are Nick and Eric bringing to the table, making their offers irresistible to investors?
Tune in to learn more about the hottest and most relevant information on Real Estate Investing!
Thank you all for listening and I will see you on the next episode. When you are ready head on over to https://billyalvaro.com or go grab your tools to help you at https://billyssecrets.com
[00:00:00] BILLY: What's up. What's up. This is unstoppable REI wealth episode 55. I am Billy Alvaro today. I'm going to be interviewing two young studs from Boston, Massachusetts, these two guys, Nick Earls and Eric De Nicola high school boys. Now they're in their thirties. They're making some waves in a development area inside Boston mass. These guys are taking buildings, converting them over to apartments, ground up condos, selling units for a million dollars a pop. And here's the key. They knew nothing. When they got started, they didn't have any fear. And they're absolutely crushing it. I want you to listen to the interview. It's only about a half hour 35 minutes tops, but we go through two case studies, a condo from ground up and a conversion building on how they did it, their thought process, how they actually figure out the cost. There's some good lessons in here. Listen to it. You have properties. You want to flip inside Boston that are condo conversions land. Look, these guys up, connect with them. They are two young guys who would go play. catch you guys in the next one,
[00:00:59] Welcome to [00:01:00] unstoppable real estate investing wealth. My name is Billy Alvaro, AKA the unstoppable VA former billion dollar mortgage banker gone bankrupt turned professional real estate investor where each week you'll learn the tools, strategies, systems, and secrets myself and other highly successful real estate investing entrepreneurs use to start, grow and scale [00:01:00] their businesses, creating massive profits and how you can too. And we'll teach you how to put those profits to work. So you no longer have to get ready to finally experience financial freedom and generational wealth. Now let's get started.
[00:01:37] what is going on everybody? Welcome back to the episode of unstoppable REI. Well, I'm your host, Billy. Alvaro the unstoppable BA and I am on today with two gentlemen east coast. There's like myself, not in New York, but close enough throughout Massachusetts. These gentlemen are in the space of apartment investing now in watching me for a little bit, you know, that I have a fond desire to start getting into their space. So I'm going to take this [00:02:00] time to pick their brains, figure out what the hell they do, doing, how to do it, how this was successful. Welcome to the show Eric and Nick and the company name is winter spring capital. Welcome gentlemen.
[00:02:09] NICK: Hey thanks for having us
[00:02:11] BILLY: Absolutely. Absolutely. So, so listen, you guys have been partners in this business for how long
[00:02:17] NICK: started in 2015. And
[00:02:19] BILLY: what was your background? Gentlemen were you fix and flippers wholesalers?
[00:02:22] NICK: I got my real estate license at a college, so I was selling mid-sized apartment buildings for a few years. Come from a construction background. My brother's a carpenter. My father is a contractor, so kind of always been in the real estate world. Eric and I have been friends for almost 20 years now, met each other when we were kids. So I had the real estate background to start with, but Eric comes from. The finance world, which as I'm sure you know, is also very helpful real estate.
[00:02:51] BILLY: Absolutely. And Eric, what about yourself? How long have you been in the finance world
[00:02:54] ERIC: yeah. So when I, uh, yeah, Nick and I met in high school, um, and then we kind of went our separate ways for [00:03:00] college. And, uh, I was working in New York city, um, right out of college. I was trading stocks. I was working in public equity and then I started working for a firm that dealt with private equity, kind of private equity information services, and, uh, That was so I kind of got the financial background. So I went to school for originally engineering and I kind of switched halfway through when, you know, one of the professors said, you know, the, the guys who make the most money, aren't sitting in this room right now. And I said, okay, I got to kind of change my, that was like a, a ding moment for me. But Nick and I always knew we wanted to do something together since high school. Uh, we didn't want to work for someone else. And, you know, I always tell them. So like the first minute I sat down and my first job at 9 0 1, I said, I, there's no way I can do this I'm 60, like one minute into the job.
