February 13, 2022

JF2721: How This New Multifamily Investor Closed 4 Deals in First 6 Months ft. Amy Sylvis

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How do you gain credibility as a new investor? Amy Sylvis, an active investor in multifamily, developed a strategy that helped her close four deals within the first six months of her entering the commercial real estate space. In this episode, Amy shares how she sourced these deals and the methods she uses to build trust with investors and partners.

Amy Sylvis | Real Estate Background

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Slocomb Reed: Best Ever listeners, welcome to The Best Real Estate Investing Advice Ever Show. I’m Slocomb Reed. This is the world’s longest-running daily real estate investing podcast. Today, we have Amy Sylvis with us. How are you doing Amy?

Amy Sylvis: I’m amazing. How are you?

Slocomb Reed: Doing great, excited for this conversation we’re going to have. Amy is the founder of Sylvis Capital, which buys large multifamily complexes in emerging markets throughout the US with her investors. They focus on Class B properties with a value-add component. She is currently the GP of 276 units in Evansville, Indiana, 20 units in Huntsville, Alabama, 58 units in Clarksville, Tennessee, and 80 units in Augusta, Georgia. It took her close to 10 years to enter the commercial real estate multifamily space due to her cystic fibrosis. She’s now been on the GP side for seven months. Seven months and she’s already got four deals under her belt. Amy is based in Los Angeles. So you’ve had a pretty busy seven months, haven’t you?

Amy Sylvis: It helps to have partners, right? They say it’s a team sport, so – I don’t want no illusion that I’ve done this all on my own, but it’s been great.

Slocomb Reed: Well, tell us, Amy, what got you into commercial real estate?

Amy Sylvis: This is my favorite question. As you mentioned briefly in my bio, I’m not shy about some of the health challenges I grew up with. For those who don’t know what cystic fibrosis is, it’s a genetic illness, or essentially, the lungs kind of give out over time. From a very young age… This story is good, I promise. It’s not going to end up being a downer.

Slocomb Reed: Please continue. There is nothing about you right now that is telling me you’re a downer.

Amy Sylvis: I appreciate it. From a very young age, I kind of understood my mortality, but also had this really strong drive to be self-sufficient. So I searched and searched for ways to become independent, kind of a bigger, badder W2, that kind of thinking. I eventually stumbled on to multifamily real estate as a way to really decouple my ability to trade my time for money. As you can imagine, as it ties into health, knowing that perhaps one day my health might not be so great, this was a really exciting solution to support myself. So that’s a kind of a quick rundown.

Slocomb Reed: I think you said accidentally stumbled. I’d like to unpack that. How did that actually happen?

Amy Sylvis: On my journey — I used to work in biotech — I was excited to be able to find an industry where I could give back to others, especially having health challenges, knowing how important it is to be able to help others in their time of need, when they have bad health. I was always looking for the bigger badder job, as I mentioned, with a higher income. I went and I got my MBA, I took two years off to be able to do that… And wouldn’t you know, right after I graduated, I stumbled upon that purple book that we all know of called Rich Dad Poor Dad, randomly, at the Santa Monica library. My head popped off; I just couldn’t believe that there was such a thing as passive income and that was attainable.

Slocomb Reed: I have to give a shout-out to the Best Ever podcast really quick. I got my dad listening, and it wasn’t until he realized how many times I referenced Rich Dad Poor Dad on this podcast that he finally read it for himself. I’m so excited to be able to talk to him about it.

Amy Sylvis: Slocomb’s dad, good job!

Slocomb Reed: Yes. He’s already retired and has a great retirement and a great lifestyle that he thoroughly enjoys, so it’s going to be a different kind of conversation, but I’m looking forward to it, because it is a really important book. It’s been really important to me for the last nine years at least. You said it took you 10 years to enter the space, due to cystic fibrosis. Why 10 years? What was the reason for the delay?

Amy Sylvis: Thank you for that. Part of cystic fibrosis is chronic lung infections that require hospitalizations for two weeks at a time, often several times a year. Despite the energetic person that you see me as today, holding down a W2 while trying to do a side hustle of real estate, it just really ran my health down. It was even someone like myself, who thought I had superwoman powers, struggled to overcome. Thankfully, around two years ago, right before the beginning of the pandemic, a miracle medication came to the market for cystic fibrosis and really unlocked my ability to finally enter into the space. So it took a while but the persistence paid off for sure.

Slocomb Reed: So that’s 10 years before you participated in the general partnership of a deal, but I imagine that’s 10 years of studying, research, networking. Am I wrong?

Amy Sylvis: You’re spot on.  It’s all about laying the groundwork. Yeah.

Slocomb Reed: And then all of a sudden, you pop off, four deals in your first six months. How did that happen chronologically? Correct me where I’m wrong. It’s like a miracle drug, some sort of time-lapse, and then all of a sudden, all four of these deals at once. Were these all in the works at the same time? How did you come across all four so quickly?

