Journey to Multifamily Millions

Diversification as a Key to Commercial Real Estate Success with Chris Larsen, Episode 67

• Tim Little • Season 1 • Episode 67

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Today's guest is Chris Larsen, Chris is the founder and Principal of Next-Level Income. He has been investing in and managing real estate for over 20 years. 

While still a college student, he bought his first rental property at age 21. From there, Chris expanded into development, private lending, buying distressed debt as well as commercial offices, and ultimately syndicating commercial properties. 

He began syndicating deals in 2016 and has been actively involved in over $1.5B of real estate acquisitions. Chris is passionate about helping investors become financially independent.

In this episode, Chris shares his journey, highlighting the importance of purpose and passion in real estate. 

We also discussed diversifying into lesser talked about assets like assisted living facilities and express car washes. Stay tuned!


Episode Topics

[01:31]  Meet our guest, Chris Larsen
[02:22 ] From College Townhouse to Financial Independence
[10:45]  Real Estate Success: Starting Small, Scaling Smart
[17:58]   Unlocking Real Estate Success: Diversifying for Growth
[26:36]  Exploring Assisted Living Real Estate Opportunities
[30:55]  Navigating Real Estate Markets and the Future of Multifamily
[35:01]  What is one red flag every investor should look out for?
[36:00]  What is a myth about the real estate business?
[39:37]   Connecting to Chris

Notable Quotes

  • "The opposite of love, in my opinion, isn't hate, it's indifference." - Chris Larsen
  • "You're better off owning a portion of something than a hundred percent of nothing." - Chris Larsen
  • "You might find synergies with someone else who is looking to do something similar, but they need whatever you're bringing to the table." - Tim Little
  • "If you follow the demographic trends, have a great operating partner, and are in spaces with high operating cash flow, you can do very well." - Chris Larsen
  • "So there's a high barrier entry. You just can't go and build an assisted living facility. You have to have a certificate of need."- Chris Larsen
  • "I think zooming out, concerning rates, typically when the economy softens, we see rates fall."- Chris Larsen
  • "All real estate is local... That tertiary market may not fluctuate at all, but at the same time, you're not going to benefit as much. People need to take into account that they need to look at the markets, not just listen to the story on a national level."-Tim Little 


Connect with Chris Larsen

Resources:
Next-Level Income Fre

👉 Connect with Tim

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https://podcasts.apple.com/us/podcast/journey-to-multifamily-millions/id1634643497

[00:00:00] Chris Larsen: I think the point that underscores this story is that, you're better off owning a portion of something than a hundred percent of nothing. So if you need to bring a partner on board, so my mother, co-signed on the loan for me because the bank wasn't going to give a kid that's 21 years old. And actually had a credit card for a few years. That's actually a good tip to go out and get a credit card, for your kids, teach them how to start using money in the real world and doing those things. But yeah, so she co-signed on the loan. It was my money. It was my down payment. I managed it. I found the art tenants that were coming in, renting the rooms out. I basically did a house hack. So I think the cool thing about real estate, is it's not like cycling, like there's a type of cycling event. For everybody that's out.

[00:01:20] Tim Little: Hello everyone and welcome to the journey to multifamily millions. I'm your host, founder, and CEO of ZANA Investments, Tim Little. And today on the show we have with us Chris Larsen. Chris is the founder and principal of Next Level Income. He has been investing in and managing real estate for over 20 years. While still a college student, he bought his first rental property at age 21. From there, Chris expanded into development, private lending, buying distressed debt, as well as commercial offices, and ultimately syndicating commercial properties. He began syndicating deals in 2016 and has been actively involved in over 1.5 billion of real estate acquisitions. Chris is passionate about helping investors become financially independent. Welcome to the show, Chris. Yeah. And it is great to have you. So I gave everyone a very high-level overview of your background, but on this show, we really like to get into the details of how you got started on your journey. So please take us back to the beginning and tell us how you got to where you are today. 

