Ryan Tanel, founder of Top Producer Investment Capital, shares strategies to maximize returns and accelerate wealth growth such as structuring deals that appeal to different types of investors, being flexible with your business plan, and executing fast property turnarounds.
Key Takeaways
- Know Your Investors' Goals: Tailor your deal structure to align with your investors' objectives. Some seek quick wealth accumulation, while others prefer stable, long-term investments. Understanding their goals helps you craft appealing opportunities.
- Force Appreciation and Trade Up: Ryan emphasizes the value of maximizing property appreciation within a shorter timeframe. Learn how forcing appreciation can lead to significant equity growth and the strategy of trading up to continually leverage your capital.
- Operational Challenges and Partner Selection: Real estate success hinges on effective partnerships and sound operational management. Ryan shares his experiences dealing with unexpected occupancy drops and expense increases, highlighting the importance of reliable partners and adaptability in a dynamic market.
Ryan Tanel | Real Estate Background
- Top Producer Investment Capital
- Portfolio:
- 225 units in Texas
- Based in: Austin, TX
- Say hi to him at:
- Best Ever Book: Shoe Dog by Phil Knight
- Greatest Lesson: Figure out who your partners really are because a lot of people can talk a big game, but when it comes to the daily grind of getting to do a lot of work or communicate effectively with a team, you really can see a different side of a lot of people.
Click here to learn more about our sponsors:
Transcript
Narrator:
Quick disclaimer, the views and opinions expressed in this podcast are provided for informational purposes only and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to bestevershowdotcom.
Ryan Tanel:
Be around successful people in the room over and over again and gain new partnerships, new mentorships. Even if that costs a lot of money, that's some of the best spent money you'll have spent.
Narrator:
Welcome to the best ever show, the world's longest running daily commercial real estate podcast. Our hosts interview commercial real estate experts every day to get you the best advice ever with none of the fluffy stuff.
Slocomb Reed:
Best ever listeners. Welcome to the best real estate investing advice ever show. I'm Slocomb Reed. And today we are joined by Ryan Tanel. Ryan is joining us from Austin, Texas. His company is Top Producer Investment Capital. They syndicate value add C class multifamily.
The current portfolio consists of 225 units across the Dallas, Austin, and San Antonio markets, properties ranging from unit counts of 12 to 75. Ryan, can you tell us a little bit more about your background and what you're currently focused on?
Ryan Tanel:
Yeah, absolutely. Thank you so much for having me on. So I've been doing real estate for about 10 years. I started off as a loan officer, helping people get approved for mortgage financing to buy their own homes and investment properties.
And then I bought my own investment properties along the way and house act with a duplex first, then a single family, then did a couple flips, creative finance deals, and got to the point where I was ready to get to the big leagues and do multifamily, especially with syndication with other people's money. So the first property was a 32 unit and kind of a small market outside of Austin. And we've just kind of grown the portfolio ever since. And I've been doing this full time for about two and a half years. I love it. I can't imagine doing anything else. Yeah, we're here to just help grow investor pocketbooks and diversify their portfolios with real estate.
Slocomb Reed:
Nice. So a couple of questions here. You're based in Austin, so it makes sense to invest in Austin. Why also Dallas and San Antonio?
Ryan Tanel:
Well, I grew up in Dallas originally, so I'm very familiar with the area. And since I've lived in Austin for a little over 10 years now, I know that area pretty well. And then San Antonio is about an hour to hour 15 drive away from Austin.
Austin is a very difficult market to invest in. It's very appreciation heavy. There is a ton of competition from people inside anywhere in Texas, anywhere, all across the U.S. and even other parts of the world have their eyes on Austin. So as I was evaluating deals, even though I knew that market the best, I had a good opportunities there with multifamily. There's only so many new deals that come up every week. So in my spare time, after I analyzed every property that I could in Austin, while I was waiting for them to come up for sale, I would dip my toe into the smaller secondary and tertiary markets around the cities and I knew a lot about Dallas and so it was easy to do that.
