Antoine is a repeat guest who appeared on episode JF1720. Previously, he talked about how it took him 9 months to find his first apartment building and today he shares how different it has been in finding new deals because his door has been flooded with multiple deals because people started to see he was serious and would get the job done.
Antoine Martel Real Estate Background:
- 25-year-old real estate investor
- Does 120 flips per year (turnkey rentals), owns about 100 units
- Based in LA, CA
- Say hi to him at https://martelturnkey.com/
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Best Ever Tweet:
“Controlling your growth is important, you can move very quickly but sometimes it’s important to slow down a little bit to see how things go” – Antoine Martel
Theo Hicks: Hello, Best Ever listeners and welcome to the Best Real Estate Investing Advice Ever show. I’m Theo Hicks and today we’ll be speaking with Antoine Martel.
Antoine, how are you doing today?
Antoine Martel: Very well. How are you?
Theo Hicks: I’m doing great. And thanks for joining us again. So Antoine is a repeat guest. He was on here about a year and a half ago. So as a reminder, he’s 25 years old now, real estate investor and he does 120 flips per year. He also owns 100 multifamily units. This is up from 20 units last time we spoke, so he’s gotten 80 more units since then. He’s based in Los Angeles, and his website is https://martelturnkey.com.
So Martel, do you mind telling us a little bit about your background and then what you’ve been up to over the past year and a half?
Antoine Martel: Yeah, sure. So thanks again for having me on the show again. It’s great to be back, and a lot has changed, a year and a half later… We’re doing around the same amount of flips per year or turnkey rentals per year through Martel Turnkey, but especially last year, I was focusing a lot on the multifamily acquisitions. As you can tell, to buy 80 units in one year was a lot for us, because it was multiple different properties. So I think when I first came on the show, I’d actually bought my first apartment building, and that was a 20 unit building. And I think I was talking to Joe about how it took me nine months of reaching out to agents, non-stop for nine months, every other week, contacting these agents to find that first building.
And then after the first building, it was like the deals were coming to me left and right. My email was blown up with deals next door to the building I had just bought. The word had got out that some rich guy in California was buying stuff in Memphis, and all these brokers started reaching out to me. And I’m by no means rich, it was just they saw that all the renovations being done on the property and they thought, “Oh, wow, maybe that guy can pay top dollar for my property,” and little did they know that they were selling it way under market value and that’s how we were able to buy so many so quickly. So that’s how we were able to buy 80 units last year. So that’s kind of what I’ve been focusing on in 2019.
And then 2020, we’ve kind of slowed down the apartment building side, and I’ve been again focusing back on the turnkey side. So trying to get us from 10 houses a month to where we are right now to 20 houses a month, by opening up a new market.
Theo Hicks: Wow. So you bought the 20 unit property, and then all the 80 units came from brokers just reaching out to you?
Antoine Martel: Yep. I didn’t have to go look for one deal after that. It was crazy. They say the first deal’s the hardest and that was very true in this case. I looked super-hard for that 20 unit. As soon as people saw that I performed and the kind of renovations I was doing, the deals were coming to me. And also, I had rapport with brokers now, where before I was cold calling these brokers, “Hey, my name is Antoine. I’m a real estate investor in California.” They get that phone call all day. But now I can say, “Hey, I own 123 Monroe Street in Memphis, it’s a 20 unit building. Do you know it?” “Oh, that’s you, huh? Yeah, I saw it. I drove by it,” because it’s a small part of town. So there’s very few brokers, but you have to get in with something. And that was my foot in the door then with all these other brokers, because they saw that I was legit. I had bought something and they saw the renovations that were happening, so they were kind of excited to send me other deals, because there’s a lot of dilapidated stuff that just hasn’t been touched since 1960, and I was coming in and giving it a 2020 refreshed look, and the brokers were excited to be a part of that.
Theo Hicks: So these brokers that are reaching out, had you talked to them previously and said, “Hey, I’m Antoine, I’m looking to buy deals” and they’re like “You know, maybe… I don’t know…”, or were they these brand new brokers that essentially were cold calling you now. Had you already talked to them before?
