YOUR DAILY REAL ESTATE INVESTMENT SHOW
April 19, 2022

Learning Where The On-Ramps to Multi-Family Investing Are Located with Paul Moore

In this episode, I talk with Paul Moore the managing partner of Welling's Capital. Paul was a finalist for Ernst & Young’s Michigan Entrepreneur of the Year for two years straight (1996 & 1997). Contributor to BiggerPockets and Fox Business....


In this episode, I talk with Paul Moore the managing partner of Welling's Capital.

Paul was a finalist for Ernst & Young’s Michigan Entrepreneur of the Year for two years straight (1996 & 1997).
Contributor to BiggerPockets and Fox Business. Paul is the author of The Perfect Investment: Create Enduring Wealth from the Historic Shift to Multifamily Housing and Storing Up Profits: Capitalize on America's Obsession with Stuff by Investing in Self-Storage.

Paul also co-hosted a wealth-building podcast called How to Lose Money, and he’s been a featured guest on 200+ podcasts.

We talk about the highs and lows of his success in investing in real estate. We also discuss the "chasing shiny object syndrome" with investors today and how you can keep from gambling away your money.

Paul also talks with me about the importance of diversity when investing and what you need to look for when vetting the right manager.
Finally, he shares the ins and outs of his position at Welling's Capital and his goals for the future.

Don't miss this exciting new episode with the amazing author, capital raiser, and real estate educator Paul Moore.

Transcript

Unknown Speaker  0:00  
All right, man, we'll get it.

Casey Brown  0:06  
Hey there, and welcome to the cash flow pro podcast and channel. I want to welcome you here today. And today we are going to be speaking with PAUL MOORE of Wellings. Capital. Paul, how are you today?

Unknown Speaker  0:19  
I'm doing great. Thanks for having me on Casey, what an honor to be here, man,

Casey Brown  0:23  
man, we're just excited you're here and excited, we can all maybe learn something and hopefully get to the bottom of what we need to do to get to where you are in life at this point. So

Unknown Speaker  0:36  
if anybody wants to get where I am, after all, I had a podcast called How to lose money for years. So I

Casey Brown  0:46  
think I think the How to lose money. Part of it probably was the play on turning it around possibly

Unknown Speaker  0:54  
two weeks, talked to successful entrepreneurs, investors, business owners, managers, and we talked about their path of pain that everybody goes through on the way to success.

Casey Brown  1:09  
Yep, I'll tell you. And, you know, you and I were talking before the show, and I think that path to pain, or that path of pain, rather, is fairly common. And I think there's a lot of very, there's a common thread that's kind of sewn between all of us, and how we get to where we are and, and to be quite honest, the majority of it seems to be, I don't say education based or something, maybe it was just like something like, Man, if I had just known this, or just known that. So that's, that's why after speaking with you before the show, I'm just really excited for us to dive in here and learn, you know, those real life experiences that led you down the path to become a capital raiser. And as we learned a few minutes ago, you know, the fund of funds model that you've got. And you know, you're you're, you're in a spot where a lot of people want to be so let's just to kind of dive right in and start from the beginning. And maybe you know what, set your sights on saying, hey, I want to be a capital raiser at some point, or hey, I want to be in the real estate business or or maybe the combination of both. So I'll let you take it over and tell us a little bit about where you how you got where you are.

