September 21, 2022

JF2939: Data Analysis & Underwriting for Multifamily ft. Micy Liu

Micy Liu is the founder and managing partner at Life Mission Capital, a commercial real estate firm that focuses on multifamily investing. She is a GP of 348 units, a fund manager of 929 units, and an LP of 187 units. She also works a full-time W-2 job in the data analytics space, which helped her cultivate the skill set necessary to excel in due diligence and data analysis in the commercial real estate world.


In this episode, Micy shares how she uses her data analysis background to her advantage during the business plan execution process, the importance of prioritizing the collection of data, and how she is adapting her business models in response to the economic volatility investors are facing right now. 


Micy Liu | Real Estate Background

  • Founder and managing partner at Life Mission Capital, a commercial real estate firm that focuses on multifamily investing.
  • Portfolio:
    • GP of 348 units
    • Fund manager of 929 units
    • LP of 187 units
  • Based in: Fayetteville, AR
  • Say hi to her at:
  • Best Ever Book: DotCom Secrets by Russell Brunson
  • Greatest lesson: Confusion causes indecision.



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Slocomb Reed: Best Ever listeners, welcome to the best real estate investing advice ever show. I'm Slocomb Reed and I'm here with Micy Liu. Micy is joining us from Fayetteville, Arkansas. She is the managing partner at Life Mission Capital, a commercial real estate firm focusing on multifamily. Currently a GP of 348 units, a fund manager of 929 units, and an LP on another 197. Micy, can you start us off with a little bit more about your background and what you're currently focused on?

Micy Liu: Yeah, absolutely. So you already mentioned about my involvement with Life Mission Capital, which I'm the founder of as well. We're mostly a private equity firm that helps busy professionals invest in real estate by providing a white glove service. So we do a lot of due diligence, a lot of the underwriting, and talking to investors to help them place their capital into the opportunities that we're either a [unintelligible 00:02:16.12] or a fund manager on. I also have a full-time W-2 job in kind of the data analytics space. And that's why I've been able to leverage my due diligence skills [unintelligible 00:02:28.15] analytics background as well.

Slocomb Reed: Nice. So you differentiate here between being a general partner and a fund manager... Honestly, Micy, in a way that a lot of people on podcasts like this one wouldn't. Can you tell me a little bit about where you and why you differentiate between fund manager and GP?

Micy Liu: Yeah, there was really no reason to differentiate, and a lot of people just kind of put out together as general partners... I just wanted to be specific and also be accurate, because I believe your podcast manager reached out to me about GP units, and I wanted to be accurate in the representation... So I spread it out. So in case there's any misunderstanding. But in general, as anyone I talk to who's a passive investor, and I just explain to them about the involvement, being a fund manager; we're also in LP positions, so my investors' interest are more aligned with me as a fund manager... Versus in general partners there is potentially a smaller conflict of interest, relatively speaking. So those are some of the things that we usually share.

Slocomb Reed: Micy, that's an interesting way to differentiate when it comes to conflict of interest. Can you go a little further into that, and the differences with regards to conflict of interest, where you call yourself a GP and when you call yourself a fund manager? And if you could, Micy, when you're a general partner, what all activities or responsibilities do you have beyond raising capital?

Micy Liu: Absolutely. When I'm a general partner, I help with a lot of the investor communications, even after the raise. Also, attending asset management calls, helping with anything that's needed from an asset management standpoint; helping with maybe compiling the report for investor updates, profit and loss, things along those lines.

So when I'm a fund manager, the responsibilities are somewhat similar, but I'm not operating at a property level, I'm operating at a fund level. So we'll have the fund PPM, the fund portal, the fund profit and loss to work through along with my partners, to present that to the investors. So that's kind of it, in a nutshell.

And in terms of the conflict interest part that you mentioned, what I mean is that we're in the LP positions, so that when we fight for, let's say, a lot of times in -- for example, one of the opportunities I'm looking at [unintelligible 00:04:54.28] but the sponsor created a board; it's called an investor advisory board. So we as fund managers sit on it, because our interests are exactly LP interests, so we're representing things that's more like, okay, we want to make sure our LPs and all the LP shares we're getting are going to continue to get our pref, and because of that, we would like to vote for sell versus refinance, versus on general partners side. So as you know, a lot of the multifamily opportunities are more on the backend in terms of general partner compensation, so there may be a slight conflict of interest of wanting to sell faster, versus holding it to cash-flow as well.

Slocomb Reed: That's interesting. I know very few general partners who would be willing to let their LPs decide whether it was time to refi or sell Are you saying that's what this sponsor does?

