From $500 Receivership to 850 Units: How the Motew Brothers Built MO2 Properties

[00:00:00] Speaker A: Foreign. [00:00:06] Speaker B: Welcome to the Real Estate Chicago Style podcast. I'm your host, Joe Smazel. I'm a multifamily broker at Interra Realty and an owner operator at Smoz Apartments. I've got the Motus with me today. Two guys have been friendly with for a long time. You said last week I was in here, like when am I going to be on the podcast? Let's do it tomorrow. What are you doing right now? So here we are. Thanks for doing it. I've known you guys for a long time, done a lot of business together, think highly of you and looking forward to having you on. [00:00:37] Speaker A: Thank you. [00:00:37] Speaker C: Yeah, we appreciate, appreciate you asking us. [00:00:40] Speaker B: So you're a couple of. I mean I think Motsu is one of the most active middle market investors, operators, developers, managers. Probably a sign of your modesty that like when I was on the website trying to get a little like blurb together to intro you guys, it wasn't much about like the scale of your business. So can you kind of give folks a matter like whether it's a unit count or how many buildings you have just so people that aren't as familiar with you kind of know your experience. So what does the portfolio look like today or how do you measure the size of the business? [00:01:14] Speaker A: Well, it's funny, I think Michael and I both don't, I actually don't know and I'm not saying this like in a way that we own so many, I don't know the actual amount of buildings that we own. We're somewhere around 850 units. Yeah, you know, I think that's kind of what Michael and I do. We just kind of plug along on a daily, you know, on a daily basis and just do what we do. So I don't like sit there and be like, oh, I want to get to a certain number. Yeah. But you know, we're somewhere around 80 buildings on 8, 150 units. [00:01:45] Speaker C: Yeah, that's, that's pretty accurate. I mean we're not, we're not super detailed in knowing, you know, you knowing the exact size of our portfolio, how many buildings we have. We spent a lot of time focusing [00:01:57] Speaker A: on [00:01:59] Speaker C: deals and looking for deals and we have a really good team which we could talk about later and took a long time to build the company we have today because when we started it was just the two of us. And that being said, we're still incredibly hands on operators. It's just that it's funny, that question comes up a lot. My kind of stock answer is always like We're a smaller size real estate company and there are a lot of guys that are much bigger than us [00:02:27] Speaker B: that in today's world where everybody, including me, is on LinkedIn and you know, there's a level of self promotion, honestly that's necessary in my business or that I've at least just like gone numb to having to do. But I feel like a douchebag about that sometimes where you talk about how many deals you've done or how many, you know, you know. [00:02:44] Speaker A: Yeah, but that's your business. Okay, but for you. [00:02:46] Speaker B: But the point of it is like, I like, you know, part of the reason why people like me like doing business with you is you guys are like doers, not like talking about it. You're like, you spoke, spending a ton of your time doing, doing the deals. [00:02:57] Speaker C: Yeah. [00:02:57] Speaker B: Which I think. And not measuring some number of deals or having some arbitrary goal on what the volume of your portfolio looks like. [00:03:05] Speaker C: Which is interesting because as we, Kenny and I age, we are focusing more on like, okay, what is our plan? You know, like what is. Again, we're always so caught up in like bring us deals, we're deal junkies. We want to pursue deals, we want to find deals. And we spend more time today than we ever have sitting down and saying, okay, let's talk about some of the [00:03:27] Speaker B: goals we have on the business versus. [00:03:29] Speaker C: Yeah, yeah, on our business. How many units do we want to get to? Are we going to sell things where [00:03:34] Speaker A: we want Our management company? [00:03:35] Speaker C: How big do we want to grow? Yeah, we spent a lot of time talking about, you know, we have a few companies that run out of motu and we think like we have good infrastructure, kind of good back of the house and we think we could probably build on that. Yeah, we could build more brokerage, we could build more construction, we could build more management. [00:03:52] Speaker A: And so, but it always goes back to, we think about that and then, and then a deal pops up and then we're literally, like I said, we [00:04:00] Speaker C: spent a lot of time talking about it. [00:04:02] Speaker A: Like our deals, like, you know, it just ebbs and flows like everything else. Like we happen to be in a cycle now where there's just a. I feel for us, we're probably doing the most projects we've ever done at once [00:04:14] Speaker C: in bigger size projects. Yeah, yeah, that's true. We're, we're doing more projects than we've ever done in their larger size. For us. [00:04:22] Speaker A: Yeah. [00:04:22] Speaker C: Where our wheelhouse was typically six to eight units. [00:04:25] Speaker B: We're gonna talk. Let's. Yeah, I'll get You guys going with four rapid fire questions? [00:04:31] Speaker A: Okay. [00:04:31] Speaker B: I don't know if we've ever rapid Fired through anything. The three [00:04:37] Speaker C: go fine. [00:04:37] Speaker B: So both of you answer each of these, and then we're going to talk about. We're just. I'm gonna. I don't even think. Follow this outline. I think we'll just talk about what you guys are working on and see where it takes us. This outline was also put together bright and early this morning. [00:04:50] Speaker C: So six minutes ago. 60. [00:04:54] Speaker B: What's your favorite Chicago pizza place? [00:04:57] Speaker C: Oh, gosh, I'm a Lou Malnati's guy. That's still my favorite. [00:05:01] Speaker B: What do you. [00:05:02] Speaker A: What do you get? [00:05:02] Speaker C: I get deep dish sausage. [00:05:04] Speaker B: Deep dish? [00:05:05] Speaker A: Yeah. [00:05:05] Speaker B: That's kind of a contrarian Chicago answer. [00:05:08] Speaker A: Yeah, I'm a deep dish sausage. I had. I had pequods again the other day that honestly was so phenomenal that I don't, you know. And how's this? There's a new restaurant that opened up that. I love their pizza. Dimmy. Dimmy. Oh, yeah, it's really good. [00:05:20] Speaker C: I love a plug. Yeah, their pizza is great. [00:05:23] Speaker A: Yeah, those are like, opposite. Yes. [00:05:26] Speaker B: You could fit like five Dimmy Dimmies [00:05:28] Speaker A: in one pizza, you know? Really? We were talking about this the other day. I. I think we used to just call it pizza, but everyone calls it tavern style now. Yeah, I love tavern style. You know, that's a pizza we grew up on, dude. [00:05:39] Speaker C: I mean, like coal fire pizza on Grand Avenue is. Yeah, that's a really good pizza. I'm a pizza guy. I love cold fire. [00:05:48] Speaker A: I know you do, but I. I [00:05:50] Speaker B: was objectively good [00:05:54] Speaker C: pizza. He doesn't like that style. [00:05:55] Speaker A: Yeah, I don't like that style. It's a good thing I didn't say it's not good. [00:05:58] Speaker B: Work out every day if you guys are both like. [00:06:00] Speaker C: Probably because we just got deep dish yesterday for our office meeting. [00:06:06] Speaker A: Yeah. [00:06:06] Speaker C: And I got bagels and salami and turkey and corned beef and came in and everyone was like, we don't want it, we don't want it. And so we ordered pizza. [00:06:14] Speaker B: Good stuff. All right, you each have to answer this. What's an apartment amenity that helps leasing. And what's an apartment amenity that helps retention? First thing that comes to mind for [00:06:25] Speaker A: both, I always say washer dryer units. [00:06:28] Speaker B: For leasing or for retention? [00:06:29] Speaker A: For leasing. [00:06:30] Speaker B: And then what about retention? What's something that you think that keeps [00:06:34] Speaker A: people staying around an amenity in the unit or building or building amenities for the most part. I mean, until recently, I would say communication I think the one thing and Michael and I get, we communicate very well with her tenants. [00:06:46] Speaker B: Yeah, we can. Okay, fine. That's fair. [00:06:48] Speaker C: No, that's a fair point. I mean, I mean, what's an example? [00:06:51] Speaker B: Like the communication that you think like just being responsive or proactively. [00:06:55] Speaker A: I think being responsive. I think that Michael and I, every one of our meetings we talk about like communicate with the tenants even if you can't, even if the problem's going to take a while to fix, just make sure you stay on top of it. [00:07:04] Speaker B: Yeah. [00:07:05] Speaker A: And I also think Michael and I, and not that we love to, but we do sometimes get involved if there are other issues. And I think tenants like that. [00:07:13] Speaker B: Well, I think it also like humanizes the business a little bit. I think tenants would much. They appreciate just being corresponded with like normal. [00:07:21] Speaker C: I would say it's the number one [00:07:22] Speaker B: thing you have to do even if [00:07:24] Speaker C: you don't attend to the problem as fast as they want you to. [00:07:28] Speaker B: Yeah. [00:07:29] Speaker C: If you respond immediately and then continue to communicate, you, you tenants will stay and tenants will be happy with, with, with where they're living. They'll feel safe, they'll feel secure. But if you ignore tenants, even if that means like we might not be able to fit, it might be a part issue. Yeah. [00:07:46] Speaker B: Right. We can't do. [00:07:48] Speaker C: Why would we do it quickly? But if you tell them we ordered a part, it's going to come in. And in the meantime, let's say it's their furnace. We'll provide you with some kind of heat. [00:07:58] Speaker A: We'll. [00:07:58] Speaker C: We'll throw an AC unit in your window. [00:08:00] Speaker B: Yeah. [00:08:00] Speaker C: And it's like if you communicate quickly, these tenants are generally pretty happy and [00:08:08] Speaker A: that helps retention and keep them up to date. I mean, keep them up. I was in here the other day. We have an issue with washer dryer. Tenant actually showed up which at like 8:30 in the morning, which I was actually shocked about. Like literally, he just like, what's going on? Like we don't own a washer dryer company. We're waiting on the part. It was totally fine. You know, we have an issue with an elevator next door. That's been a month month an elevator. But Gianna's done a good job communicating with them. We've talked to the ted. It's not a big building. I mean, but it's. Right. And the other thing that we don't do, I think a lot of companies like you call our office. You get a person. [00:08:43] Speaker B: Yeah. [00:08:43] Speaker A: Very rarely does it. We don't have like a whole Intra. Get, like, press this, but talk to this. Like, literally, we make them. [00:08:49] Speaker C: Kenny and I will often tell our man. Our property managers, like, because they are younger and they. They'd rather email. [00:08:56] Speaker B: Yeah. [00:08:57] Speaker C: And we. We're always. Our first question is like, did you call them? They're like, well, we emailed them. Like, did you call them? [00:09:02] Speaker B: Yeah, well, I started talking on the phone. [00:09:04] Speaker C: Like, pick up the phone and talk to someone. [00:09:06] Speaker B: Yeah, yeah. [00:09:06] Speaker C: Because a lot translation is lost. [00:09:08] Speaker B: Often brokerage, too. [00:09:10] Speaker C: Yes. [00:09:10] Speaker A: Yeah, for sure. [00:09:11] Speaker C: Brokerage. Yeah, I totally agree. Like, pick up the phone and actually talk to the person. [00:09:15] Speaker B: Yep. They can see. They can tell the sincerity in your voice. You can figure out if there's something