Unknown Speaker  2:25  
Yeah, so I had an engineering degree, which was my first mistake. And then I got an MBA at Ohio State and went to Ford Motor Company for five years, I really enjoyed Ford. But it wasn't, you know, like, a big company. I mean, I found myself constantly trying to find entrepreneurial opportunities on the side. And so after about five years, I left Ford with another guy. And we started a company, he'd already started a couple years ahead of me, actually, I joined him. And we started doing a staffing thing we built that sold it in five years to a publicly traded company. And I moved to the Blue Ridge Mountains of Virginia to raise my family and enjoy some passive income. Well, I thought, I'm an investor. Now, I wasn't an investor at all. I was a speculator a full time speculator. I didn't know the difference between investing and speculating. And so I started doing stupid things with the money. And, you know, if you if you take Warren Buffett and Benjamin Graham's principles, you can boil it down to this investing is when your principal is generally safe, and you've got a chance to make a return. And speculating is when your principle is not at all safe. And you've got a chance to make a return. And so I really have to define myself as a speculator. The problem for me was, I tried to have the same fun and excitement. From my investments that I got as being an entrepreneur, being an entrepreneur is fun. I started well over two dozen businesses over the years, I literally don't remember them all. I've got a desk drawer full of cards from different companies. I even did some multi level stuff years ago, and I did all this stuff. And I thought, Oh, this is fun. The startup modes fun when it gets to cruising altitude, it's pretty boring. And I would kind of turn my site somewhere else. So I could also say I was a certified shiny object chaser along the way. But I'll tell you, it was it was a rough road, especially for my family because I was always in startup mode. I was always working those long hours. And then, you know, often just moved on to something else. And so that was definitely an issue with me over the years. I'm talking, you know, 25 years ago, 20 years ago. Well, in 99, I invested in real estate for the first time and then more in 2000. I started flipping houses I did about 60 House flips with a good friend of mine. We then started building houses, and I learned something really important, Casey. And this is a real good takeaway for your audience. You shouldn't build an expensive waterfront house. If you don't know how to put a doorknob on your own house. I'm just saying.

Unknown Speaker  5:21  
I've got a locksmith upstairs right now proving my point, or our lock broke. And someone said, we'll just take it apart. And I said, Yeah, right. I've got a checkbook for that. And at any rate, seriously, it's not. I tried to be a builder for about eight homes. And I found out over through the course of this, I had this inkling that hey, I'm a good starter and promoter, but I'm not really a good manager. And I had to face that, but I didn't face it yet. And so in after the downturn in 2008, but by that time, I had done waterfront lots at Smith Mountain Lake in Virginia. I'd done multiple websites, I oversaw one still running right now. I've got I had done a subdivision, Jen, all kinds of things have flipped about 30 or 40. Lots at this waterfront resort. But anyway, in 2010, I invested in oil and gas in North Dakota, and everybody that drilled a well in North Dakota was making money, except us. So we actually decided we wouldn't be part of a wildcat. Well, it was too boring to make just 40% return on your investment annually, or whatever they were making. We wanted to go big. Yeah. So we drilled a we were part of a Wildcat well, that if it's successful, it would have made the guy who run ran at one of the wealthiest guys in America. And he was a legit guy, wonderful guy. But it didn't work. We put all this money to the bottom of a hole in the ground five holes in the ground and hit oil every single time we came up with nothing. But what we learned during that process was there was a massive housing shortage in the oil fields called the Bakken of North Dakota. And so we invested in housing there, we did our first multifamily deal. And I had always been curious how to get involved in commercial real estate, I didn't know where the on ramps were, where the entry points were, who to trust how to invest? Well, we just found ourselves doing it. We build up a ground up multifamily, quasi hotel. And then we did another one, then we did a Hyatt Hotel. And we ended up selling all of that. But along the way, I thought, yeah, I love multifamily. And so I went through a multifamily mentoring course, to officially learn how to do it. And, and I'm writing a book on multifamily called the perfect investment. And we did our first multifamily deal, which was in Kentucky, in fact, and it didn't go well. And it really punctuated, to me the fact that I am not a good operator. I know how to find good operators, I know how to pick out great property managers. But I'm not the one to do it myself. And so it all became crystal clear for me a number of years ago. And that's when I decided, hey, we want our company to be a company that goes out. We want to be a due diligence partner for our investors. And it's someone who vets the very, very best operators and then we converted quickly after about a year from doing single syndications. As a third party, we converted over to being a fund because we want to give our investors diversification across different asset types, different geographies, different operators, different strategies, and of course, different properties. And so that brings us up to today. Now, what I skipped was how I learned to raise capital, and we can circle back to that, but I'm gonna take a breath and see if you have any questions.