In addition, the longer you're in this business, the more partnerships that you form and there are good operators who work out of Dallas and good operators out of San Antonio and when you can help bring value to all of those areas, it's easy to partner with good people. But I would say that's as far as I'd like to go. I like to be able to drive to a property, tactfully feel it, get a sense of the area, be able to be on site and notice when there's problems, either with management, advertising, trash in the area or something that's obvious that you'll notice when you're there, that's just hard to see when you're far away.
So for me, I think Texas is a great market. People are still moving here. I believe in it long-term. So yeah, I'm going to continue to stay investing in Texas.
Slocomb Reed:
Yeah. Those points make a lot of sense, Ryan. Couple of questions here. One of them is you're in three separate markets, all drivable, touchable tactically from your home in Austin. How involved are you in the day to day property management of your portfolio?
Ryan Tanel:
The two of our properties we have vertically integrated where we self manage the properties. When we do our self management.
Slocomb Reed:
Are those the properties in Austin?
Ryan Tanel:
We have one in Gonzales, which is about an hour outside of Austin. And then the other one's in Canyon Lake, also about an hour outside of Austin. So those two properties, we have an onsite leasing and maintenance team that we pay as 1099 and we empower them with a lot of responsibilities. We go over all the financials and the money, but they have access to make the repairs and do the leasing on their site without us having to go in and dig into the weeds too much. But to get to someone at that level, it really took about six months of really onsite hands-on training pretty frequently until we felt comfortable dropping the reins off to them.
And then from there, we do check-ins depending on if there's any vacancy issues or other issues we need to address, it's really only about one or two times a month we have a check-in unless it's to address some immediate issue that seemed to have come up in between those. But then the other four properties that we have are third party managed and they're doing well just because they have that scale that comes in there.
But long-term, the goal would be to be more vertically integrated where we can oversee all of our portfolio directly. I think it helps keep the costs low. And I have such a sense of urgency. I'd like to get everything done with great detail right away. And the easiest way to do that is if you can just jump in there and do it yourself.
Slocomb Reed:
That makes a lot of sense. I am an apartment owner operator and also a third party manager in the greater Cincinnati area, Ohio and Kentucky. So that's a rabbit hole I love to go down, but let me ask as you scale the portfolio, Ryan, is the idea to get to the point that in each of those markets that you're targeting that you get to vertical integration quickly. Is that your focus for acquisitions or are you just buying wherever the deals are best?
Ryan Tanel:
We typically buy wherever we find a really good deal. So that could be in a tertiary market. That's a little outside of town. That might be hard to get to, but if we feel that we can come in there and manage and operate it pretty well on our own, even if it's a little remote, we'd rather do that on a great deal than to try to buy an okay deal just because it's close to our other properties.
And a lot of these properties, we typically underwrite for five-year holds, but long-term, we're really looking to just get the highest rate of return on an internal rate of return basis for our investors. Most of our profits are made in the first 18 to 24 months after we complete renovations. And once we get the property stabilized, right now with where we are in the economy, we are holding on to properties longer term until interest rates come back down and we can see cap rates either stabilize or start to compress a little bit again.
So we're holding on until that part and just cash flowing. But ideally we don't want to hold a whole lot of these properties long-term. We want to maximize the IRR and that usually comes by doing a quick flip and then selling.
Slocomb Reed:
That's interesting to hear that. That is a divergence from the typical value add business plan of holding for around five years to make sure I'm hearing you correctly. It's a roughly two year hold in the plan. Call it one to three years and then sell as soon as all of the forcible appreciation is forced.
Ryan Tanel:
When we underwrite and we distribute our pro formas to our investors, we show them what a typical five-year hold would look like, and that's what we underwrite too, we typically won't go into a deal unless we have confidence we can achieve a 15% internal rate of return throughout those five years. So essentially doubling an investor's money over those five years. But at the end of the day, if we get to year two, and we have realized maybe 70, 80% of that total profit over the five years, but we did it all in about half the time, we would sell earlier and that would make the internal rate of return probably in the twenties, possibly even as high as 30% rate of return.