[00:02:22] Chris Larsen: Yeah, so you mentioned I bought my first property at 21 and it's been over 20 years and actually the thing is next year be 25 years. So I'm gonna have to update my my intro there. Maybe not. Maybe we'll just leave it for over 20 years because that'll sound, make me sound a little younger. Yeah. So it's interesting, right? We can't rewind the clock. So if anybody's listening, you're like 21, geez, I might as well not even start. I'm in my forties or fifties now. Yeah. That's the worst thing that you can think of because real estate is really a get-rich slow game and I bought that first property in college when I was 21 years old. I was actually day trading in the stock market and I went to school at Virginia Tech and I was studying biomechanical engineering, but. I really didn't want to be an engineer. I want to race bikes. So I was racing at a high level on road bikes. In between my freshman and sophomore years, my best friend, who was also going to be my roommate as you're behind me. So he was moving in with me. He was my training partner. He had a massive brain hemorrhage and he passed away. And. I went back to school. I raced another year and poured my heart and soul into it. I reached the highest level of amateur racing, which if anybody's familiar is a category one. And basically at that point you race with the pros, you can take out a pro license. There's really no difference. Actually, my team went pro but I quit before that happened and I went back to school. And the reason I quit Tim is because. I was winning races, but I was not feeling anything. And for people who have thought about it, the opposite of love, in my opinion, isn't hate it's indifference. And when you go from loving something like I did, I love the sport of cycling to being indifferent. I knew it was time to move on. As I contemplated why that was, it was because I knew I was meant to do more than just ride my bike around in a circle. And the other thing was. I thought what happens if I die tomorrow? What happens if I die next year? Am I going to be happy with the way I've lived my life? And I didn't feel like if I kept doing what I was doing, I would really be satisfied. I want to have experiences. I want to be able to do things like raft down the Grand Canyon, take three weeks, raft down the Grand Canyon, which is why I have this picture here behind me to remember and remind me of those experiences and why I had the opportunity to do those things.  And again, for anybody That. Is conscious and like stops and thinks for a moment. The world today requires financial resources to be able to have independence. So we talk about financial independence and what is. It means the ability to do things from a financial perspective. So I set out on this path towards financial independence. I was day trading in the stock market. I was making like a thousand dollars a week. As a junior in college, but it was super stressful. There were days I lost money, and months I lost money. There were nights I wouldn't sleep. And I was like, this is not investing, right? This is not freedom. This is a job. This is even worse than a job in some cases. So I started reading and educating myself, reading over 250 books while I was still in school on finance, business, investing, and the stock market. Real estate, you name it. I read it and went to different conferences, but ultimately I decided that I was going to use real estate as my path toward financial independence, and bought that first property, a single-family property. And I can go into kind of the specifics on how we got that, that first little deal done and built my own portfolio, which was a single portfolio 10 years ago, we shifted from. Single-family residential into the commercial space to allow us more flexibility, and the ability to scale, and then about where are we now?  About seven years ago, we syndicated our first deal. So we started bringing investors along with us because people were like, Hey, what are you doing? How do how do you own all this real estate? How are you? How do you own an apartment building, in addition to all these other things and you're working, I was in the medical device, so you're like working all these hours, but I don't understand how you do this. We started bringing investors along with us and it's been a fun ride. 

[00:06:14] Tim Little: Yeah. And there's so much to dive into there. I think a couple of key points are you talk about the opposite of love being indifference. And I think that kind of resonates. With me in the opposite respect, right? That can signify why you keep doing something just as much as why you should quit. And it's funny because... I've gotten out of the military a few times, off of active duty and that, but I've stayed in some respect, whether it was the reserves or the National Guard. So I've had continued service that whole time. And my wife keeps asking me like when are you just going to get out? You've already hit long enough to retire and collect a check when I'm 65. But that's a while off, first of all, but two, I always tell her every time she asks when it stops being fun, right? When I lost that passion for it I stopped wanting to be there. And I think that really hits on exactly what you were talking about. If that day comes, then I will happily drop retirement paperwork and never put on the uniform again, but I'm just 

