In the 45th episode of Cash Flow Pro, Yannik Cudjoe-Virgil of Merlynn Acquisitions. The former football player suffered a devastating career-ending injury his first year playing. During his recovery, he picked up Rich Dad, Poor Dad and decided to take...
In the 45th episode of Cash Flow Pro, Yannik Cudjoe-Virgil of Merlynn Acquisitions. The former football player suffered a devastating career-ending injury his first year playing. During his recovery, he picked up Rich Dad, Poor Dad and decided to take his life into his own hands. Today, Yannik tells us his story and why he chose real estate.
Merlynn Acquisitions is a multifamily private equity firm that focuses on identifying cash-flowing apartments that provide predictable and stable returns for their partners. Their goal is to double the equity investment in five years or less and provide quality affordable housing to tenants.
In this episode, we discuss:
- Taking action when faced with adversity
- Raising capital and forming relationships
- Use your money to build wealth not just save it
Make sure to tune in on this episode to find out more!
Find your flow,
Resources mentioned in this podcast:
Casey Brown 0:06
Hey there and welcome to today's episode of cash flow Pro, your daily real estate investing podcast and YouTube channel and today I am here with Yannick, Cujo virtual of hang on I had to get that out of I had to make sure I said that right so I got off track but with Merlin acquisitions, so Yannick, how are you today?
Unknown Speaker 0:34
I'm great. I'm awesome, Casey, as well. How are you?
Casey Brown 0:37
Well, thank you so much for being here with us. We're so we're kind of excited about this. And, and it's, it's just not every day that I have to tell the listeners up front, Yannick used to play the NFL. He is so let's get the stardom out of the way so that we can hear his real estate investing story and his story about how he got to where he is today. So Yannick, I'm gonna let you kind of take the take the reins here. Tell us a little bit about you know where you were growing up and how you grew up. And what you saw that eventually led you down the path to say, Man, I really want to be involved in the syndication or not, not that you were thinking about syndications when you were when you were a kid or anything, but I'm just saying what kind of things led you to want to have an interest in the real estate business?
Unknown Speaker 1:27
Absolutely. Well, thank you so much for for having me. So my background, as you stated is in the professional sports room, played for the Tennessee Titans, originally from Baltimore, Maryland. And, you know, fortunately, I had an opportunity to play professionally, it's always it was always my dream. Unfortunately, I had a career ending injury, my rookie year, I tore my patellar tendon. And, you know, my kind of red pill moment, you know, stemmed from just rehabbing and figuring out, you know, am I going to going to be able to get back on the field? Right? You know, we had a new GM coming from the Patriots, and I'm pretty sure some of the listeners who are sports fans know, the Patriots doors are in and out, right. So you know, everyone was scared of the locker room. And I just kind of thought to myself, hey, what am I going to do after football? Right? I have this knee injury, I've had, you know, three surgeries so far, you know, what am I going to do? And fortunately, you know, I picked up the book, Rich Dad, Poor Dad, I'm pretty sure he, you know, read that book. And that book was seriously just transformational. Really, because that same month, I spent $20,000 In one month, and I still, to this day, really have no idea what I spent it on. And so after just after doing that, and after reading a book I really said to myself, Hey, I've really I really have to be a little bit more smarter when it comes to finances. Because I don't know when I'll be able to get back on the field. You know, you've heard a statistic probably you know, 70% of professional athletes go broke within three years of leaving the league. So I did not wanting to be part of that statistic. So fortunately, I got rich dad poor dad, I read that I got on bigger pockets just started, you know, infusing myself with knowledge and wanting to get into the commercial real estate space. So started off in brokerage and I joined a couple firms, corporate asset management for private equity firms specializing institutional and retail capital as an asset manager. And, you know, started flipping houses and jumped into into the syndication space and here I am today.
Casey Brown 3:33
Awesome, man, that's such a that's a that's a great way to come in. I mean, you know, in the fact that that you had the opportunity to either I don't want to say like lay around or whine and whatever and or, or the opportunity to say, Hey, this is the handout was dealt let's go and man to just I think that's that's part of the professional athlete that I think a lot of people miss because there's so much noise on TV and so many so many different just just we hear the highlights of the athletes being whatever they are however they're acting or whatever but afforded to that you guys carry to get to the point where you've got is in fortitude and stubbornness that that not a lot of people understand. I mean, there's there's virtually no way for the average person to understand that you woke up every single day and you had one thing on your mind and it was brown. It was I don't know what shake that is football shape. And that was that was what you eat, slept breathed. That's what you did. And again, so so that for two to say, Hey, okay, I can't do this, but I'm going to take that same. All I have to do is kind of shift here. Right? Is that that? Absolutely.