[00:03:44] BILLY: So listen. some people they're cut out for it. And some people they're not, and obviously, you know, you're cut from the cloth. I'm cut from it. I can't work for somebody else. I can't be in that. Redane nine to five, same thing every single day, punching the clock. Like [00:04:00] how old are you guys? If you don't mind me asking
[00:04:02] NICK: 32, Eric's turning 32, soon he's 31.
[00:04:06] BILLY: You guys are young and in your prime man, this is good. I love it. Yeah, you guys are primed to do this, like rocket ship take off. So let's get into the business that you're in today. You guys joined forces. How long of a couple years back?
[00:04:20] NICK: Years. Yeah, 2015. We started our company, did our first project.
[00:04:23] BILLY: Good in 2015. And so give us this, the story of how you guys formulate and said, you know what, Nick, Eric, you guys are talking, you guys been high school friends forever. Like we want to do this business. How did you come up with this month? Of going after and investing in apartments. I know Eric is a finance guy. You're a construction. Well, why didn't you start with single family? Why did you make the jump right into the multi-family?
[00:04:45] NICK: You know, it's interesting because we, our original plan was, Hey, let's save up some money for a few years and buy a rental property and just kind of go down. That traditional path, the slow way. [00:05:00] Exactly. Uh, the painful way you could say, but what we saw here in the market we're in, in Boston is, you know, it's either the number one or the number two life science market in the country right now, up there with San Francisco. And in the past 10 years, you've had this huge influx of high-income workers. Moving into a city with very restrictive zoning. So we're not really able to keep up with the demand, which has led to prices skyrocketing. So we wanted to buy a rental property, but we saw this because I was, uh, in real estate sales at the time we saw this opportunity to develop condominiums and that's what we've been doing ever since we've since added apartment conversions and we're doing an affordable housing job. Boston is a really good market for condominium development, just because a lot of these high-income workers, you know, you've got a good blood Sheree rental market here, but a lot of them want to own their units. So they want to buy a condominium, but they still [00:06:00] want to live in a dense urban center. Uh, they still want all those conveniences. They don't necessarily want to live in the suburbs. So we've been selling condominiums to people like that. Ever since our first project was a two family, which according to the zoning code, you could add a third unit. So we took that to family, fixed it up, increase the size of it by about 40% added a third unit, and then sold them individually as condos and just kept kind of rolling our money back into new projects. And over the years, as we built up a reputation, we started picking up investors. So that's been our bread and butter, uh, since 2015,
[00:06:37] BILLY: smart, smart. That's that's a pretty cool niche. And so you're, you're going in ground up or you knocking down something that's already on the bill, on the property, or are you, that seems to be your method?
[00:06:48] ERIC: Yeah, it really, you know, it's project to project, um, depending on where we can add the value, but I'd say at this point, almost all of our projects are knocked down, ground up new construction. Uh, we did last year, [00:07:00] we finished, uh, like a historical renovation. It was just a three phase. Well, really big units in a really nice part of Boston still sold like a million, almost a million and a half a piece, those condos, but that was a very tedious renovation, was a historical building. We couldn't knock it down. So rare situations like that we'll keep it. But most of the time knocked down ground up. It's actually an easier process for us.
[00:07:22] BILLY: What's it like to go out and to try to search for properties that you guys know you could either. Change the zoning or the zoning's currently there with the property that's on. It is not up to its highest and best use. Like, what is that process like you looking for like a needle in a haystack, trying to find these
[00:07:41] NICK: properties, definitely a needle in a haystack or a situation. So a lot of times what you'd call them would be urban infill projects where you're in a two family or three family zone and we w you know, right now we're doing a 32 unit, a 31 units, so we've kind of scaled up, but [00:08:00] this is what we had been doing for years and kind of got us to this level as you'd go to like a two or three families zone. And you'd find a lot, that's maybe double the size of the typical lots there, and you'd propose to build. 7 8, 9 units. And you know, you'll go through a community process, but getting back to your point, finding the lots, it is a needle in a haystack thing. You want to find particular lots that are generally speaking oversized for their zone. Those are the projects that we started with going to zones like that and creating value where others didn't see it because we go through a titlement.
