In this episode, Neil Henderson and Clint Harris talk to Tim Vitale, a multifamily real estate syndicator and founder of Upside Capital Group. With a focus on time, financial, and location independence, Tim discusses his journey into the world of real estate syndication, his strategies for analyzing deals, and the importance of building strong relationships with investors. Tim also shares his insights on debt coverage ratio, timeframes, and how to choose the right operator for a successful investment.

In This Episode, We Cover:

[03:27] How Tim Vitale got into real estate syndication

[09:36] Importance of understanding the market and job growth

[12:16] Analyzing deals and the importance of debt coverage ratio

[15:31] Timeframes and protecting your investments

[27:45] Alignment of interests and choosing the right operator

[28:49] Advice for passive investors in multifamily syndications

[31:12] Connecting with Tim Vitale and Upside Capital Group

Books and Resources Mentioned:

Truly Passive Income: trulypassiveincome.com

Website: Upside Capital Group

Facebook Group: Making Moves Real Estate Community

Support Our Show Follow us on Twitter @trulypassive Follow us on Facebook at TrulyPassiveInc Follow us on TikTok @TrulyPassiveIncome Sign up for our FREE Passive Investor Course

Pithy, Shareable Quotes:

"Real estate over the long term, you're gonna win. It's the people that get burned in the short term because they don't have time on their side." - Tim Vitale

"Go build a relationship with the person that you wanna invest with. Spend time in person with that person." - Tim Vitale

Coming Up Next on Truly Passive Income:

Mentioned in this episode:

Sponsored by Nomad Capital

Looking to invest in self-storage? Nomad Capital converts vacant big-box retail spaces across the Southeast into climate-controlled storage, with a target of 20% annual returns. Our fund combines low leverage and high depreciation for strong growth and valuable tax benefits. By buying properties at deep discounts, we often achieve break-even at just 40% occupancy. Join a proven model in a resilient asset class that continues to deliver, even in today’s market. Learn more at nomadcapital.us/tpi. Accredited investors only.

​ Neil Henderson: Hey everyone.

This is Neil Henderson and you're listening to the

truly passive income podcast.

This show demystifies the world of passive real estate investing in syndications for

people who want to be financially free so they can spend more time doing what

brings them joy with the people they love.

Today, we're talking about multifamily syndication with Tim Vitale, who in just

two years has built a portfolio of over 700 doors valued around $87 million.

We'll discuss the importance of finding the right operator in a syndication,

evaluating those potential operators and finding the best financing that

leads to the best returns for investors.

Welcome to the Truly Passive Income Podcast.

I'm Neil.

And I'm Clint.

Let's get started.

Today our guest on the podcast is Tim Vitale with

Upside Capital.

he's gonna be talking to us about multifamily syndication today.

Tim, how are you?

I'm good guys.

Thanks for inviting me to do this.

Yeah, thanks for coming on board.

Tim, we met locally here in Wilmington of all places.

but the actual, the first time that I heard about you, was, I don't

think you've heard this story.

I've.

Gotten into syndication.

Neil and I are are partnered with nomad capital and we're raising capital

for self-storage syndication deals as well as investing in our own deals.

And I was talking to some different friends of mine, a buddy of mine at

Daniel Island, Charleston, south Carolina, called me and was like, man, I don't

know if you've heard about this Tim guy, there's some guy up in Wilmington that's

buying and selling apartment complexes.

And like my neighbor came to me, was like, man, you heard

about this guy in Wilmington?

And he's I've got a buddy in Wilmington too, He called me from Charleston.

And that's when I was like, who's this guy?

And I looked you up and we have 20 mutual friends.

And I was like, okay, we gotta meet.

And then next thing you know, you and I were one of the same real

estate meet ups, the small world.

Yeah, I don't think I heard that before.

I actually, I can't remember really the first time we had come across paths.

point is you're Mr.

Worldwide, so doing big things.

Mr.

Wilmington and Charleston, you mean

Tim, tell us a little bit about yourself and your background, your

former career, and what you're doing now.

