May 15, 2023

JF3175: One Powerful Lending Solution Most Investors Overlook ft. Senate Eskridge



Senate Eskridge is a professional multifamily investor, syndicator, and real estate investing coach. His portfolio consists of nearly 1,800 doors of value-add multifamily properties across Idaho, Oklahoma, and Texas. In this episode, Senate discusses why he sources his loans from local credit unions, how he’s battling the rise of rehab costs, and which technology tools he’s using to communicate with investors.


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Senate Eskridge | Real Estate Background

  • Professional multifamily investor and syndicator who has enjoyed helping people learn how to invest in diversified assets.
  • Portfolio:
    • GP of 595 doors
    • LP of 1,200 doors
  • Based in: Twin Falls, ID
  • Say hi to him at: 
  • Best Ever Book: The Power of One More by Ed Mylett
  • Greatest Lesson: Make sure you have full faith and understanding in everything your lender says they can do.


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Slocomb Reed: Best Ever listeners, welcome to the best real estate investing advice ever show. I'm Slocomb Reed, and today I'm joined by Senate Eskridge. Senate is joining us from Twin Falls, Idaho. He's a professional multifamily investor and syndicator who enjoys helping people learn how to invest in diversified asset classes. In his current portfolio he's a general partner in almost 600 doors, and a limited partner in around 1,200 doors with some of those limited partner positions also being in his general partnership deals. Senate, can you tell us a little bit more about your background and what you're currently focused on?

Senate Eskridge: Sure. I'll give you the short version. I started in single family way back in 2009, somewhere in that range, and did a lot of different things - fix and flips, BRRRRs, buy and hold, moved into small multifamily, and I quickly figured out that I wasn't going to be able to make the kind of income I wanted. I wanted passive income. And what I created for myself was basically another job. So I needed to make some kind of a shift. In 2020 I decided to move into multifamily, and I started selling all of my single families, and moving everything I could into multifamily.

To learn and to get as good as I possibly could, I joined a mentorship group, and started going to every conference I possibly could, including ones like Best Ever...

Slocomb Reed: Nice.

Senate Eskridge: Great conference, by the way. And later I actually became a coach with that mentorship group, where I actually now teach people how to buy multifamily and invest. But I quickly also figured out that I was going to run out of my own capital, and so I started now syndicating, where I can help other people invest into complexes as well. So that's why I say I'm a professional syndicator, multifamily buyer, and also real estate coach.

Slocomb Reed: Nice. Of your syndicated deals where you're in the general partnership, how many of them have gone full cycle?

Senate Eskridge: Still none. Like I said, I didn't start till 2020, so I've got a couple of them there after the peak of that business cycle, and they'll be going full cycle in the next year to 18 months, as long as the market cooperates. But one of the greatest things about what I've done so far - I've had long-term fixed rate debt on everything, so I'm not in a hurry to sell, and wait for the market timing.

Slocomb Reed: Let's talk about that long-term fixed rate debt for a moment, because that has not been a popular position to be in until it was too late to get it. Are you primarily a value-add investor with your multifamily deals?

Senate Eskridge: I am value-add primarily. So the answer is it wasn't on purpose, actually. I had two different times that I tried to use a bridge lender, and the bridge lender couldn't perform. And instead I went with local credit unions. I am a huge fan of credit union loans. There's so many advantages to them. They're much better for the investor, they're much better to work with, they're much better for me as a partner. They do have pros and cons, but they give me better loan to value, they give me better terms, so better rates. They never have a prepayment penalty, and they're very flexible if I need something. I just call up my local lender and ask for this or that, and they help me out.

Slocomb Reed: Going to a local credit unions, what is the property size or the deal size that you're getting your lending from them for?

Senate Eskridge: That's one of the cons, they're generally smaller loans. But every credit union has a different legal lending limit. The one that I use currently, up to 14 million is their limit. That's one that I use a lot. But there's a couple others that I'm building relationships with that can go all the way up to 20 million. There's also a company that will help you pool multiple credit unions together, where you can go over that 20 million mark, but I've never used them. But they are out there.