Micy Liu: Actually, it's not a vote, it's more of an advisory board. So there's no voting involved.

Slocomb Reed: Gotcha.

Micy Liu: Just having that relationship, and the platform... Because we won't be the only person involved. When you have a platform, and when you have majority of the investors who are the bigger investors, in this case fund managers, saying that "We believe this is not the best decision", it may not have a legal voting right, but it does put some social pressure, if you could call it, on the sponsor's decision.

Slocomb Reed: Micy, that makes a lot of sense, and it's good to hear that you hold sponsors' feet to the fire, making sure that they are getting returns for their LPs. With your data analysis background, Micy, tell us about an aspect of fund management and asset management that you find comes naturally to you, or that you excel at, that you see other general partners or fund managers who don't have your background struggle with.

Micy Liu: That's actually a very interesting question. The reason I say that is - you mentioned asset management, and that's probably something I do not enjoy... As I was working through things this morning, whether it's at the property level, or at the fund level, I just don't enjoy that; I don't enjoy paperwork, I don't enjoy administrative work. But what I do enjoy is talking with investors, and digging into numbers in terms of in the projected proformas, underwriting... Those are what I do enjoy, which I leverage my deep analytics skills in.

One of the main reasons I invest in real estate is because the numbers add up. I tried to do day trading at one point, and looking at trends and projections on different charts, and it just didn't make sense to me. But when it comes to real estate investing, the numbers add up. I can say roughly with this confidence interval, perhaps, that this deal is going to make it to the projected returns we have.

And also, another aspect of my skill set I didn't mention is the sales and marketing background. I did also graduate with my undergraduate with sales and marketing, and also supply chain. So I get this skill set developed about talking to people, connecting with investors, understanding their pain points, and understanding where their motivations are. On top of that, with my supply chain operations background, mapping our standard operating procedures to help with overall deal flow, and the overall process... But when it comes to me actually doing it, I don't actually enjoy repetitive processes, but I do enjoy mapping out the process and doing the underwriting, so that everything comes together in a more holistic cycle for my company and my investors' experience.

Slocomb Reed: Yeah, that makes a lot of sense, Micy. Specific to after the capital is raised, after the purchase closes and you're executing on your business plan, where is it that you see your skills and expertise developed as a professional data analyst? Where is it that you see that translating the most? ...during the hold period, the execution of the business plan.

Micy Liu: One thing I see as a private equity firm that works with 5 to 10 selected sponsors, one thing I see is everyone documents their asset management in a slightly different way. Especially when we're working with some of the bigger fund opportunities, they have so many assets grouped in their portfolio and grouped under the fund, so the visualization of what's happening in their properties sometimes can be a little challenging. So the actual reporting, rolling up, and understanding, projecting out "What would it be like this month with our current macroeconomic situation in terms of interest rate, if we were to refinance 12 months from now - how likely we're off, not just in terms of rent collections, but in terms of decisions we'll have to make on sell or refinance?"

I think when you look at a larger company - I work for a very large company in my W-2 job - we're constantly projecting P&L. And that's not just in this case cash flow that we're projecting coming in for the remaining of the year, but we're also projecting the five-year hold, how closely we're on track with that. I know there's a lot of things that can happen within five years, but having something that's easy for everyone to get to, that represents how closely we're on or off-track, and when we should push more, and when we have a little more breathing room - I think that's important. So what I'm going through as I'm working with different operators is to kind of identify the key metrics people are tracking, and perhaps figuring out a way kind of like what Neal Bawa does, how he tracks leases versus how many people actually came, and how many people actually signed up on it, and actually went through the credit check process... And just understand a little bit more, so have really more of a data point, data-driven decision-making, not just on the property management side, but more on the investors' experience and investors' return side, kind of have all that input, the operations and the potential output mapped out a little more clearly.

Slocomb Reed: It's interesting to hear you say all of that, especially when you say that you don't enjoy asset management... But that's an interesting point about Neal Bawa and those kinds of metrics. I'm an apartment owner-operator in Cincinnati, Micy. My family is from Northwest Arkansas, [unintelligible 00:10:58.19] but my investments are here in Cincinnati. And I recently, like late last year, started really seriously tracking those leasing metrics, to your point, and using them as an indicator of where I was by comparison to market rents, and implementing systems for getting better feedback from showings, things like that. And I've had my systems ironed out to streamline the process for quite a while, but not to analyze it, and not to take my daily operating activities and build a dataset that informs my investing at a higher level - where's the rent rate, what renovations matter. I started doing that and I realized some very simple things that I could do... Like, if my apartments are on the side of the building that's shaded in the afternoon when all the showings are happening, and there are no overhead lights, spend 30 bucks, put a couple lamps in the apartment, and it shows beautifully. But without taking the steps to collect data and analyze it on a regular interval, simple things like that I would have missed. So I totally get what you're talking about, and the value of prioritizing the collection of data, so that you have a dataset that you can analyze. Micy, I'm right there with you.