Antoine Martel: Both. So a lot of the brokers I’d spoken to in the past, just because I was literally cold calling everybody for those nine months when I was looking for that first building… I mean, I was on LoopNet. Anybody who had a LoopNet account in Memphis, I was calling them. So most of them I had spoken to in the past or sent an email, but most of them didn’t pick up the phone or didn’t reply to the email. Now, as soon as I bought that property, they saw it closed in the MLS, and it was made public that that building had sold, and they saw the renovations happening, then people started doing their digging and started replying and calling me like, “Hey, I saw you bought this. I have this off-market opportunity” etc.
So it was a little bit of both. Many of them had spoken to me in the past, and then the conversation had kind of changed a little bit because they were like, “Yeah, okay, now that I know you’re legit, I’m going to go start talking to some sellers that I know, because I think you’re going to close and you’re going to do what you said you’re going to do.”
Theo Hicks: And then in this part of town, you said, there’s a lot of dilapidated 1960s houses. Was this house that you bought, this 20 unit, one of the first homes in that area to be rehabbed, or had there already been rehabs occurring in that area?
Antoine Martel: This is Midtown Memphis, so a lot of the single-family homes have been renovated and updated and they’re selling for $200,000 or $300,000, which is pretty high end for Memphis, Tennessee. So that’s the single-family inventory. The multifamily inventory on the other hand, there was a bunch of new developments, like new construction projects, old parking lots just being leveled and being turned into dirt and then an apartment building going up… So that’s kind of what was happening, but nobody was going to these old 1960s/1970s apartment buildings by a Mom-and-Pop landlord and renovating those, and making those look nice, with tile flooring and stainless steel appliances and granite countertop, right? So that’s kind of what my niche was, because nobody was really touching that. Somebody was either flipping the homes and selling them for 200 or 300 grand. I wasn’t really interested in that. And then somebody was doing new developments. I didn’t have the cash or the people to be able to do that. So I was kind of right in the middle, which was doing the value-add small apartment buildings.
Theo Hicks: And then these more recent deals that you’re doing, are you just doing the exact same business plan, doing the same renovations to them, still have the same market rents, same level of renovations, things like that?
Antoine Martel: 100%. Exactly the same time. We’ve bought five buildings so far and all five of them have been exactly the same gameplan. Normally, we buy them, the rents are 400 to 500 bucks a month for a one-bedroom apartment. We’ll go buy those properties. Tenants, most of the time, just leave on their own accord after we start doing some exterior renovations. Then with the vacant units, we start renovating those, spend 10,000 to 20,000 bucks a unit, and then relist them for rent for $800 to $900 a month, so pretty much doubling the rents. And there’s a clientele out there that’s willing to pay for that, whether it’s college kids at the University of Memphis, or young working professionals that work downtown or in the Medical District.
Theo Hicks: That’s something else interesting you said there. So you’re not having to forcefully remove people, you’re not having to wait until a lease expires. They’re just leaving on their own accord?
Antoine Martel: Yeah, because most of these mom and pop landlords just have — it’s crazy… 70% of the leases are just month to month anyways. And many of these people, once they start seeing the renovations on the exterior like paint the property, we’ll repave the parking lot, we’ll build a fence around the property, they’re like, “Oh-oh, my time is ticking. There’s no way that I’m going to be able to keep this rent up. I’m just going to start looking for a place to move.”
So they’ll kind of do it on their own. I’ve never had to go and forcefully evict a bunch of people in an apartment building. I don’t like to clear a house, especially if it’s a 20 unit building and I have three or four units vacant. Okay, I’ll work on those units for a month… Because the renovations for these units take a couple of weeks. It’s not some quick paint job. It takes a couple of weeks, because – new flooring, new kitchen, new bathroom, everything’s been touched in the apartment. So it takes some time to get it done. I don’t want to have an empty apartment building, I’d rather be making 400 bucks from somebody than just having a unit sitting vacant.
Theo Hicks: And then do you know going into a property that the leases are month to month, and that’s one of the things that you are actually looking for in a property, or does that not matter as much?
Antoine Martel: It doesn’t matter all that much. We’ve just been kind of lucky with all the deals we’ve bought, that the majority of them are month to month tenants. If a property that I was buying and the numbers still work, but they were on leases, I think I could still make the deal work. it wasn’t really a big factor for me. It was just something about these mom and pop landlords that own these properties. They just didn’t really care about leases and didn’t renew them, and many of these people were month to month and they lived there for many, many years.