Cool.

Yeah.

Thanks guys.

so I'm originally from Connecticut and I graduated from UNC Wilmington in 2012,

with an accounting and finance degree.

So I worked, in Manhattan for a couple years, and then for that

same company in Manhattan, I worked remotely for them from Charlotte.

So I spent about eight and a half to call it, 10 years with another

job, included about 10 years in the corporate finance, accounting world.

And I had worked up to assistant VP of finance and accounting at that Fortune

500 company, and I learned a ton of valuable skill sets from that W2 job.

Learning how to, build budgets and analyze businesses and, profit

statements, P&Ls, income statements, balance sheets, all that kind of stuff.

The important stuff when it comes to evaluating commercial real estate.

so I found my way into commercial real estate because I didn't really

like the single family space.

I bought a condo and I was making like $150 a month on it or whatever.

It's I'm never gonna get to where I want to go at this space.

And, My friend of mine had introduced me to commercial real estate and I

started looking down that path and just never looked back, cut the cord on

the single family stuff, and just been doing commercial real estate ever since.

So you had a good job as an assistant VP of Finance,

fortune 500 Company in New York City.

Clearly you had an interest in real estate or we wouldn't be talking.

What finally made you leave your job to pursue commercial real estate?

Yeah, so I ended up leaving my job to pursue commercial real estate.

And in order to answer that question, you gotta backtrack just a little bit.

when I had got promoted to Assistant vp, I thought that this is when I was gonna make

it, So that's when you're making the, 50, a hundred percent raises and I was gonna

start making buku bucks and be able to, buy the house on the water and the nice

boat and all that stuff, and, I went from making $99,000 a year to $103,000 a year.

I was like, wait a second.

This is not the Kool-Aid that I had been sold.

so that was late 2018, early 2019.

and then, I started down the single family path.

I did that for about 11 months, and then when I found commercial real estate at

the beginning of 2020, I cut the cord with a single family stuff, like I said.

Went all in on commercial real estate and what ultimately pushed me to leave

my job before I was really making any type of money in commercial real estate

was we were all working from home during the pandemic and, they finally told me I

was gonna have to go back to the office.

And I looked at it and I said, I'm gonna get fired for not doing my

job if I go back to the office.

So I fought for staying remote and they weren't having it.

So that was on a Friday, on Monday, put in my notice and I said, I'm leaving.

My wife had suggested over the weekend, let's sell the house and

downgrade and sell everything and live off the equity that we have in

our house and we'll just go all in on the business and try to make it work.

So ultimately, Covid is the main reason that pushed me outta my job.

If it weren't for that act of having to go back to the office full-time

when I didn't want to, I probably would still be working my W2 job

early 2020.

What a bold time to get into multi-family development with,

moratoriums on evictions for nonpayment and everything else tumultuous that

was going on at that point in time.

that's certainly a leap of faith.

When you made that decision at that point, how many deal cycles had you gone through?

Had you completed anything?

Were you still in the education process?

Like I know what you've accomplished since then and people are about to hear

about that, but where were you in that deal cycle when you made that jump?

So I did my first deal, which was a 92 unit apartment

complex in August of 2021.

I quit my W-2 job, September of 2021, and sold everything

and moved back to Wilmington.

Call it November 1st, 2021.

So I had just done my first deal.

I didn't even get a part of the acquisition fee cuz I was just

brought in very late in the game.

I had a very minority partnership piece of that deal.

but that was the stepping stone that enabled me to have the

confidence to drive forward and.

Say that I had the experience in order to raise money and operate deals

and underwrite them successfully.

And I started to build that track record with that first deal.

And I tell everybody, the law, the first deal is just do whatever

you can to be part of a team.

I would've done it for free, to be honest with you, just to get that experience.

And, that, that's where I was when we took that leap of faith and we

sold everything and moved Into the apartment was, I had done one deal,

I had two more under contract.

I saw the writing on the wall or the light at the end of the tunnel.

