December 26, 2022

JF3035: Growing Your Investor Base Organically ft. Jordan Fisher

Jordan Fisher is the principal at Next Wave Investors, a Southern California-based private equity investment firm with a specialized focus on value-add multifamily investments. In this episode, he shares how he’s grown his investor base organically, how he plans to formalize and boost his fundraising, and why he thinks trying to save money on payroll is a bad idea.

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Jordan Fisher | Real Estate Background

  • Principal at Next Wave Investors, a Southern California-based private equity investment firm with a specialized focus on value-add multifamily investments.
  • Portfolio:
    • GP in more than $500M in acquisitions
  • Based in: San Clemente, CA
  • Say hi to him at: 
  • Greatest Lesson: This business is a lot more than financial. The success of a high-value multimillion-dollar investment comes down to the boots on the ground operating the property. Brokers and investors who like to improve how a property looks on paper by saving money on the payroll are making a mistake.



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Ash Patel: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. I'm Ash Patel, and I'm with today's guest, Jordan Fisher. Jordan is joining us from San Clemente, California. He is the principal at Next Wave Investors, a Southern California-based private equity firm focused on multifamily investments. Jordan has almost 20 years of experience in this space, and his portfolio consists of being a GP on over $500 million in acquisitions. Jordan, thank you so much for joining us, and how are you today?

Jordan Fisher: I'm great. Thanks so much for having me, Ash.

Ash Patel: It's our pleasure. Jordan, before we get started, can you give the Best Ever listeners a little bit more about your background and what you're focused on now?

Jordan Fisher: Sure. So I'm a little old, so the background's kind of along... I've had a few careers so far. I went to college, and I was an Army officer for a few years. And during that period of time - it was a great period of time. I loved it. I had trouble living on an Army officer salary; I was stationed in Hawaii, and I remember at the time gas was like a $1.60 in Hawaii, and I thought that was so ridiculously expensive... It sounds like it's free now, but... Anyway, so I ended up running up credit card debt, and I'd have like these anxious nights where I couldn't sleep, like "How the hell am I ever gonna pay off my credit card debt?" And so I got out of the service, and it was late '90s, and [unintelligible 00:02:34.28] and I got a job as an IT consultant. I didn't really study software engineering or anything like that, but I did well in school, I studied math and science, and I just promised I'd learn it. So I did, and I did pretty well, and during that period, I was able to pay off my credit card debt. So that was like a huge relief for me. And I was like "Man, I never, ever want to get in credit card debt again."

So I had a little bit of money in my pocket, and this was the beginning of the 2000s, and like a lot of people, you're just like, "What do I do?" I tried buying stocks before, and I got creamed. I'd see a stock go from 100 down to five and I'd be like, "Oh, well, it's bargain now." And then it would go down to zero. I just always thought like "They're professionals. That's what they did, was study stocks." And there's technical analysis, and then there's fundamental analysis, and then 100% of the people investing were smarter and more educated about stocks than me, and I was like, "This is not the place for me."

So my old man - he was in the real estate industry where he sold used refrigerators and stoves to apartment buildings. And that's what he did for a living in LA. And I'd do deliveries for him, and I kind of was familiar with apartments, and so I started thinking maybe I'll invest in an apartment building. So I was working in IT, and I was living in Huntington Beach... For those of your listeners that know Southern California, I was driving up to a city called Torrance, and in between those two cities there's a city called Long Beach. And Long Beach is probably the one really rundown, not nice city, where you can be a mile from the beach and actually be in a scary neighborhood. So it's cheap, and I was like "This isn't gonna last. This is California... Beach close properties... It's gonna go up." So I'd drive -- I started driving apartment buildings for sale, and I started -- triplexes, not like big apartment buildings. Triplexes and duplexes, and just get a feel for what the rents are going for in the different little pockets of Long Beach, and what the prices are selling for...

So during that time, I bought my first investment; it was a triplex in one of the scarier sections of Long Beach, but it's still only like a mile and a half from the beach, so I thought "This is gonna be okay."

In the meantime I started my own IT consulting firm, and I spent about seven or eight years building that firm, buying real estate, doing trades, maybe some private partnerships... And I sold that firm in 2014, and I had a little bit of money... And I didn't know what the heck I was gonna do with my life. I knew I liked multifamily a lot, and I liked real estate a lot, and I met my business partner, David, just through our daughters and hanging out, and he was looking to make a change... And we met another person through my kids, that he worked for a mortgage brokerage, but he also said "I could help raise equity, and you can actually do this professionally." That's how I kind of learned about this business, was just through people telling me "Here, you've got this track record, and we can raise money, and you can do this professionally."