else you can do to make them happy. Yeah. [00:09:21] Speaker A: Yeah. [00:09:22] Speaker B: All right. What's your go to road trip Snack and drink. You're stopping at a gas station. You're going to a hockey tournament. [00:09:30] Speaker A: For sure. McDonald's regular Coke. For sure. Yeah, 100%. And then at a gas station. I like pretzels. Pretzel rods. [00:09:39] Speaker B: Pretzel. [00:09:39] Speaker A: Pretzel rods. [00:09:41] Speaker C: See, I have to have a ginger ale, and I have to have a bag of Bunch of crunch. I'm a candy guy. Yeah. I literally pack a bunch of crunch and ginger ale for a road trip. Sometimes Swedish fish and then some kind of, like, chip. [00:09:55] Speaker B: Like a snack bar. [00:09:55] Speaker C: Yeah, we have a lot. [00:09:57] Speaker A: Yeah. It's a little salty, by the way. I'm salty with the Coke. Like, I like. I love sugar, but I much rather have, like, a pretzel rod and a Coke. [00:10:05] Speaker B: All right. We're not rapid firing. This is the last one, though. And then we can ramble all we want. What's your favorite building in your portfolio? And I know you're gonna be like, oh, they're like. They're like our kids. We couldn't knit, although. So you have to actually just give one for whatever that represents to you what your favorite is. [00:10:22] Speaker A: Oh, my God. That's a great. That's a great question. Because here's the funny thing. I always say this to my girlfriend today, but I don't. I don't fall in love with my buildings because it's our business, if that makes sense. Like, I. I like. I would probably say the office. I like our office building. [00:10:37] Speaker B: Yeah. [00:10:38] Speaker A: I love coming here. I think that this. If you saw this project, when we did it, it was like, falling down. There wasn't a whole lot going on the street. And since we've been here, which has been. Jesus, Michael, like, 12 years. I. I mean, it's. I mean, it's probably my favorite. Like, if you actually. The other one would be this new one we did in Logan Square. Yeah, that. I like that one. [00:10:59] Speaker C: We converted a 1316 Logan. Yeah, Logan and Troy. [00:11:03] Speaker A: Yeah, I happen. [00:11:04] Speaker B: Yeah, that was on the boulevard. [00:11:05] Speaker C: I will say this, though. It's interesting. It's a great question, and I. I can't come up with an immediate answer, but I think part of it is because as we've grown, when we were first starting, we were intimately involved in every project, in every aspect, and I think that's what kind of made me like certain buildings, because we did so much. Now we have employees now that handle a lot of things we used to handle. So I don't feel as connected to the properties as I used to. So we used. We'd go in, Kenny and I would lay them out together. They'd frame it, or before they frame, they lay down two by fours for like, the size of the bedroom. We would go there and we don't. You know, now we have designers, interior designers, our architects do more work. We have guys here that are doing more of the construction management. [00:11:51] Speaker A: So our rehab guys know what they're doing. [00:11:53] Speaker B: Yeah. [00:11:54] Speaker C: Our rehab guys are so kind of experienced and fluent in it. We interact with them less. So we kind of hand over a project to one of our rehabbers, and Kenny and I pull away. And then, like we've talked about earlier, we go on to the next deal. So I don't, like, not married to any particular building lately because I'm a little less involved after the pursuit, after. After we close the deal and after we kind of entitle it or whatever we're doing, I will say I really like 691. I think it's. It's probably one of my. My favorite buildings. [00:12:25] Speaker B: Stay tuned. [00:12:26] Speaker A: Stay tuned. That's a new building for everybody. Yeah, that's a new construction. [00:12:31] Speaker C: New build. [00:12:32] Speaker A: Interesting. Really? [00:12:33] Speaker C: Yeah, I kind. I kind of like that because we've never really. We've never done anything of that size ground up. [00:12:38] Speaker B: Yeah. [00:12:38] Speaker C: So. And. And it's a little bit. You know, it's. It's. On average, it's more units than the most of our properties. [00:12:44] Speaker B: Yeah. [00:12:45] Speaker C: So I just. [00:12:46] Speaker A: And the whole process. [00:12:48] Speaker C: And that was a long process. [00:12:49] Speaker A: Yeah, the whole process of that thing was really long. [00:12:52] Speaker C: Really long. Securing the lots. [00:12:54] Speaker B: I can also imagine that, like, being that it's three doors down from your office. Like, you know, that was a parking lot. And, you know, I think talk about this on the. The show before. I don't think people Listen consistently enough to be like, all right, tuned in. But, like, I think that there's something innate in us that likes the idea of building and, like, seeing it come to fruit, like rehab. An existing building can be gratifying, but, like, it was existing part apartment stock before. Like, I think when you take a piece of dirt and you build, like, and then you see people enjoy it with that level of, like, quality housing, it's pretty cool. [00:13:24] Speaker A: It's pretty cool. [00:13:25] Speaker C: I, I was. Every time I drive by it, I'm like, that's, that, that's really cool. [00:13:29] Speaker B: Yeah. [00:13:29] Speaker C: I mean, it's just. And again, it was so new for us. And, and again. [00:13:33] Speaker A: Well, but think about what we've done on the block. I, I, I mean, like, when we came here, I mean, we own, you know, a decent amount of property on this block. There was not a whole lot. I mean, since then, you have spoke and that avenir across the street, like, this whole neighborhood changed. [00:13:46] Speaker B: It was kind of a tweener neighborhood before, right? [00:13:48] Speaker A: It was a very tweener neighborhood with not. I mean, there was, ironically, there's, there are a lot of rentals there, but, like, I feel like we've kind of helped create this stretch of between grand and Ogden on Milwaukee. Like, we've been an integral part of it, and that's pretty cool to me. Yeah, I feel like. And the guy who we ended up buying a lot of the property from, we had a connection to with our father, which is a crazy story. [00:14:13] Speaker C: 691 just is layered with multiple stories and challenges. [00:14:17] Speaker A: Oh, yeah. For over five years. [00:14:21] Speaker C: Over five years. [00:14:22] Speaker A: Yeah. And we were parking on it. And literally, when people didn't you ever park there, it was like a valley you go in, and everyone's like, why don't you spend money to do it? Because as we all know, in Chicago, if you wanted to do a parking lot, you're spending probably 3, 400 grand. [00:14:34] Speaker C: Owner of that, of three of the four lots there owned this building. [00:14:38] Speaker B: Okay. [00:14:39] Speaker C: And he had a existing building on it that had a fire. And, and, and he. Did we tear that down? [00:14:44] Speaker A: No, no, the city tore it down. [00:14:46] Speaker C: City tore it down. City tore it down, which helped us a lot. And, and, and then we had, you know, we, this was like, six years ago when we purchased. It took us two years to get the fourth lot. Different owner. [00:14:56] Speaker B: Okay. [00:14:57] Speaker C: Which, which we pursued. And, and it was really. [00:15:01] Speaker B: They were stubborn on price or what? [00:15:02] Speaker C: Oh, yeah. [00:15:03] Speaker A: Oh, he was so stubborn. He didn't want to sell. [00:15:05] Speaker B: You couldn't charm him. You lost your Touch. [00:15:07] Speaker A: Yeah, this. Trust me, we try. There was no. [00:15:11] Speaker C: I dealt with for forever, and. And then we met him, and. And then he got sick. This guy was one of the most difficult guys that we've ever dealt with. [00:15:19] Speaker A: And we kept telling him, we're, like, [00:15:21] Speaker B: about doing the project and just the three laps. [00:15:23] Speaker A: Yes, we did. And we told, okay, so we're gonna build it, and your lot will now be worth a lot less. [00:15:27] Speaker B: This is your chance. [00:15:29] Speaker A: And so we eventually, I think we kind of caved him. He didn't come down. Maybe he came down $25,000. [00:15:34] Speaker C: Yeah, he did. [00:15:35] Speaker A: Literally. But. But like Michael said, that's kind of the story of, like, this whole. [00:15:39] Speaker B: You know, so it's not dumb. I mean, we can't really say. I was gonna say start to finish. I mean, like, it's not fit. Like, it's finished in the sense that it's done physically and you're. It's. It's substantially occupied. [00:15:49] Speaker A: We have two units left. [00:15:50] Speaker C: Yeah, we're over 90%, but, like. [00:15:51] Speaker B: So when did you start that project? [00:15:54] Speaker A: When did we start construction on it? [00:15:56] Speaker B: No, when did you start the. When did you acquire the first three parcels? Like, when? [00:15:59] Speaker A: Five years ago. Legitimately. Five years ago, Definitely. I mean, I remember going. [00:16:03] Speaker B: I think it was longer than that, too. [00:16:05] Speaker C: I think it was six years ago. [00:16:07] Speaker A: Seriously? [00:16:07] Speaker C: I think so. [00:16:08] Speaker B: Well, I mean, maybe it was five. Before COVID I think it was. [00:16:12] Speaker A: I think it was. Right. [00:16:13] Speaker C: Yeah, it was before. [00:16:14] Speaker A: Well, because we went to their house. So we bought the lots from. And maybe before COVID For sure. Yeah, it might have been before COVID I mean, Michael and I, we literally went. This is the days, which I think Michael and I love this part of our business. We went to their house, just scream [00:16:27] Speaker C: out to Cheryl and say, cheryl, what do we purchase? Because that's kind of what we do all day. [00:16:31] Speaker B: Yeah. [00:16:32] Speaker C: I would just scream, and she would tell us, but I think it's for sure more than five years, because it was definitely before COVID Yeah, it's been [00:16:37] Speaker A: a long time, but I'm saying the whole process of getting that. And I do understand why Michael likes it, is like, we had to go like, this is. We went to the seller's home in Highland park, sat with them, and we were 80 or 90 years old, you know, and like I said, there was a story with our father, who's a doctor, who helped this woman, saved her life, according to him, and, like, was cried when he. We bought this building. [00:16:58] Speaker C: We bought this building. [00:16:58] Speaker A: We bought this building. He, like. But he says Your last name? Motu. Like, yeah. And then he started crying, literally, on the phone, and he said that your dad helped us adopt my daughter. Adopt a kid. Our dad was an OB GYN and saved my wife's life. [00:17:11] Speaker B: Oh. [00:17:11] Speaker A: Literally. Yeah. And we became very close. [00:17:15] Speaker C: He sold us this building, the three lots. The building at 669 Sangamon and the building on the corner that we flipped to. [00:17:24] Speaker A: I always forget me, maybe. I. I actually don't remember. [00:17:28] Speaker C: You would know them. I can't remember the name. [00:17:30] Speaker A: The same guys who built. [00:17:32] Speaker B: Yeah. [00:17:32] Speaker A: Brandon. [00:17:33] Speaker B: The French last name or whatever. [00:17:35] Speaker A: Right. [00:17:36] Speaker C: Brahimi, maybe. [00:17:37] Speaker A: Yeah, that's what I said. [00:17:38] Speaker B: Contemporary concepts. Yeah. [00:17:40] Speaker A: Yes. [00:17:40] Speaker B: I was thinking of the one over here. The. [00:17:42] Speaker C: The silver one. [00:17:44] Speaker B: I was thinking of the high rise over here. [00:17:46] Speaker A: No, no, they didn't do the high rise. They did the. [00:17:48] Speaker C: And they did the corner. [00:17:49] Speaker B: They built the yellow on the facade. [00:17:50] Speaker C: Yes. [00:17:51] Speaker A: Correct. [00:17:51] Speaker C: Yeah, yeah, yeah. So. So, I mean, Irv sold us. [00:17:55] Speaker