[00:08:37] BILLY: So, what is that process like? Cause I know what it's like in the single family side, we can narrow it down and really look at our lists and hone in on the type of person we want to target and the type of property we want to target. Are you guys doing something similar in your space where you're getting a list and really honing in and finding out, you know, those top 100 properties that have the highest and best use that you guys can go after[00:09:00]
[00:09:00] ERIC: yeah. You know, it's kind of been an evolving process, Billy, over the years of doing this, where early on, you know, we didn't really understand this concept of connections and really how to build out your network and have deals coming to you that are off market. So we are looking on, you know, the listing service, multiple listing service MLS for our region. And kind of, you know, we just we'd look in multi-families. We kind of put in a price cap based on, you know, where we were at that point. And then the process kind of evolved where we still do that, but there's a lot of guys who are, who are coming up kind of behind us or similar peers to us where there's a lot of competition for stuff that's on market. So we really bought into, and it kind of was organic, this kind of building our network. We'll like I said, we didn't really realize or buy into it at first. But once we did, we now are at the point where, you know, the best deals we. Have come to us from either brokers off market deals, commercial level properties that, you know, aren't even really on the MLS sometimes. And I'd say even a few of them, we have [00:10:00] big lists of off-market deals while I've been, when I say off market, I mean, not even deals, just people who own a house, for example, that we see, we know, okay, it's in this zone, that zone is very favorable for this, this, and this let's call these 500 people. And we've got a few that way too
[00:10:15] BILLY: got it. So you have a dual process to get it and networking, you know, people sometimes knocking like, Hey, marketing's a way to go and networking. You just get, you build your network, you get free deals coming in, like less than, right. Do you guys have a process for networking? Like, are you intentful with the way in which you network to drive your buisness
[00:10:36] NICK: you know, we have a, um, a third partner kind of like a junior partner. He joined the company a couple of years after us, but another friend of ours.
[00:10:43] BILLY: Keep that guy off, we don't have room for a fourth man.
[00:10:47] NICK: Yeah. We can't keep splitting the pie too many times, but he. He's kind of like a full-time networker. So he deals with investors. He's gotten off market properties, you know, he tries to build the [00:11:00] brand on LinkedIn and other areas just to get the word out about our company. And we've gotten deals that way we've got off market deals that way. And we've met brokers that way. And then like, as Eric said, a lot of it's organic, you know, just being in business for however many years now, six, seven years. We've done a bunch of projects. People have seen our work on social media, or they've seen it in person. What early in the market, people know us. We have past investors over time. People just start messaging us and saying, Hey, you know, I see you're doing this. Do you have any other deals you're looking for now? I get messages from brokers and I don't even have to try to network with them. I just, people are messaging me on LinkedIn, emailing me. I don't even know how they got my email. It's all just from putting our brand out there and you know, doing good work. You know, you had a bunch of successful projects. You'll build a reputation and deals will come to you. So it's, it's been nice.
[00:11:56] BILLY: How long ago did you bring on a third partner?
[00:11:59] ERIC: Just over [00:12:00] two years ago now
[00:12:01] BILLY: because Eric, when I , when I asked the question about him, you guys, is there intent behind the way in which you're, you're getting your networking done. I saw you shaking your head no a little bit, but honestly you really do have a process cause this third partner is your key to developing outside business. He's the guy you guys might not be focusing, but that third partner. And I guarantee it he's intentional. The way he's marketing, he's putting out his text is a media post and bringing these people in. So key that's a key takeaway with listeners that here, if you're going to be networking in the beginning, it might be organic. You don't know what you do or what, if you put some intent behind it, you're going to get some serious results as Eric and Nick have with a third partner who I'm assuming that's his, probably his primary focus is business development
[00:12:44] ERIC: that's a good point because it's actually, you know, we kind of looked at it as, okay, we need to mark it. He needs to get our name out there. We need to mark. We have a social media girl who works for us and she posts a bunch of stuff on our accounts and gets in our thought was we need to get our brand out there for investors [00:13:00] so that we can bring on investors to the project. But it's kind of had a two-prong effect where now, because of that, because we were so intentional about that, the, you know, I've come to cause just by sort of marketing and getting out there, looking for investors, tons of people you interact with, maybe they're not investing, but they have deals of their own. So that's actually a good point, Billy.