Unknown Speaker 4:51
Absolutely. I think you know, entrepreneurs, people who are highly successful, whether it's being in the 1% that actually makes it to an NFL or just Being a high performance entrepreneur, I think, you know, the common characteristic is just being able to really immerse yourself and become an expert at what you do on a daily basis. And kind of like you said, right, just have that fortitude every single day, I'm going to do whatever it takes to get there or get better today. So yeah, absolutely just wanted to divert that energy from the professional sports realm to real estate.
Casey Brown 5:23
Yeah. And it seems like you've done a fabulous job of that. I mean, and what now now, take us back a little bit, and what year what year? Are we? What year or years? Are we kind of talking about here?
Unknown Speaker 5:35
So we're talking so I graduated from the University in 2014. My first year in the league was 2015. And I retired 2017. So right about that late 2017 ish timeline is when I actually made the decision to shift into real estate.
Casey Brown 5:52
So you played your first year 2015, at the Tennessee Titans, and then and then spent the next two years kind of rehabbing and figuring out if you were going to be able to, to get it done or no,
Unknown Speaker 6:04
absolutely, absolutely. And, you know, it was a really tough time, just trying so hard to get back into the NFL. And, and I tell people all the time, you know, just the mental struggles that you have to deal with from being the guy that's, you know, trying to keep a spot on the team. I mean, you know, people come in, during the season, think of every, you know, Tuesday, right, and the NFL Tuesdays are days off. Every Tuesday, you have about 10 guys coming in to try out to take your spot. Again, think about that in the corporate life, right? If you had people that were coming in every single week to take your job, what type of mental pressure that would be on you. So, you know, it was a lot within that two year period. But, you know, fortunately, I found real estate investing.
Casey Brown 6:50
Awesome, man, that's great. So let's kind of shift towards that, that end of things and let's get away from from what got you where you were, where you were, and let's kind of shift into and say, let's talk about your first deal. I mean, when you first got into this space, and and you said hey, I've got a I've got to go down this path, or I want to go down this path. What you said you started in the brokerage side of things where I'm assuming you listed and sold or or something along those lines, correct?
Unknown Speaker 7:21
Yes, yes. More specific to the commercial real estate space. So started off in brokerage focused on multifamily investment sales, because I knew that I wanted to get into the commercial space, and office and retail tenant rep. So, you know, doing some boutique, you know, small neighborhood retail listing, but also, you know, focusing on the multifamily investment sales.
Casey Brown 7:43
Awesome. And then that that led you like so we're talking like 2018 2019 2020, something like that led you to, to to the syndication world. Right?
Unknown Speaker 7:57
Yeah. Well started, you know, 20, say 2018 2019 was when, you know, they're my brokerage kind of phase and, and then I moved into the asset management space for retail and institutional, private equity companies. And actually, a few weeks ago, I quit my job, officially, so I'm full time syndication.
Casey Brown 8:19
And that's, that's probably the most kick ass thing I've heard all day long. That you know, I mean, that's sorry, man. That's, that's awesome, dude. That's so like, Mikey, I love to hear that. That's great. What was your degree in kinesiology?
Unknown Speaker 8:41
I thought that I was going to play 10 years and I went on a gym and just sail off into the sunset.
Casey Brown 8:48
Man isn't that something and God had big God had different plans. And now he now you're here with us. And hopefully, hopefully, we're all on this journey together. So. So let's talk about your first syndication. And I want to I want to kind of lead into, you know, we talked a little bit about the people that you would like to serve in the future as far as potential investors and so on. But let's talk about your first indication. What was what were some of the things that you determined were things that needed to be tackled? First, the pervert really tackled first sorry.