And so we started the next wave at the end of 2014, beginning of 2015, and it's just -- we've done a lot of trades, we've got full cycle on almost 30 deals, and... You know, keep going. So our strategy right now is value-add; we focus on the Western markets, so Arizona, Nevada, Utah, Oregon, Washington. We've got a couple deals in Texas... And the reason we picked those markets is in the West it seems like everything's going pretty well. The West are all strong markets, but we want stuff that is within a direct flight of Orange County, because David and I both go travel a lot. We would love to do a deal in Southern California, we just can't figure out how people make money.

Ash Patel: Interesting. Okay, so I had somewhat of a similar path... I was in IT in '99, so during the tech bubble, and you saw a bunch of overnight millionaires from the stock market. And all of a sudden, that went away. But we were lucky to have jobs in 2000-2001, because the economy collapsed, and we were in IT, and things were good at the time. You strike me as somebody that gets bored easily, and you're always looking for the next big thing, right?

Jordan Fisher: I do get bored easily. I have a little ADD somewhere in me that I can't get rid of. But I'm not really changing strategies, or chasing deals. I kind of got into IT just on accident; I was getting out of the Army, and I never really thought about civilian careers. I didn't know what I was gonna do with my life. But I was like 25-26, and liked the consulting side, because I was good at it, and I got to see different industries, and different careers within those industries; HR and finance... But it wasn't something I really had a passion for. But on the side, I was doing these projects in multifamily, just with my own small savings that I had.... And doing stuff with maybe some family deals... So I really liked that.

And as far as -- we're in a lot of markets, and that's because... We don't like that. I mean, we think that that's tough; it kind of sucks to go out to make a whole trip just for look on one deal. But the reason why we're in so many markets is because in the West, things get really heated; hyper-competitive in Las Vegas. So we have to not just believe in the market, we've got to believe in the deal. And when you can't find any deals in those markets, you've got to look somewhere else... Because we're selling deals as well; we do reposition them fairly quickly, and if you can take a win, you take a win. So we've got to find new stuff to buy, and so that's why we got into so many markets.

We're really trying not to enter any new markets. Hopefully, things become a little more calm. We really believe in Phoenix and Vegas; like, those are great places, they're growing strong... We just couldn't find any deals we believed, in because the prices got so competitive.

Ash Patel: What are your thoughts on the people buying those three cap deals?

Jordan Fisher: I think -- it's funny, I don't like [unintelligible 00:08:18.20] First, I would say we were scratching our heads... Because everyone says they're conservative, or whatever. But to win a deal -- there's never a deal where you're the only guy looking at it. In general, to win a deal, you're the high bidder. So we're aware of that. But we would get beat out by 10%, multiple millions of dollars. So we think that there are going to be some people that feel some pain, because we know that there's aggressive financing, and we know that there's high leverage debt out there that maybe didn't cap their float as much as they should... And we think there's going to be people that have a little bit of a hangover after the party.

But we talk to brokers and we talk to our lenders, and there's basically saying everybody's paying the mortgage right now... And I'm surprised, but maybe we're too negative. But we'll see what happens in the next year, I don't know.

Ash Patel: Can you describe caps on floaters? That's basically capping interest rates, right?

Jordan Fisher: Yeah.

Ash Patel: How does that work?

Jordan Fisher: Okay, so you buy a floating rate mortgage, it's based on an index, and the common indexes so far -- it used to be LIBOR, but they changed to SOFT, and I don't even know what SOFR stands for, but it's really similar to the Fed funds rate. And it's that index plus a spread. So common spreads a year ago were maybe 3.25%. So the index was at 0.10%, the spread was at 3.25%. And so your net rate was 3.35%. So as that rate goes up, then your rate goes up. So SOFR has gone from 10 bps, to - I think it's around, depending on the SOFR, 3.5% to close to 4% right now. So your rate would be close to 7.5%. Lenders don't want you to go there, so you have to buy a hedge.

Basically, we bought hedges that capped your index at 1%. So if the index goes above, from 1% to 2%, your rate cap pays the difference; they pay that one point difference. So it basically locks in and caps your net mortgage cost.