[00:13:19] BILLY: Yeah. I love it. You guys are doing the right thing. So give us an idea of the projects that you can do. And currently I know Nick, you said that you have a 31 to 35 unit that you're in the process of developing up
[00:13:31] NICK: yeah. So we have a ground up luxury condominium building, right in the heart of kind of that life science sector. Part of Boston, five minutes from Harvard and MIT, that'll be 32 units. Um, it's gonna have some real nice amenities spaces, gym co-working lounge, roof deck. So that that'll be a high end luxury condominium building. So it will be selling all 32 units and. Outside of Boston and [00:14:00] kind of a more affordable satellite city called Lowell. We're doing an office conversion to apartment. So it's an existing office building and we're converting it into 31 apartments with five first floor retail tenants as well. And, uh, that one will also have like a gym, nice roof deck. So one's a rental and then one is going to be sold as condominiums
[00:14:22] BILLY: got it. So the affordable rental. So I want to, I want to actually take some time because this is going to be good to show and showcase your expertise to the listeners. I want to use these two as case studies, right? I want to get into you and pick your brains about. Give my listeners, some takeaways of how you guys think through the process to come up with your numbers. So my question is, I know what it's like in the single family world, you see either a piece of land or you see a property. We can calculate very easily figure out what the effort pair value is, know where our construction costs are and then come in with an offer based on what the risk is and what kind of returns we want my question to both you and you [00:15:00] guys could break it up, Eric and. Nick The first property, the higher end luxury ground up when you're going in, you're looking at this property to make a bid. How will you guys determining what you can offer on the property? If you don't yet know what your, all your costs are like, how does that process work
[00:15:17] ERIC: that's a good question. So we, you know, we look at, and we say, okay, there's 32 units here. And for example, in this one, sexually four of them are affordable units per city requirement when you get to a certain size. So we know right away, okay. Those four, we know what they sell for. There's a specific price they have to sell for. So of the remaining 28, we look at comps in the. When you look at condos that have sold, and there's tons of them in that area, which is why we were interested in the first place. And we see, okay, what are they getting per square foot in this area? Very high price per square foot. And we say, okay, each of our units is, you know, 900 square feet. They're getting this much per square foot. We know those four fordable. So [00:16:00] across these 32 units, we could sell this thing out for X. Right. And then we say, okay, We know the square footage of this building. We know roughly the construction cost per square foot to build something. So then we just multiply that and we come up with, okay, so this is the total cost to build this thing could hard cost wise. Then we look at okay, if that's the cost to build this thing, and that's what we could sell it for one more component in there would be kind of like soft costs. So we kind of know those roughly perfectly. You know, it's a hard cost and what all easier, meaning, you know, true construction costs, you know, your contractors cost a little easier and soft cost. Cause those can vary the work in based on our estimates, soft costs, you know, legal fees, architecture fees. And then we work in interest. Once we see kind of this total cost, we can calculate interest based on what alone might be. So now we know, okay, the total cost for this thing would be this. Before we get to a price and we can sell it out for this, what kind of profit margin could we live with [00:17:00] and what a bank finance. And then we kind of just work backwards land on a price. And that that's kind of a very high level overview of how we would do it.