A: Now, we would have done it, but ironically, if we had that lot, we would have built it. Like, we. We weren't, you know, at that time. We didn't build new construction. [00:18:01] Speaker B: You missed the days where you were, like. I missed the days where I was having, like, dining room meetings. Like, you go to somebody's house and you meet in the kitchen. [00:18:08] Speaker A: That's what. That's what we did with that. [00:18:10] Speaker B: I missed the days of, like, get. Getting an actual signature on either a listing agreement or a construction. That's my point about it. [00:18:16] Speaker C: A little disconnected because we don't do that anymore. [00:18:19] Speaker A: I know. [00:18:19] Speaker B: I think it's some of it, like, it's easier to say in hindsight because when you're in that, you're just, like, really in the stage of your business where you're like, you're focused on what's next and you're, you know, you haven't reached. Like, right now you'd be really proud if you. I'm sure you are proud, but, like, if you just. If you fast forward 10 years and you're like, you know, here's where to scale the business now. Here's what you're working on. Here's what you're daily. [00:18:38] Speaker C: Sure. [00:18:39] Speaker A: I think that's one of the things starting over that Michael and I never. We don't do it. Michael and I don't sit around and, like, ever be like, we're proud of what we built. I mean, we are proud of what we built, but, like, it's one of the things that just doesn't enter my mind. [00:18:50] Speaker B: Yeah. [00:18:50] Speaker A: Like, because I don't know. I don't look at what we do as a job. I really don't. [00:18:54] Speaker B: I think it's also just kind of like, I think like real estate deals. And then like your kids have weird ways of like, kind of warping time where like a day can seem really long and like a year can seem really short. And I think like when you think back, you're like, oh my God, that was eight years ago, 10 years ago, 12 years ago, whatever. And it just like, it's just a blur in some ways. [00:19:14] Speaker C: Well, I mean, I could tell you like, and we don't have to get, get this deep into it, but when we start, when we, when we join forces, I mean we, I mean we were taking receivership jobs for buildings on the south side. No, no, survive. [00:19:29] Speaker A: Remember? We high fived each other. We took a job on. That's a crazy. From the guy who owned a fudge shop in Mackinac Island. And we went, we met him on like somewhere on Wabash. [00:19:40] Speaker C: That was an Itasca connection. [00:19:42] Speaker A: Itasca was like, no, no, that wasn't. [00:19:44] Speaker C: I thought that was Rick Barth. [00:19:46] Speaker A: No, that, no, no, that was just a random guy. [00:19:49] Speaker C: No, no, that came from, that came from. Yeah, that came from Rick Barth. [00:19:52] Speaker A: But there wasn't a receivership. [00:19:53] Speaker C: No, he. But Rick Barth introduced. [00:19:55] Speaker A: Anyway, so Michael and I were, we were high fiving each other. It was a 500amonth account and we were. And Michael and I would drive out to the. I don't. 5300 something. Do you remember that? Yeah, we drive and we were like, we were so proud to pick up a $500 account. [00:20:08] Speaker B: Yeah. I mean, I think the lesson in it for anybody that's listening that's like starting is like, you should celebrate that because like, you'll think back on it and those times, like, I remember the first check I got was like. I mean it was under $5,000. And it like gave me another two months to live. Like where I was like, all right, I have a little bit more Runway. And then like my fourth deal was like, I got a twenty thousand dollar check. It was a four million dollar deal. I had twenty thousand dollar check. And I'm like, this just changed my life. Yeah, yeah, like, literally, like, it's not an overstatement. It changed my life. I was living, you know, like pretty frugally and it. I knew at that point that I had enough cushion to see it through. [00:20:47] Speaker C: Yeah. [00:20:47] Speaker B: You know, like, but at the beginning you don't know. I mean, like any amount. Like you're doing so much work that's not monetized, you don't get paid for. [00:20:54] Speaker A: Yeah. [00:20:55] Speaker B: So like when you have those, celebrate them. [00:20:57] Speaker A: Yeah, yeah, that is true. I, I mean we were literally sharing an office with somebody. It was Michael, me and Cheryl. [00:21:04] Speaker C: Yeah. [00:21:04] Speaker A: And, and like we celebrated any account we picked up at that point. Literally anything. A receivership, I had no idea what I was doing. Receiverships, like I go to court, I had like, I was like all nervous and anything you realized you go to court, they don't even care. Yeah. [00:21:17] Speaker B: Like, it's also like a superpower to not know everything that you don't know. [00:21:22] Speaker A: Yeah. [00:21:22] Speaker B: You know, and as a young person, embrace it. Put enough people around you that do know. So if something comes up, you can ask the right, you can ask the right questions to figure it out. But like, nobody knows everything. [00:21:32] Speaker A: No. [00:21:33] Speaker B: Pretend like you do. [00:21:34] Speaker A: Yeah. [00:21:35] Speaker C: We like being around people who know more than us. [00:21:38] Speaker A: Yeah, always. [00:21:39] Speaker B: Good thing about not being a very smart guy like me is I mean [00:21:42] Speaker A: you get to learn every day. Right. [00:21:44] Speaker B: Well, and everybody in real estate, like I think the most successful people in real estate are like, what do they call that? Like, like their knowledge is like narrow and deep. So like you know a lot about one topic. Like I, I can pretty much hold up with any like Chicago multifamily. But if you talk to me about another asset class in real estate, very surface level. I mean that's what's been fun about the podcast. I talk to people and I learn a lot about. [00:22:06] Speaker A: Yeah, that is your podcast. You do industrial, you do office. [00:22:09] Speaker B: It's fun. [00:22:09] Speaker A: Yeah, it's stuff that we we've never, we've done a little office so. [00:22:15] Speaker B: Well, let's talk about it. So like we talked at the beginning of the intro of like what you guys are working on. I mean historically you've done a lot of walk up rehabs, which I know are still a big part of your business, but you're doing a lot more now. I mean you're doing ground up. We talked about. You're doing river north office to resi Conversion loft office building. You're doing a church conversion adaptive reuse in Logan Square, about to close on [00:22:37] Speaker C: adaptive reuse in the west loop. [00:22:39] Speaker A: Yeah. [00:22:40] Speaker B: Breaking news. [00:22:40] Speaker A: Yeah. And, and, and we're about to close on another 52 unit new construction of land on, on Grand Avenue in a couple weeks. [00:22:49] Speaker B: So what, what triggered the idea to do ground up and adaptive reuse? [00:22:55] Speaker A: Well, I think adaptive use goes along with what we've been doing. Our whole lives. Like, I don't. [00:22:59] Speaker C: It's funny when you, I don't look at Illinois. [00:23:01] Speaker A: Yeah. [00:23:01] Speaker C: I like walk through it and I, and I think like this isn't any [00:23:04] Speaker A: different than a six flat flat. Yeah. [00:23:06] Speaker C: Like we know, we know that we're going to gut it to the studs. We're going to relay the units out and we, and we know what kind of apartments we have to put in here. It really is not, it's not a big jump to go from adaptive reuse office to resi to our neighborhood walk up rehab. [00:23:22] Speaker A: As long as it's not a high rise. Like, it's not a high rise code or anything. I mean it's a typical. This has to be seven stories, but it's not high rise code. And so like it's like just everything else we do. You're just taking the building, gutting it. Now what we have learned in taking these office building, I mean is that, well, this particular one, this particular one there, every time we move a wall, [00:23:40] Speaker C: there's something going on, isn't entirely new for us, but. [00:23:44] Speaker A: But the scale is like, the scale of. [00:23:45] Speaker C: It's a little bigger than a 6 flat. [00:23:47] Speaker B: Yeah. [00:23:48] Speaker C: I mean we, we took down a beam today above a storefront and they're like your column supporting the whole building needs to be redone. So like, you know, it's like that particular project every single day, every day something it in where they're at right now in the project. Some, there's some like catastrophic event that we have to figure out. And of course it's like you can figure it out, but you need a structural engineer. So the architect has to be involved. Now the GC is involved. And now it's a dollar and it's [00:24:18] Speaker A: weeks before the answer. I mean you can't get that answer. Like now you got to get the right. Like Michael said, you got to get the structural guy involved. The architect's got to get involved. Then you got to get the plans and you got to get them approved. Like. [00:24:29] Speaker C: But I will also say this in terms of why, why do. It's not a huge shift, but ground up is a bigger shift. Yeah, but I mean, I think that easiest answer is just opportunity. Like we have an opportunity and we think like, okay, can't, you know, we talk about it. We say like, you know, like how much different can it be? I mean, and what we found, and we can get into this later, we can go into it now is that we. The process of building ground up was a much easier process for Us when we were surprised by it. [00:24:56] Speaker A: Yes. [00:24:57] Speaker B: What was easier about it than you expected? [00:24:58] Speaker A: Well, I mean you don't have to deal with every day getting a text message saying we found that we took this wall down. You have to replace the beam. [00:25:04] Speaker B: Yeah. [00:25:04] Speaker A: So you go in, you know, after you get the soil test and the foundation work up. I mean it's just straightforward work. Yeah. [00:25:11] Speaker C: You deal with the neighborhood. You know, you get your zoning change [00:25:14] Speaker A: you're talking about for new construction and. [00:25:16] Speaker C: Yeah, new construction. And then, and then we also, you know, we hired a third party general contractor. [00:25:21] Speaker B: Yeah. [00:25:21] Speaker C: So we were removed from the construction almost, you know, like entirely. [00:25:25] Speaker A: Who happened to be. [00:25:26] Speaker C: And he ended up being a great find up being a really good fit for us. [00:25:30] Speaker A: Yeah, he's really good at it and we were fortunate. And he's a developer as well and he's done a great, he did a great, he made it very easy for us. [00:25:36] Speaker B: Yeah. [00:25:36] Speaker A: I mean that building got built, I mean he, in basically 12 months in pretty much. Yeah. I mean on schedule, under budget. That is something we don't say in this office a whole lot. Which is, I mean literally, I, I, we do not say that a lot. [00:25:49] Speaker C: We've been, it might be the last [00:25:51] Speaker A: by way you walk in there and it's all new and like, like it's just so, it's gorgeous. [00:25:56] Speaker B: So what if, so I, I don't know if you know it offhand, but how does like the cost per foot of that being ground up new construction compare with doing a. I think it's a similar size project on it. [00:26:07] Speaker A: I can answer that for that. But that happened to be, I think an anomaly. We ended up building that and we talk. You want to get in detail. It was like for like 191 a foot. [00:26:14] Speaker B: Oh. [00:26:15] Speaker A: Which is, and by the way, right [00:26:16] Speaker C: now we had other prices closer to 225. [00:26:19] Speaker A: Yeah, 225. And right costs. And right now gutting a building, you're, you're at like 175 a foot on. We're doing a 16 unit in, in Wicker park right now and we're over 165 a foot. [00:26:37] Speaker