[00:07:13] Chris Larsen: not there yet. You know what I. You, you literally use one of my quotes and that was my wife. I was working. I mentioned I was working in the medical device field. And if people want to like my full story, I'll share it with you, I can get a free copy of our book at our website and nextlevelincome.com. Before we wrap up here, but I. Yeah, I ran, I bought that first property. It cost me 3, 000 down. It was a 90, 000 townhouse. My mom co-signed on the loan with me, for anybody that has started in the real estate space, on their own, you realize that you either run out of capital or you run out of credit. So the banks eventually say, Hey, we're not going to lend any more money to you. Or you just can't make money fast enough to continue to buy properties. And as I got into my, my second and third properties, I was working for the university. To pay for my MBA at the time I felt rich, like I was making 1500 bucks a month, but I had two townhouses already. I wasn't paying rent. I was making money. It was awesome. Like it was, I had, cause I was making more than I was spending. That's that's a great spot to start out. But. I wanted more. I wanted to build a bigger portfolio. So I said, okay, how can I make more money? And I ended up going into the medical device industry and it was a lucrative career. And look, I have so much respect for yourself and everybody else that's in the military.  My father was in the Navy. My grandfather was in the Navy. Uncles, we grew up 10 miles from the Naval Academy., I understood we hosted Naval Academy students. So I understand what that life is like. And I haven't considered going to the Naval Academy myself, but I've never done well with authority. So I was like, eh, really all joking aside, I wanted to race my bike and actually Naval Academy had a good team at the time in college. But when we got to that point where I didn't have to work anymore, my wife said, why are you still doing this? And I said I'm still having fun. I was making a lot of money, too. So I was like I'm still having fun. I was building the team. I said, I won't, I'll stop doing it when it stops being fun. And that is, it's really cool. And people say like, why do you still, why do you do what you do if you don't have to do it? And it's it's fun. I just hung up with a gentleman. He's about to turn 30. He bought his first property at 21 and I was sharing with him, he also is in the medical device space, actually with the companies to work for, and I was sharing with him some of the things that I learned when I was like, after I was his age, I said, Hey, here's some things that you can do that old fast forward. You like 15 years. That's fun to me. That's fun to provide that value and do those things. And that's the other thing when, when it stops being fun, that's one thing. Yeah. But then there's a big piece of ego and I think, look, if you're listening and you're a man in America, we were like, we're not supposed to talk about the differences in genders. We're not supposed to talk about these things today, which is silly because the fact of the matter is cultural, if you're a man in America, you define yourself as good or bad by what you do. And if you spent 18 years in an industry or, a couple of decades in the military, as you did, Tim that's who we are, right? And that's, we tell people, what do you do? Oh, I do this. I do that. It's really hard to walk away from that, especially if you're good at what you do. So if you're at that point where you were, you're financially independent and you don't have to do it anymore, it's not being fun anymore. It's still going to be a struggle from my experience to walk away. And remove your ego from that. And to me, that, that was the biggest thing was trying to say, Hey, what, how am I going to be relevant in the future? How am I going to do something? Not that it's just fun, but how am I going to do something that is meaningful and impactful? 

[00:10:47] Tim Little: Yeah. That, and just how boring is it if you literally just stop doing everything? If you, even if you can retire at 30 or 40, like why would you want to? Yeah, it's I think it's the whole point of having the flexibility like you talk about, that creates the peace of mind that we're all really looking for, not the opportunity to sit and watch TV or read a book all day. That I don't think that, provides value to anyone's life. Yeah. If anything, it detracts. Let's get into the details of how you were able to get that first property. You spoke to it a little bit. You got help from your parents and there is. Absolutely nothing wrong with that because I think that is the key point and then I'll let you talk. It's just that. The earlier you start, the better and bigger things will be as you move forward. And that doesn't mean, if you're 40 or 50 don't start. It's just always sooner is always better. And I just wasn't smart enough at, 21 to be thinking about these things and to be getting started and investing. Unfortunately, I think I was making, I think I was making like 7 an hour working at Cracker Barrel at that point. Working my way through college but please tell me how you were able to take down that first property. 