So I don’t think it would be a deal-breaker for me if they were on leases, unless they were on something crazy like everybody was on a two year lease and I couldn’t do anything for two years, then okay, that might be an issue… Because most of my projects for the multifamily and my goal is to make them just two years long, where I could buy them, renovate them the first year, increase the rents, and then year two stabilize it and do a cash-out refinance. That’s kind of what the goal is. So, it hasn’t been an issue thus far and I don’t think it would be an issue again, unless there’s some crazy lease in place.
Theo Hicks: So you’re doing the cash-out refi to get your own money back or do you have investors investing in these deals?
Antoine Martel: Good question. So the first two deals we bought were our own capital; no investors. I wanted to test it out, wanted to make sure I knew what the hell I was doing before I started raising money from other people. Then the three deals after that, they came to me and I didn’t really have enough capital to take them down myself, and I was like, “Okay, maybe I’ll start bringing in some people into these deals, and not do a syndication, but more do joint ventures with people,” because I’ve been investing in real estate for five years now, so people along the way have been reaching out to me to invest, and they have large sums of money, and [unintelligible [00:12:15].08] No, I want to do something bigger. So those people I reached out to, and “Hey, I have this apartment building, do you want to partner up with me on it?” And that’s how I was able to buy the last three buildings. So that’s what I’ve been doing with the last three buildings, is just raising money, joint venture just with people I’ve met and networked with along the way.
Theo Hicks: And then what does that JV look like? What’s the breakdown of the compensation?
Antoine Martel: So most of them — of course, it’s different for every deal, but let’s say for building the cash required is half a million dollars. So most of the time, we’ll come up with 50% of the funds, the investor will come up with 50% of the funds, and then we’ll sign on the loan, they don’t need to sign on the loan, and we’ll get 60% ownership and they’ll get 40% ownership. That 10% additional fee for us or kickback to us or equity for us is just for finding the deal, managing the deal and signing on the loan.
So that’s kind of how we’ve been doing it. Some variation of that, of course, every deal is a little bit different. But that’s kind of how we’ve been doing and working out these deals.
Theo Hicks: Perfect. And then when you say you’re managing it, so do you have your own management company or do you have a third party?
Antoine Martel: I’ve just been managing the construction process using our contractors, etc, etc. Property management companies, all third party. We’ve been using third party property management for the last five years and it’s amazing. I don’t really want to handle the property management side, so we just have these companies we’ve been working with for a while that managed our single-family homes, they manage our turnkey rental property clients, and they also manage the apartment buildings as well for us.
Theo Hicks: And then for the JV, these investors, are they just bringing the money or do they have other roles in the deal as well?
Antoine Martel: Well, it depends on how active or passive they want to be, because we have a system and process in place already. Many of them are going to be passive and still be in the decision-making process. And about like, “Hey, should we go high end?” Again, most of our units, we do them exactly the same, and same renovation. So they’re part of the decision-making process and they’re involved in the process, but many of them kind of just let us take the reins and they’re kind of just standing beside us along the ride.
Theo Hicks: Perfect. So since this is your second episode and you gave us your best ever advice last time, let’s do it a little differently this time and we’ll say, what is your best ever advice or the best thing that you’ve learned or the piece of advice that helped you scale from 20 units to 100 units, since we last spoke?
Antoine Martel: Great question. And I would say controlling your growth. I’m a young guy too, and right out of college, I bought my first house, my last semester at university, and now I’m doing 120 homes a year, 10 houses a month just a couple years later. And a lot of people would say that’s super fast, but to me when you’re in the weeds every single day, it doesn’t seem all that fast, because every day you’re pushing to the next level and doing stuff to get to the next level to do another house, another house, another house.
And I would say that you can move very quickly and you can blow up your business and buy a ton of apartment buildings, but sometimes you need to take your foot off the gas pedal, and you need to kind of slow down a little bit, see how things fall through or see how things go. And I think that with the whole COVID Coronavirus thing as well, it’s had a lot of people take their foot off the gas a tiny bit, just to see how things shake out. Because with the turnkey rentals too, we were nervous about people backing out of deals, we were nervous about our contractors not being allowed to go to the job site, even with the apartment buildings [unintelligible [00:15:29].13] be able to go to the job site.