And then that way we can take that investor's money and either do a 1031 exchange or just move that into the next property sooner and hopefully compound higher earnings. We'd rather max out the forced depreciation where we get all of our value at upfront. And then holding on and managing, it can be well, but usually you're not going to get as high as that first renovation.
Slocomb Reed:
On this business plan, Ryan, how many times have you gone full cycle?
Ryan Tanel:
Well, I'm newer into the business doing this full time. So all the properties I have, I actually still own. We haven't actually sold any multifamily yet. I've bought my first duplex back in 2016. And I think out of the, I've had five single family or one to two unit properties that I have all sold all of those.
And they've all got great returns, but we still own all of our multifamily five plus unit properties and we haven't actually sold any of them, but we do plan once interest rates probably get down to 5% or less to start selling.
Slocomb Reed:
Ryan, I asked for a moment because I was typing some notes. There are a few things here that I really want to dive into, uh, because this is a business plan that I have executed on a few times now. In fact, I'm under contract to buy a small property here in my neighborhood of Cincinnati, Ohio, where we're doing the exact same thing.
What we are showing investors is the five to seven year hold. The IRR projection is based on that, but this is an eight unit property. We're going to be able to get these units turned to get the rents all up to market and force all of the appreciation that can be forced, I will have been able to enforce in one year. So, from that point, how long we hold the property will be dictated, frankly, by market conditions, the way that you're holding onto your properties now with the projection that there will be a better time to sell in the relatively near future.
So I want to ask you a question that I personally have an answer to, but I want to hear your take on it. Value add syndicators often go directly to IRR as their key metric. There are a lot of great reasons why internal rate of return makes the most sense, why it is the most comparable between business plans, asset classes within value add looking at IRR. Why is it that you focus on selling quickly after appreciation is forced instead of continuing to hold the property?
Ryan Tanel:
I think you get a couple of different types of investors and the way that you structure your deal needs to appeal to the investors. So there are a few investors that are retired and they don't necessarily need to maximize their net worth very quickly. They are just interested in either getting the tax benefits or having a conservative, low risk, more likely return on their investment even if the rate of return is a little bit less.
And then there are a lot of investors. It doesn't matter how, I guess long-term they have it. They just want to increase that net worth as quickly as possible. And I think a lot of my investors gear towards the latter. They come onto these investments because they might have other investments in the stock market or crypto or something else. And they need to diversify into real estate. So they see an opportunity. They like the story. They understand that we're improving the community and making a profit along the way. And a lot of these guys have good jobs or they make good money, but they want to retire and they know the fastest way to retire may not be working harder, but just making smarter investments.
So that's typically the type of investor that I appeal well to. But if you have investors who are not really cared about growing their net worth, they're just preserving the existing money they have and maybe getting some additional benefits along the way, longer term hold properties might be more appealing to those types of investors. So I think it's just structuring it based on who you're having as an investor.
Slocomb Reed:
Your investors are less concerned with cash flow along the way and more concerned with how quickly they can grow their capital.
Ryan Tanel:
Yeah, absolutely. I'm a younger guy. I'm 34. So a lot of my investors are in the early to mid stages of their careers and they're doing well and yeah, they're interested in getting out of the rat race and retiring as soon as they can.
Slocomb Reed:
Yeah. That makes a lot of sense. Your focus is on acquiring 12 to 75 unit properties.
Ryan Tanel:
Yeah. I would say 10 on the very low end. If it's close by me, it's not too far of a drive. And we've looked at properties above a hundred units, but usually the bigger properties, we'll have additional partners who can bring more capital to the table. I do feel comfortable in a 20 to a hundred unit space because I feel like we can bring a fair amount of retail investors into a property. We can be nimble and get it turned around very quickly.