C: Yeah. [00:26:37] Speaker B: Wow. [00:26:38] Speaker A: So there's your answer. The delta between building new and rehabbing is getting smaller. [00:26:43] Speaker B: But so when you're done with those, you have a building that's 100 years old. You have, you know, you could say they don't build them like they used to. Like you can never build the envelope the way that you can in a, like a courtyard that's built in the 1920s. Right. So does, does that change at all for like, does it change your maintenance? Does it change like the, do you find that you have the same product that you're operating when those two are done? [00:27:06] Speaker A: Oh, you mean the new construction? Compared to that, I, I still think the new construction is easier. [00:27:11] Speaker C: It's funny that theory. I'm thinking like, I don't buy that at all. [00:27:14] Speaker A: No, no, I, I. [00:27:15] Speaker C: 100 year old, you can never build them again. Guess what? Even when you got renovated, even when you put a new roof on, even [00:27:20] Speaker A: when you do windows, lentil windows, you, [00:27:23] Speaker C: you're still dealing with 100 year old building. It's, they're always compromised in some way. Not to say that new construction doesn't have its problems and, and I'm sure issues will come up, but they're much different. [00:27:34] Speaker A: Yeah. Even soundproofing between the floors. Like, I mean there's only so much you can do. Existing building, hopefully. [00:27:40] Speaker C: I mean these 100-year-old buildings are, you know, we are, we're finding that like no matter what you do to them. Wear and tear, you know, we'll talk about the sewers. Yeah. You have the sewer lines never had collapsing. [00:27:53] Speaker A: We've had more sewers collapse on these hundred year old buildings in the last three years and in my 30 years prior. [00:27:58] Speaker B: Really? [00:27:59] Speaker A: Yes. So now we buy a building. We're assuming we're doing the new, we're doing, we're doing a new sewer system which we never budgeted. Yeah. And we're just assume we're tearing out the roofs or assuming we have to do masonry. When we bought buildings 10, 15 years ago, we never budgeted for that. No, literally. [00:28:14] Speaker B: So there's a place for both. I mean like new construction is great to have, but like you have a lot in Logan Square. Logan Square is a neighborhood that's like gorgeous building stock. You know, like the one on Logan Boulevard that you referenced on like Logan Boulevard is arguably one of the best residential streets in the city. You know, and you can't find the boulevard system anywhere. [00:28:34] Speaker A: And we actually have a decent amount of nice product there. We also own the building at 2569 Milwaukee, where new Wave Coffee's in. Yeah, I know that happens to be one of the nicest. Yeah, that's a beautiful building. [00:28:44] Speaker C: I agree with that. Certain character you can't, you can't have. You just can't repeat. You can't do that again. And I appreciate that. Yeah, I really do. But in terms of maintenance. Yeah, I, I think it's a much different Game. [00:28:56] Speaker A: Yeah, but you have your issues with like new construction stuff. Like, you know, you have systems that you have to like. [00:29:01] Speaker C: It's more frustrating and you construction to have an issue come up because you're like, why would that happen? I kind of expected an 100 year old building. And, and, and I do agree with you. It's really nice to go through a neighbor and be like, look at this building. Like it was. [00:29:13] Speaker A: That's what we loved about what we did. [00:29:15] Speaker C: And now look what it looks like. [00:29:16] Speaker B: Yeah, yeah, yeah. I think it's. [00:29:18] Speaker C: Without compromising the integrity of, of, of the neighbor, you know, the aesthetic of the building. [00:29:22] Speaker B: Right. Well, I mean that was also the [00:29:24] Speaker C: exterior aesthetic for sure. [00:29:25] Speaker B: Like that was also historic. I mean. [00:29:26] Speaker A: Yeah, we happen to have a lot of buildings in historic properties. Yeah, we happen to have a decent amount by the way, which help us a lot for other reasons. [00:29:34] Speaker B: Well, so I mean that one though you wasn't in a bit of a saga. The historic nation on the one on Logan Boulevard. [00:29:42] Speaker A: Well, we had a whole series with that. No, no, we got, I mean we want to get in detail. We got, we bought it and they proposed a down zoning it the second, literally a week after we bought it, [00:29:52] Speaker C: they proposed to down zone. Very specifically our two building our two properties in different locations, both of them by the same alderman. [00:30:01] Speaker B: So the one on Kedsey, the one on Ken. [00:30:04] Speaker C: Yeah, the only two buildings that came up on that, on that docket or whatever. But we want to down zone these very two before we purchased them. [00:30:12] Speaker A: No, no, it was right after. Right after we closed right after. And by the way, we're lucky because a guy who worked for us got a call from somebody saying, do you know that it just got proposed at city hall? We had no clue, we didn't know about it, that your two buildings are going to be down. So now I will say something. We talked about sitting down with like owners. Like how we like that Michael and I went on a campaign. Remember we went to like alderman meetings. We met with alderman. Like that was kind. It all worked out and the city actually was great. And we met with the historical guy. [00:30:43] Speaker C: Andrew from the community group was great. [00:30:46] Speaker A: Yeah, I mean everyone was. I want to make that very clear. It was, it was very easy to deal with them and they were very helpful and because Michael and I, we don't want to fight like we met with them. What do you want? Why are you actually looking to propose to down zone our buildings? [00:31:00] Speaker B: Okay, so that's, I mean I think that that is like a head on way to address it. But it also, again, it's like, all right here. I understand that people have different, like, objectives of what they want in the city. And I think we have to embrace as, like, you know, the idea of providing housing has become, like, It's a very heavy thing. Like, it's. It's. And I think that it's become very political and stuff, and sometimes that gets in the way of just, like, finding a middle ground, which is unfortunate, but the best way to find the middle ground is to just, like, go meet with somebody and sit down and be like, I understand that you have people to answer to. I understand that there's reasons why you're objecting to this. Like, we're a family business. We're going to be in it for the long term. We want to improve the housing. Like, you know, which is. [00:31:44] Speaker A: And I think that helps a lot [00:31:45] Speaker C: by saying that one of our first. [00:31:47] Speaker A: Like, we. [00:31:48] Speaker C: It all worked out for us, and I think the city. But I think one of the issues we had was, like, no one ever approached us and said, what are you doing? Right, Right. Like, if someone would have come to us and just said, hey, we. Before we. Before we lay this down, zoning on you, here's what we're thinking, but maybe we should find out what. What you're doing. [00:32:06] Speaker B: Right. [00:32:06] Speaker A: And. [00:32:07] Speaker C: And we ended up having that. [00:32:08] Speaker A: We talked about communication. There was no communication from the city. [00:32:11] Speaker B: You can have it. So. So, like, I think the. I think the responsibility, like, too many people in our business have been, like, defensive and, like, thought that all this stuff is unfair. So I think that when these things get sprung on us, these regulatory things get sprung on the. I say us, like, the business in general, we get all mad. Like, why didn't you come to us? Which I think that they would say, well, we didn't come to you because you guys have been just arguing about how unfair everything is. And I think if you don't. One of the things that's challenging, but you have to be willing to embrace about the apartment business is it is, like, it's heavy. It's political. It's, like, close to home. I mean, it's home for people. So it's really close to home for [00:32:53] Speaker A: people, which is one of the things Michael and I always say. We've been doing this for over 30 years, and we're not close enough to [00:33:00] Speaker C: look at it and say, like, there's [00:33:01] Speaker A: some valid points here, but we agree. That's my point. We are part of the neighborhood. Like, let's not forget we Are part of the neighborhood and we want to continue to be part of it. And we want what's best for the neighborhood as well. Yeah, we're not, we're not looking to build some. Something that doesn't belong somewhere. Which is why most of the buildings we buy are as of Right. Zoning. We very rarely ask for zoning changes. Yeah, I, I mean, we just don't. [00:33:21] Speaker B: So did those have unused zoning capacity? Okay. [00:33:24] Speaker A: Yes. Yeah. [00:33:24] Speaker B: So that's why the down zoning would have been so impactful because you would have been able. So you were trying to add housing stock also? [00:33:30] Speaker A: We were trying to add it, yeah. We were trying to add housing stock, yeah. You know, one of the things they wanted and we ended up giving. [00:33:37] Speaker C: I mean it was as of. Right. And also. [00:33:40] Speaker A: But they wanted more. What they wanted and which eventually we found out is they just didn't want a lot of studio one bedrooms, which. Which ironically we weren't doing. So once they found out we were doing it, they were, they were like, oh, okay. We thought you guys were trying to cram in 100 units into a building and do studios in ones. We're like, no, we're actually keeping nice big units. [00:33:58] Speaker B: So what I was going to interrupt you and say is like the other, the other thing that I think gets lost about that conversation, General is like the seller, like you bought those from a really long term, like private. [00:34:08] Speaker A: Who we're friends with. [00:34:09] Speaker C: We're still friends. [00:34:11] Speaker B: But hang on. The point of it is like he ran those buildings for a long time. I mean, I, I don't, I don't know him. Like you guys know him. I knew him a little bit. But like, isn't it fair that he gets paid like what they're worth and like they were paid. You paid him what you paid him because of what you could do. [00:34:29] Speaker C: Correct. [00:34:30] Speaker B: And like if they down zoned him, you're basically like taking from this like [00:34:34] Speaker A: long term owner who owned it for over. [00:34:36] Speaker B: Who put. [00:34:37] Speaker A: 30 years. [00:34:37] Speaker B: Yeah. He put in three decades of work providing housing. Like, isn't it fair for that person to expect these families, these individuals who expect to get paid what they're worth when it's time to go to sell them and not down zone them and like jam them up when he's ready to retire? Whatever. [00:34:50] Speaker A: We always feel I don't care what someone paid for a building. [00:34:53] Speaker C: Although I'm just going to say in that situation, he had already sold them before they started. [00:34:58] Speaker B: But I think. [00:34:58] Speaker A: No, but we buy it based on, on what we could do. [00:35:02] Speaker C: Based on what we could do. [00:35:03] Speaker A: Right. [00:35:04] Speaker C: He got his pre. Which is a funny story because he's great. And. But he, we dealt with him for three, three, four years and he never, he said, I will sell to you guys very specifically. [00:35:15] Speaker A: He never raised the price, but I. [00:35:16] Speaker C: And, and this is your price, but I will not sell it for a dollar less. [00:35:19] Speaker A: And four years later, he never raised the price. He said, this is what I want. And, and to his. [00:35:24] Speaker C: We had purchased one building from him in