Unknown Speaker 9:26
My first little attention, on the GP side of things were was actually an 18 unit deal in Baltimore, Maryland. And, you know, it was in a, it was in a great location, relative to other parts of Baltimore City. And, you know, some of the things that we wanted to put in place before we started fixing up for deals was really just getting that capital together, you know, but even beforehand was really focusing on what is our investment strategy, right? Because I think that's something that's really important as investors to really figure out okay, you know, start from the foundation, you know, what am I actually trying to achieve? You know, our goal is to create passive income that allows us to pass it on for generations and generations to come. And we found that multifamily was a great investment vehicle in the commercial real estate to do so. So we started off, you know, we wanted to we wanted to do the multifamily investment, and then, you know, we wanted to get the capital together. I think a lot of people, you know, contrary to what some people say, you know, if you find the deal, the money would come. I have, I do not agree with that. I think that the money, it comes out of money, right, you know, you can have a deal tomorrow, but can you actually purchase it. So we wanted to make sure that we had the capital lined up, to actually do the deal. And then from there from us getting the capital, then we started reaching out to brokers. Fortunately, I met my partner who was a syndicator, prior to us doing business together. And we formed a relationship and started really going out there and talking to brokers talking to properties, I'm sorry, you know, for our properties, and really building that team. And by him being a syndicate a syndicator. You know, I just leveraged his relationships with attorneys, as property management company on their infrastructure that he had to go out and do my own first deal with him.
Casey Brown 11:14
Awesome. Awesome. Now, obviously, that so you see, so you have the money lined up? And in the meantime, you're built? Well, you have the soft commitments? I assume, correct? Yes. Okay. So you've got the soft commitments lined up. And now you're building relationships with the brokers and you're trying to find, you know, you're you're you're basically just kind of stirring here seeing what kind of comes to the top right. Yes. Okay. And what was the first deal that jumped out? And or how many deals did you have to underwrite before the first deal really jumped out? And you're like, Whoa, here it is?
Unknown Speaker 11:52
Well, you know, where those releases, and, you know, just saying, in general, you know, you really have to think about underwriting a 102, submit on 10, and probably get one, right. So it's, you know, it's a really big 14 game, you know, you really have to open up your lead pipe pipeline to actually get a deal. So when we were able to find a deal that made sense, financially, it penciled out, you know, we were able to move on and quickly, not only because we had the capital, but also because we had the market knowledge from owning other properties in the area, I'm a partner home or property in the areas well, so we actually had a really good business plan from past experience, from knowing the market, and, you know, trusting our real estate experience to actually go out and execute the business plan.
Casey Brown 12:36
Yeah, yeah. And that's, and that's there. Again, it comes down to, you know, one of the things that, that when you when you step back, and you start looking at what, what makes a good real estate syndicator, or like, look at look at attributes that some of the best syndicators have. And it's almost almost undeniably true that all of them come from some type of a process background, some type of a bat, and you're not, you're not any different you because because every day you get up you had you had these processes, and then then those daily processes were lengthened down into weekly processes, and the weekly processes lengthen out into monthly processes. And it's the same thing, and I always, I've always said that like, like the majority of, of the passive investors that at least we see are somehow related in the medical field, or somehow related in the engineering field. And those are two of the most probably processed as if that's even a word careers. And so with that being said, so you you go out, and you're underwriting and underwriting 100, to submit ello eyes on 10. Or to even have 10 picked out I guess, and then and then close on what what, what was that first one? And how many doors? Was
Unknown Speaker 14:03
it? The first one was an 18 unit syndication.
Casey Brown 14:08
18 units. Wow. And then and then what was the raise? What was the total raise?
Unknown Speaker 14:13
The total wage for this deal actually was $450,000. And the reason that it was so quote unquote, low was because we were able to strategically get some construction apartment financing with a local credit union. And, you know, obviously, now we talk about rates, you know, increasing and, you know, the Fed or just raise rates, you know, about a month ago, and the forward curve is looking pretty scary for a lot of real estate investors, particularly, particularly that, you know, that acquire that, you know, we wanted to make sure that we protect our investors from anything down the road. So what we were able to do was structure construction department that you know, so we didn't necessarily have to raise all of the rehab funds, which was about you know, 500,000 to do the complete value add exists Out.
Unknown Speaker 15:01
Low capital for the table. was really good with that. Do you know a lot? About 5% Going on a fixed rate? Department?