I feel like a lot of the more institutional players look for properties that are a hundred plus units because it's easy to manage those from anywhere in the U.S. and they're large enough to afford a full-time staff. But I feel like once somebody owns a hundred plus unit property, there's a level of sophistication that they have to have that it's less likely that they're going to get into such financial distress. They're going to sell it at a big loss or have a much needed value add to the property.
But we have found in sub a hundred unit properties and that tend to 80 or 90 unit space that there's more likely less sophistication or maybe an owner that's busy doing something else that they let something go into a little bit of a disrepair or in a little bit of a worsened state. So this, we see more opportunity for value add, less competition from institutional players. And it fits into our niche of being quick and nimble and able to do things very quickly with the team that we have instead of having to rely on a lot of outside sources. So the asset size has more to do with who the likely sellers are.
Slocomb Reed:
Are you also working on getting direct to seller or are most of your deals brokered?
Ryan Tanel:
So far we have done two deals direct to seller and those have been the most profitable deals. So I do want to focus more on those in the future, but we get a much larger inflow deals from brokers because they're out there doing it every day and they have those connections. So I would say it is a mix of both.
I'm a relationship person. It's a lot easier for me to work with relationships with brokers and grow those over time. But a broker's main job is typically getting the most money for their sellers. And so it's hard for them get as much profit for us on our end. So I like long-term doing the direct to seller method, but I think I'll focus on whatever's working. So we'll continue to do both.
Slocomb Reed:
Ryan, based on the business model that you're talking about and my desire to do the same and my experience doing the same, not with limited partners, but with joint venture partners who knew what they were getting into, I wonder how to handle the objection of negative cashflow in the short term.
Obviously, especially when apartments need to be renovated, the more units you can renovate at a time, the faster you can get the property fully optimized, all units at market rents with happy tenants. However, the vacancy you have in the moment, you risk going cash flow negative on a month to month basis. How is it that you and your team juggle that question both with investors and then in practice in the execution of your business plan with regards to how fast you move? Do you allow your properties to go negative on cash flow because you're interested in moving quickly, or are you trying to maintain a certain occupancy rate while also accelerating the process of getting through whatever each apartment needs to get to market?
It's a very good question and having a vacancy rate can be very scary. Going cash flow negative can be very scary, but if you see the big long-term picture and if you see what the comparable properties in the area are doing, it's a little less scary to take some of those risks. So the speed at which we can operate is just based on the available crew that we have.
Some of the times if we're working in these secondary or tertiary small markets, it's hard to mobilize a good labor force out there. We've typically been able to find a crew of four or five guys and they're typically able to turn anywhere between two and four units a month. So we try to have between two and four vacancies a month coming up and turning those, however, if it starts to happen that we have more than those, we don't mind if vacancy goes up a little bit.
If we know we're in the process of renovating, but we still typically like to keep vacancy, I'd say less than eight units total so that we don't get too far backlogged because having a negative cashflow can really strike some fear into some investors. So even though as operators, we build plenty of reserves. We typically try to have anywhere between three and six months of operating expenses and mortgage payments in our reserves before we take on a project to cover anything that might come up along the way. But we don't want to get out in front of our skis and just leave units vacant if we don't have the manpower to renovate. So I guess, yeah, that's a sweet spot of keeping around four units vacant so that we're able to renovate out of time.
Slocomb Reed:
Keeping four units vacant on what property size?
Ryan Tanel:
Typically on the 10 unit size, you could do the whole property pretty quick. So when it's a smaller unit size, you just wait for the leases to come up, but that would be on the larger unit size. So I'd say if you get 60 to a hundred units, that's when you start capping it at around four and maybe you'll do month to month extensions, or you won't raise the rent on a few of those existing leases to help keep them in there a little longer before you go in and start renovating. If you're expecting higher than four vacancies.
Slocomb Reed:
That number makes sense.