Amy Sylvis: To your point about the timeline, the big exponential growth factor there was finding like-minded partners with similar values. I am an only child, and I learned very quickly that working with others, finding others, and that’s where Quattro Capital came in. I found Maurice Philogene; many probably recognize his name in this space. Our values aligned firmly that real estate is great for the money, money is not a bad thing, but really, it’s a vehicle to be able to buy ourselves time, own geographic freedom, and of course, be able to give to others. So once I was able to sync up with him with a deal that I had found, things just rolled as the other parts of Quattro Capital were able to surround me, and we would partner to be able to take down many of these deals.

Slocomb Reed: Nice. Evansville, Indiana, Huntsville, Alabama, Clarksville, Tennessee, Augusta, Georgia – so the South and the Midwest. How many different emerging markets were you looking in to end up in those four?

Amy Sylvis: Well, I’m sure many people can agree, it is a seller’s market, to say the least. So we looked very heavily at emerging markets. Obviously, it’s a little bit easier in the Southeast, and it’s just really a matter of understanding those demographics, but also understanding where perhaps not everyone was looking for deals. We were competing with institutional money… So it is, to answer your question, several emerging markets combined with great opportunity.

Slocomb Reed: Gotcha. In all of this so far, Amy, what has been your steepest learning curve? Whether that be an experience you’ve had, or a hurdle that you had to get over, or something that you had to sort out. What’s your biggest learning curve?

Amy Sylvis: I think the biggest learning curve was getting my first deal and finding my first deal. I’m sure many of the listeners can relate. When you’re the brand-new kid on the block, getting credibility, making brokers believe that you’re going to be able to take the deal across the finish line was something I really struggled with before I had the a-ha moment of how I could leverage a team and develop a mutually beneficial relationship with folks that already had experience.

Slocomb Reed: You bring up something that a lot of people, if not all people who get into this space, feel. I’m new, no one’s going to take me seriously, I don’t have any experience, and I need to convince different kinds of people, investors, lenders, brokers that I’m going to be able to perform in a space where I’ve never operated before. Give us some of the specifics of what that looked like for you putting your first deals together, with the understanding that all of our guts turn hearing you say that, because we’ve all had that same feeling. Give us some specifics about getting it done for your first deal.

Amy Sylvis: Happy to. So the biggest pieces I alluded to was finding partners. The way I found Quattro Capital and partners was by figuring out what their needs were. I think all of us have the thought process of “This is what I need, this is where I want to go”, but I really tried to flip it on its head and figure out what do these folks, who I think are amazing, have a great experience, and great knowledge, what do they need that I could possibly provide, and give freely with an abundance mentality, and knowing that that would eventually lead to them knowing, liking, and trusting me, because I was able to put them first and provide value there. I don’t know if that’s specific enough, but I’m happy to keep going if you’d like to learn more.

Slocomb Reed: If I were trying to give that answer a punch line, Amy, it would be that you networked your way out of the newbie dilemma.

Amy Sylvis: Perfectly said.

Slocomb Reed: Cool. Why Evansville, Huntsville, Clarksville, and Augusta?

Amy Sylvis: All emerging markets, all at various kinds of stages of emergence. But we love looking at job growth, first and foremost. I know that of all of those that you mentioned, Evansville probably doesn’t pop up as the sexiest market everyone’s thought of right now… [laughs] But we see it as being likely growing on the scale of Chattanooga. I think Chattanooga [unintelligible [00:13:04].07] came in, and Toyota set up a big plant. It’s kind of a similar size there and the state of Indiana is investing massively. So that brings me to my next point, is the state, our local governments investing in infrastructure? Are they on top lists where folks want to live? Is it affordable? So we look really heavily… And b we, it’s a little bit of an obsession that I leave with the folks I work with, just because we know the power of what an emerging market can do to appreciation. So that’s what they all have in common. They’re all within our chosen property managers’ sphere of operation as well, which was an important piece.

Slocomb Reed: Gotcha. Amy, within your partnership, what do you specialize in? You said you really like analyzing what’s happening in the job market in these areas. What is your steak and potatoes?

Amy Sylvis: I would definitely say good market research, as you mentioned. Also, I do bring deals, I find deals, I build relationships with brokers and sellers, and I dabble in capital raising. I’m out here in Los Angeles; as you could imagine, not a ton of people are interested in investing here, which I get, I’m not either… So providing opportunities for folks that are looking to diversify outside of the stock market and paper assets. So I do a little bit of everything, to answer your question. I know that’s not the straightforward bread and butter maybe answer you’re looking for, but I’m a little bit of a generalist in that sense.