Slocomb Reed: So how big are the loans that you're getting where you're getting these terms?

Senate Eskridge: My average loan size is somewhere between 8 and 9 million right now.

Slocomb Reed: Average loan size 8 and 9 million. So what size property is it that you target and that you currently have in the portfolio, and what markets are these in?

Senate Eskridge: Different markets have got a little bit of different size. I do some deals in Idaho where I live. Some of the deals are harder and harder to find in Idaho, but when I find a great deal, I still buy it. My average in Idaho is around 30 units. But I also buy in Oklahoma, around 100 units, and Oklahoma is what I target. Also in Texas, inside the Texas triangle, and we're probably around 10 million in Texas, 75 to 100 doors, somewhere in that range.

Slocomb Reed: What is it that attracted you to those markets?

Senate Eskridge: Well, Idaho, because I live here. I can drive right down the road and touch it.

Slocomb Reed: Of course, of course.

Senate Eskridge: But I like to diversify. And in Texas, I believe that this is one of the fastest-growing and most stable markets across the country. And it's going to continue to grow, because it's very attractive to businesses, it's very attractive to residents. People are moving to there, not away from there. And then Oklahoma - I like all sorts of those Midwestern states for more cashflow. They have a higher cashflow on a month to month basis. A little bit lower on the appreciation maybe, but they help us pay the bills today.

Slocomb Reed: That makes a lot of sense. Of your 595 doors, how many properties is that?

Senate Eskridge: 12 properties.

Slocomb Reed: Gotcha. And is that then 12 different syndications you've done since 2020?

Senate Eskridge: Yes.

Slocomb Reed: Within your general partnership portfolio, Senate - and I'm talking about the current portfolio, not your acquisitions activity - how is it that you all are experiencing the changes in the market in 2023?

Senate Eskridge: Well, the changes that we're going through are definitely different -- our underwriting is completely different, and how we're underwriting things are completely different. Like everyone else, we're seeing higher interest rates, and because of that, we've got to be a lot more aggressive with our price. And one of the things that I'm really --

Slocomb Reed: Senate, I'm talking about the portfolio that you have currently, the 600 doors under management - how is it that you're seeing that the operation of your current portfolio... Are you seeing any changes between now and when you acquired, two and three years ago? For example, first of all, kudos to you for the fixed rate debt. We don't have to talk about what's happening to your interest rates, so that's awesome. But utility costs are highly volatile right now. Is that something that you are feeling with your current portfolio? And are there any other things happening nowadays that you are experiencing have an impact on your portfolio, whether positive or negative to the bottom line?

Senate Eskridge: Thanks for clarifying that. So there's a couple of things. You mentioned interest rates - we had a couple of properties that we were planning to do refinances for, to return some cash to investors. So we've obviously tabled that; there's no sense in going from a rate of say four or five, to seven; that just doesn't make any sense. So a lot of those things are on hold. As far as issues and things that we're facing, one of the biggest things was the rents grew a lot faster than we originally anticipated in several markets. So for a lot of time, we were having a hard time finding the ceiling. And now, over the last several months, that's starting to taper off. In fact, I would say a couple of our properties even, the rents are above market. So we're trying to feel that out, where we want to naturally bring that back down, to be right at the top of the market. Because you don't ever want to be too far above, because then you're never getting it rented


Slocomb Reed: Vacancy increases, you get frustrated, you have angry conversations with your property manager... I'm a property manager, so I'm familiar.

Senate Eskridge: Yeah, exactly. So that was one of the biggest things, was the rent escalation was really fast. Another thing that we're seeing in some markets is the volatility of insurance costs. And when we go to do the insurance renewals, even when we don't have claims, or any of those types of issues, when they're coming back and giving us that renewal cost, they're significantly higher than planned. Luckily, that's been offset by that rent increase we just talked about... But there's been cost escalations all over the place. And they're balancing out. Luckily for us, we're very conservative with our cash positions, we always make sure we have enough cash to weather virtually any storm... And we're also very conservative with our loan-to-value, so that our breakeven occupancy is really low. So they're high-performing properties. So those are not really issues.