that time period. A smaller size building in Wicker Park. [00:35:29] Speaker A: Yeah. [00:35:29] Speaker B: And. [00:35:30] Speaker C: And he liked us. And he was another guy that we talked. [00:35:33] Speaker A: He was a hockey guy too. [00:35:34] Speaker C: We had a hockey connection with him. And he knows everyone. Everyone knew him. You knew him like all the brokers knew him. And, and he stuck to his guns and also kept his word. [00:35:43] Speaker B: Yeah. [00:35:43] Speaker A: And he actually, we got to get him back in. He keeps saying every time, all the [00:35:49] Speaker C: time, box games or concerts. And he's always like, he's like, I [00:35:52] Speaker A: want to see the building. He's like, okay, we'll come see him. [00:35:54] Speaker B: But I said, yeah. And that's awesome. But I think like when you think about like the northwest side, like the Row ordinance as it like translates into like the long term owners who been part of the fabric of that community and then you put a tax on them selling it. [00:36:10] Speaker C: Yeah. [00:36:11] Speaker B: Or you put all these hoops to jump. I mean it's just like it strips like 100% Dest Egg, you know, like, [00:36:19] Speaker A: well, the unwanted consequences as you know this, like some of these buildings can't sell because you can't get fannie or government financing because of the right of first refusal and they won't loan on it. So the people you're trying to help, who came here and took a chance, families, you know, aren't able to capitalize on what they. [00:36:37] Speaker B: Okay, but what you guys did is working through the community and working with the aldermen and working with the city. It like, it at least helps the rhetoric around landlords, you know, housing providers, landlord, whatever you want to call it. You know, it at least helps because then they know, all right, not we don't need to like vilify. [00:36:53] Speaker C: Yeah. We're not the evil landlords. [00:36:54] Speaker B: And then something like that comes up and you hope that the next time it invites an opportunity to have a conversation about it so that they can accomplish what they want to accomplish without all these unintended side effects is what [00:37:05] Speaker A: you see unfortunately with the Rome completely. I think as Michael said before, they never called us a down zone. And then you think if there was more communication between the city and the people who own buildings, I think we'd have a better result. I think we all want the same thing, which I really do. [00:37:20] Speaker B: Good. Yeah. A good Chicago. [00:37:23] Speaker A: I think we all want a strong Chicago where people feel safe walking around, where it's a thriving economy. I mean, look, Michael and I always say there's no better city in the summer than Chicago. I was just talking. Someone was telling me the other day, young kid, they're like, it's the best city in the summer, which it is. [00:37:39] Speaker C: I mean, it's a pretty good city all year round. [00:37:41] Speaker A: Yeah, no, I know, but you always say that. [00:37:43] Speaker C: Too believable. But. But it's just in general, it's an affordable city. It's a walkable city. [00:37:49] Speaker A: Drivable. [00:37:50] Speaker B: Ish. [00:37:51] Speaker C: I still think it's a safe city. So I. I don't. I think Chicago as a metropolitan city and as a big one is. Is. I mean, as we know through people. I mean, our demographic is 25 to 32 years old, and they are. I mean, we. We're 100 occupied. [00:38:10] Speaker B: Yeah, we're still. They want to live in. [00:38:12] Speaker C: They want to live in neighborhoods, and they want to feel safe. [00:38:14] Speaker B: So when you get. I think one thing that's interesting about your. Like, if you rewind a handful of years until, you know, the couple years after Covet, a lot of people who were even in the middle market space, but who were active in Chicago, went and did business in other parts of the country because. Well, for a lot of reasons, you know, but some of them were just like, it was easier to raise money. You know, the rent growth was different. They were maybe more business friendly. Like, there were. There were reasons why people did it. Why did you guys decide to kind of double down in Chicago? [00:38:45] Speaker A: Well, I think we're very comfortable here. And I will tell you during COVID which Michael and I laugh about, is that our tenants all paid rent. I mean, I think we obviously work with some tenants, which is what we're able to do because we can talk to them personally, but because actually, we didn't see any negativity in it. Like, we still were 100% occupied. Our people were still paying their rent. I don't think we had a single eviction during COVID A few things also. [00:39:10] Speaker C: I mean, Kenny and I are like, we kind of know where our aptitude is, and we know where our work ethic is, and. And we're risk takers. But. But with what we know that we will go after certain deals because we Understand the deal and, and we know, we know the area so well. Like we didn't feel comfortable leaving and we're such, we're, we're hands on operations operators. I think we're very uncomfortable with the idea of doing projects in other states and handing over management to someone else and not having the control of the deals. And I think the other thing, I think it's really important. We had a pool of investors that we still have who are all bullish on Chicago. So we weren't, we're not looking for institutional money. Yeah. We have guys that are like really positive about Chicago during all of our sort of downturns or any kind of turn and they want to keep, keep investing. [00:39:57] Speaker A: And these are guys who own companies that actually deal with some of those institutional groups that would not invest into [00:40:04] Speaker C: deals in other states. And they, they like our product. They like, they like what we do. Obviously they trust us and they, I mean they never wavered at all. No said like keep buying what you're buying. We're in. [00:40:15] Speaker A: But, but they also never wavered because we didn't, we had no vacancies. [00:40:20] Speaker C: We had no. [00:40:21] Speaker B: Because of your conviction. The two were in tandem where if you guys are convicted and if the operations are good, then the investor appetite generally like follows. Right. [00:40:29] Speaker A: Yeah. And we're, we're available. I mean Michael and I get calls at 5 in the morning till 11 o' clock at night from our investors. Legitimately. [00:40:36] Speaker C: Yeah. [00:40:36] Speaker A: I, I mean and I, I. And we answer some of them and [00:40:39] Speaker B: I know their hours and I know. [00:40:42] Speaker A: Yeah. [00:40:43] Speaker C: And, and, and like we, we wanted to and we never, you know, we had no intention of slowing down. Like we want to keep doing deals [00:40:50] Speaker A: and we did the. We say though there are two years or. I don't think we bought a single building. It was horrible, my friend. I were coming here like doing our job. [00:40:58] Speaker C: It was just like depressing because we had no deals. Yeah. During COVID Nobody. There was no transaction. [00:41:04] Speaker A: We did one transaction. 12:26 Greenview. Think about that. We closed on that in May. [00:41:10] Speaker C: What deal? [00:41:11] Speaker A: 1226 Greenview. That was the only deal we did for two years. [00:41:14] Speaker C: Yeah. [00:41:14] Speaker A: And we actually just ironically are selling that. Trading into a new construction project. [00:41:20] Speaker B: Well, I mean I think that it. How we doing on time, Steve? Good. [00:41:24] Speaker A: 25. [00:41:25] Speaker B: All right, cool. [00:41:26] Speaker A: So [00:41:29] Speaker B: 42 minutes in. [00:41:31] Speaker C: Yeah. [00:41:32] Speaker A: Jesus. You did say it was going to fly. Yeah. You did say that. [00:41:36] Speaker B: No shortage of things to talk about. So. [00:41:38] Speaker C: We haven't even talked about hockey. It's fine. [00:41:41] Speaker B: Hang on. I just want to Figure out where. [00:41:43] Speaker C: Yeah. [00:41:43] Speaker A: Be scans over here. You'll see our little hockey memorabilia. [00:41:49] Speaker B: So I think we should maybe we stay on Chicago because it's just like everybody that listens will like him. [00:41:56] Speaker A: I also think you want to go to Chicago. Michael and I talk about this. I sometimes think, and maybe I'm wrong, but like the barrier to entry when we first started, I didn't feel was so hard. I do think now it's a lot harder to buy your first six flat. I mean, I do. I mean, first of all, forget about even dealing with this. [00:42:14] Speaker B: I'll prompt you on it because I don't want you to. I mean, I love the continued conviction in Chicago and I think it also is like the lesson in it. In hindsight, it's easier to see because we've had now four or five years of really strong rent growth and Chicago's performance performed a lot better than some of those other markets that people went and explored. I mean, I think the interesting thing part about it and I think the idea of like diversification and risk management kind of work in conflict with like focus and like knowing your niche. And I think it's tough. I think it's tough to balance those things because you guys, you mentioned your, you guys are risk takers. Like if you're, if you're investing in real estate, you have some sort of tolerance or for risk. And when you're the operator of it, like, it's probably heightened. And I feel that too, where like I have risk tolerance, but then like some days I feel like a risk aversion and not wanting to get out over your skis. Like, do you guys. How do you balance that? [00:43:10] Speaker C: I think also, I mean, I, it's interesting because I also think, remember we're, we're. We're. All of our deals are, are acquired through investor money. So I mean, you know, we, we took, we have conversations with people all the time like who do big funds and, and like we hear about people who lost money in these funds. Yeah, I mean, we, I wouldn't sleep. Like, I can't even imagine. [00:43:32] Speaker A: You want to say why if you lost only money. [00:43:35] Speaker C: If I had a deal that was losing money, or I had to call an investor and say, I'm sorry this one didn't work out like that. That would keep me up at night. Like, it's just we have our own money in the deal also. But, but I'm less worried about my own money than I am about the investors money for a lot of reasons and not just because I need it again or because I. But because it's really important to us that, you know, these people trusted us with their money, and we don't take that lightly. Like, we think, like, we've invested in other things where literally. Yeah, disappeared from the country. We never even opened the business. You gave us money for like 25 grand gone. It's like a ton of money. But, yeah, I can't even imagine doing that. So, I mean, I think. And I'm not saying that's risky. I'm just saying. And I don't think we're. [00:44:19] Speaker A: I don't look at. [00:44:20] Speaker C: We're not risk. [00:44:21] Speaker A: I think what we do is risky because. But we do not. Like. I agree with Michael. I'm sorry, interrupt. Like, I don't look, I don't ever lose sleep. You know, I lose sleep over when we get a deal tied up. Sometimes I'm like, okay, we need to raise the money. Yeah, I don't lose sleep once we get a deal because Michael and I have doing this. Like, you know, we always say, we can rent 34 units in a building. We can rent six. [00:44:41] Speaker C: We also have always had this tagline like, dude, the money. I'm always like, we'll find the money. We always do. Yeah, we need the deal. [00:44:47] Speaker A: I stress more about it than he does. [00:44:48] Speaker C: I'm like, find us a deal. Like, we'll get the money. [00:44:51] Speaker B: I think, like, when I see families and individuals that have been doing it for a really long time, like, I see a level of risk aversion or like, risk management's maybe a better way to put it. Not