Ashley Wilson, CEO of Bar Down Investments, covers a wide variety of topics and challenges facing today’s real estate investors. She discusses the current market conditions and the challenges her team is facing in evaluating property values. Ashley shares the types of value-add deals they are looking for, including distressed properties and unfinished projects with insights into the losses experienced by developers in the current market.
She also shares her insights on preparing for the impact of COVID-19 and gives recommendations for giving back and learning from investment mistakes.
Key Takeaways:
- Operations is Everything: In a downturn, when interest rates and costs are rising fast, the only thing you can fall back on is solid operations. Ashley shares the strategies and safeguards her team has in place to protect their deals and their investors when times get tough.
- Relationships Are Key in Commercial Real Estate: Ashley emphasizes that commercial real estate is a highly relationship-based industry. Building strong rapport with brokers, investors, and other stakeholders is paramount to gain a competitive edge.
- Adaptability and Forward Thinking: Ashley's experiences during the COVID-19 pandemic demonstrate the significance of adaptability and forward thinking in real estate. She outlines the steps her team took before the pandemic hit, which allowed them to thrive when others struggled. Planning for multiple scenarios and being prepared for unexpected market shifts is crucial.
- Value-Add Strategies and Community Building: Ashley discusses her approach to value-add investments, focusing on existing properties. Her strategy extends beyond cosmetic enhancements, encompassing operational improvements, safety measures, and community engagement. By making investments that benefit both tenants and the local community, investors can create long-term value and goodwill.
Ashley Wilson | Real Estate Background
- CEO of Bar Down Investments
- Portfolio:
- Multifamily properties
- Based in: Newtown Square, PA
- Say hi to her at:
- Best Ever Book: Rich Dad, Poor Dad by Robert Kiyosaki
- Greatest Lesson: Not everyone analyzes deals the same way, and that’s okay. Not every deal has to fit in your perfect little box.
Check out Ashley’s previous episode: 2377 - Raising Occupancy and Avoiding Skips during Covid with Ashley Wilson
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Transcript
Joe Cornwell (00:02.257)
Best ever listeners, welcome to the best real estate investing advice ever show. I am your host, Joe Cornwell. Today I am joined by Ashley Wilson. Ashley is a partner in a multifamily syndication, Bar Down Investments. She also runs apartmentaddicts.com. She is a returning guest to the show. Ashley, thank you so much for joining us today. How are you?
Ashley (00:23.926)
Great, thanks so much for having me, Joe.
Joe Cornwell (00:26.321)
And it has been over a year since you're on the show or about, so tell me a little bit about what has happened the past year, what have you been focused on, and how has your business evolved?
Ashley (00:37.194)
Well, we are centered around operations and I think this past two years has really tested operators more than ever before. So our focus over the past year plus has been on operations and really staying on top and actually getting ahead of where we think the market's going.
I think it's been a challenge for everyone. Um, since I got into multifamily, I always said that everyone should be focusing on operations and everyone was kind of just dancing the night away with the upwards tick of the market. And where we were in the market cycle, I knew we were overdue for a recession. And I knew that operations was going to be the only thing that got people out of a sticky recession.
I didn't know what was going to cause the recession. I didn't know how long we would be in the recession or when exactly it would come. But I think the point is, is that operations, it's so important and in a downturn, it's the most important aspect. So for, with respect to our investment firm, we've just tightened up our operations, gotten ahead of everything.
We stopped distributions very early on. People were still doing distributions and we could see the writing on the wall. And we just said, we're not going to do distributions one month to turn around and do a capital call the next month. That's not how we do business. So we stopped distributions pretty early on to just build up reserves. We saw the changes in the marketplace with insurance and how that was taking a toll on cashflow for properties. And the evaluations coupled with interest rates and real estate taxes. I mean, you name it, I think multifamily has been hit from every single angle over the past year and a half. And that's something that we have been very heavily focused on and have always been focused on.