Casey Brown  9:07  
Sure. Well, yeah, and I think that, I think, of course, there's, there's a lot of questions there. Now I want to I want to go back and you know, there's a there's a single term that goes along with, with what you were talking about when when you're basically speculating. And I think another term for that might be called like gambling, almost. I mean, you just you basically look at it something that's like, hey, either a 49 51% chance to Saturday the other and, and, you know, like you said, I think a lot of people think that that's investing, like that's, that's, that's the furthest thing from the truth. That's basically saying, Hey, I'm trying I'm going to try to cut the I'm going to try to cut the timeline of making this much money down to one minute. Second, rather Rather than saying, Hey, I think this is a good plan, I think this guy's a good operator, I think this is a good way to do it. And when you go that route, it just tends to people get tend to get frustrated because they think well, so and so made it. And so you know, and then all of a sudden, it's kind of gone. You know, anyway, that we want to kind of preface that for the investor side of our audience now, as we as we move forward and

Unknown Speaker  10:32  
move to comment on that real quick. Sorry. Yeah, so George Soros, who did you hear? did is he like campaigning to be Antichrist or so I'm not sure. But anyway, George Soros is a great investor. That was a joke. Jordan Soros is an amazing investor. He's like 90 something years old. He said, If investing is fun, if you're having a good time, you're probably not really investing, you're probably speculating. Paul Samuelson was the first Nobel Peace Prize winner in from the US and economics. And he said, investing should be boring, it should be like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.

Casey Brown  11:14  
There you go. I mean, it's, it's, and so many of us are, like, you know, when I'm the I'm a lot the same way. So I'm not I don't want to act at all. Like, like, hey, you know, I'm so much better because I can do this, this or this. What I'm saying is, there's so many of us that are just like you and I say us, okay, because I'm the same way I see this shiny object that I'm like, and somehow or another in my mind, I'm like, oh, man, if I could just make this app and this app connect and do this, then that's gonna be wonderful, will not do it. And, and this next part of this process is fixed. And then all of a sudden, you know, I've realized in a week that none of that really mattered. And I just needed to get in and put in the work. And, and so some of that, that chasing the shiny object syndrome is, is it's real. And it's and again, from experience myself and saying that we just, we've got to be careful, because when you get into the investing game, you get into dealing with other people's money. And you know, it's one thing to chase shiny objects with, with

Unknown Speaker  12:20  
your money. Right, that's exactly

Unknown Speaker  12:24  
right, the objects with somebody else's money. And so

Unknown Speaker  12:29  
that's absolutely true. I've written a lot about that on bigger pockets as well.

Unknown Speaker  12:51  
Casey, are you gone? All right. I can still see I'm still recording here. So maybe I should tell some jokes just for the editor. Okay, you can get a million dollars and never pay taxes. What? Yes, Paul, how can I get a million dollars and never pay taxes? I'm glad you asked. First. It's two steps First, get a million dollars. Second. All right. That's pretty funny in the 70s. All right. Where are you Mr. Casey? Hey, Alyssa. I'm on this podcast here with Casey Brown. And if he gets ahold of you up, he just got back on.

Casey Brown  17:08  
Hey, man, this is this was super frustrating because my single sign on is saved in one window anyway, long story, but then I tried to go to a different browser wouldn't let me use Safari and anyway, so here we are. It's still recording.

Unknown Speaker  17:26  
No. Yeah, it's still recording me the whole time. So I think we can go

Casey Brown  17:31  
if so you're talking about being interviewed and bigger, or you talked about in a bigger pockets interview? And then

Unknown Speaker  17:37  
oh, yeah, I know where I was. Okay. Casey, I talked about that all the time on bigger pockets. In fact, I'm regularly writing been ringing this bell about Don't speculate. Don't speculate. Things are looking an awful lot like 2000 678 Right now, though, they won't end just like that, because history doesn't really repeat. It just rhymes. According to Mark Twain. The truth. It probably is. It's rhyming a lot. Right now, listen, one of the top multifamily syndicators in America emailed me this morning. He's a friend of mine. And he said, I have a dog property, it's a multifamily property with about a 2% interest rate on an interest only and I'm barely covering the mortgage. Things. Okay. He said I, someone just came along and offered 50% More than I paid. And they're gonna take on what is probably about a 5% mortgage. Let me ask you some case, and how is that going to work? For those investors? It's probably even going to make it through a year.