risk aversion. If you're like. If you're participating through all the different cycles, you know, Meaning, like, it doesn't mean always buying. It doesn't mean always selling. It just means like, kind of doing a balanced version of both. Like, sometimes you prune a portfolio, sell something. But like, if you have. It's kind of what I'm trying to do is like, slow and steady, where you don't have all your maturities hit at one time. [00:45:25] Speaker C: Correct. [00:45:25] Speaker B: You don't. Like, you try to always be in the market enough where you get a taste of different markets. And then if you buy something that you paid too much for, for hopefully you have others that offset it. Like, you want everyone to stand alone. [00:45:35] Speaker A: I. I think that's. [00:45:36] Speaker B: And then if you end up, like, buying stuff that you're prepared to own long term, I feel like that also helps with, like, managing the risk of it, because if you can figure out how to hold it if you're able to hold it, whether it's because of other properties or because of other income that you have in other businesses or whatever, like, kind of heals everything. Someone had once said, got hammered. Are the guys that. Did they do everything at one time because, you know, they think that that was this way. [00:46:03] Speaker A: Or they're looking to sell to get out. Like, we never look. We don't buy anything and say, okay, we're going to sell in three, four years. [00:46:08] Speaker C: We always say, like, we have optionality. We're going to look at what the stabilized product, the returns after a refi. And if we don't. We don't like that, maybe we'll sell it and maybe we'll trade it. [00:46:20] Speaker A: When are we. I'm being serious. When are we ever sold a building that we haven't. That we haven't refied? Like, before we. That we literally have. I mean, we always say, no, no. But I'm like, no. I mean, Michael and I talk about this. We never do that. Like, we always say, okay, if we can't pull up our money out, we'll sell it. And we have end up never selling them. [00:46:40] Speaker C: Okay. And I will also say, I think part of that is because our deal size was a little smaller. [00:46:44] Speaker A: Yeah. [00:46:44] Speaker C: Now we're talking about these new construction. 36 unit building, the deal size 20. The checks are bigger. [00:46:50] Speaker A: Yeah. [00:46:50] Speaker C: The profits might be bigger. So even here, I mean, this was. This would be the first one if. [00:46:56] Speaker A: If we sell it. Yeah. [00:46:57] Speaker B: Yeah. Well, one thing which we run simultaneously [00:47:00] Speaker C: the refi in the sale analysis. [00:47:01] Speaker A: Yeah. [00:47:01] Speaker B: Which is healthy. [00:47:02] Speaker A: So. Yeah. [00:47:03] Speaker B: One thing that we talked about before we started filming is like the smaller deals, you know, which was the recipe for your growth was really like recycling that capital and buy something, add your value, pull your, like refinance it to pull your money out of it, put the money back to work with your investors and like continue to own the real estate and then maybe sell it down the road after that, depending on what happens. But it's harder to do that now [00:47:30] Speaker A: with the smaller stuff. [00:47:31] Speaker B: And so like. So say. I think a lot of people that listen to this are like a little bit younger. Say you're 30 years old starting today. Like, how would you. How would you get started today? Well, I mean, what, you know, now. [00:47:44] Speaker A: So I mean, I always go back. I'd be right. Word remiss to say, like, I learned from a guy who's one of the biggest Northside real estate guys. And he always said, always said, stick with what you know. He's never gone out of the state. He stick with what he knew and up until, you know, 20 years ago or he only owned six flats. So that's all I really knew. Like I never looked at a bigger building because I never, never did that. So we, we consistently just bought what we, Michael and I grew up. [00:48:13] Speaker C: I think the other thing I would say is like you don't have to hit a home run. [00:48:17] Speaker B: Yeah. [00:48:17] Speaker C: Like I like these. If I was, if I was talking to someone and we talk to people all the time who are buying one offs or just trying to get in the business and we know a few of them now and, and we say like, Yep, buy a 6 flat. Buy a 5 flat. [00:48:30] Speaker B: Yeah. [00:48:30] Speaker A: Like see that's like buy a 4 flat and live in it or live [00:48:34] Speaker C: in, or buy something and live in it and then, and then use that money to buy another one. And so you don't have to do everything at once and you don't have to, you're not going to be huge right away. Like just chip away at it. And I think these six flats are a really good way to do it. Although we talked about this before the podcast, it is a competitive market for those type of buyers right now. [00:48:52] Speaker B: Yeah. [00:48:53] Speaker A: Well it's also to you as like I, we were talking about before, I think getting into this market. Like when we bought our first building it was $20,000. Now again it was 1994. I think I bought my first building. So maybe inflation, whatever that is where today. But I didn't feel like it was a lot of money. You have to buy these buildings. Now you're looking at coming up with 2, 3, $400,000 which is a large chunk of money. So I think, I think that is not easy for these young kids to buy. But like, I mean and also back in the day when we were doing it, you would have like seller finance deals. Banks would be, you know, don't forget this before the whole bake. Yeah. When we first bought our buildings, I think it's important to know you were able to work with these banks. They give you higher leverage. [00:49:32] Speaker C: I've also found this, let me just say this. These, some of these younger people that are getting into the business and maybe real estate's not their primary job. [00:49:40] Speaker A: Right. [00:49:41] Speaker B: Yeah. [00:49:41] Speaker C: Profession they don't. We kind of are spoiled in that. Like we can look at any building and we know we have the guys to rehab it. I mean we know everything from soup to nut. Like right. These guys are shying away from like when we say well do you Want to gut, renovate the building. And they're like, no, not at all. Like, maybe we'll put kitchens and baths. [00:50:00] Speaker A: Yeah, yeah, a lot of. [00:50:01] Speaker C: So they're not looking at it with the vision we have, which I'm not saying we started doing that. We kind of did. [00:50:06] Speaker A: No, we did though. [00:50:07] Speaker C: We didn't. We never looked at something and said like, oh, just put a kitchen and a bath. We were like, let's gut it. Yeah, we kind of know this business. A lot of people competing in that asset class of the smaller size walk up buildings don't want to renovate them, especially if it's not their. [00:50:23] Speaker A: They want turnkey. [00:50:25] Speaker B: It's a ton of work and it's really expensive. It's expensive to own them and it's really expensive to renovate right now. [00:50:30] Speaker A: Navigate zoning and city and all that other stuff that you have to deal with, even permits, finding the right architect. I agree with what Michael said. It is very. I think it's much more difficult today. [00:50:39] Speaker B: Okay, I agree. But I would also say that it shouldn't be easy. And there were things about the business that were harder then than they are now for sure. So like something you said is it's not easy to get a few hundred thousand dollars together to buy a building. It should not be. Because if you are looking for an easy investment, you're in the like, if you think that you're going to do it for half an hour a week and do it, armchair, whatever, you know, like, it is not that. So I think if you're not prepared for it to be hard when you buy it, don't get into it in the first place. I waited until the first building I bought was $800,000 building. It was a half a block from my house. Not even a full block from my house. [00:51:13] Speaker A: How many units. [00:51:14] Speaker B: I bought it from the guy that. He's your mentor. The Winnick family. [00:51:17] Speaker A: Oh, sure. [00:51:17] Speaker B: Very highly. Four unit building. 1346 was Webster. [00:51:21] Speaker A: Oh, come on. Oh, you bought Webster. [00:51:22] Speaker B: Yeah. And I lived on the 1200 block of Webster and. And I had to save for like I made a, like a good living being a broker for a decade before I bought that building. Yeah, I solved. I didn't. It was not a home run. I solved. When I was running my numbers. I look at these things all days. I was running my numbers and I was like, will it at least break even? Right. And that was it. And I'm like, I'll learn from it. And this was before I had my second kid. So I'm Just saying like now it's doing great. Now I have less than 50% debt on it. It cash flows. It's been awesome in a 4 flat, [00:51:54] Speaker A: which is not easy to do. Yes. [00:51:57] Speaker B: So like the point, I think the point you made. Yeah, but the point you made is, right, it was hard to buy it. Yeah, but like it's a hard business. [00:52:05] Speaker A: Look at, I mean Michael. And don't forget like when we bought our first buildings, we were, we were renting them. I was, you know, using, you know, you know, guys that I had met in the business through Al, you know, Winnick to rehab them. Like, like it, you're right. It's a lot of work on top of having a full time job. Yeah, yeah. And I mean like Michael and I did that for years. [00:52:22] Speaker B: I think, I think the, the, you know, like what would you do? Like just, you know, do something like do it, you know, because you have time on your side when you're young and like if you, and, and what [00:52:31] Speaker A: do you, what do you have to lose? Like honestly, like how much net worth you have, all this stuff. I, I know that's a bad way to look at, but the truth of the matter is go take a risk if you really like this. Go, you know, get money together. [00:52:42] Speaker B: You know, you have time to make it back, right? [00:52:43] Speaker A: You have time to make it back. [00:52:44] Speaker B: Yeah. [00:52:45] Speaker A: You know, if you can withstand the ups and downs in real estate, I think you'll do fine. [00:52:48] Speaker B: Yeah. What's something about like, because you're, you know, your business has grown a lot now. You have a lot of people that work with you and like what's something about the scaling of your business that you made a mistake on and you do different today? Or they like some. Something that you wish you would have done earlier in the growth of your business. [00:53:06] Speaker A: You mean I'm hiring somebody? [00:53:08] Speaker B: Hiring. Or the type of stuff you were buying, however you think about, like. [00:53:12] Speaker A: So I think we would have looked at. I, I can. Sorry. I, I think I, I think maybe we would have looked at bigger buildings. [00:53:19] Speaker C: Yeah, probably. [00:53:20] Speaker A: I mean we never, we never. Like if you had a courtyard like we were. You never called us something. [00:53:25] Speaker C: I think the other thing is we might have, we might have. The way that we were getting our money might have changed also. We might have said we're gonna start, we need, we need $100 million and we need to just go right. Like we're a deal by deal company, right? We get a deal, we go raise the money. And I'm not sure if what would have changed if we did that. But I think in hindsight, looking back, like, what really put us on the map is we found an equity partner that basically, literally said, we. We're going to give you $50 million, buy as many buildings as you can. We love what you do. We're not going to question anything. Like, go do it. Like, we'll handle everything else. The money is not an issue. [00:54:06] Speaker A: But their goal was what? [00:54:08] Speaker C: Yeah, but they were selling