So, right now, we're, with respect to operating, doing quite well. Our properties, actually, our entire portfolio is doing very well. In respect to acquisitions, we are definitely on the pulse with some prime properties that are distressed and have some challenges to overcome. So we're looking to be able to capitalize on those opportunities. We've never stopped looking. I know there are a few groups that stopped looking for a while, stopped looking, there's always a deal to be had. It's just a matter of, you know, how long it's gonna take you to find that deal. And then for our coaching program, we have actually spent the last three months revamping our coaching program.
It's really important to us not to focus on quantity of students we get in the program, but quality. So we've tightened up our requirements of coming into the program because we've done an analysis on who does well in our program. And what we found is really any sort of experience you had in real estate prior to coming into apartment addicts, you do very, very well in our program. So we are now focused on students who have prior real estate experience because then we can take them and get them, you know, running off to the races right away.
And that has been another focus of ours is making our program, we want our program to be the best program that someone could go into in multifamily because it has all of the essentials that you need, it has all of the support systems that you need and networking. So those are two of our main focuses over this past year.
Joe Cornwell (04:28.269)
Okay. So let me back up to some of the things that you brought up. So let's take a step back with your investment business. You have partners, if for anyone who may be unfamiliar with you, tell me a little bit about your actual investment firm and how it's set up and then your role within that.
Ashley (04:49.026)
So our investment firm, we have four partners at the helm, so to speak. It's myself, Jay Scott, and two other partners. Kyle Wilson, my husband is one of those two remaining partners and the fourth partner is less well-known because he's not on the circuit, so to speak, but Kyle is becoming more well-known because of the Drunk Real Estate podcast that he hosts with J Scott.
Our partnership is set up that we all have varying levels of responsibility. Um, however, if you look back at the origination of bar down investments, I started bar down investments. So when I originally started it, I literally did soup to nuts on all aspects that we needed to do. And we've grown the business since then. Jay came on as a partner about four years ago, as well as this other kind of silent partner we have. Um, and Kyle has been working on the business since day one as well.
In terms of the responsibilities, I've literally done everything, every single aspect of the business, but today what I do is I oversee asset and construction management and I oversee the acquisitions team. Those are the two main focuses that I do from a day to day, but I also am the CEO. So in terms of strategy and where we are going next, that's one of the things that I am very involved in with J. So J on the other hand he is very focused on investor relations are the legal side of our business, the accounting side of our business. So we really focus if you want to think of it is our business is kind of set up as two businesses. His side of the business is more the investment firm, the equity and legal side and structuring, and mine is more the real estate, the actual asset. And that marries very well because we have very complementary skill sets, we're ethically aligned, we're motivated by the same why, so it's a good partnership.
Joe Cornwell (07:05.457)
Now you said that the firm is barred on investments. I assume that's a hockey phrase, is that correct? How'd you come up with that?
Ashley (07:12.798)
My husband played professional hockey and he, um, played for 11 years. He played in NHL. He played in the KHL and a bunch of other leagues and bar down is a shot that you take in hockey and it involves high level precision and a lot and lots of practice. It's the most beautiful shot in hockey. It hits the top of the crossbar, which is the top of the goalie net. And then it falls into the the goal. So what we like to think of is when you invest with us, you have your best shot with investments because we are very into the details. We're a precision company. We focus on high execution and high team members, so high level team members. So that is why we really like the saying of a bar down.
That's the origination behind the name.
Joe Cornwell (08:12.081)
No, that's cool. Very unique. And I don't know anything about hockey. And I knew that was a hockey phrase. So, so obviously you're, uh, branding it well enough that people, you know, kind of know what you're talking about and, uh, no, that's very cool. Um, so let's back up a little bit to the operations. I know you said you guys are still looking at acquisitions and you're heavily involved in the operations of, of the, uh, assets that you have under management currently. So how has that shifted in the past year? I know you specifically mentioned, you know, some of the things you're doing, um,
But yeah, it's give me a little bit more insight onto what you guys are doing in today's market.