[00:12:02] Chris Larsen: Yeah. So look, I think the point that underscores this story is that, you're better off owning a portion of something than a hundred percent of nothing. So if you need to bring a partner on board, so my mother, co-signed on the loan for me because the bank wasn't going to give a kid that's 21 years old. And actually had a credit card for a few years. That's actually a good tip to go out and get a credit card, for your kids, teach them how to start using money in the real world and doing those things. But yeah, so she co-signed on the loan. It was my money. It was my down payment. I managed it. I found the art tenants that were coming in, renting the rooms out. I basically did a house hack. So I think the cool thing about real estate, is it's not like cycling, like there's a type of cycling event. For everybody that's out there, like every type of you have to be in shape. But let's say you're built like a football player, like Marty Nostein, who was an Olympic medalist. One of the first on the track for Americans. And he was from Pennsylvania. He was recruited from a football team and he was a sprinter. The guy's thighs were so big. He had to have custom-made pants made for him. Okay. Custom-made jeans, or you can take somebody that's like me. There were six feet, 145, 150 pounds. And I'm going to do more like endurance-based events, right? You have mountain bikers, you have all kinds of different stuff. Real estate is the same way. If you're, whether you are a smaller investor and you're trying to get started with 3000 or 30, 000, or whether you're a larger investor that wants to invest 300, 000, 3 million, 300 million, there are opportunities out there. To do it. So yeah I saw the property for sale. I looked, I looked at what I was running.  I'm like, this guy's parents own this and rent it out. Why can't I do this? And I just said how can I do this and try to figure it out that way? So what I would say is if you're hesitant or trying to get started trying to scale, go look and find somebody who's doing what you're doing and making it work. Don't listen to people and say, Oh, you can't do that. Say, okay, who is doing it and why are they doing it this way, and then figure out how to do it the same way. And then you could even see if they want to partner with you. Yeah, so I bought that first townhouse and had my mom co-signed on the loan. And then the guy that lived next door, I knew he was graduating in a couple of years. And I said, hey when you graduate, what are you going to do with the townhouse? He said we're going to sell it because his older brother had lived there and he was living there. I was now in grad school and he was a year behind me. So I knew he was graduating and going to chiropractic school. And I said when you're ready to sell it.  I said, tell me what you're going to list it for. And I said and I'm, I think I was licensed. I think I was a licensed agent at the time. So I managed the transaction, and he split the difference on the savings that he would get. So I got a discount on it. He got a discount on what he would pay.  And I now own. Two, three bedroom townhouses, six units that were connected with the wall. So it's like my own little apartment building and I rented out five of the six rooms. And that's how I got started on that way. And then, I was able to leverage some of those properties along with, the income I was making in the future, and that was a very linear, very slow way to scale up, but that's how I got my start.  

[00:15:09] Tim Little: Yeah. And I think that's okay. Especially when you're starting out slow and steady, I think is the best way to go. And you can make the big plays later, the riskier plays, but yeah, I think that's so huge. Just a, I'm saying small step. It's probably, it's a big step for a 21-year-old, but a small step like that can set you up so well. For the future. And so that's why I'm always trying to advocate, whether it's nieces and nephews that I'm talking to soldiers, under my command, I'm just like, guys, financial literacy, please learn what you can do, the earlier you start, the better. And something as simple as house hacking.  For whatever reason, I didn't think to do probably because I didn't think it was possible for me and my economic situation, and limiting beliefs, but there's usually a way to, get it done as long as you're creative enough and you really look out for those solutions. And, meanwhile, I was renting from a guy who was in the Navy and he bought a townhouse. And, had two of us living in the two extra bedrooms and I was like, man, this guy's getting over getting us to pay him. Don't hate the play. I hate the game. Yeah, I was too stupid to get out of my own way. But no, I think that's great. And specifically for military folks listening, like a lot of them don't realize that.  They can use their VA loan, for this as well, whether it's that single-family property and the renting out bedrooms or all the way up to a four-unit, which, I didn't even know when I first used my VA loan that I could do on small multifamily properties as long as I was living in the property.  And you talk about economies of scale, buying a four-unit property, assuming you can qualify, maybe you can show the potential rent on there and some banks will take that. Yeah,, that sets you up huge. If you're able to do that, especially considering a VA loan, you can put as little as 0 percent down.

[00:17:02] Chris Larsen: Yeah. So look, let's say you're listening, you're in the military and you're like, I don't have the money to do it, but I'd love to do it. Tim's talking about, you going to your local real estate meeting. They do a meet and greet at the beginning or afterward and usually at those meetings, they have people stand up and say, Hey, I got a deal or I'm looking for a deal.  You stand up and say, I'm in the military. I'm looking for a fourplex to buy or something. I'm looking for a partner that can partner with me. I'm going to manage the property. I've got a couple of deals I'm looking at, but I need them. Between 000 a capital, whatever it might be. And here, maybe I'm sitting on the other side of the room and I'm like, wow, like I don't want to manage the property. I'm busy. I'm a professional in the medical device space. I want to get into it. And I got a couple hundred thousand sitting in the bank because I've had a few good years. In my business, right? And I hear you stand up on the other side of the room and I say, Hey, Tim, let's talk afterward. So figure out a strategy, figure out other people that are doing it and then put it out in the universe. And it would be amazing how those opportunities start to flow in for you. 