Break: [00:14:32][00:16:41]

Slocomb Reed: Market analysis and capital raising. In your backyard, you’ve got a great opportunity for capital raising, I would imagine. I don’t know where your literal backyard is, but being in Los Angeles should put you in a good opportunity for capital raising. I’m in Cincinnati, Ohio; you’re in a better spot for it than I am at least.

Amy Sylvis: I used to live there. It’s a great city.

Slocomb Reed: Oh nice, cool. So these emerging markets in the South and in the Midwest… Amy, we’re talking about markets where you’re projecting job growth. Are you underwriting to the five-year hold? Is the plan to hold these for about that amount of time and then sell?

Amy Sylvis: I love that question. It is. We really go by what our investors demand, so the five year hold is kind of the industry standard in that respect. That being said, as probably others have seen that are invested in emerging markets, we’re reaching some of our five-year proforma’s in 18 months. We’ve got a portfolio in Knoxville, Tennessee that we have on the market, we think that markets tapped out, and we think it best serves our investors to sell at this point, even though it’s a little bit of a shorter turnaround, and go find the next emerging market. So the plan is five years, we don’t ever promise anything short of that. But sometimes circumstances arrive, like in Knoxville, where we go ahead and have a disposition early.

Slocomb Reed: Gotcha. Underwriting to the five-year hold. I am a buy and long-term hold investor, Warren Buffett style, buy and don’t sell. I’m happy to trade up, but I’m not underwriting personally to a five-year hold, I am underwriting to what my grandkids will inherit. So Amy, you said Evansville, Indiana feels like Chattanooga, Tennessee 20 years ago. When I hear that, that makes me want to buy in Evansville, Indiana and hold it for 20 years. I have a feeling I know your answer already, but I’d still like your opinion on this, because you’re in this deal. Why not buy something in a market like Evansville and just continue to see that long-term appreciation, rent growth, increase in cash flow? Is it simply that you need to provide an IRR to your LPs and the sale is going to be what does that?

Amy Sylvis: I love this, because it shows the nuances of how you can customize these deals based on what the GPs want and what the LPS want. And your point is well taken. I think all of us want that long-term, multi-generational wealth. There are several strategies. We say in our PPM and we let our investors know that they may be refinanced out of the deal, as opposed to us selling; that’s one option. As you mentioned, some folks need liquidity; LPs aren’t happy with a 10-year hold.

The other thought process is as you think of an emerging market and kind of the slope there, without getting too mathematically in depth, you really have kind of a little bit of an S-curve. So you have appreciation and rents that are increasing at an increasing rate, and then you have them kind of roll-over and they’re increasing at maybe a decreasing rate. That doesn’t mean that they’re decreasing, it just means that the rate of change is decreasing.

We love to hit these markets when they’re increasing at an increasing rate. So if we can be in the market during that cycle, or that part of the cycle, and then find the next emerging market, and keep hitting that, we find that our investors appreciate that market identification and being in the emerging market at the most lucrative point. That doesn’t mean that there will continually be growth in Evansville and we won’t stay there in some sort of capacity, but at five years, we want to find the next Evansville that’s taking off and that is really emerging like that.

Slocomb Reed: That’s a really helpful explanation, Amy; thank you. The trajectory, the acceleration rate of rent growth; is the rent growth accelerating or decelerating while still growing. That makes a lot of sense to hit that point, where you see the top of the bell curve coming even if rents aren’t going to go down, you see that the rent growth is slowing, and that’s a good time to get out. Because it also means with rent growth and with projected future rent growth, it’s still going to be an easily saleable asset, because somebody else is going to want that growth.

You said it’s in your agreement that you may refinance LPs out. Talk me through the logistics of that. You as the GPs decide you want to hold on to an asset and go ahead and deliver the ultimate return to the LPs that they were looking for. Walk me through the step by step of how you make that decision, that that’s what you want to do, and you decide this is an asset you want to hold longer, and what is it that you’ve agreed to disperse to your LPs in the event that you make that decision?

Amy Sylvis: Candidly, we’ve never done it before. It is something we have on the table, we like to be able to be fully transparent about what can go on… But what I just mentioned to you about the emerging market equation – we want to participate in that, too. We know full well that the market can go where it goes, and sometimes scenarios are difficult to think of five years in advance, so we give ourselves that option. Above and beyond that, I wish I could provide you with some experience in that respect, but we just haven’t reached that point. We’ve always decided to sell up until this point.

Slocomb Reed: So let’s talk about it hypothetically then. Again, Best Ever listeners, I’m asking the question that I want the answer to, and bringing you along to hopefully get some value. Thinking like a long-term hold person myself, if I were engaging in deals, underwriting to the five-year hold the way that you are, I would be excited at the opportunity of being able to deliver the promised return and retain the asset. Speaking hypothetically, what are the hypothetical conditions, Amy, in which you see that happening with one of your assets? Not necessarily one of the current ones, but forecasting into the future? Under what circumstances do you refi, deliver on your promises to your LPs, and keep the asset?