Ashley (08:46.526)
It's interesting because if you look at the overall cap rate, um, which really dictates value in multifamily space, cap rate had the cap rate expanded for years leading up to 2022 really. And we saw massive compression and Q1 of 2022 coupled with low interest rate environment, which yielded a tremendous amount of sales and mean, if you ask any broker, they weren't even able to put together a marketing package before the property was out the door and being bid on. There were no what's called CFO or call for offer period because people were just trying to get these properties as quick as possible. And when you look at that from a market standpoint, what you realize is, first of all, there was a lot of properties trading. So in terms of the supply, a lot of properties have traded over the past, the bulk of properties. In fact, statistically, it was one of the highest transactional period in history, Q1 of 2022.
But there are other things that happen when you look at something like that, which is the fallout of, okay, now all these people are sitting on a ton of capital. What are they going to do with that capital? So people like to say that interest rates or cap rates trail interest rates because there's a little bit of a lag effect due to the interest rates kind of impacting the cap rate.
That is true, but there's another variable that comes into play, which is 1031 exchange, which is a tax advantage strategy for deferring taxes. And what happens when you have a high volume of properties transact and people are sitting on a lot of capital that they need to get losses for so they don't have to pay these high taxes and this tax exposure is they need to then continue to place that capital and put it somewhere else.
So my personal opinion is the reason why cap rates did not expand as quickly as they should have when the interest rates were expanding at such a high level is because people still had to place this capital and they were willing to overpay by three million dollars so they wouldn't have a five million dollar tax hit. And when you recognize that what you then start to realize is that the prices are still inflated. So back to your original question, what were we doing versus acknowledging that, acknowledging what was going on in the marketplace to understand were we paying true value on a property?
And I think there's a lot of podcasts, a lot of different research on what is really value, how do you evaluate a property? The traditional way in multifamily is three different approaches. It's either comparable sales approach, um, the replacement costs, which is what an insurance company does, or the NOI approach, which most investors use for realizing value of a property.
But in my opinion, over the past two years, we've had to kind of use a combination of two, because if you think about it, the replacement value approach has gone significantly up. That's why insurance company rates have gone up, right? Because the labor shortage, cost of materials have gone up and the risk of natural disasters have gone up. So, the replacement value risk has gone up and that's why insurance values are driving up. So if you look at it from a basis perspective, it's really hard to build a affordable property today because of those factors. So when we're looking at acquisitions, we're taking that into consideration on purchase price and what we're really staying stuck to is our overman, overall fundamentals of ensuring that the property cash flows, that the property has some appreciation that we can force place as opposed to rely on natural appreciation and cap rate compression.
So these are things that we have taken into consideration and when we've taken them into consideration, I can tell you that in 2023, when we were looking at properties, we had about a spread of a 35% difference from what we were willing to offer on the property versus what a seller was willing to accept. That's in large part due to the fact that sellers were thinking of what they could have gotten in 2022 for pricing, and that just no longer was the case. I think now that time has gone on, I think a lot of sellers have come to the realization that um, their property values have gone down just to this cap rate expansion and the interest rate environment.
So now we're seeing kind of a spread of about 10 to 15% from asking versus what we're underwriting. So there's still definitely a spread in the marketplace, but there are also more properties that are heavily distressed and, um, those properties are trading off market, there's a lot of deals going on direct to lenders, insurance companies.
Um, direct to seller. I mean, there's just a lot of more hairy deals than before, and a lot of more creative structuring that's going on than ever before.
Joe Cornwell (13:59.069)
So you mentioned earlier, you guys are looking for more value add situations. So give me a few examples of like the types of deals that you're looking for with the value add.
Ashley (14:10.306)
So we are looking for a few different types of deals. One is because we're so operationally focused, we get approached all the time for deals that people are about to lose them to the bank and they want us to come and rescue them. So whether that is to buy them out or to take over operations, people really are open to anything and they know that we are heavily focused on operations so they know that we're the person to go to for that in construction management, but that is one way in which we are being approached. Another way is lenders are coming to us as well because they know our history and our track record of taking over these properties. So that's another source for us.