Casey Brown 15:17
Hey, we're getting some kind of feedback from your microphone it's probably my phone. Okay, there you go. Is that? Better? Yes. Much better. Oh, my gosh. Much better, much better. Let's, uh, let's, I want to, I want to go back. Let's go back in, and they'll let it all this out, you know? Yeah. So when, when you were telling us say, I'm trying to think where we so on the on the 18, unit syndication? And we were looking at you said, a $450,000 Raise? And where did that Where did you go to find investors.
Unknown Speaker 16:08
So our investors really just came from our network, you know, people who were busy professionals, kind of like what you mentioned, you know, engineers, you know, medical providers, people who are really looking for return in today's market, and also professional athletes as well, you know, athletes who have earned, you know, a good amount of capital in the NFL and, you know, really understand the benefits of putting that money to work and actually seeing that grow slowly. But surely, we're able to raise those funds and purchase the 18 unit deal. And, you know, we're able to get really good financing on it, we were able to secure a construction department note on it, which allowed us to not have to raise an extra 500,000 towards closing the project, you know, it allowed us to really just love her up a little bit to, you know, get lower proceeds that we will need to close on the transaction. So that was really good. We were really excited about that, considering where rates are today and where the forward curve is looking. In the future projected.
Casey Brown 17:09
Sure, sure. Now, did you take that deal full cycle? Or is it still? Is it still? Do you still have it? Yeah,
Unknown Speaker 17:17
we still have it, we're, you know, we're almost halfway through our business plan. And, and things are moving, you know, progressing in a positive direction. And we're excited about it. You know, we're excited about it. And, you know, we're projecting well over 2x, multiple over a five year period. So we're super excited about, you know, closing this deal.
Casey Brown 17:35
Shoot, yeah, man. And so what was the total purchase price? And you said it went from you got in with a credit union, where you got construction to perm financing? And what, what was the total purchase price the capital raised, and everything included?
Unknown Speaker 17:52
Yes, the total total purchase price was 1.325. Okay. You know, we just, we just had to raise about, you know, 450,000, and the rehab budget was around 500,000.
Casey Brown 18:06
For the bank included the rehab budget, I'm assuming in the initial loan, you raised 20%, or whatever for that. And then And then, and then what did it give you like a 12 month window to do the to do those repairs, and then after 12 months, or something it converted to permanent? Yes. So actually, we
Unknown Speaker 18:23
were able to negotiate two years of interest only. And that's really great, right? Because we were there first, we wanted to take it to agency, obviously, for the non recourse option. And from there, you know, we really didn't find any options from from the actual agency wonders that would be feasible for this particular project. So we took it to a smaller bank, who really, you know, they really fight for business like this, you know, the smaller multifamily space, they don't get to see the big 100 unit properties for the unit properties. And so we're able to negotiate interest only that, you know, we were able to get the rehab funds looped into the original loan, which you know, serving as a construction loan for the first two years, and then it would convert to perm, which turned into a fixed rate. You know, for 15 years, we priced every five years over a five year Treasury benchmark. So we were super excited about placing the right debt on that property.
Casey Brown 19:23
Sure. Yeah, that's awesome. Now, what about your second I mean, how many deals have you done? Have you done more than just that one or Yeah,
Unknown Speaker 19:30
so we've done two deals. So far we also did a 22 unit deal which was similar location similar structure we went to a different credit union three years interest only on that you know, the rate was much better at 3.75 construction debt converted to par and the same structure and you know, things are working out well.
Casey Brown 19:51
Sure. Now what's what does the on that converted to perm or converted to permanent financing? I guess for the listeners that maybe wondering what we're talking about. Was there? Is there some type of an interest rate? Cap? Or? Or is there? Obviously, they I don't know that they can hedge the interest rate out that far, as far as taking on, like old money versus new money. Is that or what what does that interest rate look like three years down the road? Yes. Or when it converts to permanent? Sorry, yes.