And the thought process was if I sell my house, and I, it was like 150, $160,000

of equity said that's enough money for us to live on for at least two years.

And I said, if I can't put any money into the bank account in two

years, it was never meant to be.

So that just gave me the confidence and that momentum in order to

go all in on commercial real estate and sell everything.

Wow.

that's amazing.

I'm in the same boat.

I did the, almost the same thing as you, as I sold a house that I had

a ton of equity in, which allowed me the runway to take the chance

to pursue real estate full-time.

I know the excitement and the stress that you feel.

Yeah.

They say that some of the most stressful things that you can do in life are

have a kid change jobs and move, I didn't have a kid, but I did change

jobs and move within the same and sell house in the same three month period.

So that, that end of 2021 was very stressful.

that resonates with me.

I, made my exit stage left from a 16 year career in medical sales this

past November to go full-time into real estate a month after we closed

on our new house and when my wife.

Was 23 weeks pregnant and we are having our little boy this Friday.

I understand the stress you're talking about.

I remember talking to you about it and you were just like, no,

dude, I'm never leaving my W2 job.

I love what I do.

And I was like, we'll, see,

You were right!

I was wrong!

I'm happy to admit that because it's the best thing that's happened to me,

right?

So let's fast forward.

So since.

November, 2021.

a lot's been happening with you.

What's happened with Upside capital?

Tell me about, your number of deals and your number of units.

Yeah, so we went full cycle on that first deal, the

92 unit provided a 33% average annual return for our investors.

it was literally a 12 month holding period.

I ended up being the seller on that transaction as a minority partner,

but also I was at the buyer.

So I ended up going from a very small position.

I owned like 8% of that deal.

Now I own 40% of that deal, not the gp, the total deal equity there.

We went full cycle on that deal, and we are currently in the process of

selling and refinancing a number of properties, but since essentially

August, 2021 until now, which is, call it a year and a half, maybe a little

bit more than a year and a half.

I've gone full cycle on one deal, have bought another 14 syndications.

It's about 757 units now.

I own a 4,200 square foot warehouse, some self storage.

I own a mixed use building that's got two restaurant triple net

locations and the total portfolios valued around 87 million or so.

Not a bad 18 months.

Not a 18 months, was it?

Yeah.

give or take.

Yeah.

Give or take.

So I want to circle back just for a second.

one of the deals you said that You had roughly 10% of the deal, but

then you ended up with, you still control it and it's 40% of the deal.

Yeah.

So we recapitalized that project and bought it with a new LLC and fresh debt.

and I went from the minority partner on that deal to the managing member on

that deal, and walking away with, 40% of the deal because I was able to sign

the loan and write the earnest money check and raised almost half of the

money and, I brought a lot of value to the table from, 12 months prior

to when I first got into that deal.

12 months later, after that purchase in August of 2022, I brought almost

everything to the table except for a handful of things, right?

So like my value to the group had gone up substantially, which, equated to

a higher equity position in the deal.

Are these are 506(c) deals.

that one was actually a 506(b) for non-accredited.

And it's funny that you asked that question.

I don't know if you guys have the same philosophy or not.

I think you only do 506(b), but I like to do a combination of B and C.

for those that don't know, we always say, B is for the boys.

your crowd, like your friends and family.

And 506(c) is for the crowd, right?

So you can post it online and you can publicly advertise it and raise

money from accredited investors.

We actually do a combination of both because what it helps me do is be

able to post about active listings that I have, and I also mentioned,

Hey, I also do 506(b) deals.

if you're not accredited and you're interested in investing into a 506(b)

deal, join my investment portal.

But if you are accredited, you can invest into this one.

It creates a little bit of that, FOMO of, oh my God, what are these other

deals that he has that I can't see?

Cuz I'm not part of that portal.

I use 506(b)s and 506(c)s interchangeably.

One, I use the C if I'm gonna try to grow my investor list.