Ash Patel: And Jordan, these are for bridge loans or interest-only loans.

Jordan Fisher: Yeah, mostly for bridge loans. But there's floating rate agency loans that can go for 10 years, too. But a year ago, the debt funds in these bridge loans were cheaper, or just as cheap as the agency loan. So most people were buying with these bridge debt loans.

Ash Patel: [00:10:42.02] And I would imagine buying these caps is quite expensive.

Jordan Fisher: It is now. So that's the thing... So there's these companies that forecast what the index is going to be at. So maybe a year ago, or maybe a little more than a year ago, if you looked at the curve, the curve never went above 2%. So if you were just going to cap your rate at 3% you were paying very little, because it was never supposed to get there.

So funny, because my business partner -- I'm a little more loose and he's a little more conservative, which makes us a good partnership... So we bought our caps; we capped for year one SOFR at 50 bps, year two at 100 bps, and year three at 150 bps. And I was like, "Man, we're just throwing away money." It's like life insurance, right? If you don't die, you never get paid. So if SOFR never reaches those limits, then it's just a waste of money. It's an insurance product. Of course, now I'm very, very happy we got those caps.

Ash Patel: And what does that cost? On a $30 million purchase, what does that cap cost?

Jordan Fisher: Well, again, it's gonna depend on what you're capping your index at. But right now, to cap at probably 4% -- the last I saw, there was basically two points on your loan for the rate cap.

Ash Patel: Ow...

Jordan Fisher: Yeah. So for the past year, we've tried to stop using floating rate debt, because it would be a surprise; you budget maybe one point for your rate cap, and then you really don't know until the day before you close when you buy the rate cap what the price is going to be, because it changes daily.

Ash Patel: Interesting.

Jordan Fisher: Yeah. So for us, you go to the closing date and you budgeted one point for your rate cap, but now it's two points... That throws you -- you're sure to close, so you've gotta find that money somewhere. I don't like surprises at the closing table.

Ash Patel: Yeah, thank you for explaining that. I'm a non-residential commercial investor, so we don't have agency debt, and we can't buy floating cap rates.

Jordan Fisher: Oh, okay.

Ash Patel: So we just do long-term fixed debt.

Jordan Fisher: Which is a good place to be...

Ash Patel: Yes. In hindsight, it is, yeah.

Jordan Fisher: Your probably really happy right now.

Ash Patel: Yes. You mentioned a couple times you can't find a deal in these markets, so you've moved on. What constitutes a deal to you?

Jordan Fisher: Okay. We are return-driven. So most value-add - if you want a 20-year-old building, it's been maintained very well, it just needs a refresh, and you can put in some higher-end fixtures and push rents.

Ash Patel: That's what the book says.

Jordan Fisher: That's it, that is center of the target. And we never get that, ever. Because when those properties come out - and they do come out - there's way bigger companies, they might have lower return thresholds for their investors... So we just -- we get outbid. I mean, we get crushed. It's like, the brokers don't even take it seriously. They won't schedule a tour.

Ash Patel: Hold on, wait a minute... You've got almost 20 years in this business, almost $500 million in acquisitions... And you don't have credibility with these brokers?

Jordan Fisher: I'm being a little bit facetious here, but the reality is, we don't get those buildings; we don't win them. There are firms that are better at fundraising, they can raise money easier, and they can raise money either -- I don't know exactly their magic. Everyone's kind of got their secret sauce, right? But they're able to get to higher prices faster than we are.

Ash Patel: Yeah. So you don't have the reputation of overpaying for deals.

Jordan Fisher: I think so. But overpaying is a different word. There's these companies out there, that are big companies, and they buy things at higher prices, and that's with less leverage... Because our investors - we try and deliver on high teen returns; their investors - they're happy with low teen returns, so they can pay more, because they have a lower threshold. So they're good companies, and I'm not saying they're overpaying; I'm just saying they're paying a price that we can't pay. So we don't win those deals.

So we end up getting the deals, like maybe it's an older vintage, maybe it's a worse neighborhood... Something where it's not the center of the strike zone; there's something about it which the majority of investors don't want. And because of that, we can get it at a price that makes sense, we believe, for our investors, and we've done well for them... So we try and make money, and we try to really be dispassionate about the property.