[00:17:08] BILLY: Yeah. So it makes sense. So it's just, it's very similar to the way we would do it on the single family side. And she's got a few more different numbers. The calculation, Eric, with that regards, when you're figuring out. Your overall process. How long do you take into consideration? Well, first of all, first question is, I'm sure you're buying this subject too. So you know that you can get the amount of units that you want to get in. Are you guys just buying the dirt and rolling the dice
[00:17:34] ERIC: it varies. It varies if we see a really good project where we think, look, we could get this thing through zoning. There's a lot of precedent in the area. We're only going to try to go for say 10 units. And we see 20 unit building down the street and other 15, we might take that gamble, but the gamble would come with the caveat, that worst case scenario, what we could do within the zoning code by. right would still break us even. So there's never going to be a situation. We couldn't do [00:18:00] something, but you would love contingent deals, obviously that's much better for us
[00:18:03] BILLY: yeah. It's smart. And in your neck of the woods, how long does it take once you get through the entitlements? Actually break grounds. I'm up here in New York. And I got to tell you, we have a project, a 48 unit that we've been working on three and a half years, trying to get this through, to get the entitlements. It is a pain in the ass.
[00:18:21] NICK: Yeah probably not to different here. I mean, Ton of red tape, bigger projects and mid-size projects can take three, four years. The smaller ones we did, we've gotten a lucky, or we've gone through in six months getting a project entitled. And then we've had other projects where we were in permitting for two and a half years. So crazy. Yeah, it is not. You cant control the city employees response time
[00:18:47] BILLY: I know, I know it's a painting. I, so when you're doing that, then back to Eric on the finance side, I'm assuming you're not closing until you have all your entitlements into where you can [00:19:00] break ground. So you really have no holding costs. You just have your money. That's hard that went down to the property. Is that right
[00:19:05] ERIC: uh, again, it does depend. I mean, there are times where we've had to hold on to properties and pay holding costs that entire time. So it has to, for that to happen, it has to kind of be a home run. You know what I mean? We have to know, okay, look, we're willing to eat this cost. So if we, if we take on investor capital, we're gonna, you know, say upfront, Hey look, you know, this is the amount of time it's going to take their soft costs, meaning carry costs. Pre-construction soft costs that we have to fund. So we're going to raise for that as well at that stage
[00:19:34] BILLY: and when you do that, raise Eric, are you telling your investors up front, look, this is all going to be deferred until we saw it selling these things off. There's going to be no interest payments.
[00:19:43] ERIC: Yeah. So it, for our condo projects, since we're kind of in that niche, we look at a realistic timeframe for the investors. We say, Hey, look, this is going to be a balloon payment at the end of the project. And as soon as you know, the loan is paid off, the next step is paying you guys, all your principals [00:20:00] and we as units. Cause, you know, they're condos and they, and they'll sell individually. We'll continue to pay you guys back. And we usually give a preferred rate of return, kind of a total preferred rate of return over the two three-year timeframe. And we pay them all their principle, pay them that preferred rate of return. And then we can start partaking in the profit. So they know going in, it's going to be delayed
[00:20:21] BILLY: got it so you have a delayed process on your, on your financing. You giving them no equity share on the upside.
[00:20:26] ERIC: It depends, you know, we have, but we found for a lot of the guys who invest with these condo specific deals, we do, they, they kind of prefer this, this structure better.
[00:20:35] BILLY: That's good What kind of preferred rates returns? You guys have offered your investors in projects like that
[00:20:40] ERIC: um, you know, again, it varies on like we estimate the risk, but, and it's the timeframe and everything, but I'd say, you know, say a typical condo project two, three years, we might say, you know, look, we'll give you a about maybe 50% on your money. Uh, prefer at the end before we, you know, touch anything.
[00:20:55] BILLY: So it's a, it's a decent return. It's a, it's a real, yeah, it's a real serious [00:21:00] ticket for sure. That's a, that's a great way to. So you take it out a like that this is good. So now I'm going to switch gears, right? I mean the first case study, we went over very similar to the way we do it on the single family side construction costs. Whether it's a property, you're looking at your soft costs, your hard costs, your financing costs, putting it all in asses your risk. Now let's switch gears and talk about the one where you're doing a conversion, because this is where I would think it's more of a, and I could be wrong, but I think it's more of a higher level. A lot more assumptions have to go into this because you have a building as, as is that you now have to come in and try to figure out what the hell is going to take to convert this thing. Walk us through that process.