But then the 506(b)s typically be, the smaller deals, the smaller raises,

the ones that typically might have a little bit better returns, cause I

like to offer those ones to our friends and family and, the people that have

done business with us in the past and continue to reinvest their money with

us so we don't publicly advertise it.

And those best deals go, to the 506(b) crowd.

So how would you describe your overarching multi-family

investing strategy to a passive investor?

So it's interesting that you asked that, because we was at a

party this past weekend and somebody had asked that and he was like, I'm

a realtor and I love real estate.

And we used to own some investment property back in Maryland and he was

just like, I got so tired of managing it.

And I said, good.

that's where I come into play.

This is where I help you.

you help me, I help you.

It's a win-win scenario.

I do this full-time professionally.

We are in the process of going vertically integrated and having our own property

management company and things like that to manage these properties.

But what that enables me to do is, Manage and operate these deals

professionally on a day-to-day basis, cuz I don't have anything else to focus

on except for multifamily and I have the systems and the processes and the

relationships and the connections in order to operate these deals effectively

and efficiently with minimal headache.

And I would consider it minimal headache, but as I'm sitting here, Producing over

400 K-1s to our investors this year, and I've gone through all this tedious work.

I'll say this.

it is a little tedious going through all the tax stuff, but ultimately

we've built the systems and processes in order to do the absolute best that

we can to manage these professionally.

And, to compare it to somebody that might own a handful of single family rentals or

something, is that they do it on the side.

what is it, called, moonlighting it, or they're doing it on nights and weekends

and things like that, and they're probably tired of working all day at their W2 job

and then go and have to fix the toilet for, whatever reason, or pick up trash

because they got a citation from the city.

That's all I do during the day, right?

So we focus on managing those properties really, really well in order to get

the best returns for our investors.

And we take a more scientific approach to it because we're looking at how to

maximize the income and decrease the expenses in order to force that NOI or

net operating income as fast as possible.

For example, there's one property that we bought March 1st of

last year for 4 million bucks.

We just got it appraised for nine and a half million.

12 months later, right?

More than a hundred percent increase in value in 12 months.

And there's another property, the 92 unit that we bought in August.

We paid 6.2 million for it, and we just got an appraisal for 10 and

a half million eight months later.

So we are very, very, very scientific on our approach to income and expenses

and managing depreciation and CapEx and cash flow and all those things

because of my experience in my W2 world as an accounting and finance major.

That's what I look at.

I look at cash flow statements, I look at the income statement, the balance sheet,

and make sure that whatever decision we're doing for our investors is going

to lead to the highest and best use of their money and the best level of returns.

Tim, I'm really glad that you just mentioned that.

There's a lot to unpack there.

this podcast is called the Truly Passive Income Podcast, and we

are focused on all things that are truly passive investment strategies.

And there is nothing about what you do that sounds passive at all.

It's, you're clearly brilliant.

You've got a strong background in finance that translated into a very

successful career with commercial real estate, specifically value add

multifamily, but for people that don't live in this space, everything

that you just said sounds exhausting.

Now, we could talk about this all day.

I'm nerding out on this and I love it because this is what we do.

This is what we're in the business of, and from the standpoint of our investors, I've

made the point several times, and it's one of my core beliefs, that in order to

have any level of success with real estate investing, you have to have three things,

and it's time and experience and money.

This is a situation where there's a lot of people out there that have money or

capital, but they don't have experience, and a lot of times they don't even have

the time required to get the experience.

So this is clearly a situation where this is your business, this is what you do,

and you've taken your time, the experience you have from your work, and then the

time that you had on the side during Covid to expand upon that, and now you're

taking a combination of your time, your experience, and somebody else's capital.

To put together a successful real estate strategy that for that investor can be

a truly passive investment strategy.

So from the standpoint of your investors, I know you do 506(b) and 506(c), but

either way, accredited or non-accredited, let's say that you have an investor,

it's the first time they've operated with you from the standpoint of hearing

about you and what you do, can you explain to our listeners what that

looks like all the way through the life cycle of a deal as a passive investor?

there's one thing that I love about what I do, is that right?