Unknown Speaker 20:25
So for both both properties, you know, when it converts department, that's actually a fixed rate. You know, that's repriced every five years over a five year Treasury plus a spread. So when you say that, you know, for the first deal to 18, a deal two years interest only plus a five year fixed period, we have seven years to be protected, so to speak, before we you know, see some sort of change in our interest rate,
Casey Brown 20:50
or what that interest rates going to be for seven years? Correct? Correct. Awesome. That's great. Yeah, shoot. Yeah. And then and then of course, it, yeah, like you said, luxury price based on men all times, they have floors and ceilings that can only reprice so much, you know, so yeah, that's, and that's great. And then and especially the fact that it just kind of converts after, after the short interest only period, of course, the interest only period is when you kind of try to build up those reserves and build up the backlog of, so you have some cash on hand to replace it, ah, back unit or something like that. So. And, so. So your you were talking a little bit earlier, before we before we jumped on the show, you were hoping to to potentially put together maybe a network of some professional athletes that are maybe like, kind of cater to them so that you can, if you were to start a fund, you would be trying to to work in with him? Because obviously, you have a you have the community there that you could reach out to? And hopefully, you know, kind of work your way in, right?
Unknown Speaker 22:00
Absolutely, absolutely. I think there's an amazing opportunity from that perspective, considering that, you know, professional athletes kind of cute, they talk to each other, more than they will talk to anyone that wasn't in that locker room, right. And so being able to use that network to, to help folks you know, protect their, their wealth to help folks, you know, get a return on their money. You know, it's, it's, it's, I'm super excited to have that opportunity, I think, you know, in the professional athletes space, you know, a lot of them, you know, even myself when I came out of the University of Maryland, and then went to the NFL, you know, I didn't necessarily have investment knowledge, you know, I knew about saving my parents taught me a lot about saving, saving, saving, but when it came to actually making some, you know, financially astute decisions, you know, on the investment side, I really didn't know what to do with the money, right? So it's kind of like giving a child or kid you know, that went from being a broke college student, to being starting a multimillion dollar contract, you know, in a few months, right, you know, anyone that has that type of money and is still, you know, very relatively young at 21 years old, you know, they're just, they just got done party, right? Providing folks or, specifically to the professional athletes base with an opportunity to not only conserve the wealth, but also grow it as well. It's something that we're really excited about, and we're really passionate about, considering that I was learning really, in that phase, you know, a few years ago,
Casey Brown 23:38
yeah, it hadn't been that long. I mean, you're not that far separated from it is, as far as and it's, you know, the opportunity, I assume the opportunity to be able to tap that, in that work is probably like anything else, it's just a little bit of a smaller possibility every day that goes by that you that you you know, when you start looking back, you know, start leveraging that and start saying, Hey, guys, come over here and check this out. I want to help you know, and I'm sure that as, as a professional athlete, whether for any sport, I'm sure they're inundated with, with just people, I mean, everybody wants a piece, right? And so, you know, you oftentimes have to, to be able to separate the, or focus on who you can and can't trust because I'm sure there's a majority that you cannot trust. And you know, you see it all the time on TV and you know, so and so escape with such and such amount of money that or fraud or whatever. And so yeah, I mean, it definitely you definitely have an in there with somebody to have to have a discussion and then it turns to, Hey, can I help you or something like that, so that's awesome, man. So what does the future look like? Let's let's talk a little bit about, you know, what does the future look like and are you are you just kind of going to You said something about Starting a fund, which I think we covered. And then are you looking at just are you looking at deals right now? Or how what does it look like on the deal front right now?
Unknown Speaker 25:08
Absolutely. So we have a goal by the end of the year to be fine on the doors on the management. And hopefully we're hoping to do some bigger deals to get to that number.
Unknown Speaker 25:19
Right now, what's the total right now?
Unknown Speaker 25:21
Right now on this? Syndication space? Only I own properties personally, but just last indications, 40 units.
Unknown Speaker 25:28
Alright, we got 60 to go, man. Yeah, that's,
Unknown Speaker 25:31
that's a couple of new properties. Right, we can do it. As far as the future, you know, we're we're, we're always looking at deal flow primarily in the Baltimore market. And we're looking to expand outside into Virginia and Philly, some of the surrounding markets and in the Atlantic. And as far as deal flow, I think right now, we're still looking for deals, but figuring out where pricing is given, you know, the rates that are coming up, and I think, right now is really good time to really structure debt for the future and figuring out, you know, okay, you know, the rates are going to be here today, here's what we expect, but what is it going to look like, in the future two to three years down the line where we might refinance from a value add deal into permanent agency loan and figuring out okay, how are they going to see leverage on debt moving forward? You know, how are we going to price the loan proceeds? In a few years, you know, how are we going to exit out of these properties? If they're expecting rates to continuously increase, right? So we're being strategic about the debt that we placed on the property is, is always a number one, front for us, because debt is always the biggest killer for real estate deals. If you're not structuring the debt correctly, if you're not being a student, and how you're, you know, putting debt on a particular property you're in for, you know, turmoil, right? So figuring out, you know, how can we place that on these on these properties? And then also, you know, what types of returns that we can go out there and get for our investors. So I'm sure we're excited about the future.