A third source is actually something very new, it makes logical sense, but it's not something that I would have even thought of two years ago, which it, which is builders are coming to us because they were unable to finish the project and they want us to come in and finish the project. So if you don't know anything about new construction, uh, with respect to multifamily, you're basically looking at a property and getting out your crystal ball to figure out what the interest rate environment is going to be in 12 to 24 months from the time you purchase the property. And the reason you have to know the interest rates 12 to 24 months out is because once you are done construction and you are under a construction loan to complete that construction, which has a high interest rate, you need to roll into some sort of other debt, cheaper debt product.
Most people like to roll into a government type debt like a Fannie or Freddie type loan, which has long term secure debt for you to tap into at a cheaper rate, which makes it more advantageous than for you to sell and reposition. Because of a lot of builders not, I mean, no one could foresee the interest, how quickly the interest rates went up, maybe some people saw that the interest rates would get to this rate, but not as quickly as they have. And what has happened is construction is on top of that construction loans. That's even more expensive.
So they're being hit really hard and they are not able to finish these projects because they just don't have the ability to even pay the mortgage, let alone all of these materials that they need to finish the project. So that has been another source for us in terms of projects. We get approached at least weekly on different deals that are somewhere in the process of being built.
Um, I actually really liked that those, I think I liked those the most out of all of the opportunities we're getting because to me that is the highest upside as opposed to these deals that are heavily distressed, they were mismanaged, they were purchased for too much. Um, you know, those deals are really, really hard to make work. We haven't been able to make a single one pencil. It's not saying we don't keep looking at them, but in comparison to the development projects, it's so much closer for us to be able to do a development project and make those deals work.
Joe Cornwell (17:36.313)
And so yeah, break that down a little bit more detail because I'm hearing everything you're saying. I think I understand the process, but what I don't get is I'm putting myself in the, let's say the builder's or original developer shoes. Is this just a less painful exit for them? Are they bringing you in as a partner? Like what does that structure look like and what's in it for them? You know, outside of just, I guess, walking away and turn it over to the bank.
Ashley (18:00.658)
Um, so every deal that we have been sent, they don't want to partner. Most builders are not in for a long-term hold strategy. Very few, the smallest percentage. In fact, if you look at, um, developers, most developers develop and sell. They don't develop and operate very few do that. And so if they can develop to a certain point and then sell to an operator and get out.
In a good market, that's very favorable for them because it's, it's a faster return on their money in this particular situation or in these particular situations where these developers are just stressed, it's a different situation because, um, oftentimes they're about to be foreclosed on by the bank. So to not have that on their record and be able to get additional loans in the future is huge for them. They they're in the business of developing and if they can't get a a construction loan, that's going to be a huge problem for their business moving forward.
The second thing is there's this idea of if you're going to lose, lose fast.Sometimes people are willing to take that loss just because it's better to lose fast than to continue to lose and keep putting out money. It's better to control what you do know versus what you don't know and what the future may
have in store.
So I think the reason developers are doing this, I mean, there are very few instances where they could make a little bit of a profit, but just to get out of it, I think they're already over it. The projects that we, all of the projects that we have been sent, they have been standing still for months. So it's not like they're still working on these projects and they're coming to us and asking us to take over.
They have already put the brakes on working on these projects, in part because the more they pull from that line to build, the more they have to pay an interest each month. So if they know that it's a non-profitable business, they're not going to pull more off the line so that their mortgage payment has to go up every month. So typically these projects have been sitting for at least two to three months before we get contacted.
Joe Cornwell (00:02.709)
You don't have to give us any specifics, but in general, when you assume one of these development projects or you underwrite it, what is the approximate loss one of these builders or developers is experiencing to sell a deal to you and walk away?
Ashley (00:20.782)
That is a phenomenal question and I actually don't know the answer and I think the answer could be looked at differently depending on whether or not it's in the moment in terms of the loss that they're willing to take off the sale versus what they have in at the time versus what they've projected in terms of if they had completed the project in any other market cycle, what they were set to make versus what they're actually making.
I know on a projection standpoint, I mean, you're talking millions and millions of dollars. But in the moment, I, you know, maybe a couple million. But I don't, I don't know in terms of.