everything. [00:54:09] Speaker A: Yeah, everything. [00:54:10] Speaker C: So if we were to hold those buildings, Mike and I, and I will say this. We went to an investment investor group who's now our biggest investor, and we beg them. We beg that. Just raise a bunch of money. We know what we're doing. And there's unbelievable deals out there. This market will. [00:54:24] Speaker A: Will come back right after the recession. Like when you're buying six flats for $250,000 in West. [00:54:31] Speaker C: We said, you guys, they knew us already, and they were somewhat interested. We went into it. We went to a big lunch. We pretty. Pretty much wrote on a napkin what we thought all these deals would do. We were right, by the way. We just weren't. We weren't, like, we weren't institutional. [00:54:45] Speaker A: Right. We're back in the napkin, guys. [00:54:47] Speaker C: And. And they said, no, no, and then. And then. Which was fine. It's just that we would have, I think, in hindsight, again, if we could have found an, like, if we could have raised money, like, done a fund of some sort. Yeah, we. And we were kind of talked out of that. [00:55:02] Speaker B: But you've kind like. Well, I understand that it would be like. But you've kind of still done it, but on a deal by deal done well by these investors, and they keep coming back to you. So they're like, if you looked at it, they would still probably allocate a certain amount of money, and they did. [00:55:18] Speaker A: That's true. [00:55:19] Speaker C: I mean, it also changed. [00:55:20] Speaker A: But go back to what you said. But Michael, go back. [00:55:22] Speaker C: Structured the deals a little differently. [00:55:24] Speaker A: Okay, go, go. How many deals have we wanted that we put on our contract that we have not closed? [00:55:29] Speaker C: I've always said that we would never not raise the money for a deal we want to buy. [00:55:33] Speaker B: But so if you had a fund, the counterpoint to it, maybe. And I'm not. You answered my question. But, like, the counterpoint is a fund. You typically. Typically have a time horizon. [00:55:41] Speaker A: Yes. [00:55:41] Speaker B: So, like, that's correct. [00:55:43] Speaker A: Which is what we were afraid of, Michael. [00:55:44] Speaker B: But you could do it again. I mean, you could say, like, all right, we have fun, too. That's, you know. [00:55:48] Speaker A: Yeah. [00:55:48] Speaker B: But Those generally have 5, 7, 10 [00:55:50] Speaker A: year like money and those funds you're going to sell and you're selling. [00:55:55] Speaker B: Right. That can be kind of exhausting too, because you have to keep. [00:55:58] Speaker C: Can be. [00:55:58] Speaker A: And as a reporting, I mean, you know, like I said, we are back with napkin guys now. We do have a lot of younger guys who put decks together and much more sophisticated reporting, you know, now. But like you're talking about a whole nother level of reporting for institutional guys that, that we, and we might have, [00:56:15] Speaker C: we might have hired a high level analyst sooner. [00:56:18] Speaker A: Yeah. [00:56:19] Speaker B: Let's talk a little about like, like hot sub markets. Like if there's anything that's like, if there are any that are outperforming, if everything's the same, that's an answer too. But let's just like talk about like what's going on the market today for 10 minutes. [00:56:31] Speaker A: Okay. [00:56:31] Speaker B: And then we'll do one rap question. [00:56:34] Speaker A: That's okay. [00:56:34] Speaker B: Cool. So being that you guys operate in a lot of like Chicago's most popular neighborhoods, are there any. It seems to me that there, there's a lot more parity across like the northwest side neighborhoods and the north side neighborhoods than there were, you know, decades ago where like, I think especially like your demographic tenant would probably just as well, a lot of times live in like West Town or Bucktown or Logan Square as they would in Lakeview. So are there any neighborhoods that have, that have outperformed others or that you guys have like rental demand, however you measure, like a hot neighborhood? Are there any, I mean, just right [00:57:13] Speaker C: off the grub, Logan Square. [00:57:14] Speaker A: I was going to say we are 100% agreement square water. [00:57:18] Speaker C: Really? [00:57:18] Speaker A: Yeah, yeah. [00:57:19] Speaker C: The time to rent we had, we had how many units were at 3116? 42. 42 units. We rented that up and we rented [00:57:26] Speaker A: 42 units in like six weeks. [00:57:28] Speaker C: Yeah. [00:57:29] Speaker A: In contrast, we rented 34 units here in like five months and we're still have with two left. [00:57:36] Speaker C: Two left. [00:57:36] Speaker A: Yeah. [00:57:36] Speaker B: Is it a price point thing or [00:57:38] Speaker C: is it just, I think it's neighborhood. [00:57:40] Speaker B: If you delivered that in Logan Square, you think it would have been. [00:57:42] Speaker C: Yep, I think we would have rented that. [00:57:44] Speaker A: I, I, I think so. Well, we'll let you know in a year because we're doing a project on the Hollander Building on 2418 North Milwaukee with a partner, Jason Wisnitzer. And we'll let you know. Yeah, I, I will be interesting to see. [00:57:57] Speaker C: I could say if it was the same time because I mean, Logan is a great building, but it's still we have an existing building which a lot of Logan renters like that's also part of it. Yeah. And so, so maybe maybe I don't [00:58:08] Speaker A: know, maybe price point, but maybe price point a little bit. [00:58:11] Speaker C: This is also. I mean I love this neighborhood, but it's still kind of a tweener. You don't have retail. [00:58:16] Speaker A: Right. [00:58:17] Speaker C: You don't, you can't. You're not like. [00:58:18] Speaker A: But you do have time. You know. I agree with that. But it's funny because the people who live are all say they just walk to Fulton Market. It's 10 minutes. [00:58:26] Speaker C: Oh no, sure you can. But, but, but it is still. We've always found on this block. It's the lease up is. It takes a little longer than being in the middle of Logan Square. Bucktown. [00:58:35] Speaker B: Yeah. 31 6. I mean that, that is your steps from the train, your steps from the square, the namesake square. There's a million coffee shops, restaurants right [00:58:43] Speaker A: near the farmer's market. [00:58:45] Speaker B: But here it's interesting. Like, and I think this can be said about other kind of neighborhoods that you'd look at as like in between other neighborhoods is here. It's just as close to river, north West Loop. We. [00:58:57] Speaker A: Okay, let me say we love it. [00:58:58] Speaker B: Selling you on it because you've obviously been. [00:58:59] Speaker C: No, no, we love it. [00:59:01] Speaker A: You can get everywhere in two minutes. Like you can jump on the highway, you can get to Lincoln park, literally going down Elston, you can get to the Gold Coast. Like we love it that way. [00:59:11] Speaker C: It's not really a walk up neighborhood. [00:59:12] Speaker A: Good. [00:59:12] Speaker B: Yeah. [00:59:13] Speaker C: And. And it's different obviously than West Loop [00:59:15] Speaker A: and Fulton, but we have over 100 units here. And the truth is in our existing buildings, like obviously putting 34 units in a new construction taking a while. But when we have units come up at 836 or this building or I mean they rent in two days. [00:59:28] Speaker B: So is the answer that like I think table the lease up of Logan and the. And Kedsey. [00:59:34] Speaker A: Yeah. Are. [00:59:36] Speaker B: Is your rent growth? Is your like leasing demand similar across most of the neighborhoods or for the [00:59:41] Speaker A: existing, by the way? Yes. And I can tell you if we can talk. You want to talk numbers, as you said, if you want to talk numbers. So this year we had a 67% retention. [00:59:51] Speaker B: Oh dang. [00:59:52] Speaker A: 67. Our average increase was 5% on. Over 5% on renewals and 8% on new rentals. [01:00:00] Speaker B: Yeah. [01:00:00] Speaker A: And by the way, we. I mean which is a lot. [01:00:03] Speaker C: We can go into a whole discussion about. About retention these days. [01:00:05] Speaker A: Yeah. [01:00:06] Speaker C: I mean I think one of the Theories is like, you know, it's hard. First of all, we know the supply and demand issues in Chicago right now, but it's hard to move right now and get the same product for the same price. [01:00:17] Speaker A: You just can't do it. [01:00:18] Speaker C: So you're not moving out of one of our buildings to find an equal product and paying less money. [01:00:21] Speaker B: Right. [01:00:22] Speaker C: Unless you're moving into a computer. [01:00:24] Speaker A: Yes. [01:00:24] Speaker C: Or. [01:00:25] Speaker A: Or a completely different price bracket. Yeah, yeah, it's true. [01:00:28] Speaker B: Yeah. Or people, you know, have life decisions. They get a job transfer, they get married or they. [01:00:33] Speaker C: I mean, think about it. I'm just saying it used to be like you lived here for a year, you could find somewhere of equal or greater value for roughly the same price [01:00:40] Speaker A: in a different neighborhood. You go to different neighborhood. [01:00:42] Speaker C: Now it's almost an interesting. [01:00:43] Speaker A: Like you said, all these neighborhoods are. Are so similar. [01:00:46] Speaker C: Yeah. Like now it's like you're going to Wicker park, you're going to Ukrainian Village. I mean they're all per square foot. Pretty, pretty similar. [01:00:53] Speaker B: Yeah. Yeah, I agree. [01:00:55] Speaker C: So I mean we're finding people are staying because you have moving costs and it's hard to find in place. [01:01:00] Speaker B: Will you. So the math on if you have. If you have 5% on a renewal and rent growth and you have 8% on a new lease, I mean the math on holding, that is certainly better for retaining versus because there's obviously the turn. [01:01:12] Speaker A: Unless you want. Unless they're going to you to sell it. Unless I want to sell the building. [01:01:17] Speaker B: As I was going to say. So you would. [01:01:18] Speaker C: Unless you're talking about your noi. [01:01:19] Speaker B: Do you get like. So does that all factor in the decision when you guys are sending out renewals? Like what the investor appetite is for selling. [01:01:25] Speaker A: To answer your question for sure now because as you said, you know, we're going out of an environment where we have 3% loans on these buildings that are now going to 6. [01:01:33] Speaker B: Yeah. [01:01:33] Speaker A: So we now more than ever, first of all, Michael go through. Michael and I go through every lease renewal. We personally because we still know all the units. So we literally go through every one of say okay, you know what? We're not raising them this much. We know it's going to be hard to rent. Or we, or we know this is way under ramp. [01:01:47] Speaker C: Put AI into calculating the algorithm. [01:01:49] Speaker A: Yeah, lease range renewals yet. And some people do. [01:01:52] Speaker B: But. [01:01:53] Speaker C: But we, we have not. We go over, our leasing team comes in, they print out a sheet. We sigh because it's like an hour and a half that we have to go. [01:02:00] Speaker A: We do we're like, we're so annoying [01:02:01] Speaker C: small and we go over every single apartment. [01:02:04] Speaker B: I, I'm like, I'm all for the anti AI way of doing stuff. I mean, I understand there's applications of it and I don't want, you know, I'm sure people are going to tell me I'm an idiot, but like, I, I just think that people are craving for the anti AI version of it. They don't want any. [01:02:21] Speaker A: Well, they want anti AI to come to MOTU Properties. Yeah. [01:02:24] Speaker C: I mean, look, like you said, I don't want to be naive. It's certainly important we use it, you [01:02:29] Speaker A: and I, but we use it like, like we use it to one, one billionth of it's like, like, yeah, like, yeah. [01:02:35] Speaker C: We use it