Casey Brown  18:49  
Well, what's happening I think, unfortunately, for for a lot of unsuspecting investors, is there's this relative idea that the cap rates are always going to be positive. Or, you know, there there is the thought that, you know, people are going to be buying for let's just say, let's, let's go to say they're buying at a breakeven cap rate, okay, our mortgage is this or insurance is this, our expenses are this and we're not going to make any money. But guess what, in 10 years, this property is going to be worth boom.

Unknown Speaker  19:24  
Exactly. And it isn't a good business strategy.

Casey Brown  19:29  
And what do you call that? What did we just call that? Gambling, gambling? I mean, that's it, you're basically saying, hey, that's cool, man, take my money, tie it up, and I'm gonna hope that I don't. Now the chances of losing your whole principal in a real estate deal. And you know, there has to be a lot of other outside things that happen in order for that to take place. But the fact of the matter is, is I can sit at home with my 50 or $100,000 in my bank account, and not worry about out it rather than, than some some, some guy having that I'm like, Well, hey, you know this this look into good is it and then all of a sudden it's so it's it's that's coming. And there's a lot of unsuspecting people out there that are going to be blindsided when this happens,

Unknown Speaker  20:18  
right? It's absolutely true. Think about it. If cap rates go up one point and you bought it 4% And it goes up to five, you think well, I lost 20% of the value. Do the math on it, you have to actually raise rents 33% Assuming costs go up at the same, right. Okay, you have to raise rents, let's say at least 25%, just to get back to breakeven. That's right. Well, if you've got an 80% mortgage, and I know most people don't have 80, but let's say 75, you're dangerously close to losing your deal. If cap rates go up one point, but let's face it, they could go up two points, then people will lose their deals when they have to refinance, and there's no money there.

Casey Brown  21:05  
Yep. And the thing is, is that, you know, some people are okay with that. And I feel like there's a small percentage of real estate investors out there, who are just, it's just almost a game. And they're like, Okay, so hey, here, here's 100,000 bucks of my $1 billion, nest egg, whatever. And so I feel like, it's just not an okay, investment strategy for me or my folks, that's just not, that's just not the way it works for us. But when you start talking about somebody that's like, Hey, man, I'm gonna take a 60 There's a 60% chance I'm gonna double my money 40% chance I lose half of it. What you know, what's $100,000? You know, that's a different crowd. That's a different type of audience. Well,

Unknown Speaker  21:51  
it's fine to speculate as long as you're doing it with your spare change. Or if you just want to live that way, that's your choice. But I didn't want to live that way. After I tried it. I mean,

Casey Brown  22:02  
it's a long road, it's a long road, I mean, especially if it's money that you're counting on to, to, to facilitate the life that you you know, sites, retirement or whatever, you know, something that you're wanting to slow down, and you're want to have a steady stream income. That's definitely just not the way to do it. So now that we've got the gambling out of the way, and the speculation out of the way, you know, again, everything you said, basically, I'm like, Oh, I relate to that. Wait a minute, that sounds like me, wait a minute, what? And then, so from an operator standpoint, I think there's a lot of us out there, again, I'll just I said us, who, who just don't feel like, you know, it's one thing when somebody pays rent, and the rent becomes, the rent becomes part of your investors return. It's another thing when a single mother can't pay a rent, and you have to tell her that she can is no longer welcome to live there. And, and, and I don't just mean like single mother, single father, single whoever, a family or whatever a person. And that's just not what I'm good at. I'm not good at at the shrewd part of this business. And I realized, like you had said, I'm not much of an operator. But and I think that that's a lot the same way that the passive investors are like, Hey, I'm not an operator, I don't want to have to kick people out. I don't want to go change light bulbs. I don't want to have to clean carpet. I don't want to have to do this, this or this. So let's invest here. Now. I think obviously, the first question that pops in everybody's mind when you start talking about that is well, we'll so you have these operators that you work for or that you work with. You vetted the operators, you found out what's the benefit? And why should I come to you? Right, all instead of going directly to the