Amy Sylvis: So I think the biggest scenario, of course, is serving LPs. We’re in constant communication with them. If they want liquidity, if they want five years is up for them, everyone has individual circumstances. So if that’s kind of the general thought process and theme that we get from our investors, then that’s the number one priority. We in the GP team felt like it would be good idea to hold, but our investors are telling us that they want money back – we can have that conversation.

Something else to keep in mind is we’re all kind of looking at these cap rates going, “Holy moly, how much lower can they go? What’s going on in the market?” Hypothetically, I think we’ve all had the issue of “Yeah, it’s great to sell. We’d be able to realize a lot of appreciation, but where are we going to put the money? Where else are we going to put it?” Ideally, finding the next emerging market is great, but I think if we are unable to find something that makes business sense to redeploy, 1031 into, or something like that, holding the asset while also giving our investors back their return I think could hypothetically make a lot of sense in that scenario.

Slocomb Reed: Got you. One last thing before we move to the last section of this interview, Amy… The more distressed the asset is when you purchase it, the more opportunity you have to force appreciation. So you focus on B-class value-add in these emerging markets, and you said you have been able to reach your five-year expectations in 18 months. Have you considered purchasing more distressed assets that require more activity on the front end in order to produce a higher return? Or possibly produce appreciation so much that you could refinance out your LPs, deliver their return, and still leave some equity on the table for yourselves to get a loan instead of having to sell?

Amy Sylvis: Absolutely. The asset I mentioned in Augusta is just that. It is a full gut… A heavy-lift is a light term for what’s going on there. The previous owner was put in jail for fraud, there was some interesting element that we’ve had to work through to kind of turn over the tenant base, and we’re pouring in quite a bit of money. So yes, we do occasionally dabble in that type, exactly what you mentioned. There is some great appreciation we can force there, but the flip side of it is we’re in inflation, we’re in the highest inflation we’ve seen in 40 years. That’s a wild thing to be able to project, control costs, and still be able to do all that. So it can be done, but even though I dye my hair, I’d still like to not be fully gray with all the stress there… [laughs] So we’ll do it every once in a while.

Slocomb Reed: Alright. Amy, are you ready for our Best Ever lightning round?

Amy Sylvis: Let’s go.

Slocomb Reed: Amy. What is your Best Ever way to give back?

Amy Sylvis: I love an organization called Emily’s Entourage. I mentioned how life-changing the new cystic fibrosis drug has been for me over the past two years. Unfortunately, there are about 10% of people with cystic fibrosis that do not benefit from this medication. As you can imagine, the devastation that we all feel for those folks who are “left behind.” We are determined and we focus every day to making sure that we find something for them. Emily’s Entourage is who I dedicate my time to, giving back to make sure my dear friend Emily Kramer-Golinkoff and the other folks in that part of the cystic fibrosis community get to enjoy the health that I do.

Slocomb Reed: Wow. What is the Best Ever book you recently read?

Amy Sylvis: I just reread the Creature from Jekyll Island for the fifth time. It’s amazing how things play out in what I read five years ago, now fast forward five years ahead, how poignant it is. I can’t read that book enough, I can’t recommend it enough, it is eye opening, and I recommend it to everybody.

Slocomb Reed: It’s a long book, though. Make sure you have an extended weekend or some long amount of time that you can dedicate to reading it, but there is high-quality information in there, I assure you. Definitely, it’s a powerfully opinionated book, but it is also very eye-opening as to how our federal monetary system works. Very helpful. What, Amy, is your Best Ever advice.

Amy Sylvis: Best Ever advice is to have the Go-Giver mentality. I don’t know if anyone’s read that book by Mr. Burg.

Slocomb Reed: Another good one.

Amy Sylvis: Another incredible one. It is such a powerful way to live. Obviously, it involves empathy, but you’re really unstoppable when you think about others before yourself, how you can serve others. Whether it’s in business or in your personal life, there’s just a limit to what can be done and what good will come to you when you care about the needs and wants of others. That’s my Best Ever advice.

Slocomb Reed: Amy, where can people get in touch with you?

Amy Sylvis: Sure. I love LinkedIn and I’m very active there. Please get in touch with me over on LinkedIn. Of course, my website, sylviscapital.com. That’s it.

Slocomb Reed: Awesome. Well, Amy, thank you, this has been a great conversation. Best Ever listeners, thank you for tuning in. If you enjoyed listening in on this conversation, please do follow and subscribe to the podcast. Leave us a five-star review and share this with someone who could benefit from what Amy has shared with us today. Thank you and have a Best Ever day.

Amy Sylvis: Thanks so much.

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