Casey Brown 26:59
Awesome, man. Well, I got to say Yannick, and I connected through a mastermind that we're both in called Race masters. And of course, I'm always I'll always give Hunter Thompson and raise masters a plug. Because it's really been a community of just kind of, we're all there's, there's not a lot of taking, but there's a lot of giving. And then, of course, I say there's not a lot of taking, but there's you take from what somebody else gives you when it in the form of knowledge. And so, you know, when you start talking about these cap rates, and well, interest rates, rising cap rates, compressing, and things like that, and the thought that, you know, at some point, we may, there's a very good possibility, we may begin to look at the potential of having to underwrite a negative cap rate, you know, what I'm saying? Like a cap rate that doesn't initially cashflow like right off the bat, you're losing, you know, you're you're not making money and that cap rate is negative. So you know, a lot of that stuff, and I've heard Hunter speak about it, to add length and, and it's just something that's a very, very good possibility as we move forward with with the given the idea of interest rates, given the idea of prices and given the idea of, of just basically the economic landscape in general. But listen, well, Yannick, I'd like to ask you, what is what is the best book you've ever read?
Unknown Speaker 28:30
The best book I've ever read, you know, I think I want to keep it closer and just say, you know, Rich Dad, Poor Dad, to be honest, man, I think, you know, I'm, I'm big on you know, what has actually changed my thought pattern in life, you know, and one of the big monumental changes that I've experienced and what has caused me to make those changes and I think there's that book alone, you know, I can't wait to just pass it down to my kids because, you know, just being able to change that mindset from being a consumer to an investor and just focusing on you know, long term wealth. It's truly amazing and just being able to quit my job you know, a few weeks ago and, and have that passive income to actually replace it is truly amazing. So, yeah, that's what I would say, you know, my, the best book I've read, it's
Casey Brown 29:17
awesome, man, where is what's the best trip that you've ever taken? Or where's Where is somewhere like a dream trip that you'd like to take?
Unknown Speaker 29:27
You know, that was the best trip that I've taken so far. Was the trip, like a year and a half ago to Tulum, Mexico with my girlfriend, we had an amazing time out there. We're able to actually sit across from sting ratings and, and do a whole bunch of just, you know, visiting the Mayan ruins and really just taking a step away from the business life and just relaxing for a little bit. You know syndications. Although it may look glamorous, you know, when you're starting off growing a business it's really hard just being Being the, you know, the point of contact for everything in your business, right. So just being able to step back, you know, take, take a couple days off and just relax. It was truly rewarding so.
Casey Brown 30:13
So now, for the listeners who might have picked something up here or want to reach out to you or somebody that needs to, wants to get in touch to learn more about the potential of maybe even investing with you, what's the best way for them to reach out to you?
Unknown Speaker 30:29
Um, so the best way to reach out to me, is why email I'm always happy to have a 1015 minute conversation with anyone that's interested in investing in real estate or is interested in our company. And anyone can reach out to me through my website called Merlin acquisitions and our our y n acquisitions.com. Or my email address why cool Jones CMD JL e at Merlyn acquisitions.com. Again, I'm always happy to have 1015 minute conversations with anyone that's interested in real estate. And one thing that I want to leave here is just being able to perform due diligence in real estate business is important, right? So if anyone wants a due diligence checklist before they go on my website and get a free checklist as well. I'm always happy to just provide value in all fronts. So thank you so much, Casey, for having me.
Casey Brown 31:20
Thank you for being with us. And we certainly appreciate your time. We know you're a busy man and and we want to thank you again for being with us. So I hope everybody has a wonderful rest of the day and thank you for listening to the cashflow pro
Transcribed by https://otter.ai