Unknown Speaker  23:55  
owner? The answer's no. Yeah. So for one thing, if you are I'm gonna backup a one step before I say answer that, and that is this. If you have a full time job, and you're making a lot of money, you're probably working more than 40 hours a week. Maybe not. You've probably got a life, you've probably got a family, you should have some time off. You probably don't even much as it's tempting. Because you saw it on HGTV, you probably are not going to really enjoy dealing with toilets, tenants and trash on your weekends, lunch hours, evenings, vacations. I was talking to an orthodontist, actually an oral surgeon and he said, Yeah, I'm building up a 20 home portfolio and I'm actually only on home three and I'm It's driving me crazy. I have to make calls to painters between oral surgeries and I just can't do this. There's no way I'll ever get 17 more houses. It's a serious business. He just realized Yeah, he had to hire you know, he wanted to invest passively. So why Should they come to a fund of funds instead of just directly to the operator number one, we are able to pick the very, very best if you've got this again, full time job, or even if you're enjoying retirement, you probably don't have the skills, the knowledge, the time to fly around the country, and really that operators the way they need to be. But if you're gonna give $100,000 to somebody, you want to get to know them. You want to have dinner with them, you want to see how they treat their staff, you want to get reviews, you want to check their deep criminal background, check everything well, chances are and most investors we talk to don't do very much of that at all. They just like somebody because they heard them on a podcast, or they saw a nice website, where we do all that deep dive. And you know, the 8020 rule, Perry Marshall has a book called 8020, sales and marketing. It's brilliant. And we all know what the 8020 rule is. But the 8020 rule, Perry told me that it's fractal we're friends, and he said, It's fractal. He said that the top 20% of the top 20, get the top 80% of the top 80 results. So the top 4% In other words, are getting 64% of the you know, in the top 64% of the results at least. Yep, so we're looking for those and you're looking for those truly great operators. And those truly great operators often are not good promoters. I was on the I was on a webinar recently with a great operator, who was a terrible promoter, they didn't know how to use Zoom. And when they did do the webinar, there was a guy on the webinar, literally one of the presenters eating an apple while the other guy was talking. I thought it was amusing. And it just reminded me, you know, these guys aren't great promoters, but they're amazing operators. And that's the kind of things we're looking for. So that's number one, we can get better deals. And if the deals you and I can find, are going to produce more safety and a higher return at the same time, that's going to more than offset the small fee we charge. So that's number one. Number two, we've we actually are a larger investor and as a larger investor, we can often get better terms. So one of the investments we make is with an operator who has a 6040 split and a 7% preferred return. But we get an 8020 split. And I think it's instead of a seven, we got a 9% preferred return in most of our investments with them. Well, as a result, we're actually getting, we're passing that along to our investors. And that's sort of more or less just offsetting our fees and our words, our fees will be washed out in that, you know, in that transaction, because we're getting a better return from that. The fees

Casey Brown  27:58  
plus the plus there. The the investors still making more. Yes. And you're still making you know what, whatever the fees are, yeah. Okay. Go ahead.

Unknown Speaker  28:11  
Sorry. Yeah, and I'll just say it's washed out more or less. In other words, if it was the exact same investment, it might be more or less the same return. Because our fees, do you know, they are there's a cost to that. The third reason is we have diversification, somebody can invest $50,000 with us. And that money be spread across well over 100 different assets, five or 10 different operators, 22 different states. I mean, and different asset types. I mean, we're in self storage, mobile, home parks, multifamily, light industrial RV parks, and we might even do an occasional specialized retail deal. And so you can't get that. I mean, if you wanted to invest $1,000 across 50 deals, well, there's no way to get in because no one's going to take $1,000. But we'll take 50. And we'll spread it across that. And that diversification is the third reason I would say people should consider us

Casey Brown  29:15  
now I want to I want to jump back a question that I know is as burning right now. Because this is the why. So tell us a couple of different things. The operator, let's let's let's look at the operator, what allows him to give you better terms, first of all, and number two, what is why is the operator even coming to you and saying, Hey, Paul, I'm worried we'll give you this if you can bring us this. I mean, I guess I'm talking about like size of investment possible. That

Unknown Speaker  29:57  
yeah, so we're only writing one check. So For example, we invested, I think it was $25 million in one portfolio and the guy's portfolio only had 58 million in total. Okay, we're so we were like 40 something percent of that that was one check to them one investment portal entry. Yeah, it was one phone call to deal with for them. And so that's one reason that they wouldn't mind giving us a better split. And then we're managing all those individual investors. That's really the biggest reason.