I do have some things I really try to avoid. Flat roofs - because I hate flat roofs; they always leak. I like properties that have balconies for their residents, because balconies aren't for sitting and doing anything, they're for storing your stuff. And if people don't have the balconies to store their stuff, they're going to store their stuff in the common areas. There's like little things I like, but at the end of the day, I'm returns-driven. So if there's a property that I don't like a lot of things about it, but the value is there and we can deliver a return, we're gonna buy it.

Ash Patel: Jordan, what metric do you use for return? Is it cash on cash?

Jordan Fisher: No, we are primarily driven by IRR. Most of our investors, they're not investing with us for living off of; they're not retired folks that are living off it; they're trying to build their wealth. So it's really - can we take a property that's got whatever problems with it, but we can buy it at a low price, add value, and sell at a high price, and make their returns? So that's really what drives our investors.

Ash Patel: And are you specific to class A, B, C, all the above?

Jordan Fisher: No. All things being equal, everybody likes class A better. Class B is really my favorite spot to be. But we do class C - I mean, we have done some really tough projects in tough neighborhoods - if the price is you got to factor in everything. And you can deliver real returns there. It's tough work, but if the returns are there, we'll do it.

Ash Patel: What is your bottleneck today? Is it deals or is it investors?

Jordan Fisher: It's probably investors. David and I, we just kind of figured this out on our own. We didn't really go into a mentorship or anything, which, in hindsight, we probably should have done... But we were a little older and a little more established, and we just sort of went into the business. And neither of us came from a family that had any money connections, neither of us had any sales experience... So we thought, "Let's just focus on doing really good properties." Let's underwrite well, let's manage well, let's turn the property well, and didn't really pay attention to fundraising. And it's hard work. Learning to fundraise is tough. And there's people that have grown much, much faster than us, because they're better at fundraising. So it's something we're learning and we're working on, but it's not our core expertise.

Ash Patel: Let's dive into that evolution. Way back in the day, you had somebody that said, "You guys should do bigger deals, and I can help you raise capital."

Jordan Fisher: Yeah.

Ash Patel: If you could, walk me through the evolution from back then to where you are today. What steps have you implemented to increase the number of investors that you have?

Jordan Fisher: So the way we did it is - there are middlemen, right? There's equity brokers, and most of our first deals were done primarily with equity brokers. Now, when you do a deal with those guys that help you raise money, they still want the GP, which is us, the general partners, to have skin in the game. 10% co-invest or 15% co-invest. So at that point in time, if the co-invest was maybe $300,000, we would do very few deals, because we didn't have that much money. So we started reaching out to friends to co-invest on the GP side of things, and we'd give them a share of our promote and economics.

So that network of GP co-investors grew just through word of mouth, and then we finally got to the point where we didn't have enough room in our GP to satisfy all investors. So we started doing some smaller deals with those GP investors just as our standard LP investors, and we kind of moved them over. So just kind of through word of mouth and networking, our investor list is probably maybe 100 to 150 people; most of them have done multiple deals. And just through word of mouth, and through LinkedIn, and social media... We kind of brag, for a lack of any better words, right?

Ash Patel: You promote yourself, you market yourself.

2:Yeah. And we've got MailChimp, and we kind of advertise our deals... But it's mostly just organically been growing. And still, it requires a lot of equity to do deals now. And so most deals we do now, if it requires 10 million equity, we can raise half of that with our network, and then we'll go with another fundraiser to raise the other half. So it's kind of a combination to really get there, because it's a lot of money, it's a lot of trust from people to do that much -- they've earned the money, and they pay taxes, and it's incredible that people trust us with their money. So it takes a lot of people to really kick in and do a deal.

Break: [00:19:01.01] to [00:21:02.13]

Ash Patel: Jordan, again, you've got that incredible track record, you've got the experience, you've got the team... What steps could you take to formalize and really boost your fundraising?

Jordan Fisher: That's a great question... And it's kind of strange, because David and I - we talked about it, right? There's marketing companies out there that really promote, and there's probably a lot of marketing efforts we could do... But it's kind of strange too, because we get some people that are like -- okay, they'd like to invest, and then we might not have a deal for months. And it's kind of weird to kind of keep them hot and horny when you don't have a deal for a long time. But we also don't want to be in a position where we're doing a deal that maybe we're stretching a little bit just to --

Ash Patel: Just to do the deal.

Jordan Fisher: Yeah. So we kind of just like to have this organic people, like we're gonna put a bunch people on our interest list, and when we have someone we really believe in, we're gonna bring it to you guys. But we're not out pounding the pavement, because people would be like "I'd love to invest with you" and then we're like "Well, okay", and then you're like, "Okay, well, I'll call you in three months."