It is a win-win scenario that people are looking for that passive income and in

my opinion, now, call me right or wrong here, in my opinion, being a limited

partner in a syndication or investing in stocks is literally the only thing

that you can do that is 100% passive because, now, I'm not saying you are

good or a bad investor by investing in the stocks, and you could just pick

something and be done with it, right?

But when it comes to being a passive investor in a syndication, there is

less of an investment into the deal itself and more of an investment

into the operator and the sponsor.

So when you are investing into a syndication, like what we do, You are not

really investing into the project itself.

You're saying that I trust Tim, or I trust Clint or Neil with my money.

And what happens over time is that those investors begin to learn what

level of returns you offer, right?

I have a typical window for my investors.

It's, 15 to 20% IRR, 15 to 20% average annual return.

And I'm looking for typically a 2x equity multiple over a five year period.

five to seven year period, right?

So it can fluctuate a little bit, but if we can do a deal within

that range, then that's good.

And, you can bump up the IRR by refinancing the

money quicker, or, whatever.

there's a whole lot of different things there, but that's

generally our bucket, right?

So I have a number of investors that they don't even look at what we have to offer.

They're just like, they call me, they say, Hey Tim, I got a $100k.

Is this deal good?

I'm like, yeah, of course everything that I offer is good.

Just do you like it?

And he goes, I don't really care about the property itself.

He goes, if you tell me this deal is gonna produce these level of returns, then fine.

So all the investor ever has to do is build a relationship with one of us,

for example, and then begin to trust us.

And then you as an operator have to deliver on what you

say you're gonna deliver on.

And that's how you start to build up that track record and, that the credibility.

But for the investor, at the end of the day, after they've built

a relationship with you guys and you've delivered on their returns,

what does that look like for them?

the, so they sign, the subscription documents that say, yes, I wanna

subscribe to X amount of units that costs X amount of dollars.

And here's all my tax information, da, da, da, da, da.

Send in the wire payment and they're done.

That's literally it.

That's the only work that a limited partner has to do is to build a

relationship, sign the documents, and send a wire payment, and then you can

own that asset for 5, 10, 15 year, whatever the lifetimes end up being.

You are purchasing a piece of equity into an LLC that owns real estate,

and real estate is the vehicle that creates returns for the LLC, right?

So what that means for the investors is they are gonna get, the appreciation,

the depreciation, the cash flow, if there is any, and all the benefits

of investing in real estate, but not having to do any of the work because

the three of us do that professionally.

And we have the time, we have the experience, we have the systems and

processes, we have everything necessary in order to be a successful syndicator

and run a successful business that creates returns for our investors, right?

typically for our investors, they're getting an update every quarter,

every 90 days or so with how the property status is going, what are the

renovations that are going on right now, especially on the value add projects.

everyone wants to know occupancy, what's the income, what's the expected income?

Where's all the money going?

How much money have we spent to date?

just providing an overall level summary of what's going on at the property

in order so that the investors who are your partners, they're limited

partners, but still partners.

They have an understanding of what you are doing at the property in order

to give them returns on their money.

so once you know the property kicks off cash flow because your value add is done.

you're getting distributions quarterly as well.

So we time those to be fiscal quarter distributions.

So we like to do, January through March, distributed in April through June,

paid in July, et cetera, and so forth.

And then also our investor updates go out quarterly as well, and then at the

end of the year they get a 1065 return that shows their partnership, equity,

interest of the net income or losses, including depreciation, and they report

that on their taxes and they're done.

Right?

I mean, it's, to me, it's the most passive investment you could possibly

do because you build a relationship with somebody, you sign a piece of paper,

you send a wire payment, and now your money's working for you through me for

however many of years that you're looking for that money to be deployed for.

So, on the investor side of things, it's up to that investor to determine how long

do they want their money deployed for, what location do they want their money

deployed into, what level of returns, what level of risk, et cetera, and so forth.