Casey Brown  30:33  
So you're saying that the fact that you can bring a bigger chunk of pie to the paper, that the that the operator saying, Well, hey, Paul, yeah, well, if you can do that, that's gonna save us, all of this will let you do it, we'll let you handle the investment relations part of this. And then we can go do what we love to do, which is be operators.

Unknown Speaker  30:53  
Yes, that's right.

Casey Brown  30:55  
And I guess that that's, that's just it just, it looks to me, like there's again, and I don't want to act like I'm just now learning some of this because, because this is the same thing we do. But so what I'm getting at is, is you're laying a road here, where it's like, there are several wise but but all of them kind of lead back to the same path, which is best for everybody. You know, you're you're like, Okay, we can bet these operators, we can know that, hey, this guy has been in business for boom, boom, boom, boom, boom, and this guy has made this, this, this, this and this. And so we're vetting our operators based on that, then you're saying, hey, then we can diversify. We can say, hey, if there's a hurricane in Florida, we've also got property in in Ohio, or we've also got property in Kansas, or if there's a dust bowl in Kansas, we've also got property in Virginia's so the Virginia's rather. And so when you start talking about just the fact that diversification seems to me like that's, that's a massive value for people to invest. Oh, yeah.

Unknown Speaker  31:57  
I mean, literally, if I was a passive investor, and I had a choice of investing with your fund of funds, or my fund of funds, versus one deal, I would absolutely do. I mean, knowing what I know, from the inside, I would absolutely pick the Diversified route. Yeah. Well, again,

Casey Brown  32:14  
go back to the what we very first covered in this in this in this episode was was are you an investor? Are you a speculator? Because while they both could certainly lean on some of the same objectives. The main thing is that you're either gambling your money is as a speculator, or you're saying, hey, I want to generate a specified return for a specified length of time. And this is what I'm going to do it. So really, the diversification just makes the most sense for that type of investor.

Unknown Speaker  32:51  
Yeah, yeah, that's absolutely true. I mean, look, if somebody says, you know, diversifying is only for amateurs in my answer is, exactly, that's what we're dealing with no offense, to me, my investors, but only a few out of 515 investors, only a few are experts. And even if they're an expert, that doesn't mean they're an expert in RV parks in Oklahoma.

Casey Brown  33:21  
And I'm going to get your I want to get your take on on this. And this is this is a subject that I bring up fairly regular, just because it's so it's absolutely enthralling to me. But there's a there's a little there's, there's a guy that I've watched for several years. And this is his strategy. And when I say his name, I think everybody's probably going to know who he is. But he lives in Omaha, Nebraska. And his, his first the very top of his list, he says, We the management, like you vet managers period in the story. And as long as the manager is doing their job. Basically, it makes our job as being as investors, then you see what I'm saying? I mean, my follow on that right to say, hey, if the if the guy in Omaha, Nebraska, which I think we all know him come as Warren Buffett, and Berkshire Hathaway, Berkshire Hathaway diversifies their funds across, you know, on numerous other brands, now they're not doing they're obviously real estate elements to that. But what I'm getting at is, is he takes investor monies, as shares of Berkshire Hathaway takes that money and then goes out and buys insurance companies and companies and those kinds of things. So it's the same. This is how billionaires do the business do business today. I mean, and that's it's so good. This is where the cream rises to the top. And you and I are focused on the cream not not gambling my money on somebody that might be rising to the top.

Unknown Speaker  35:08  
It's absolutely true. So Warren Buffett says he focuses on the horse more than the jockey. And that really bothered me because I really think he focuses on the jockey. So I drilled into that a little bit. He says, I only want to invest in products that have enduring, they're a durable product with a durable competitive advantage and a moat. So I'm focused on the product. But that's not totally true. He focuses on the manager, more so. So in 1979, when he got a phone call from a guy he knew well, he knew him very well. And he thought, This guy is perhaps the best CEO in America. And that guy said, Hey, his company was called Crystal cities. He said, I want to buy ABC, would you help Buffett in a 15 minute phone call to his friend said, Yes, I'm in. Well, he didn't have to go out and vet all the details of ABC and all the underlying stuff. He didn't have to become an expert in TV broadcasting. He knew his friend at Crystal cities was, so he jumped in, I think he put in $600 million, or something like that. Nine, you know, right. And so it wasn't that much at the time. But I mean, for in today's dollars, but anyway, he made a massive profit, profit 17 years later, in 96, when Crystal City sold ABC, and I believe it was to Disney, he made a massive profit, he didn't have to know how to run a TV station, he found a manager who did doesn't pick the Dairy Queen flavors, but he makes a profit from every Dairy Queen.