Ash Patel: Okay, so let's dive into that a little bit... Do you only reach out when you have a deal?

Jordan Fisher: Yeah. [laughs]

Ash Patel: Listen, we've only been talking for 15 minutes, and you're a fun guy to talk to you. I want to know more. I want to know about your background. I want to know about that 20 years of experience. Why not put that out there more often?

Jordan Fisher: I don't know. I think a little bit David and I - neither of us are front guys. Both of us want to be behind the scenes a little bit. We're not great at getting on a mic and talking to a bunch of people... So it's probably just not our comfort zone a little bit. Even these kinds of things, it's a little bit outside where I feel comfortable. So it's something we should be doing more; it just feels weird.

Ash Patel: What was the highest dollar amount of one deal that you've done?

Jordan Fisher: I think the largest deal we did was a $60 million deal.

Ash Patel: Okay. Was that out of your comfort zone?

Jordan Fisher: Yes. [laughs]

Ash Patel: Okay. Listen, this is no different. Right? Push yourself. You've got the personality, you've got the experience to share... I think if you put yourself out there, your investors will feel more connected to you. Right?

Jordan Fisher: Yeah.

Ash Patel: You just need to stay present in their minds.

Jordan Fisher: You're 100% right.

Ash Patel: That's it. Push yourself.

Jordan Fisher: Yeah, I got it. You're 100% right. And it's like one of those things where you know the right thing to be doing... And then it's also tough timewise, though, I'll say... Because David and I really give a s**t; we just do. I have deals where I've done with no investors, and I'll take way more risk with my own money than I will with somebody else's money. So we are on the road a lot. I mean, every week, checking on the deals, and we want to execute according to the game plan, with no excuses... So that does take away -- we haven't really scaled; I think to scale, you'v got to step back on some things, right? You can't do everything yourself. And the thing that we really haven't been able to step back on is executing on a game plan... Because I never ever, ever want to have to call an investor and say, "We screwed this one up." We screw up a lot of stuff, but they made money. [laughs]

Ash Patel: Okay, so you're being tough on yourself by saying you haven't scaled the way you should have. On the flip side, look how well you've grown organically.

Jordan Fisher: That's true. And we're pretty proud of what we've got. We've got stable, really happy investors, and we've got enough scale to where we feel great. Could we have gotten bigger? We could have, right? But we feel great about where we are, and I love working every day, David loves working every day, we've never gotten in a single argument... So everything's really good. But it's a constant grind, and a little bit more scale would always help with fees and paying more staff... But we're just not willing to force the issue... And so we're happy with where we're at for sure. We're incredibly lucky.

Ash Patel: Jordan, I'm gonna guess that you and David are not big on social media...

Jordan Fisher: I do a little more than him. [unintelligible 00:25:04.01] So as I was seeing people -- so I did develop a little bit of a following on LinkedIn... But this is a face made for radio, so I'm not sure --

Ash Patel: I get that a lot, too...

Jordan Fisher: So I'm not out there taking pictures of myself in buildings, or doing YouTube videos of myself... But I do try and write some stuff on LinkedIn... And especially if I have an original thought, then I try and post something.

Ash Patel: Well, two good topics for your posts... One, talk about your long-term partnership and how you guys have never gotten into a fight. There's got to be a lot of lessons there that other partners can learn from. And then two, you mentioned you're on the road a lot.... People want to know that. I want to know -- you're not just sitting behind a desk, crunching numbers; you're out in the field, you're looking at the units, you're managing properties... You're hands-on. I think it's really important for people to know, and I think you've got a lot of lessons to share.

Jordan Fisher: I, I do...

Ash Patel: So look, I don't want to hear it, man. Push yourself. You've got to get out there. You've got so much to offer. But just how you grew organically - I think your investor base will grow organically based on that.

Jordan Fisher: I think you're right. I should share more. It's incredible... Usually, when we go to the properties, they're not happy stories I want to share. It's like --

Ash Patel: Awesome. Even better.

Jordan Fisher: ...somebody backed into a carport, and now I've gotta pay 15 grand to rebuild it. [laughter]

Ash Patel: Yeah. My business partner just took a video of a strip mall - she had to evict a tenant, and there's a team of sheriff's officers removing belongings. All the years I've done commercial real estate, we've never had to evict anybody. She's been doing it a very short time and already has an eviction... But that was cool to watch. So share everything, man. That's how people get to know, like, and trust you.