There's so many different variables there that only the investor can define,

but you as the sponsor or the operator just, Hey, these are what I can offer you

and do you like any of these offerings?

And let's go out and make some money together.

Tim, I want to dig in just a little bit in into the details of

the kinds of properties that you pursue.

You mentioned value add.

are you looking for a particular size, a particular, age of the

product, class of property?

Can you tell us something about that?

So we have done quite the variety of projects now.

I would say my bread and butter is like a C to C+ asset built in 1985 or newer.

somewhere around 70 to 80 doors, up to about 140.

We come in and we do the value add project, with those

properties and refinance out of them in 24 to 36 months or so.

And then we typically go and put a five to seven year term loan

product on that after we're done.

That's my bread and butter.

Now, I have done deals that were, complete guts, right?

It was a D class property.

We brought it up to a C+, maybe even a B-, complete gut.

we, every single unit, all new subflooring, all new kitchens,

all new bathrooms, new roofs, new parking lot, like everything,

A to Z, we did on that project.

we just completed that one and we're working through a refinance.

Now, I have to say, that was a significant amount of work and so much time and energy

and resources went towards that deal.

I think I might shy away from doing something that much

of a heavy value add again.

But we also own brand new construction.

So we have a 19 unit, built to rent community in Boone, North Carolina.

And that property, there's literally no construction cuz it was just,

we got the CO and a certificate of occupancy and we closed on it.

And it's just, it pays our investor, I mean, it's pumping off like.

19 units are pumping off like $45,000 a month in NOI.

It's insane.

and the expenses are really low.

It's a really low headache property, but there's not that much appreciation

on the product because, we paid a premium for it and the offset there

is, you ride it out for five or 10 years with very low expenses.

So we've done everything in the gambit of, D class value add.

Brand new class A construction purchasing.

but I would say most of the things that we look to buy to do that value

add project in order to give the investors, the returns that we like,

is gonna be that B or C class property, 1970s, 1980 or newer, 70 plus units.

I think that in this space, in my experience, it's definitely,

there's economies of scale with the size of the project, but there's

also, inertia and momentum, like in terms of finding your deals and

looking for what you're going for.

in my experience, it was, as word gets out of exactly what asset class you're

going after, you stop having to work so hard to go find them and people

start bringing them to you cuz they kind of understand what your bread

and butter is and where the market is.

How did you guys start out sourcing your deals and how is that deal flow?

Is it evolving for you or where is it now?

Yeah.

So one thing that we like to talk about in our coaching program is to pick a single

market and go really deep in that market.

And that's how we started and that's how we made one of our best relationships

with a broker outta Charleston.

and he keeps our pipeline completely full.

We have like maybe three brokers that we have really great relationships with and

they know what deals we're doing because were under contract with them on it.

They know when we're gonna close it.

They know when to line up the next one, and they're just like, Hey,

here's the next one, here's the next one, here's the next one.

but then that also, that same broker had introduced us to the

seller of one of these properties.

And now, we just closed on a property in Charlotte last week, on a Monday.

And then on Wednesday we locked up an 88 unit property with him.

Right.

So it's, we don't really have to go out and look for property anymore because

our brokers and our sellers keep us full.

really the biggest thing is you wanna make sure that you're somebody

that people like to work with.

So if you generally build a good reputation of being a closer and

somebody that is easy to work with and does what they say they're gonna do

with sellers, brokers, and investors, like across the board, just, if you do

that, you're gonna have more deals and opportunity than you know what to do with.

It really is the law, the first deal, as they say, where once

you've closed a deal, Or two or three.

Now the brokers know that you're the kind of person who will close on a deal.

They're not, you're not a tire kicker, you're not someone who's gonna come

back and retrade with them all the time.

and like you said, they will start bringing you those deals.

Yeah, I would say we have only retraded on two deals before and

the reason that we had to retrade on it was because we were under contract when

they were doing 75 basis points increase in the rate like every other week.

so we had to go back and retrade just because like we couldn't

even close on the property anymore with the debt that we had.