Casey Brown  36:51  
The manager that knew how to run the TV station, he also didn't have you know, he had the answer to one investor versus, versus the whole crowd of them behind him. And you said, it's, it's, it's so anyway, all right. No, I just I get to talking about it. I'm just like, you know, this is what makes the most sense for everybody. I mean, it's just, you're either a speculator or you're, you're speculator slash gambler, or you are an investor. somebody that wants to make a steady return. Okay. Right now. So let's, let's move forward. And let's talk about Wellings. Capital. And let's talk about what where your position is right now. And what, you know, kind of maybe the short term and long term future hold for for that, and and what you're looking at,

Unknown Speaker  37:42  
yeah, so we are really continually looking for recession resistant assets first, and then we'll find an operator that's doing a great job, and we won't invest unless we find both. RV parks looked really good to us. A number of years ago, we've been investing in mobile home parks for years. And that was going incredible, but RV parks just went on steroids with COVID. And, you know, a huge percentage increase in RV sales and RV park popularity and all that has led to a real desire to be in the space. But we weren't willing to do it because we weren't an operator. And we couldn't find anybody except a few institutional players like Sam Zell, and some communities who knew how to do RV parks really well. When we finally found one. And we've done some vetting on them. i My wife and I went down to Fort Worth, and we actually stayed in one of their RV parks, and we had got to enjoy that. And then my business partner flew down a week later to their headquarters, and actually got to meet their staff there to interview them talk to various investors talk to, you know, a variety of people who were involved in their company. And we're in the process of deciding whether or not to invest with them. And I think we probably will. Sure that's what Wellings capital does.

Casey Brown  39:05  
Well, that's so So yeah, there again, you mean, you basically just laid it all out, we find an operator, we vet an operator, and instead of investor that's saying, hey, I want to put this money in having to call and basically say, Oh, this guy, look, I like him, I'm gonna put my money with him. Well, I like a lot of people to you know, myself and you just, you're like, Okay, what if he runs off with it? What if he whatever so I guess I see. And then you go down there and, and vet them and look at their actual product. You know, we were in the multifamily space. You know, one of the things that we always look for is quality of life kind of stuff. So it's essentially the same scenario. We look at quality of life. You know, what is the quality that these operators are putting out there for the residents you know, are they are they do they care about what is going Hang on at their apartments, and so on and so forth. So, but So you all are going to move towards the RV park investments you think

Unknown Speaker  40:10  
will be that to everything else we're doing right. Sure.

Casey Brown  40:13  
And what what other what other spaces do you think you all are going to look for with your I think it's your next fund. Is that correct? Yeah,

Unknown Speaker  40:20  
we'll have a new fund opening up within by the time this podcast launches, probably. So yeah, we plan to stay in self storage, mobile home parks, as our main bread and butter and then also apartments, very specialized on apartments, we just don't by any deal, we were looking for operators who have incred an opportunity to sniff out intrinsic value that you couldn't find elsewhere. Yeah. And so that's, that's what we're looking for. And that

Casey Brown  40:49  
that's so that needs to be on the top of everybody's mind, intrinsic value, because I hate to tell, you know, the unsuspecting investor out there, that when when, when an operator when their main objective is, is to just say, we're going to buy this, and our return is going to be based on an increase of rents. Wonderful, short term, I guess, it depends on the area. Again, I've seen it firsthand as you have as well. You have to find those intrinsic value deals. Very true. And and I think, you know, a strategy could be based save maybe 30% on rent increase, right? But not hold on? Not the whole strategy doesn't need to be oh, we're just gonna go up on the rent.