Joe Cornwell (01:03.701)
Okay, and as a percentage on a typical deal, what would that be?
Ashley (01:13.782)
The averages across the country. I can speak to the individual deals, but in terms of the average across the country, I don't know. I mean, I know that developers in general on equity, they are looking to get at best, or excuse me, at minimum, low 20% return, and then upwards from there in terms of return on the equity side. But, you know, from a, the national average with distressed development, I don't know the answer to that.
Joe Cornwell (01:50.821)
Yeah, yeah, I guess. So just like, let me make up an example. And then you can kind of give your thoughts on it. So let's say a development is $50 million, or if there's a more accurate number of what you're seeing that feel free to throw that out there. But you know, are they losing like 5 million on a on a $50 million total project costs? You know, so I guess I would look at that as like a 10% loss. But it's obviously, you know, if it's a $50 million development, they didn't put all the cash up in most cases, I would assume. If they had these construction notes, then they're going to be putting up a percentage of that. Is that in line with the size of deals you're seeing? Are they smaller? Are they larger? I mean, what's the average development that you're seeing cost-wise?
Ashley (02:34.174)
I think that is safe to say that that's the average of what I'm seeing, but in terms of where it is in the actual stage. So I'll just give you two examples of deals we've looked at. We looked at one deal where it was a reposition of an existing structure, but it was gutted and um.
I mean literally like down even past the studs, it was really just the foundation kind of. And that project, I mean that was supposed to be close to a hundred million dollar project in totality but they stopped right after they gutted everything. So they hadn't put in all of that capital at that point. Whereas you know we looked at another project and that project is near completion and they've put in significantly more money in fact almost all of the money and it's just a little bit of money that's remaining but there are just all these loose ends that they don't have the capital to put in and it's crazy because it's only a few million dollars but it's hard to get money.
Additional money when you're already in this dire situation and from a cash flow perspective being able to afford the mortgage and pay the mortgage on top of that like that risk profile. So most people like to say with development, the riskiest part is when you first are getting all of the permit approvals and the zoning and when you first get started, the whole design aspect and final approval break all the way up to breaking ground.
That's what people like to traditionally think of as the most risky part of development has happened in our current interest rate environment is that it's shifted that risky part and it's actually prolonged the risky part through the actual construction of the development because of the interest rate fluctuation and the fact that construction loans are variable interest loans. So at the core of this situation, just like at the core of the problem on current existing interest rate loans, floating debt loans, you have a lot of risk when we have a very unstable interest rate environment.
Joe Cornwell (05:03.749)
Okay. Yeah. And that, and that all makes sense.
How would one, let's say our listeners, our listeners are typically focused on either commercial or residential, commercial, real estate, and various sizes, not necessarily this size particularly, but if they wanted to do this maybe even on a smaller scale, How would one go about finding these types of leads?
Ashley (05:28.45)
There are so many great ways that you can find properties. If you're going from a smaller scale, looking for for rent signs at apartment complexes are the easiest way, especially if it's a small apartment complex, because if it's a small apartment complex, the owner probably doesn't have the funds to be able to have full-time staff, so most likely the owner is picking up the call. And if they have for rent signs, especially right now when we're in this tremendous housing shortage in most major markets across the country, then they're going to have this burden to find a renter, whereas they might want to just exit the property. Furthermore, if they're an owner from a property and they've owned it for a while, they might have a lot of equity built into that property or they might own it outright. So you might have some options in terms of seller financing that you can tap into. And with seller financing, the great thing about that is it gives you the opportunity to tap into lower interest rates and lock them in as the seller will carry the mortgage so to speak, carry the note, the hold back for you and then you pay the seller as opposed to you paying the bank. So I think that's one good strategy.
In terms of other good strategies, if you have a good connection with a construction company, construction companies are pretty tapped into where distressed properties are. They either weren't paid for a job or there could have been a recent fire that they've had to shore up or just amongst contractors, they're very a tight-knit community so they'll talk about different properties they know almost every property they can give you leads that way.
