Hello and welcome. My name is Gino Barbaro, one of the co-founders of Jake and

Gino. And in this how-to, I got my buddy Lon Welchon. Lon has been on a Jake and

Gino podcast. And I wanted to get him on today's How To specifically for what's going on

right now in the economy, what's going on in

the world, what's going on in multifamily. Lon is the founder of Ironton Capital. He's got a

great resource for us as well. So if you want to grab his resource, go to Ironton Capital

forward slash Jake Gino. That's irontoncapital..com forward slash jake e g-in-o.

Go pick up that resource.

Lon, let's just jump right in.

We were on for a few seconds.

And I asked you, scratching my head saying,

Lon, are you having the same situation as me?

I'm looking at these deals. And it seems as if I have to pay an exorbitant price and I am paying for profits, basically.

I'm paying what the thing is going to be worth two or three years from now. There's no cash flow day

one. And I have to take all the risk. I have to raise all the capital. I have to do all the work,

but the seller is getting compensated. Are you coming across that or am I the only one in this market looking at that way? Well, I think there's a lot of sellers that have got a lot of wishful thinking and that's the bucket that you're in. So we see that there's really three strategies that make a lot of sense for us. One is you're doing a development project from scratch. so there won't be any cash flow, but there'll be a big payoff at the end. The second is you buy an existing asset that's in good shape, well managed, doesn't need a lot of headache work on your part, and you pay a fair price for a good asset. And then the last is a value ad deal, where you've got something that's been neglected. It's got bad management. It's got a lot of deferred maintenance or the tenants are in disarray or whatever the issue is. And those should be bought at a discount. And there's enough motivated sellers. If you turn over enough rocks, you'll find one like that. The fourth case is the guy who's got the crummy asset, but he wants to get paid full price for it. Like, you know what? You just need to lose it to the bank and then I'll buy it from the bank later. So there's four. Number one is development. Number two is an existing asset. Number three is the value add, which I'm talking about, but maybe three and four can be combined. And you made a great point. not turning over enough rocks because my market may not be big enough. I am in a geographical area within three hours of a certain city because we're vertically

integrated and we're trying to keep operations within there. Now we're expanding out, but that still

doesn't give me enough of a look at enough deals. But number one and number two, Lon, they fall into

the bucket where, yeah, I'm okay to pay a little bit more because I know I've got a great asset. I know it's stabilized and I know long term I'm going to be okay. But that three and four is where I'm taking a ton of risk there. Absolutely. All the work. And where do you see in this part of the market cycle does it reconcile with no you're

going to get paid based on actuals you're not going to get a four cap or a five cap anymore on a

1970s asset when did you see that turning or do you even see that turning in the near in the near future

in multifamily no i think when the pharaohs were trying to sell their pyramid to the other guy,

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