Unknown Speaker  41:36  
Yeah, so yeah, for example, we just invested in three apartment assets, and the rent increases look really promising. But what was more important to us is this operator has a really amazing way of getting tax abatements from local cities, basically, you can get 180 to 100% of their taxes abated for 99 years. And so he buys these and the day he buys them, he also signs that agreement with the city to get their taxes rolled back. That's a massive intrinsic value that the no other operator we know of has learned to unlock.

Casey Brown  42:14  
Well, there you go, the geography. I mean, they know their area, right. It's the geography, geographical diversification needs to be. It needs to be at the top of everybody's mind. Right? Because there's you just you can't otherwise make that work. So anyway, all right. Now, again, before the show, we talked, and we're kind of running out of time here. So I want to I really want you to you had said you, I think you all we're looking for somebody that to be a capital raiser, yeah, we would love to

Unknown Speaker  42:47  
continue to build our team. So if anybody wants to get ahold of me at Wellings, capital.com, we'd love to hear from you.

Casey Brown  42:54  
Sure, I can tell you what Paul knows what he's talking about, you know, he's been in this game a long time. He, you know, definitely reach out to him at Wellings capital. So is that, is that the way you want people to reach out to you? I mean, that's kind of the next move in the show is to say, Hey, how can the audience reach out to you, but But Paul, if somebody wants to possibly invest with you, and Wellings capital, or if there is somebody out there that's like, Hey, I think I could be I can raise capital with them. What's the best way for somebody to reach out to you specifically, or your team that where they can get in touch with

Unknown Speaker  43:29  
who they need. And the best way would be just to go to Wellings capital.com. And a little form will pop up and say, if you want to learn more, you can connect with us here. Wellings capital.com/resources has a lot of information they can learn. So they can learn more about investing in real estate in general, and specifically self storage, mobile home parks, they can get access to my books, and some other ebooks we've done.

Casey Brown  43:56  
Awesome, man, that's great. And I'll tell you, I love the I love the whole RV park. That that's, that's a layer that's kind of added to some of these people that we've been seeing in this that you and I both been seeing in this business is, is kind of moving through, but I'm like you they were a little shy on the operators. I mean, they there's not a lot of really good solid RV park operators out there, because there's so many, it can be full of holes if you're not careful. So that's wonderful. That's so glad. I'm so glad to hear that, that that's the space you're kind of moving towards at least with your next fund. So anyway, well, hey, Paul, I want to thank you again for being with us today. And I know that you had probably 1000 Other places to be and I know the audience is thankful for for you spending all this time with us. But I can't I can't thank you enough. And we really appreciate everything you've you've left us with today.

Unknown Speaker  44:51  
Absolutely, man. It's great to be here, Casey, and, man, I'm really honored and wish you the very best.

Casey Brown  44:57  
We'll certainly thank you and you all as well. And I hope that this is not the last episode we can do together because I feel like the audience can benefit from everything you bring to the table. Okay, reach out to Paul, if you want to talk with him more about investing with Wellings capital or again, if you're possibly looking to maybe be part of his team. I know that he'd be glad to hear from you. So, Paul, thanks again, sir. Everybody have a wonderful day. Thank you for listening to the cashflow pro podcast and being here in us on our channel. And we hope everybody has a wonderful rest of the day.

 

Paul Moore Profile Photo

Paul Moore

After a stint at Ford Motor Company, Paul co-founded
a staffing firm where he was 2x Finalist for Michigan
Entrepreneur of the Year. After selling to a publicly
traded firm, Paul began investing in real estate.
He launched multiple investment and development
companies, appeared on HGTV, and completed over
100 commercial and residential investments and exits.

He has contributed to Fox Business and The Real Estate
Guys Radio and is a regular contributor to
BiggerPockets, producing live shows, recorded video,
and blog content. Paul also co-hosted a wealth-building
podcast called How to Lose Money and he’s been
featured on over 200 podcasts. Paul is the author of Storing Up Profits – Capitalize on America’s Obsession with Stuff by Investing in Self-Storage (BiggerPockets Publishing 2021) and The Perfect Investment – Create Enduring Wealth from the Historic Shift to Multifamily Housing. Paul is the Founder and Managing Partner of Wellings Capital, a real estate private equity firm.