As far as on the good side, I truly do believe that when we complete our business plan this time next year, I think the rates are going to start coming back down. That's my crystal ball. About the time the election season starts, I think we're going to start seeing some rates come back down, and that'll be right about the time we're going to be exiting some properties. That'll be a really good time for us.

Break: [00:10:06.22]

Slocomb Reed: Senate, back to the expenses that you've seen, the costs that you've seen increase dramatically... With the 12 properties in the portfolio, where is it that you have seen the cost of insurance increase the most, and where is it the least?

Senate Eskridge: It's interesting. So in Idaho, it's very little, the insurance increase. It's been almost non-existent; we had insurance at state level. In Texas though, we're seeing a lot of increases coming across the board, especially on the coastal cities in Texas.

Slocomb Reed: That's the answer that I really expected, that I think all of our listeners expected as well. I still wanted to ask, though. What other expenses have you seen increase? I mentioned utilities; is that someplace where you're seeing costs rise? Labor, anywhere else?

Senate Eskridge: Yes, both of those things - utilities have gone up, labor has gone up... But the biggest surprise for me across the board, across the entire portfolio is the rehab expenses, just in general. So the flooring has almost doubled in price I feel like over the last couple of years. And with the labor, it's not so much the labor cost necessarily like per hour, it's what you have to pay to get somebody to just show up. It's very difficult to even find labor to come and do these tasks. And it's an interesting concept to me, because I don't understand where all the workers are; we have people that complain about not having any jobs, but then it's hard to find the workers. That would be one of the biggest challenges that we've faced in that regard.

Slocomb Reed: Both the material expense and the labor expense, and the availability of labor in general. I definitely resonate with those things as well. Cost of renovation being the most surprising, cost of insurance... Just a couple more questions on this line. Timing-wise, how have the revenue and expenses of your property increased in correlation to one another? Were you experiencing significant rent increases, and then the expenses went up? Was it the expenses first?

Senate Eskridge: The rents went up first, and the expenses have been lagging behind. And part of the reason for that is we've got very good professional managers that really keep a tune to that maximum rent that we can charge. And when I say maximum rent, I also mean maximum income, revenue in general. So they monitor things like utility billback, and they're always looking for things to increase the income, such as Internet packages, and concierge services like valet trash, those types of things. We're always looking for ways to maximize the revenue of each property. And as I mentioned in the earlier parts of this conversation, we push those rents so hard to make sure that we're at the top of that market. And now those have peaked out. So they're starting to level across the portfolio, and now those costs are starting to rise and catch up with that.

Slocomb Reed: So there were some pretty good months in there, where the rents were going up before the expenses. It sounds like you guys put some of that money in the bank to sit there for the volatility we're experiencing now. On that point, actually, Senate, within your general partnerships, do you co-GP? How big is your team, and what are your primary responsibilities?

Senate Eskridge: My primary responsibilities are inside the contract to close portion. So once someone has found a deal, and then I take it all the way to the close, setting up all the legal aspects of deal, things such as PPM, the portals, the PSAs, all the legal structure. I help set everything up so that the investors have the best possible relationship, or experience through the relationship. That's one of my key components.

And then after that would be investor relations. I really focus on making sure that my investors have a great experience. I want to make sure that they feel like they're being treated with a white glove. So those are my two specialties. As I said, contract to close, and then the investor relations. Some people also call that a capital raiser; that's one of the jobs of an investor relations person, is to help people invest into a deal. And then as far as the team goes, I actually work with different teams in different areas of the country. And I do that on purpose, because you've got to make sure that you've got really good, solid boots on the ground that can run the operations on a day to day basis. And I've worked really hard on developing those teams. So who I work with in Idaho might be a little bit different than who I work with in Oklahoma, for example.