Micy Liu: Yeah. And it's also about going in there with a foundation of what are the key metrics to track... Because I see sponsors, some of them, they would be putting on the presentation, tracking the operating income pro forma, but then in their monthly report they may be looking at net cash flow. So it's harder for passive investors to look at "Are we really on track or off track, from a numbers standpoint?" So laying a good foundation for the metrics you mentioned is going to help companies scale, versus being a lot more manual. I enjoy the process of creating structures and organizations to make it scalable.

Break: [00:13:01.16] to [00:15:01.12]

Slocomb Reed: Micy, it's easy to talk about what we're naturally good at... If I can ask where within commercial real estate and multifamily syndication - where have you struggled? What are the skill sets that you had to develop as a result of being an apartment investor?

Micy Liu: Yeah, I would say the storytelling piece. So coming to the podcast today is about telling stories. But it was difficult, especially on the social media platforms. I wasn't used to posting daily, or multiple times a day, just posting about educational content and posting about what we're doing. I'm such an in-the-moment person, so when I'm doing things, I'm doing things. So being able to capture the moment and letting people know what I'm working on - obviously, that's been a skill, and I'm still trying to figure it out, to be honest. So being an influencer sometimes is a skill set that I don't think about. So I kind of got my left brain, my brain, and one side, I'm a very analytical person, on the other side, I'm super outgoing. And sometimes they kind of collide, and sometimes they don't.

So I'm definitely working on continuing to engage with people on the social media platforms, how can I better grow the platforms... And one of the things that's been somewhat helpful is -- not necessary on the social media platform, but on the overall digital marketing, is Russell Brunson book. He has so many books, and one of them is DotCom Secrets. So understanding the entire buying cycle, and how people really have different awareness levels has really helped me grow in that space.

Slocomb Reed: Nice. Micy, remind me, when did you first getting into apartment syndication?

Micy Liu: As a limited partner, I started late last year. And then shortly after that I started as a general partner. It took me about six to seven months to really understand the whole process to a point that felt comfortable. As I said to you, I'm a data person, so it wasn't enough for me just to see the investment summary. I had to understand how the numbers added up. So I took intense courses, masterminds to make sure I knew how to underwrite, and make sure that every opportunity I was investing passively or actively, I understood how the numbers added up.

Slocomb Reed: Gotcha. Micy, a moment of honesty here... This is a question I'm not even sure how to ask... So I'm going to start rambling, see if a question comes out, and hopefully our Best Ever listeners gain value from it. I am not a general partner, I'm not involved in any apartment syndications yet. I'm a buy and hold investor, with a focus on repositions, proper BRRRR style deals where there's enough forcible appreciation for a cash-out refinance... And one of the reasons I'm comfortable doing that, and I'm comfortable taking on major rehab, and tackling complex current, like, today situations that I have to resolve, is that they don't involve forecasting into the future any more than 6 to 12 months. I really only need to know what I need to do to get between now and a solid T3 that will let me perform a cash-out refinance. I don't have to project out five years. I don't have to project growth into a three to seven-year hold period. I know I can do vacancy factor, breakeven ratio, I know the calculations for making sure that I'm stress-testing my models and my properties... But I've never attempted to assess the performance of one of my properties five years into the future.

Given your experience as a data analyst, your underwriting experience, your mastermind experience, I hope the Best Ever listeners get some value out of this, but give me some advice... What are your best tips for me, already understanding the apartment investing space, but not understanding how to future-pace my projections beyond six to 12 months... What are your top tips for me when it comes to building out a business plan and financial projections five to seven years into the future?

Micy Liu: To me, my mind always think in three parts - input, the model, and output. And what I mean by that is you put in the money, and the money comes out in cash flow, appreciation and tax benefits. Those are really the three buckets that you would actually get the returns.

So from a cash flow, in terms of projection five years out, that's really depending on the income and expenses and mortgage. So if it's fixed rate, or whatever rate you have negotiated, you can kind of calculate from there based on if there was rate cap, if it's fixed, and how long term it is. The wiggle room is pretty small, I would say.