[00:21:37] NICK: Yeah. So what we did with this one is we put it on an offer with a due diligence continuancy. And that basically says from day one, we're going to be walking through here with our contractor architect. So we'll bring the architect. And after we put in an offer, obviously we do pretty much the same process Eric described before we submitted an offer the pencil [00:22:00] test kind of, but then as you said, it's, there's a lot more unknowns with this sort of project. So then we want to kind of sharpen the pencil, bring in the architect and the contractor. We want to be able to walk away from this deal. If any of the assumptions we made, where. And, you know, an owner could reject a contingency like that, but usually people understand, you know, you're going in and converting an existing building. So they go through the architect will draw how many units you can get. We'll go back and forth, kind of tweak it a bit. And then the contractor will look at the plans. He'll walk through the building and then he'll give us a price. So we'll kind of know. Ahead of time with the ability to walk away if anything's wrong. So we, we eliminate the risk just by having a simple due diligence clause. It is more complicated though, because our goal with these buildings is to be able to add value and then refinance and hold onto them. Whereas, you know, just selling them. So it's a lot simpler. So we look at, you know, when it's [00:23:00] stabilized, how's this building gonna perform. So. Similar buildings that are old historical nice buildings that have been converted into apartments. And we look at similar. You know what their rents are for a building with similar amenities, similar quality level, and then we'll look at what their expenses are. A lot of times you can get that from CoStar. Maybe some of those buildings similar to yours are on the open market and you can look at their offering memorandum, get that stabilized expense data. Get that stabilized rev. And then you just plug that in, based on the plans your architect drew up. We need to do all this in order to get the project finance to begin with, because we have to show the bank, you know, how's this building going to look. And then this deal is actually even a little more complicated because it has historic tax credits involved. A lot of these buildings in Massachusetts anyways, just because of the industrial. History here in the 18 hundreds and early 19 hundreds, a lot of them went through a period of not being [00:24:00] used and kind of becoming dilapidated. But in the past couple of decades, the historic tax credit program has created strong incentives for developers to go in, fix up these buildings. And then the government will provide you as additional subsidy through the form of a tax credit, which you then sell to an investor as a high tech. So that's a whole other ball game that we've, we've only recently kind of wrapped our heads around and we work with consultants that help us with that. But that's another element too. Um, these conversion sort of deals
[00:24:31] BILLY: yeah, you're learning as you go. So when you guys first started getting into, I knew you had your smaller projects that you did. And I know Nikki said, you know, in this particular deal, you had your assumptions that you made upfront and you brought in your team, your architecture, your contractor. What if you don't have any historical data to plug into the spreadsheet? What in the hell would you do? Would you. Skip that and go right. A letter of intent to purchase the building with the due diligence and then jump into, you know, your architect and your contractor and [00:25:00] hope for the best. Like what would that look like if you had to experience you were going in, you had noticed something, no green has experience and assumption you can put into. You're you're a spreadsheet at the beginning.
[00:25:09] ERIC: Yeah. It'd be, we'd probably do a longer due diligence period and see if we could get that accepted if we really had a good feeling about it. And that was almost it. We just had very little data or no data. We might have a feel about just kind of the general market. And we say, okay, look, we know. People are starting to move there. People are renting their cars. Again, these conversions are rentals with not condos. We're going to try to hold on as an asset for the long-term. So that's what we would do. We'd probably put in an offer with a heavy due diligence period. Hope was accepted. If not, you know, they probably counter and then we kind of weigh all the options, say, all right, is this worth it to take this sort of higher counter that they want to do based on everything.
[00:25:50] NICK: And I would say that we try to find data somehow, like maybe there's no data for that market, but we will look at adjacent markets and then we'd have to probably make [00:26:00] some assumptions, like, okay, the rent is slightly lower here as opposed to this neighboring city. So maybe the expense ratio will be slightly higher, but we we'd find some data. Otherwise I don't think Eric or I would, would invest in a project if there's no
[00:26:14] BILLY: data. No. I think the, the backend data for, for rentals is going to be pretty much available. It's really just the construction side of it. If somebody doesn't has never gone through a conversion, they're like, where do we even start with figuring out what these numbers mean?