[00:17:58] Tim Little: Yeah, absolutely. Couldn't agree more on the partnership aspect and, communicating what it is you want to do because you might find synergies, with someone else who is looking to do something similar, but they need whatever you're bringing to the table.   Yeah, there you go. All right. That's awesome. I want to switch a little bit, we talk a lot about commercial multifamily on this show and it's the bread and butter, but As the market softens a bit, I'm seeing, more syndicators diversify into alternate assets, whether it be, carwash storage facilities, et cetera there's so many commercial assets out there. I know you've done this to a certain extent as well. What are some of the benefits of these other assets as compared to multifamily? Yeah. 

 

[00:19:19] Chris Larsen: So let me do a quick primer kind of on my investment thesis, my strategy, and kind of why I do what I do. And I'll be brief here. So in my book, I talk about the rising tide and what it is it's really demographics. I'm looking here on the pages. So on page 68 of my book. I showed this demographic wave, right? That's going up here. And so page 68, you can get a free copy of my book and take a look at that. But the same reason I got into the medical device industry, the aging baby boomers, and their need for surgery was the same reason I got into multifamily real estate is because of the millennials. We're renting in larger numbers than ever before. And we had an under-supply coming out of the great recession. So we're still going to see that we still have net positive immigration, especially if you invest in the right areas of the country. So I think multifamily has been a great space for the last 10 years.  I think it's going to be, a real kind of stalwart for the next 10 years. But first and foremost, I look at the demographic trends. Second. Just like Benjamin Graham, and Warren Buffett. I'm really a value investor. I look for value in properties. So just like Warren Buffett does, he wants. He wants businesses that are cashflow positive and that have the appreciate the ability to find appreciation through operations or capital injections.  And I want to do it in a tax-efficient manner. So number 1 demographics number 2 value add strategy. And then. We look for where we are in the real estate cycle and I don't have the time to go into this right now, but I talk about it on episode 100 of my podcast and I talk about it frequently right now on my podcast because the real estate cycle flows in 18 and a half year cycles to seven-year cycles up one for your cycle down.  The two seven-year cycles are typically split by a mid-cycle slowdown. We saw that in 2001. We saw that in 2020. And you can go back through history all the way until we start tracking them, that these numbers in this country. And it's based on land appreciation and credit creation. And it's amazing how this just keeps repeating itself. So where are we today? We're in the second. 7 year up cycle, we're about halfway through what typically performs well in these areas of the cycle income-producing properties. So I'm a big fan right now. Tim, not only multifamily real estate, which is expensive and it's hard to finance right now with the rates where they are, but also things like mobile home parks perform exceptionally well.  In downturns car washes, I'm wearing the hat here. If you're watching on video of our main car wash brand, which is an express tunnel brand called Hurricane Express Wash. And also senior housing. So if you look at those demographic trends, that quote-unquote, silver tsunami, the 10, 000 people turning 65 every day are about to start turning 80 every day.  And senior housing is also an operational real estate play, much like car washes, much like mobile home parks. That means there's higher cash flow from the business aspect, but also means it's more complex. That means operations are critical. So we have very strong operating partnerships, direct operating partnerships in these spaces, but in the senior housing space, the average age that somebody moves in is 83. And they typically live there for three years and they actually don't move out. They move on in the way that space is. I think if you can find demographic trends and follow those in real estate, and then you look for businesses today with high cashflow, I think cashflow is really going to be king, as we move into more economic uncertainty.  And also that higher cashflow will also support higher interest rate payments as well. 

[00:23:06] Tim Little: Yeah. And all that makes sense. I appreciate you breaking down what you're looking at, which is like you said, the demographics, the value add, and the real estate cycle. And I think you're absolutely right.   Obviously the silver tsunami, some people have talked about it, but it's interesting that not as many people are talking about it as I would suspect. Based on that is based on the demographics. And I've looked at, some of those assets, right? There are even a couple of different assets within senior housing, right? You have your just 55 and up communities, right? And I would think some of those might be pretty lucrative when you're talking about mobile home parks that are 55 and up because I think studies show that they're more likely to take care of it. They have this sense of ownership, et cetera, et cetera. And there are just fewer young people. So there's less, I don't know, riffraff for lack of a better word. People are just there to settle down and have their little gardens in their little plot of land. But then you get into the much more management-intensive side when you start talking about assisted living facilities. And they, Then you're talking about all the staff that you have involved and the insurance, the liability associated, with maybe even administering hair or their medicine, et cetera. So a very different considerations associated with those, which of those are you more looking at? Are you more on the assisted living facility side? ALF. Yeah. 