Jordan Fisher: Yeah, that's a great point, and I'm gonna make a list to start doing that a little bit more... Because they're not gonna like everything they see, I'll tell you that.

Ash Patel: Awesome.

Jordan Fisher: But they might appreciate that they don't have to deal with it. [laughs]

Ash Patel: Or, if there's a takeaway for them... Mission accomplished. Back to picking your brain. How do you pick markets? When you expand to different markets, what metrics do you use?

Jordan Fisher: We don't do a lot of deep dive on markets. We like the West in general, and for different reasons. But for the most part, if you go to Portland, Salt Lake City, Nevada, Phoenix - those are all very fast-growing cities. People love them. They're lower cost than Southern California, and they're expanding really quickly, with great job growth and great demand drivers.

So what we try and do is really, before we buy our first acquisition there, learn the markets, the little niches within there; are you in a C neighborhood? Are you in a D neighborhood? And I'll tell you, we've gotten surprised before; specifically Salt Lake. There's this one deal that just stands out in my head. We bought this deal, and it was like a mile away from a Trader Joe's, and you're just "Okay. That's not bad, right?"

Ash Patel: You would think "I'd wanna live there."

Jordan Fisher: I was wrong. I was wrong. [laughs] It was a terrible, terrible location. This drug epidemic everywhere... And so you'd have a move-out where somebody would just really beat the unit to hell. And you'd renovate it, and you'd get your good rent, it turns out to be a drug addict or a drug dealer... And then six months later, you're having to spend four or five grand on a renovated unit. So you really want to know those corners and those pockets, because you can't just necessarily judge by the retail. Retail is generally a good indicator. You want to stay away from the pawn shops and massage parlors, and all those things.

Ash Patel: What was your exit on that Salt Lake deal?

Jordan Fisher: We actually did really well on that deal. We sold to another firm. But you know this - everybody, for the last 10 years, compressing cap rates has bailed out every bad deal you've done. We've missed on every budget, and still made a lot of money, because cap rates went down. So that party, I expect to be ending. So you've really got to make sure your underwriting is on point, and you budget for everything... Because we've done really well, we've executed as best we can, but at the same time, just like everybody, rising tide lifts all ships; a lot of mistakes got covered up by compressing cap rates.

Ash Patel: I totally agree. And you and I have the luxury of seeing a number of market cycles where a lot of people under the age of 33 have only seen good times.

Jordan Fisher: That is so right. Me and David - he worked for a REIT, so he was in the real estate industry. I just had my own personal portfolios, and some friends and family deals... And 2008 was a bummer, man. Instead of income coming to me, I was putting money in just to hold on to the buildings... Because rents can go down. These forecasters always say there's a housing shortage, there's all this stuff... I'm like, there's a housing shortage until people lose their jobs, and they move back in with their parents. You can tighten up and things can go vacant. And leverage - it makes your deal a screaming home run in good times, but it can kill you in bad times.

Ash Patel: Yeah. You know, it's amazing... Wall Street people will never talk about the stock market going down. Real estate people never want to talk about rents going down. I love the shortage of number of units, housing units we have. What does that mean? Does that mean the party is never gonna end until we meet that shortage? That doesn't make sense.

Jordan Fisher: It doesn't make sense. And we had this weird thing in COVID, where people got these checks from the government, and said, "Okay, I'm gonna go move out from Mom's house and get my own place." Well, just as quickly, they can move back in with mom.

Ash Patel: A hundred percent. And it's happening now.

Jordan Fisher: It is.

Ash Patel: There's a lot of news articles, I'm sure you've seen, where people are moving back with their parents, or parents are moving with their kids, because you can't afford your own place anymore.

Jordan Fisher: Yeah, rents went up really quickly.

Ash Patel: Yeah. Jordan, your investor split, investor returns - how do you structure those?

Jordan Fisher: Generally, we don't do preferred equity. It's called pari-passu, right? Everyone gets returns on an even basis, usually to a 10% or so. And then after it, our investors get a 10% return on their money, and all their money back; then we get a 25% promote, which is 25% of the profits above a 10% and your return of capital. So that's generally how our deals are structured.

Ash Patel: Oh, hold on. I like that. So investors get the first 10%?

Jordan Fisher: The GP, too.