[00:26:30] ERIC: That's actually a good point. Cause we, on our first foray into this, Nick, we did kind of almost we're looking at, okay, we know new construction in Boston. We know what that cost per foot. We know renovation cost per foot, which is kind of why we had to bring in the contractor during this due diligence period and really get a sense what, what are we doing with tier? Because we didn't really know. Per foot, what a renovation like that when you're you have an old building that wasn't residential, but you're keeping part of it. You know what I mean? And you [00:27:00] might be keeping some of the most, the, the most expensive components to construct, but you also have to change its use. So we now have an idea roughly, and it is still a pretty wide range on the per foot cost to do something like this, but we've really narrowed it down. So we could look at the next project and say, okay, it's a 50,000 square foot building. We know it'll cost. Maybe, you know, This much per foot, 140, something like that. For example, how can we make this work? So we narrowed it down, but it is still definitely a bit more of a wild card on a project to project basis than say a new construction condos.
[00:27:34] BILLY: The key thing though is gentlemen, is that you're not just shying away. You're actually taking it on and going forward. You're not saying, Hey, I don't have the data. I'm afraid to figure this out. Like you're locking. And you're making shit happen. And that's the key takeaway I don't want my listeners to hear is that you're not just putting your hands. I'd be like, oh, we'll wait, we'll wait until we get on and find somebody that's going to help us. Like you're making shit happen. So, so good for you guys. Tell me about the, the conversion one. How many [00:28:00] square feet is the building
[00:28:01] NICK: it's about 50,000 square feet,
[00:28:03] BILLY: 50,000. And how many units you said you got to get into about 38
[00:28:06] NICK: 31 residential units and then five retail tenants. First four, So it will be a couple office tenants on the second floor. We have an, a, either be a large office space or a couple smaller office spaces.
[00:28:20] BILLY: What's the expected value of that building when it's all said and done .
[00:28:24] NICK: Do you know that off the top of your head? Eric? I believe around seven, 8 million.
[00:28:29] ERIC: Yeah. Depending on where if caps go, we have a range of like eight, eight to nine, nine and a half 10 really kind of could get, could get as high as 10. And we keep seeing cap rate compression over there.
[00:28:39] BILLY: crazy isn't it?. Yeah. Give us an idea of what the caps are, where they trading for that area
[00:28:44] ERIC: that area at this point, I mean, you're the lowest your scenes, like five, you're seeing up to like six and a half for buildings like this. And then like, boss, this is a satellite city we're talking about of Boston. And then in Boston you're seeing some sub four stuff, which is [00:29:00] why we can't really build up in Boston. It's, tough tough with that.
[00:29:03] BILLY: That's insane. And you know, when you, when you see a building that stabilized and is trading for solve for. How will the guys we're investing into this on the backend making money at a, some form, like, you know, money, you got to go in and add value to get to that normal, you know, to get to that cap with the bite of that cabinets it's insane,
[00:29:23] NICK: yeah, we've asked ourselves that same question for, especially, I mean, you're in, you're in New York, we're in Boston. So we've been seeing the same thing and asking the same questions, but as developers, it's, uh, it's easier to get that extra value than just buying it obviously
[00:29:39] BILLY: for sure. All right. So fast forward from you guys, what is your plans? What are you looking to accomplish over the next five, 10 years? Cause you're young, you're 32. I'm expecting big things out of you.
[00:29:49] NICK: Yeah. I mean, so we really liked this office conversion strategy. We put another offer and on another similarly sized one last week. So we'll see how that goes. We're starting to [00:30:00] scout these off market, these kind of these older mill buildings. And, uh, we're going to keep doing condo conversions. Then another thing that we're doing right now that we haven't touched on is affordable. We're doing a smaller, affordable housing development project in partnership with the city of Boston, that'll be seven units. There'll be for a homeownership, there'll be one rental. Um, and that's our first foray into that world. But we see that as like, that's going to be a huge thing, you know, it already is. And with the way the cost of living. And this area and across the country, even just the cost of rent versus, you know, minimum wage workers, fordable housing is huge, is going to become bigger. Um, so we're, we're getting our foot in the door there and hopefully we'll be doing some big projects.