So controlling your growth and don’t grow faster than what’s possible, because I think that’s what breaks a lot of people. So just controlling your growth and making sure that you’re growing at a steady rate.
Theo Hicks: Perfect. Okay, Antoine, are you ready for the best ever lightning round?
Antoine Martel: Yep.
Theo Hicks: Okay.
Theo Hicks: What is the best ever book you’ve recently read?
Antoine Martel: The best ever book, Sell It Like Serhant by Ryan Serhant.
Theo Hicks: If your business were to collapse today, what would you do next?
Antoine Martel: Man, I’d probably do it all over again. Let’s say I had zero dollars, I would probably use the people that I know with the money that they have, and I would probably go and do some BRRR projects with residential one to four units, buy them with their money, renovate them, refinance them, pay those people out and then just keep doing that until I had enough money coming in.
Theo Hicks: What are the four deals you’ve done since we last spoke? Which has been the best deal?
Antoine Martel: There was an apartment building in Midtown Memphis right next to Cooper young, literally a football field away; you can see Overton Square, and you can literally see the square from the apartment building. That’s the best deal I’ve ever done. That’s a lifetime legacy asset. It’s, in my opinion, the best location in Memphis, Tennessee ever. So that’s pretty exciting, and we’ve paid a pretty penny for it, but I think it’ll be worth a lot in terms of appreciation which is hard to get in a place like Memphis.
Theo Hicks: What is the best ever way you like to give back?
Antoine Martel: Giving back, I was on a mentorship call for somebody’s mentorship program last night… And I think that that’s a way that I like giving back and I wrote a book and I give it away for free. I go and try to educate and help people get started as much as I possibly can. I go on live streams on my Instagram all the time and post content every single day.
So that’s how I’d like to give back and just help, you know, help somebody who was like me sitting in a college dorm room trying to invest in real estate and trying to change their life and the family’s path and trajectory. So helping people get started.
Theo Hicks: And then lastly, what’s the best ever place to reach you?
Antoine Martel: Best ever place to reach me would be my Instagram. You can go shoot me a DM, follow me. All my contact information is there. My handle is @MartellAntoine.
Theo Hicks: Awesome, Antoine. Well, thanks again for joining us and catching us up on what you’ve been up to over the past year and a half. So again, you’ve gone from that 20 units, done four more deals and now at 100 units. And you mentioned that all of your deals have essentially come from these brokers that you had either spoken to in the past or had reached out to and been ignored. But once you had done your deal, you now had that rapport, as opposed of calling brokers, talking to brokers and saying, “Hey, I want to do a deal.” Now, you say, “Hey, I’m Antoine. I just bought that 20 building down the street or at this address.”
Antoine Martel: Yeah.
Theo Hicks: And because you had reached out to them in the past, you said you cold called every single person you possibly could or emailed them, you were able to get all your deals from the broker relationships.
Antoine Martel: Yeah.
Theo Hicks: So I think that’s something that would be very helpful for our listeners to know that… You spent all this time getting that one deal… So you could say, well, you spent nine months doing that one deal, but in reality, you spent that nine months getting all these deals.
Antoine Martel: Yeah, 100%.
Theo Hicks: If you hadn’t put that work in, you wouldn’t have gotten the four deals, which seem like they came pretty easy, but they actually didn’t. It took a lot of upfront work to do.
And then you mentioned that you do have your cookie-cutter system where you buy the property, you start rehabbing the exteriors, residents get the clue that things are changing and they start looking elsewhere, so you don’t even have to worry about evicting people or having those difficult conversations. You work on the vacant units first, you spend about 10 to 20 grand per unit, and then you will get everything renovated year one, stabilized by year two, and then do that cash out refi.
You mentioned your first two deals, you used your own money to prove the business plan and then after that, you expanded to using other people’s money through JVs, and you just reached out to people that you had met before who had reached out about doing deals and you didn’t really have something that met their criteria. Now, you did.
You gave an example, you said that you’ll put up half the money, they’ll put up half the money, you’ll sign the loan and then it’s like a 60/40 split. And then your best ever advice was to control your growth; not necessarily go at a slow pace, but go at a steady, manageable, sustainable pace and don’t feel like you have to go psycho and buy all the properties year one.
So, Antoine, it was great catching up. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.
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