like Google Search. [01:02:36] Speaker A: Yeah. Literally. I don't, I don't use Google anymore. [01:02:39] Speaker C: But I will say our younger guys here, even our analysts put together dad action duo. I mean it's, it's really effective in helping them create decks. And although it's funny because one of them sort of attaches it to his proforma and it worries me. [01:02:52] Speaker B: Yeah. [01:02:52] Speaker C: Because like. And I say, Kenny, I feel out of touch. Like, this doesn't seems like Stephen over [01:02:57] Speaker B: here is biting his tongue too. He likes the AI applications for the marketing. So there's. [01:03:01] Speaker A: I understand, Michael. Actually, you bring up a very good point. Because you know, when we go to deal, we go look at a building and I know like Mike and I, we still do, but we would come back, look at the building, we'd be like, okay, let's remember the layouts. Because we always tell you brokers to give us layouts and you never do. When we walk through, walk through buildings, we're like, okay, let's, I mean, let's go through it. Okay. What we get for it. We, Michael and I would sit down and we would go through all the numbers. Now I do, I agree with Michael. I'm a little out of touch because they'll come back, our analysts will come back, they'll run the numbers and Michael and I like, oh my God, what are they going to look like? Oh, we sure going to get that. [01:03:35] Speaker C: Like so, I mean, that's part of being again, it's part of our company growing and we're taking kind of not a back seat, but, but we're doing, you know, Kenny and I would come back and go over. Do the performers ourselves, go over every unit ourselves now, now hiking like this. Yeah. Now we have people here doing that work. And again, there's positives obviously to that. [01:03:54] Speaker A: And. [01:03:54] Speaker C: And there's some drawbacks. And one of the drawbacks is like, I'm a little disconnected. I'm getting older. Might not remember what we. We walked a portfolio of like 100 units one day, and I was like, that was useless because I can't remember the last one we saw. [01:04:08] Speaker A: No, literally, that was like. [01:04:10] Speaker B: Your phone's ringing the whole time. [01:04:11] Speaker A: Yeah, the phone's ringing. [01:04:12] Speaker B: We're tired. [01:04:13] Speaker C: It's either freezing or it's 100 degrees. [01:04:15] Speaker B: But I think the. I think the recipe then is you do both and you balance them. [01:04:19] Speaker A: Yeah. [01:04:19] Speaker B: You know, which you have, you know, you're not. You don't have these antiquated systems because you have enough young people who are hip to all the, you know, new ways to look at it. But at the end of the day, the buck stops with you guys. And you guys have an old school way of doing it. So it still has to, like, you can put together a fancy model for it, but, like, it still has to work on. [01:04:36] Speaker C: A guy brings us models, and I'm like, I know. [01:04:38] Speaker A: Yeah. [01:04:39] Speaker B: I mean, by the way, by the way, same, though. If I look at a building, I can tell you within, like three minutes, people would be like. People probably assume, because I analyze a lot of buildings every. Every day, every week, whatever you want to look at it. [01:04:52] Speaker C: This. [01:04:52] Speaker B: The spreadsheet that I use when I buy a building is ridiculous. [01:04:57] Speaker C: It's like, like elemental, you mean? [01:04:58] Speaker A: Well, so is ours, Michael, by the way. No, by the way, we, like. I want to go back to what you said. I want to go back to what you said, because that is something that I'm trying to. With this younger generation. I know that. And I also learned. I'll say I learned from Al Winner because I send properties and he did an unbelievable job. But, like, I would. I feel like with Al, I was able to. And Michael does it as well. We can walk into a building, I can literally get in the car, run our numbers, and we know almost instantaneously. And I wonder if that's a learn skill, if it's something like innate, like, you know, if you're a good athlete, you're a good athlete. Right. Like. Like, is it the same part of his experience? I mean, that's what I'm saying. [01:05:38] Speaker C: We've done it so many times, like. And also part of it is that we've been involved when. [01:05:44] Speaker A: When you're the guy who's rehabbing and financing finding the building. [01:05:49] Speaker C: I mean, I was like, yeah, I did a lot of brokerage work, meaning I called owners. I mean, I used to have, like you said, I was meeting with guys in their homes, meeting with. If they didn't live in the city, I'd go out to the suburbs where they lived, and I'd meet with them. [01:06:01] Speaker B: Yeah. [01:06:01] Speaker C: And then we're also. So then you walk the building, and then you. We dealt with our rehabbers. [01:06:05] Speaker A: Yeah, yeah. Michael and I. [01:06:08] Speaker B: So some of it's, like, in place. Your point is, like, some of it's like implied knowledge or like that you have embedded in you that you can just then apply to. So. I agree. I think when you're buying something, you should think about it enough to think about all the variables that could come up or talk to people. There's so many people in this business that would be happy to help, like, be a sounding board for somebody, starting if there was somebody that came to you in a thoughtful way and said, hey, I'm thinking about buying the first building. The same with me. It's like, if. Can you. Because they would. Look, they'd have a fancy model, and you'd say, here's some things to think about. [01:06:38] Speaker A: Yeah. [01:06:38] Speaker B: And it'd probably be a pretty successful guys. [01:06:41] Speaker C: Kenny. At least we could say from here, they've managed buildings, they've leased apartments, and then they've helped run construction. [01:06:47] Speaker A: Well, I think we're good. [01:06:48] Speaker C: You could walk into a building and be like, okay, I know, exactly. [01:06:51] Speaker A: I think we're a very good incubator. There are some guys, you know, in Chicago real estate who have done very well, and we're very happy for who started out here. [01:06:58] Speaker B: Yeah. [01:06:59] Speaker C: No. [01:06:59] Speaker A: And somehow, some way, us two guys, who are most unsubscribe, we spent an [01:07:04] Speaker C: hour in your office. You guys are absolutely insane. [01:07:06] Speaker B: Yeah, I can say that, too. [01:07:07] Speaker C: Yeah. [01:07:08] Speaker A: And you're right. [01:07:08] Speaker C: We are. [01:07:09] Speaker A: Yeah. We are insane. [01:07:10] Speaker B: That's what makes the business fun. [01:07:11] Speaker C: Totally. [01:07:12] Speaker A: And you want to go to a family thing. Look it. You know, I think we're very fortunate. I can say I'm very. Get a little emotional. I'm very fortunate being partners with my brother. [01:07:19] Speaker B: Yeah. [01:07:20] Speaker A: That we. We talk how many times a day? Like 5,000. I'm not saying we don't get. I mean, there been. There have been a couple of times, we almost got into fist fights, which is true. Okay. But we're brothers. One of the guys. One of the guys who used to work here was downstairs. He went from upstairs. He thought, we're gonna go into. We're going to Lowe's. [01:07:34] Speaker C: No, we challenged each other, and he Heard the whole thing. And he's like, he had just started there. He's like, did I make a huge mistake? [01:07:39] Speaker B: I mean, look, I mean, you guys are sincerely, like, fun to work with. [01:07:42] Speaker A: Yeah. [01:07:43] Speaker B: Like, you know, I've done a lot with you guys, and it's like, you know, we'll go grab a bite or, you know, go get a workout in or whatever. And like, when we talk, we bullshit. We talked for half an hour the other day. It's like, fun. And, and I think that, like, you can, you know, there's a little bit of fighting, making up that has to happen in real estate. You know, it's just, I mean, it's the business, but, like, you know, sometimes I'll call you and you won't pick up, and then I'll call you, and then I hear you. Come on, Michael. And then I have something I called you about, and then you talk about something different for 30 minutes, for five seconds. I said, no. [01:08:16] Speaker A: Michael hates that. [01:08:18] Speaker C: Joe and I established early on. Joe's like, Michael doesn't really like bullshitting. [01:08:22] Speaker A: Yeah. Joe and I will talk about kids, we'll talk about vacations, and, you know, the other thing too, going back to family. I really do want to. Upside, we're very fortunate. [01:08:30] Speaker B: Yeah. [01:08:30] Speaker A: We have two of our kids work here full time, you know, and I really, like, it's, it's one of the blessings. I really do feel that way. [01:08:38] Speaker B: Yeah. You guys should be proud of us, [01:08:39] Speaker A: like, you know, and we have friends, you know, who are very, who call us and say, you guys, it's the relationship. You guys, you guys talk 100 times a day. I, I, it's crazy to me. [01:08:48] Speaker C: I mean, I will say this, like, I always say this, and this is not, I mean, it's kind of about real estate and all this, but we love what we do. We actually love coming into the office every day, and it's like, I'm not, I'm not saying I'm in love with real estate. Yeah, I, I, we like our, we like what we do for a living. We like being surrounded by people that we get along well with, that have good sense of humors, that have seen us go through things that, like, you know, like, yeah, we've been through a [01:09:12] Speaker A: lot, and we have, we have, you [01:09:13] Speaker C: know, both of us have, you know, our children that work here. [01:09:16] Speaker B: Yeah. [01:09:17] Speaker C: And it's really nice to come to work. Like, I, I know a lot of people at our age starting to retire, and I'm like, I, I don't want to retire. I like I like. I like leaving my house every day and coming here. [01:09:25] Speaker A: Yeah. [01:09:25] Speaker B: Well, the other thing is, it's like, I don't. And I'm not glancing over that because what you said is sincere and it's amazing. And it's like, I think a firm that bears your name, then you have next generation working in it. [01:09:36] Speaker A: Most people don't know that. Can I say we're MO2 very few people. It takes them a while to realize it's our Last name is Motu. And they're like, you're MO2. I'm like, no, it's really mochi. [01:09:45] Speaker B: Yeah, that is true. [01:09:47] Speaker C: Yeah. [01:09:47] Speaker B: But, like, I also think you, like, you know, we have a lot that we could just talk about on the phone or by email, and whenever we have something to go over, I'm like, I'm coming in. [01:09:55] Speaker A: Yeah. Just. [01:09:56] Speaker B: Yeah, you guys are there. And I walked in today. I walked in Eric Weber's. [01:09:58] Speaker C: Yeah. And I'm like, wait, Eric, we're meeting next Wednesday. He's like, I was in the neighborhood. [01:10:02] Speaker B: I was driving by. It's cool. [01:10:03] Speaker A: Yeah. I mean, we're very fortunate. We love what we do and. And coming to work. There is never a day. There's never a day. By the way, there's. There really isn't. And by the way, even if we're. They're like, the other day, like, I'm like, michael, I'm leaving early. I'm tired. Michael's the other day, I'm leaving early. Like. Like, we're just fortunate. [01:10:18] Speaker B: I'm going to leave it here. You guys do a good job of just being yourselves, and, like, you know, you can do that now because you have the confidence of being successful for a long time. [01:10:26] Speaker C: Yeah. [01:10:26] Speaker B: But young people try to be somebody that they see and that you just should be yourself and, like, practice the business the way. [01:10:33] Speaker C: Here's our broker. He's coming up to remind us that we have to be somewhere. [01:10:35] Speaker B: It's a wrap. That's a show. Thanks, fellas. [01:10:38] Speaker A: Thank you. It's been great.