Narrator:
We'll get back to the show with a first of sponsors I'm confident you'll find value in learning more about. Deciding how to invest your capital is more challenging than ever. That's why it's never been more important to partner with a company with a solid track record and that has thrived through various economic cycles. Companies like BAM Capital. BAM Capital is a trusted multifamily syndicator that has delivered a historical average of over 35% IRR with an average hold period of three and a half years. BAM Capital's never missed a preferred payment, never lost an LP's investment, and never called capital past the subscription amount. BAM Capital's currently raising capital for a fund designed for accredited investors targeting a 15 to 20% IRR and a two to 2.5X equity multiple to its investors over a three to five year hold period. If you're an accredited investor and you want to learn more about multifamily investment opportunities with BAM Capital, visit capital.thebamcompanies.com. Again, that's capital.thebamcompanies.com.
Are you a real estate investor struggling to streamline your property management? Are you tired of juggling multiple systems to effectively manage your portfolio? Meet Rentec Direct, your ultimate solution for automating management tasks, reducing errors, and most importantly, saving you time. Rentec Direct offers an all-in-one platform for accounting, marketing, tenant screening, rent collection, and much more. And the best part? You're never alone. With US-based live support and award-winning customer service, RenTec Direct is the partner you need to streamline your property management so you can focus on what's most important, growing your business and getting more deals done. If you're an investor looking to grow your portfolio, join the more than 15,000 investors and landlords who manage real estate assets totaling more than $200 billion using RenTec Direct. Just go to rentecdirect.com forward slash best ever and sign up for a free trial. Plans start at just $45 a month and you'll receive 20% off your first year just for being a best ever listener. That's R-E-N-T-E-C direct.com forward slash best ever for 20% off.
Slocomb Reed:
I think about a 12 unit and having four vacancies often feels concerning depending on who the owner is and who the investors are because you're almost certainly cash flow negative with 66% occupancy, even when you're not factoring for the capex of renovations, that makes sense.
Ryan Tanel:
I'll tell you a story. We had our smallest property here in Dallas is just a 12 unit building. And we took it over and there were nine units occupied out of 12. So it was already 25% vacant, but three units, we got in and got those first three turned in two and a half months. And then, the next three came up right away and we got those turned into the next three months and then the final six came up all at once at one point we had half of the units vacant and one was about leaving. So we were between 50, 55% vacant.
So it looks scary for a little bit, but I was excited because I'm like, this whole project is going to get wrapped up in about nine months. So I'd rather just finish this, get it filled and then let's sell it and get onto the next one.
Slocomb Reed:
That makes a lot of sense. I've been similar with some of my deals. Question Ryan, have you heard of the author Steve Burgess? He wrote a book called the complete guide to buying and selling apartments. Does that ring a bell for you?
Ryan Tanel:
No, I usually am pretty abreast of a lot of the real estate books. I don't think I've had that one.
Slocomb Reed:
I know, right? Most people haven't heard of it. Steve Burgess has a bunch of books. I think it's probably because he was like a 1980s style guru and he was using the book to sell tapes, but also to sell mastermind guru seminars. There were a lot of those classic 1980s style, the Ron Legrands of the world. Some of them are still making the rounds around real estate investors associations across the country. But he made a very compelling argument.
I only found this book because when the pandemic really took off, I started a zoom book club and it was recommended to be the first book that we read and no one had heard of it, so we decided to read it and my big takeaway from that book, I'm getting on my soap box here, Ryan, but I'm propping up your business plan in so doing.
His argument was that the time at which your equity in a property is doing the most for you is the time period during which you are forcing appreciation. Equity can double, triple, quadruple. And I'm talking in 2023 terms, not 2013 terms. It was way more drastic back then.
You can double, triple, even quadruple your equity if you have the right force appreciation play. Quadruple may sound crazy to some of our listeners who are more accustomed to those 100, 200 plus unit properties where it's a proper value added, you do your four apartments at a time across 200 apartments. Takes quite a long while to get it all done and to get across the finish line. But with an eight unit or a 12 unit, four units at a time, yeah, nine months in you force all the appreciation you can.