So the bank, said we had to renegotiate or or else, they weren't doing the loan.

And the other one we had to renegotiate on because that was, it was misrepresented

to us by the broker when we had gone and done, our inspections and due diligence

and all that, we found out every single building needed pilings and piers put

in because it was sliding down the hill.

And then, with that came a whole slew of other things.

We're like, dude, like.

Nobody said this and now we didn't even come close to budgeting the right

number, but we found all this stuff and you didn't disclose it to us.

Therefore, we need to ask for it because if you had told us upfront, then our

offer price would've been significantly less accounting for this rehab that

we would have been anticipating to do.

So, brokers know that about us, like when we make an offer that is our offer.

We don't do highest and best.

Best and final whatever.

We just, this is our offer.

This is what we feel comfortable at.

We know that we can perform.

We're not gonna retrade if we find that our rehab budget is like,

10, 15, 20% over or under, we are not gonna retrade on that, right?

Because that's not a significant enough number in order to make the deal not work.

So we will always make sure that we, if it was represented to us, right?

And we have a conversation with a broker about what our rehab number

needs to be and the scope of work.

And then we can do our due diligence and we're right in that window.

We're good.

We're closing on the deal.

We're not re-trading, we're not, being difficult to deal with.

sometimes we will have to ask for an extension, which we build into

the contract where we pay money to extend a contract because of lending.

appraisals were taking six to eight weeks at one point last year.

So, we had to use a couple extensions.

But sellers understand, like they were on the buy side once before

and now they're on the sell side.

So, you just build that reputation of being somebody that they like

to work with and I guarantee you, you're gonna have more opportunity

than you know what to do with.

So debt financing has obviously become more challenging of late.

what is your philosophy on debt financing for your syndications?

And how do you determine the optimal debt to equity ratio, and the loan terms?

that's a really great question.

so I'm a big believer in paying people to do what they do best.

So I always pay a loan broker to analyze these deals and go out to market and

get us the best loan option possible.

they go out, they do most of the legwork, and then I do all the

underwriting on our properties.

So they bring me a bunch of different options and I'll have like, 15 different

spreadsheets going of all of the same numbers, but changing the debt here and

there, like kind of tweaking it a little bit here and there and trying to see

what the best option is for investors.

So, I'm looking at what the best returns are for our investors, but I'm also

looking at what the best return is for me.

And whatever good for me is good for them, right?

First and foremost.

So, we're putting enough time and effort into each one of these loan purchases,

acquisitions, refinances, whatever.

So make sure that we're getting the best rate possible and The leverage

is a little bit less important to me as the rates and the loan terms.

because as you bring more equity to the table, your return and equity goes down,

but your cash on cash return goes up.

And where we are in the market right now, sometimes it's a little

better to go in with more equity so that you have a safer cushion.

if you come out on the backside and rates go back down, then you know

you're gonna end up winning anyways cuz the equity multiple will be there.

But, What we're trying to do is make sure that the property is going to be safe

and that there's gonna be enough debt coverage there to pay its bills because

nobody wants to have a capital call.

Like a capital call will be a syndicator's death.

And I make sure that we have enough money and reserves to pay out everything

that we need to, and then build some reserves and make sure that the

property can pay for itself because that's what we're selling when we're

getting people to invest into our deals.

And the worst thing I can do is say, Hey, I know you already gave me $4 million

to go buy this property, but I need a little bit extra more money because the

debt service changed and the expenses aren't doing what I thought they were

gonna do, and now I underwrote it wrong and I'm gonna need some more money.

nobody wants to give you more money after I've already invested money into the deal.

So, that's probably my first and foremost, the foremost of my mind,

what I'm paying attention to is debt coverage ratio and timeframe, right?

Because.

The number one thing that's on your side with real estate is time.

So I don't wanna be locked into something that's on a 12 or 18 month refinance

cycle, because if something goes wrong in the market, like it has over the last

12 to 18 months, hell not even 12 to 18, but last like six to eight months, right?