[00:24:33] Chris Larsen: So we actually have a partner that is one of the largest. Groups in the country that run and operate assisted living facilities are one of the top 10 operators in the country. So they own dozens and dozens of properties. One of the things that we're looking to do is expanding those properties to add the 55 plus in, we call it independent living or I.L. So you have the independent living. So if you think of it as a continuum of care, you have independent living. You have assisted living, and then you have typically memory care, which is a subsegment of assisted living and potentially even skilled nursing facilities, which we don't operate in. But yeah, so you have to have a competent operating partner that can operate at scale with that. But the reason a lot of people aren't looking into it, Tim, is because actually we've had. Sliding demographics, and demographic demand in the senior housing space for the last couple of decades. So we actually had lowering demand because of the demographics and right at the bottom, right at the trough of the demand. COVID punched this industry smack in the mouth. Okay. So for two years, a lot of these facilities were shut down now, not shut down. They couldn't operate but shut down from allowing people to move in. If you have a 20 percent attrition rate where 20 percent of your residents pass away every year. And you're operating efficiently, like a good multifamily property at 90 or 95%. Now you're at 55 percent occupancy, maybe even lower. You're going to have a very hard time being profitable with that. There's, there wasn't the demand to build. The groups that are in there now have a, have had a really hard time the past few years. And they're just now getting to stability as demand is starting to ramp up again. I think this is a real sleeper that's going to be a true outperformer here. Over the next decade in the right spaces. And again, if you follow the demographic trends, if you have a great operating partner, if you're in spaces with great high operating cash flow you can do very well. We're looking at properties and being able to buy those at 10, 11 percent cap rates right now. 

[00:26:36] Tim Little: Yeah, and I guess my next question on that specifically, is it focused. regionally, where a lot of these folks are going to settle down. I live in Florida, for example, and everybody knows, people come here to die.  It's just because it's a beautiful place, right? The temperature is nice, they don't have to worry about cold weather on their bones and stuff. So I know that's huge down here. But is this one of the markets that you're looking at? Or where do you think it's going to be focused? 

[00:27:03] Chris Larsen: Yeah, so we're big fans of the Southeast and that's where the majority of the properties that we're expanding and we're acquiring are, and like in North Carolina, for instance, you have to have what's called a certificate of need. So there's a high barrier entry. You just can't go and build an assisted living facility. You have to have a certificate of need. So again, it's a great, it's a great barrier to entry. It helps with respect to the demand curve that we're seeing with that. So yeah, the Southeast is our main operating area in this space.

[00:27:32] Tim Little: Yeah, that makes sense. And what are some of the, you talked about barriers to entry? What are some of the barriers to entry when it comes to one, there's the ability to manage that intensively with that amount of, more, more staffing as well. Talk to me about insurance and liability. Is that a major issue when it comes to this? I would think it would be a greater concern or burden than say multifamily. It's, it, 

[00:28:01] Chris Larsen: It depends, right? Cause multifamily, like you're in Florida, you know how challenging insurance is. Yeah. Right now, right? So it's, I wouldn't say it's a bigger concern. It's just it's a concern and it's a specific type of insurance. You have to be well insured when it comes to these spaces, certainly. But yeah, operations, and I would call that piece of the insurance, a piece of the operations again. If you want to go and operate one of these, you're going to have a real challenge standing up an operating company in this space. Very much like we saw in the car wash space, we had to set up our own operating company in that space. So I think you either partner with an accomplished operator that has a great track record, they already have the scale, so they can come in. Look it's a lot different when you have an assisted living facility and you have to serve 30, 000 meals a day. Versus apartment complex where maybe you have some vending machines. So how do you do that? If you already have the facilities, and the partnerships to produce, those quality meals 3 times or more a day, you're going to have a much greater advantage in that space. For instance. 

[00:29:07] Tim Little: And, we've talked about, some of the challenges associated, but I think it's important to note some of the benefits too, which is people will pay a lot of money to have their loved ones cared for, fed, et cetera, like much more than they would for if you were putting them in an apartment. 