Steve Burgess's argument is that if the goal is to build a portfolio, you should still sell when you're done forcing appreciation. The reason is if you capture all of your equity after the time period by which it has grown the most, you can put it into the next property where it can grow the most before you take it out and put it into the next property where it can grow the most.
So while you are trading 1031 exchanging, ideally you are not just holding on to properties once they are set it and forget it because your equity can only grow so much with natural or market appreciation at that point. So Steve Burgess is a big proponent of trading up, acquire a property, force all the appreciation you can sell immediately to get into the next one for what it can do for your equity, your capital, your net worth and the resulting portfolio that you can have when you want to get off that train. Does that make sense?
Ryan Tanel:
Yeah, absolutely. I believe that completely.
Slocomb Reed:
So I'm somewhere around 300 interviews for this podcast. And this is only the second time that I've brought up Steve Burgess's book, but it was very helpful for me to lead a book club on that because I was coming from the school of BRRRR investing or by force appreciation, refinance, and let it just sit stable and easy and cash flowing. And I've watched some of the properties where I've done that. I've watched the equity not grow nearly as much as it was back when I was taking the action to force appreciation.
Ryan Tanel:
Yeah. I'll make a comment on that. We have a lot of these sophisticated underwriting templates and when you're first learning, it's fun to play around with the numbers and say, Oh, well, what if instead of 1500 a month for rent, we got 1700, how much more profit are we going to make or instead of having $90,000 a year payroll, what if we were able to find it for $80,000?
What are the levers and the metrics that we can pull on the underwriting tab to make this more profitable for investors? Of course, you have to perform all those metrics, but the one that I always found fascinating is if you lengthen or shorten that time horizon to say, let's do a five-year hold, how does that compare to a 10-year hold? And then how does that compare to four years, three years, two years? And you start to see if you've got the same business plan and you're stabilized at the end of year two, well, the internal rate of return seems to go up quite a bit when you go down from five years to four down to three.
So that's kind of where I got that business plan is, isn't, aren't we all just trying to make as much money as fast as possible? And if we can get there 20% out of time instead of 15% a year at a time, well, let's go for the higher number. So yeah, it was fun to discover that playing around with the underwriter. And it makes sense logically. Yeah. If you've maxed out the appreciation, let's take it and move on to the next project where we're going to get our value and we buy.
Slocomb Reed:
Yeah, absolutely. And part of it also depends on the deal, especially with deal scarcity. Nowadays, Ryan, your ends are pretty high markets. People don't like talking about San Antonio as much as Austin and Dallas, which is why I know some investors local within Texas are leaning into San Antonio because they're finding better deals there. It's less attractive to non-local investors, but my focus is shifting currently to whenever I get ahold of a deal, what business plan makes the most sense instead of being a value add investor or being a BRRRR investor or being an apartment flipper effectively.
If this property is a deal, what business plan makes the most sense and let's execute on it. That's a shift that I've been seeing personally because deals are harder to come by and the debt situation, interest rates in the sixes and sevens instead of the threes and fours. Make it that way. That in my experience, wanting to do deals, I'm needing to adapt business plans to fit the deal.
Ryan Tanel:
Yeah, I would definitely agree with you there. To be honest, we've only done one deal in all of 2023 and I'd rather just be patient and find a deal that makes sense where we're not rushing into anything. And even the deal that we did, we did a seller finance loan on it. So we had a pretty low interest rate. There was interest only the entire time. And we had a lower payment way better than what we could have gotten if we had gone with agency or bank financing. And so that's the reason that deal made sense.
But I think to your point, instead of just looking for things that were easy to flip, well, now it kind of makes it hard to profitably flip something if an interest rate is that much higher. So you got to either be creative with your financing or creative with your deal structure or the business plan long-term. Maybe there is a better need to hold onto something longer term, even if it's not as profitable just to say we've got a deal that makes sense.