There's still the normal way to find deals on MLS for smaller multifamily in fact when a small multifamily is on MLS it's most likely not being seen by the whole market space because most people in commercial don't search MLS they search listings like Crexi or Apartments.com or Loopnet, so in terms of searching the MLS, they typically don't get as much foot traffic, which means that you might be able to get it for a very advantageous price just because of the lack of people looking at it.
I've also seen properties listed on Facebook, believe it or not. I've seen properties listed on Craigslist. I haven't bought a commercial property off of Craigslist, but I bought a residential property off of Craigslist.
The more creative you get, typically the better it's going to be in terms of the purchase price that you can get it for.
Joe Cornwell (08:07.657)
And as for these multifamily opportunities, you know, mid size to large size that you guys are investing in, is this all relationship based? Is this simply just building a track record, as you mentioned in the beginning, where, you know, without having that track record, without having those relationships, it's going to be really difficult to find some of these unique types of opportunities that you're talking about.
Ashley (08:28.47)
Commercial real estate is 100% relationship based. It is the most relationship based in my opinion, asset class in real estate. And it is paramount that you build a good rapport with anyone who is sourcing properties for you. The difference would be between commercial and residential real estate, residential real estate, a realtor or a listing agent can have a property. It can fall out of contract. And that realtor still the property with commercial real estate. It's very common. If a deal falls out of contract, the listing agent or commercial broker loses the listing. This is because the average time on market for a, um, or the average closing period, excuse me, for residential real estate is 45 days. The national average for commercial real estate pre COVID was 75 days.
So in terms of the owner, there are a lot of different risks associated with owning that business and owning the property that the seller doesn't want that exposure. The market can shift. You can have a natural disaster happen. Just general operations can happen and be challenging. So in terms of the risk associated with longer close periods, it goes up and therefore there's more pressure on the commercial broker to vet the buyer accordingly.
Joe Cornwell (09:56.049)
Yeah, that makes sense. And I agree with you. I think that one of the biggest challenges for most investors taking that journey from residential real estate into mid and large multifamily or commercial is that you have to build relationships. And obviously, brokers control most of that. But if you are going to go direct to seller or direct to another investment group, yeah, you have to have that relationship to have any traction of building a realistic opportunity to actually take the deal down.
So let's, a couple final questions. So you mentioned that you guys are shifting and looking at the value add. And I know you covered a little bit of that and some of the opportunities you're seeing, but is there anything in the more traditional existing inventory where you guys are doing acquisitions and then implementing a business plan for value add that's not new construction? So if there is, what are you seeing that's motivating on those types of deals?
Ashley (10:55.502)
So the bulk of our business is actually value add of existing. And what we do when we look at a property in terms of the improvements we can make are both from a cosmetic perspective, an operational perspective, a safety perspective, a branding perspective. We're really coming at it from all different angles and typically any sort of distressed property has had problems and issues in all four of those categories. So what we like to do is try to tackle all four of them and the way in which we do it, I think is, I definitely think it's unique.
We are very strategic about what we tackle first and what specifically we're tackling, but then we also are very strategic about making sure that we are very heavily community service oriented. So our whole goal is to be the beacon in every community. So every property is known as the property, the number one property in that market that you want to live and reside in because we are working with not only our residents, but small businesses, local charities and organizations, our support staff in terms of our medical, EMT, firefighters, police, we're really tapped into the overall market and not just driven by how do we increase rents and decrease our expenses.
It's really more so about building this well-rounded business that people can be proud to have in their community and we think by going about it in that manner not only does a good service to the area in general but it also is doing right for our actual tenants and for our investors something that they can be proud of that they're really happy to be an investor in the project because it's not only you know profitable but it's doing a good deed and a good goodwill towards towards everyone involved.
So it's really important for us, even with our staff, we incentivize our staff, not the traditional way, by just throwing bonuses. But right now we have a challenge that if they achieve this challenge, they get additional days off of work between Christmas and New Year's to spend with their family. What we want to do is we want to always be aligned in every aspect that we do.