Ash Patel: Okay.

Jordan Fisher: So everybody gets, on an even basis, the GP and the LP, you get a 10% return, and you get all of your money back. And then after everyone's gotten the 10% -- and that's annualized, right? So if you hold it for three years, and compound it... So you get the 10% internal rate of return, and then after that, we get a 25% of everything above the 10% return.

Ash Patel: And the investors get 75%.

Jordan Fisher: Yes.

Ash Patel: Wow. How did you come up with that?

Jordan Fisher: I think we're pretty much center of the fairway. I don't think we're cheap, I don't think we're expensive... I think that's about what most people in the business --

Ash Patel: The typical is this just 7% pref, and then 70/30 split, and then maybe a waterfall at the end of that. But having the GPs share the first 10%, I've never heard. I like it, though.

Jordan Fisher: [laughs] Yeah, so that's the way we do it. Look, we've had people that have asked, "Can we put our money in front of your money?" and our answer is no. It would feel pretty crappy if I work really hard and got somebody a 10% return and I lost money. So we should all be on the same footing.

Ash Patel: Makes sense. What is your best real estate investing advice ever?

Jordan Fisher: My best real estate investing advice is I see a lot of proformas that really try and make the returns by cutting the expenses. You'll see a deal that's operating at $1,500 per door in payroll. And the broker, or I'll see some of my peers will advertise part of their return is by taking that $1,500 per door payroll down to $1,000 per door payroll. And I think that is the absolute wrong way to try and make money. Your people are going to deliver the product; your people, they're going to lease the unit, they're gonna be the boots on the ground, oversee the turns of the unit, they're going to collect, they're going to evict, they're going to fix you s**t. And they're doing all that, and if you get a bad one, that bad one will cost you so much, because your project is going to suffer.

So my advice is do not try and save money on payroll. In fact, I overspend on payroll, because I want the best people to deliver the highest rents, and the best collections, and the highest resident satisfaction... And I want them out there every day. And you don't get loyal employees by not rewarding them. You get loyal, top talent by rewarding them, and we want them to feel appreciated and do the best they can for our tenants, and our investors.

Ash Patel: I love that contrarian advice, because that's the first thing people do. "I can cut here." It's easy to cut staff. That's an easy number to cut.

Jordan Fisher: Yeah.

Ash Patel: That's great advice. Jordan, are you ready for the Best Ever lightning round?

Jordan Fisher: Okay, a little nervous here, but okay. Let's do it.

Ash Patel: I'll go easy on ya. Jordan, what's the Best Ever book you've recently read?

Jordan Fisher: So the best ever book I read was probably a book called Never Eat Alone... And it's just mostly about networking. It's more driven for sales, but for me, it just kind of helps remind me to really stay in front of people, and connect with people, because my comfort zone is probably emailing people and texting them instead of talking to them and maybe getting together physically.

Ash Patel: Not anymore... Jordan, what's the best way you like to give back?

Jordan Fisher: I like to be connected. I don't like to write a check. So I give back mostly to people I know, that are in need... There's a woman that we just happen to be friends with, and her son had leukemia, and she had to quit work, and stay in the hospital with him, because when he's got leukemia, he's got no ability to fight off infections... So she couldn't leave. So we paid all her bills while she was in, and we've kind of taken in another person that my son is friends with... So the way I like to give back is to actually be personally involved with individuals live, and not just cut a check.

Ash Patel: Jordan, how can the Best Ever listeners reach out to you?

Jordan Fisher: Our website is My email is Jordan [at] So email me, the website, contact me... I love talking real estate, I love meeting people... Generally, I'm terrible about the outreach, so it's better when you call me. [laughs]

Ash Patel: Jordan, I've gotta thank you for your time today. First, thank you for your service and sacrifice in the military. We only touched on your experience... You've got to come back; we've got to deep-dive into some of the deals that you've done. We've talked a lot of high-level things, but I'd love to dive into some of these deals, some of the hard lessons learned, some of the wins... So if you're good, man, we're gonna send you an invitation to come back.

Jordan Fisher: I love it. I had a great time talking to you, Ash. This has been a lot of fun.

Ash Patel: Awesome, brother. Thank you again; just a great conversation. Best Ever listeners, thank you for joining us. If you enjoyed this episode, please leave us a five-star review, share this podcast with somebody you think can benefit from it. Also, follow, subscribe and have a Best Ever day!

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