If something like that happens again, then I have cushion there to ride it

out until, the wave comes back up.

Right.

So, real estate over the long term, you're gonna win.

Right.

it's the people that get burned in the short term cuz they need to

be in and outta something quickly.

Those are the ones that are gonna end up in hot water because they

don't have time on their side.

You mentioned that you're looking for financing where,

what's best for you, but also what's best for your investors and your deal.

And that's one of the things that I truly love about syndication is that

when you pick the right operator, there's true synergy in there.

It can be a win-win for everybody.

Obviously it can be a win for the seller of the property, but for you and the

investors that you have in on your deal, you have alignment of interest.

Synergy, you're both tied to the performance of the same property.

So it gives the passive investor the opportunity to pick the right person.

Obviously we talked about track record and at this point, like you

mentioned, sometimes you're betting on the individual deal, but more than

likely you're betting on the operator, so you really kind of transition from

betting on the horse to betting on the jockey and when you have the right

person that has the right interest in mind, it truly creates synergy in a

win-win situation for everyone involved.

So with that in mind, and obviously the importance is track record, what

advice could you give to the truly passive investor, when they're looking

to invest in a multifamily syndication or any syndication across the board?

Like for that first time investor, what's the most powerful advice that you have?

Go build a relationship with the person that you wanna invest with.

If you gotta spend $200 to come fly to Wilmington, to hang out with me for

a day, go out on the boat or go play pickleball or whatever it is, spend

the $200 before you invest a $100k.

Because there's a difference between shaking somebody's hand and talking

to them, mano y mano versus what you'll see posted on social media

or what you'll hear in podcasts.

And, everything is correct, right.

But you can't really get a read on body language and personality and

really seeing if there's a connection there, because again, you're betting

on the jockey, not the horse.

And, what you had said earlier about making sure that it's a,

it's an aligned synergy there is.

Is the person that I'm investing with, do I agree with their thoughts,

processes, their, that their process of elimination and how are they

gonna make their decisions, right?

Like, do I agree with their decision making process?

and the best way to get to know somebody is go have dinner with 'em, go have

lunch with 'em, go hang out with 'em for the, whatever the scenario is.

Like, it's a very, very menial investment, comparative to the amount of money or

equity that you're putting into a deal.

Do that to protect yourself because you might find that, everything that I'm

saying on this podcast is great and you agree with everything that I'm saying.

But then you meet me in person, you're like, I actually don't really like

this guy, And we're gonna be in a partnership for five to seven or 10

years, and it's okay if you don't like me or you don't like the opportunities

that I have, or my business thesis, you could meet Clint and Neil and say, Hey,

I actually like what they're doing.

I like their thought process, I like their systems and processes better

than what I'm doing, and that's okay.

There's a life of abundance.

There's enough money and deals out there for everybody, and from my perspective,

I just wanna make sure that whatever that person is doing, I wanna make

sure that that is the best and highest use of their time and their money.

And same goes for me, right?

I'm looking out of who do I want my investors to be, because it's a five

to seven year relationship, right?

I mean, we're gonna be communicating with K-1s and how the property's progress

is going and making distributions and having phone calls about whatever, right?

I mean, that, that's what comes with.

The relationship capital, right?

And it comes with the part of the business.

So go build a relationship with whoever you want to invest with first before

just write and check and a couple phone calls and things like that are good.

But definitely go spend some time in person with that person.

So tim, thanks so much for sharing with us today.

If any of our guests wanna reach out to you and find out more about

what you're about, what would be the best way for them to do that?

Facebook is honestly, go to my Facebook group Making

Moves Real Estate community.

Or go to my website, upsidecapitalgroup.com, my investor portal

and all my contact information is there.

Great man.

Thanks guys.

I really appreciate it.

Yeah, thanks so much man.

I really appreciate your willingness to share with the community and let everybody

know what's happening with Upside capital.

Absolutely.

Thanks again for the invite.

Thank you so much for listening to this episode of

the Truly Passive Income Podcast.

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