So whether that is from a compensation standpoint on compensation to a support perspective. I'll give another example. During COVID, there was a lot of turnover with maintenance folks. I'm not sure if you had it in your markets, but it was a nationwide problem where literally overnight maintenance staff were being offered almost 2X their current rates because there was a shortage of maintenance staff and people were just job hopping left and right to go to the highest and best job.
Well, we didn't play in that ocean, what we did instead is we figured out how do we make the job easier for our team and one of the things we noticed is that you have to supply some of your own basic tools to be able to be an assistant maintenance and a maintenance person. And if you don't supply your tools, then they're sharing tools and work orders are taking longer to be able to be completed because people are sharing tools and running from different units back and forth. But if they do have their own tools, that's, I mean, tools are expensive and that could be one or two paychecks is we got everyone a full set of tools with a backpack that was their tools. We monogrammed everything and gave them these tools as support to better do their position. And guess what? We didn't have to increase nor compete with the 2X job offerings that they were getting offered from competitors because at the core of their issue, people want to be able to have an easier job.
Even, you know, there's a point at which money doesn't offset, you know, the job requirements. And that's what, just having a conversation with our staff and trying to understand what would make their job easier and better and more enjoyable and being creative. So those are the types of conversations we have. And yeah, that's not a quick, easy fix. That takes time. But that's what we do across all aspects of our business, which is why our business is known as a heavy operations company because we spend the time and we have always spent the time figuring these things out.
So when something like COVID happens, we actually preemptively planned for COVID and we were doing all of these things that I had a broker call me a month after COVID officially went on the radar and I mean, this is one of the biggest brokerages in the entire country. And they said to us, said to me, I can't believe out of all the companies that we work with, you, of all people, you don't have this massive portfolio. You called every single thing that then ended up happening. You told me that we weren't going to be able to do property tours. You told me that people were gonna sit on the sidelines because they were going to be afraid of what was going to go on.
And there would be a slowdown with sales and a bunch of other things in terms of quality control with spreading of the disease and what the CDC was going to do in the FDA. And in large part that was because I used to work in vaccine research. So I worked with the FDA, I worked with the CDC. So I knew what was going to happen. But the other part of it is because we've always been operationally focused.
Joe Cornwell (17:17.317)
Okay, yeah, that was going to be my next question is, you know, what were you involved in? And, you know, uh, your background in medicine and vaccines, pandemic response, things like that. Uh, my other question was, so this was after the initial kind of rumor mill, so to speak of like, you know, hearing of, of the pandemic starting in China and then pre the lockdowns in the U S is that, was that the timeframe you're talking about? Or this was like something you had planned for way before COVID-19 was even a thing.
Ashley (17:45.074)
In February of what was it 20.
I always confuse the year 2020, right? February, 2020, we were in Florida and we were under contract for a property. And, um, I was talking with the broker. Uh, we weren't, I guess we were, we were submitting an offer. We weren't technically under contract at that point. We're submitting an offer and the broker was talking to me about, um, about, uh, the, you know, the rumblings of COVID. And I said, listen, we have te have already shut down our office in terms of access. We have already initiated virtual touring. We have already documented our wipe downs of all shared community spaces, for example, the laundry room, because we didn't want a liability issue. We have already put together protocol of how and when someone could go in a unit, under what conditions for maintenance request. We have already put all of this in play because this is what's going to happen.
And this is how it's going to affect your business in buying and selling of real estate as a brokerage. And he didn't believe me. He did not believe me at all. And I said, listen, I know what is going to happen because I used to work for GlaxoSmithKline. I worked in their vaccine department. I was the director of global project management for vaccine development. And I worked with Glaxo during the H1N1 pandemic. I know what the protocol is and I'm telling you this is how it's going to impact your business.
And then he called me in April after everything was shut down. And then later, so if you want to continue on with that story, it's actually a pretty cool story. We do get the property under contract and once we get it under contract while we are, uh, well we're under LOI, so we're under agreement while we're getting the PSA, put it under contract with another group and I called the broker and I said mark my words this market will go through a second downturn and when it goes to that second downturn you are going to call me because your buyer will have backed out because they will not have factored a second downturn and how to manage in a downturn.