That's not a lot of value add, but it's pretty stabilized. It's pretty predictable. And if an investor wants to get into something that's like that, that's already stabilized, that might make a little bit more sense right now. So yeah, I think everyone has their own risk tolerances, but I think with the deal scarcity going on in the market, combined with a lot of the competition and the rise we've seen in interest in real estate, the last few years, it is getting harder to just do your standard bread and butter deals. So some creativity and to finding and structuring deals that can make sense is pretty important this next year.
Slocomb Reed:
Ryan, as rosy as we are making this sound, we are talking about a business plan that experiences a bit more volatility. What have been your biggest issues executing on these much faster property turnarounds?
Ryan Tanel:
You know, I appreciate you asking that because real estate, especially the operations side can be very difficult. And it looks very glamorous when you put big numbers up on the screen and say, I own X number of hundreds or thousands of units or we've bought this many properties and we've raised the value from this to this in a short period of time. It can get really difficult.
The property that we've got in San Antonio, it had dropped down from essentially 98% occupied down to 80% occupied within a couple of months and had six evictions pending even with that 80% occupied that happened just really quickly because when we were moving fast and turned a lot of the units, we were pretty highly occupied and so we were okay.
And being a little more aggressive on our rents being at or slightly above where we had put the market rent with very little concessions. And I think a lot of residents got wind of that, got scared, or the ones that had been in there six months and had their lease come up and their rent was going from 750 a month up to 1250 a month. Well, that was just too much. So we had a lot of people not only move out when their lease ended, but some of them just moved out early and vacated the units because they saw what was coming and they'd rather just get out of there. And they weren't worried about their credit score being affected.
So things can change very quickly with that. So when that happens, we did have to pull it back a little bit and be a little less aggressive on the market rent. Especially this was in the fall here when it's not prime leasing season. So I think a combination of all those things just dropped the occupancy really quickly, but there's always adjustments you can make, I think, instead of being headstrong and saying, we promised investors we would get 1200 a month in rents, saying, look, realistically, if we're losing 10,000, 20,000 a month of drop the rent a little bit, get these filled up, at least temporarily, until we get much more stabilized and we get good paying tenants in there that are going to have less evictions or less foreclosures.
We've also seen a rise in a whole lot of expenses that we're pretty conservative on our underwriting. We estimate that taxes and insurance and maintenance repairs are going to be up pretty high. I thought the numbers I picked were pretty high as far as they would be on more of the worst case scenario for how some of these expenses came about. But we've seen as much as these expensive has increased the last couple of years, we've been hitting some of those numbers.
So yeah. And aside from that, I've also seen on some of these bigger properties, if you don't have everyone on the team dialed into what their function is, keeping track of the metrics and the KPIs along the way, and just kind of having their pulse on the market for why a property might be getting leases or might not be getting leases or what's been attracting people to the area detracted. And if you just look at a report, it's really hard to get a sense of if this property is going to do well, but once you get on there on site and you start talking to the people who are seeing the interactions every day, and if someone tours your property, but doesn't lease trying to get some feedback of, well, what's the biggest detractor? What are the things that we need to change and improve?
And I think having that feedback, being there on site and doing those things is what separates a lot of the operators from those who got into quickly think that this is easy, think that this can be done from a spreadsheet and an email.
So I think, and I hope we'll see a little bit of a thinning of the herd between people who don't have the chaff to get out there and do a lot of the hard work during this difficult time. When operationally, I think it's going to be difficult for a lot of people out there.
Slocomb Reed:
That makes a lot of sense. Ryan, are you ready for the best ever lightning round?
Ryan Tanel:
Let's do it.
Slocomb Reed:
What is the best ever book you recently read?
Ryan Tanel:
I know a lot of people have a lot of real estate book recommendations. I like a lot of biographies because you can learn a lot about a person's intuition or character and just the sense of who they are and how they became successful from some of the stories. And that resonates. So there's one about Jay-Z called Empire State of Mind. And even though it's not about real estate, he is a great businessman. And he talks about how he got into rap and then he owned part of a vodka label and then he owned part of a nightclub and he would rap about drinking his vodka and his nightclub to really cross promote a lot of his different industries. And I think if you can have that synergy and have that awareness of long-term vision and building a lot of partnerships that can help each other, that's a fantastic way to go about it. So Empire State of Mind.