[00:30:49] BILLY: Are You gentlemen, looking to stay within your area within the, you know, the Boston area. You're looking to go out into other markets as you grow
[00:30:57] ERIC: we're pretty opportunistic. I mean, [00:31:00] if we see an opportunity elsewhere or okay with exploring it, I mean, we had for a good part of last year, we were really focused on the Southeast of the country trying to buy much larger, maybe a hundred plus unit properties that could. Class B built in the eighties value, add where we wouldn't redevelop anything, but we'd come in increase, managerial efficiency, try to raise rents and just kind of maybe do some physical upgrades. But we put in a couple offers. Actually we didn't, we didn't get to best and final on all of them, but, um, we were pretty close, um, to taking some down. And what ended up happening was kind of. The cap rate compression down in like Florida, North Carolina and Georgia. We're very excited about it, but it happens so fast. You're seeing cap rates still are lower than Boston. We were like, well, you're buying it for two years out. Assuming you make all these upgrades in that. So we just, we kind of backed off that and said, now refocused right in our neck of the woods a bit more.
[00:31:56] BILLY: Love it, who do You want to contact you from my [00:32:00] podcast you want people to have cash to contact you with. Do you want people who are property finders in your area to hit you? Like who could we have, like reach out to you guys and network in your area?
[00:32:09] NICK: Yeah. I mean, both of those, that's typically, you know, what we're looking for is just to build our network. People are interested in investing in development deals, where you can get maybe a bit higher return than a lot of other real estate investments and brokers who, uh, looking to find, help us find projects. Those are two, the two big ones.
[00:32:28] BILLY: Tell me How could they find you guys online?
[00:32:31] NICK: So we're pretty active on Instagram at winter spring capital, our website, winter spring, capital.com, tons of articles about development and pretty much everything we've learned since we've been in business, got some investor guides on there. And then Eric and I are both on LinkedIn, Nick Earls and Eric de Nicola.
[00:32:49] BILLY: I love it you guys are, uh, two solid individuals. I can't wait to see you guys grow with. And, uh, we should stay in touch too, because I'm getting into this business, my fix and flip and wholesale [00:33:00] businesses on autopilot. And so I'm taking my energy and really focusing in, on building out a development side of the business. And my personal goal is 5,000 units over the next 10 years. And I know when I focus on it, it comes to fruition, but I need to focus on it. That's what.
[00:33:13] NICK: Nice, I love it. That's a great goal.
[00:33:16] BILLY: Bye gentlemen, loved having you guys on Boston boys hit them up. If you guys have deals in the area, if you have, what you want to invest into development projects? Eric and Nick are your guys. Gentlemen, I appreciate you having you on. Good to meet you. Let's stay in touch. I got your cell phones. I'll hit you with a text afterwards let's definitely stay in touch.
[00:33:34] ERIC: Thanks so much. Really appreciate it. That was great.
[00:33:38] BILLY: Thank you so much for listening to today's episode of unstoppable real estate investing wealth. My mission is to give you my listeners, the blueprint for success inside the secrets for starting growing and scaling. Real estate investing business, So you could experience and live unstoppable lifestyle. I've made it simple for you to [00:34:00] catapult yourself to success. Go to Billys secrets dot com@thebillyssecrets.com. There you will find every single tool. Trick strategy system. And you used to make millions of dollars as real estate. Everything my team uses and my guest views all in one place for you to [00:36:00] tap into, you could start, grow and scale the real estate investment business. I really hope you implement what you're learning. I hope you utilize these tools, tips, tricks, strategies, and secrets, and I hope to see you on the next episode god bless. Bye-bye.