And I do, I already factor that in, and I already know that it's gonna happen, so we already underwrote to that.
And he said, that's not going to happen. Blah, blah, blah. Sunday night, my husband and I were having dinner fast forward Sunday night. It would think it was in. May or early June, we were having dinner and on the news was this market major MSA had just taken a second downturn, second shutdown, so they had a shutdown. They opened it up second shutdown and everyone was in chaos Monday morning at nine AM, guess who called me?
And when he called, he didn't even say his name. He said, you were right. Are you still interested? That's it. That's the first two things he said to me.
And that is the reason why it's so important to focus on details. It's so important to get ahead as opposed to reactively manage a business. So if you have, and I'm not saying to double down on something and say, this is absolutely going to happen, so we're only going to plan for this. You have to plan for a lot of different things to happen, but you have to understand why you're planning for those things because it prepares you for when something doesn't happen the way you think it'll happen, but you already have safeguards in place. And that's how we manage.
Joe Cornwell (21:38.897)
And so how good did that phone call feel when the words were, you were right?
Ashley (21:44.01)
I mean, from an ego standpoint, it obviously felt great, but more so from a property standpoint, we really wanted this property. We really put a lot of energy, like the whole team put a lot of energy into this property. So it was, um, extremely rewarding to to have been so persistent and to have explained before, like this is what's going to happen, I'm telling you, this is going to happen, you're going to come back to us and then that happened because I feel like it just proved to that broker that we were serious and that, um, you know, we were at a different level than that buyer that they had gotten an under contract with, you know, while we were under LOI.
Joe Cornwell (22:33.885)
Awesome, well, I'm glad you guys got the deal and were able to take it down. It's a good story. Let's shift over to the best ever lightning round. Are you ready? All right, best ever book recommendation.
Ashley (22:41.567)
I'm ready.
Ashley (22:46.495)
of all time, right?
Joe Cornwell (22:48.031)
Yes.
Ashley (22:50.454)
Ooh, there's so many good books. Um, I think I'm going to just cop out and still say, uh, rich dad, poor dad, because it was the first book to change my mindset.
Joe Cornwell (23:02.233)
Okay. And best every way you like to give back.
Ashley (23:08.874)
I like giving back on multiple levels. I know a lot of people have one charity that they, you know, tried and true, but I like to give back on multiple levels from a financial standpoint, but then I also like to give back through education that I know and helping kind of teach someone how to fish as opposed to just giving them fish. So, uh, the organizations that I'm working with now, I'm teaching them all how to raise capital better. And I feel like that is a more model that can help them forever.
Joe Cornwell (23:43.369)
And give me one mistake from a investment deal and the lesson learned from it.
Ashley (23:50.118)
One mistake from an investment deal was not participating in the, uh, run up of the, or the compression and the cap rates and selling at that moment. And the mistake was made because we assumed that we needed more trailing data than what people were going off of to write up offers. So we were. Waiting for time to go on to say, hey, we need to substantiate our ask better. And it's recognizing the fact that not everyone analyzes deals the way we do, and to be OK with that, and just let the market dictate it, as opposed to us kind of making sure it fits in our perfect little box.
Joe Cornwell (24:45.117)
Makes sense, and how can people reach out and learn more about you and your businesses?
Ashley (24:51.182)
On Instagram, you can follow me at bad ash investor. And then if you are interested in learning more about bar down investments, you can go to a bardowninvestments.com.
Joe Cornwell (25:01.305)
Awesome, and we will be sure to link to those in the show notes. Ashley, thank you so much for joining us. Sorry, running out of time. It was a great conversation. I'd love to have you back someday. And best of our listeners, if you guys got value from this episode, please leave us a five-star review. Follow us on social media. Make sure you to follow Ashley as well. Ashley, again, thank you so much.
Ashley (25:22.454)
Thank you so much for having me, Joe.