Slocomb Reed: On that investor relations topic, Senate, how is it that you are communicating with your investors right now? What's the platform? What's the frequency of your communication right now, considering all of the variables that we're experiencing change in the moment?

Senate Eskridge: I focus really hard on leveraging really awesome tools to make sure that I'm staying in touch with all of my investors. My favorite portal is Cashflow Portal; this is the tool that helps me help the investors put all of their money into every deal. It's got a great program for helping my investors get there, like a landing page where somebody can go in and invest. It also has built-in signature programs, so that when they're filling out the PPM, or the legal documents maybe - it's a better way to say that - for each individual deal, it helps them all the way through that process. And then that is the same tool that I use for follow-up communications going forward, where I can send investor updates on a monthly basis. And I do think that that's the best frequency, is at least one time a month, where you're sending out what's happening on their property with their investment.

And then finally, something that you didn't ask, but that's also the portal that I use for distributions. When I go to give somebody money. I also do that through that same portal. And my frequency on that I prefer is quarterly. I think it's a lot better to do everything on a quarterly basis as far as distributions go.

Slocomb Reed: Quarterly distributions, that makes sense. And again, your frequency on communications with your LPs?

Senate Eskridge: Monthly.

Slocomb Reed: Monthly. Gotcha.

Senate Eskridge: Monthly communication and quarterly distribution.

Slocomb Reed: That makes a lot of sense. Senate, are you ready for the Best Ever lightning round?

Senate Eskridge: Yes, let's do it.

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

Senate Eskridge: Best Every book I've recently read is called "The Power of One" more by Ed Mylett. This is a very actionable book. Unlike a lot of other books that are very high-level, and don't give you a lot of actual meat and nuggets that you can go use, this thing is chock-full of actionable things inside every single chapter that you can use to change your life. So "The power of one more" by Ed Mylett.

Slocomb Reed: Senate, my last interview also recommended "The power of one more" by Ed Mylett. I read it recently, I love it, and now I listen to his podcast. What is your Best Ever way to give back?

Senate Eskridge: I give back through an organization called the Shriners. I'm a mason and a Shriner,a nd we really focus on the Shriners Hospital for Children. They help kids with burns, and orthopedic limbs, those types of things. I love the ability to give back to the kids through the Shriners organization.

Slocomb Reed: Senate, thus far in your syndication experience, what is the biggest mistake you've made, and the Best Ever lesson that resulted from it?

Senate Eskridge: Well, the biggest mistake I made was actually using a bridge lender, which is the reason I switched to credit unions. So let me tell you just a quick story behind it... We were using a bridge lender that was giving us unrealistic terms, that just made the deal absolutely amazing... And they really sold us through the loan application process that they were going to be able to do all these fantastic things. They gave us things that probably should have been red flags, that we said, "That's too good to be true." And we got to the very end, and they said, "Oh, I'm sorry, we actually can't do all of these different things."

So the mistake was believing a bridge lender when they gave us unrealistic terms. And the best advice I would have to say with that is make sure that you have full faith and understanding of every single thing that your lender says they can do, and get it in writing.

Slocomb Reed: On that note, that being the lesson you learned from the mistake, what is your Best Ever advice?

Senate Eskridge: Look into local credit unions for commercial loans.

Slocomb Reed: Last question - where can people get in touch with you?

Senate Eskridge: The best place to find me is on my website. It's All of my social links are there. I am on all the social media platforms, but on you can connect with me in all the different ways. You can even go on that site and find my Free Investor 101 course.

Slocomb Reed: Those links are in the show notes. Senate, thank you. Best Ever listeners, thank you as well for tuning in. If you've gained value from this episode, please do subscribe to our show. Leave us a five star review and share this episode with a friend you know we can add value to through our conversation today. Thank you, and have a Best Ever day.

Senate Eskridge: Thanks for having me, Slocomb.

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