Slocomb Reed:
I am downloading it in Audible right now. Awesome. What is your best ever way to give back?
Ryan Tanel:
I'm part of Austin's Young Men's Business League here. They do summer camps, which provide underprivileged kids the chance to go outside of the home for a week and get to experience what summer camp is like, if they normally couldn't afford it, it gives those families a chance to work extra hours, make extra money, do whatever they need to make ends meet without having to worry about childcare expenses or reservations for the day. So Austin Sunshine Camps, and when it's not the summer, I typically do Habitat for Humanity, which just helps build homes for those in need.
Slocomb Reed:
Nice. Ryan, specific to the properties you have acquired, what is the biggest mistake you've made and the best ever lesson that resulted from it?
Ryan Tanel:
Well, I don't know if I would qualify this as a mistake, but definitely the biggest lesson I've learned is figuring out who your partners really are in deals or who you're working with and what their ability to actually get work done. Because a lot of people can talk a big game and say that they're going to do a lot of these things or have this experience or might be good storytellers, but when it comes to the daily grind of getting to do a lot of work or difficult work or communicate effectively with a team, you really can see a different side of a lot of people.
So you could say choose good partners, but it's hard to just choose a good partner unless you've actually worked with them. So working with people on some kind of a small basis over time and slowly growing that trust and opportunity until you get into some of these large projects with them. Just making sure you're working with people that you know you're going to work well together.
Slocomb Reed:
What is your best ever advice?
Ryan Tanel:
The best ever advice that I have told myself, and I wish I knew when I was in my teens and twenties, is you need to be in the room with the people that are getting things done. And oftentimes that means you'll have to pay more and more money to be in those rooms. So sometimes it takes a little bit of work or getting the right connection or asking for a connection. But then once you have that connection, paying money to take someone out to a lunch or pay them for a gift once you have taken them out for lunch to show their appreciation for you.
Asking for recommendations, joining your local real estate council for your city or joining your bigger groups or going to conferences like your best ever conference where you're gonna meet other operators and then being part of these clubs that sometimes can cost 5,000 a year, 10,000 a year. I've heard of ones costing $100,000 a year. So the more that you can be around successful people, in the room over and over again and gain new partnerships, new mentorships. Even if that costs a lot of money, that's some of the best spent money you'll have spent.
Slocomb Reed:
Last question, where can people get in touch with you?
Ryan Tanel:
Sure. So our website is topproducerinvestmentcapital.com. You can check out all of the videos on all the projects that we've done so far. I try to do a nice story of what it was like when we bought the property, what the process was during the construction and renovation. I love to be very transparent and talk about the numbers where you can see how much profit we made, what was difficult, what surprises we encountered and how we overcame them. And then we have a lot of FAQs if people want to see what typical investors look for. And we do have a contact us form. If you do want to have a zoom call with myself or someone on the team, you can request an invitation to become one of our investors on our website topproducerinvestmentcapital.com.
Slocomb Reed:
That link is in the show notes. Ryan, thank you. Best ever listeners, thank you as well for tuning in. If you've gained value from this episode, please do subscribe to our show. Leave us a five star review and share this episode with a friend who you know, we can add value to from our conversations today. Thank you and have a best ever day.
Ryan Tanel:
Thanks.
Narrator:
Hi, Best Ever listeners. Joe Fairless here again. And one last thing before you go, would you like to receive a short weekly email with proven tips from experienced investors, free tools and resources, and a roundup of the week's most relevant news and Best Ever content? Well, if so, join the community of nearly 15,000 commercial real estate passive and active investors who receive the Best Ever newsletter. Just go to bestevercre.com forward slash access and you'll get the very next one. I hope you enjoyed this episode, and as always, thank you for listening, and have a best ever day.