So the key metric to understand is rent growth, and expenses in terms of big-ticket items, or the expense ratio happening at properties of similar sizes in a particular region. So I feel like you get pretty close just by understanding that, and then all those impact the operating income, which affects when you sell the apartment. So understanding that that's also a variable, understanding how your NOI will likely be based on some of how those factors change, and understanding the cap rate. That's going to be the main thing - understanding the cap rate, and really underwriting conservatively; you know, like this time of the market, we're really underwriting at least 100 to 125 basis point expansion between entry and exit, just because of so much uncertainties.

So all those will help us have a more conservative feel to our projections and to our investors. One thing if you're investing [unintelligible 00:20:29.09] maybe you can take a little bit more risk if you know the market really well. But when you're dealing with somebody else's money, you will really want to make sure the numbers really are more on the conservative side, due to the fact -- with the factors I mentioned to you. So input, output and the model. So the model is kind of at [unintelligible 00:20:46.21] So those are kind of how I judge it and how I like to present information as well.

Slocomb Reed: Gotcha. We're recording at the end of July 2022. Do you feel like your model is being -- "tested" might not be the right way to put it. Are you having to adapt your models to the economic volatility that we're experiencing right now, Q2, Q3 2022?

Micy Liu: Yeah, definitely. Because there's so much uncertainty in the market. Think of a bell curve, right? For anyone who doesn't know - it's goes up, and then it goes down. So you kind of have a likelihood of things happening, and there's certain financials, different websites and resources, financial institutions out there projecting not just Treasury rates, and not just interest rates, but also potential volatility that they can see coming in the market, and maybe given geopolitical situations, oil prices, and things like that. So you kind of factor in what you think is reasonable, and then the stress tests, like you mentioned. Not likely, but what if it happens, if there's another war, and things like that? What if the cap rate goes up by this much? How likely it is? That's why we never present opportunities, just with like, "This is our projected returns." I'm always trying to say "This is going to be roughly this range, but even -- it could go one way or the other." Just setting that expectation is the key, and understanding the likelihood of things occurring.

So that's all it is, with the projections and models. I actually work in the forecasting department of one of the largest companies in the world, and we're never right in our projections, because that's the point - you're never supposed to be 100% right. So just try to be on the conservative side.

Slocomb Reed: Awesome. Micy, are you ready for the best ever lightning round?

Micy Liu: Sure.

Slocomb Reed: Awesome. Micy, what is the best ever book you've recently read?

Micy Liu: I would say the DotCom Secrets I mentioned. I think every business person is a marketer... So it just opened up my mind about marketing.

Slocomb Reed: What is your best way to give back?

Micy Liu: I would say give back on areas that's focused on education, whether it's pre-K education, or financial education... I loved hosting and attending Junior Achievement volunteering programs, teaching kids how to do finance in a fun way, budgeting, and different things like that. That's a way I like to give back, because it's things I didn't know I had before... So giving back to people so they can know how to do that.

Slocomb Reed: Nice. Thus far in your commercial real estate investing career, Micy, what is the biggest mistake you made, and the best ever lesson that resulted from it?

Micy Liu: I will say it's confusion leads to basically no conversion. So I was talking to a lot of people at one point to help them invest passively in the real estate space, but I think I was over-complicating what real estate syndication is, and a lot of people were getting really confused, and maybe a little bit scared, because they didn't know what it was, so they never invested with me. So once I turned that around, I was able to convert a lot more investors, and they were able to really understand, and knowledge comes with trust. So that's been something that I've been slowly getting success in.

Slocomb Reed: Nice. And what is your best ever advice?

Micy Liu: My best ever advice is to get started [unintelligible 00:24:06.00] And I know it's cliche, but it is true. Understanding how the math works on an investment at a high level, and sometimes you just have to make baby steps to take those decisions to the next level.

Slocomb Reed: Great. And where can people get in touch with you?

Micy Liu: Visit There you'll find some of my eBooks and my contact information as well, whether you're beginner or an experienced investor.

Slocomb Reed: And that link is in the show notes. Micy, thank you. Best Ever listeners, thank you as well for tuning in. If you've gained value from this conversation about data analysis, and underwriting an asset management in multifamily syndication, please do subscribe to our show. Leave us a five-star review and share this episode with a friend who's already an investor interested in multifamily investing, so that we can add value to them as well. Thank you, and have a best ever day.

Micy Liu: Thank you so much, Slocomb.

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