[00:29:26] Chris Larsen: Yeah, so look it is, it's a space where I tell my boys are 11 and 13 and I say, look, if you want to make money it's like the old Zig Ziglar saying, right? Try to find, trying to help as many people as possible. So we are, and I look, my mother passed away several years ago. So I was the de facto child when we put my grandparents in an assisted living facility.  And I grew up watching my great-grandparents. In assisted living facilities my grandmother used to volunteer and sponsor a disabled man. So we went to visit him in an assisted living facility. And I just grew up going in and out of these facilities. So it was normal to me. But there is. There is a huge need. This is a very vulnerable population that needs high-quality care and if you can come in and you can do it in a loving caring way and provide high-quality service, it can be profitable. Certainly. Yeah. 

[00:30:20] Tim Little: All right. So you talked a little bit about, where you think we're at in the markets. Can you talk again about where you think multifamily care Specifically is especially with again, the challenges that we're facing with rates going up. Do you think that and again, I'm sure your crystal ball is just as cloudy as mine, but do you think that rates are going to start to drop? Are we at the peak? Or do you think it has a little ways to go? And just what are the things you're looking at when it comes to the multifamily market in general?

[00:30:55] Chris Larsen: Yeah, it's super hard to make predictions in that area because the Fed is Fed's like a drug dealer, right? That's got. Got the country, the economy hooked on money and rates and all those sorts of things. It's like, how do you, can you really predict the, rationally the behavior of a drug addict? It's it's how I feel like, the stock market and the economy is right now. But I think zooming out, with respect to rates, typically when the economy softens, we see rates fall, right? Do I think there's going to be lower rates in the future?  I do. I don't know, whether that's going to occur in the next couple of years or not, but I think that we're probably, we're in the second half going into the end of Q4 of 2023 today. I think we probably have another approximately two years of strength and buoyancy, in this market. I think I would not buy residential properties today. I think they're, the rates are high. The prices are high. I think we will see a turn a downturn in the residential market. I'm a big fan of really high quality, like-class multifamily property because, that, those people make an 80, 100, 120, 000 dollars a year that live in our class. Properties. They're going to be able to withstand. Some a little bit of an economic downturn now, it's all specific because we have a lot of areas in the country today that are seeing declining rents. So you want to make sure you're in good markets. Charleston is 1 of our big markets. We're actually seeing rent increases there. Some of our markets were actually seeing double-digit year-over-year rent increases where a lot of the country or most of the country are facing, net. Net declines in rents. So I think that's important. Some things to remember right now, if you're buying property, if you can find a great deal, the cash flows, you can lock in maybe a loan assumption, that sort of thing, make sure you're not over-leveraged, make sure you got a lot of cash in the bank, make sure you have, high-quality resident base and you're comfortable holding on to that property for five or maybe even 10 years.

[00:32:45] Tim Little: Yeah, no, I think everything you're saying makes sense. And there are a couple of points in there that I think people forget, which is as cliched as it sounds, all real estate is local. We hear these things on, the news or in, papers being put out by, very smart people saying this about the real estate market or about commercial real estate, which In and of itself is a million different assets, but even when they start talking about commercial multifamily, it's really hard to talk in general terms about a market as big as the United States. And so some of this. You have to get down to the specific markets in order to make an argument that it's either going well or not going well, right? I'm like you, we have properties in different areas from, Dallas to Atlanta, and those are two very different markets. And, the speed at which people were moving in there and the speed at which rents were rising, et cetera, were completely different. Of course, they're not going to react the same in different environments. And that's where you have to get back to, again, the fundamentals that you were talking about in the beginning. Demographics, what is population growth, job growth, et cetera, all can be different from state to state and city to city, because as a primary or secondary markets. Could be completely different from a tertiary market, right? That tertiary market may not fluctuate at all, but you still may not be making that much, right? They don't seem to get hit as hard in downturns because they're so insulated. But at the same time, you're not going to benefit as much. Either so people really need to take into account that they need to look at the markets Not just listen to the story on a national level because that won't really tell them 100 

[00:34:40] Chris Larsen: 100 

[00:34:41] Tim Little: All right Hey, we do need to transition into the turbo round and this is where I'm going to ask you three questions that I ask Every guest that I have on the show and I just ask for a quick honest answer All right. The first one is what is one red flag that every investor should look out for? 

[00:34:59] Chris Larsen: Yeah. So I think, whether you're investing with somebody or you're partnering with somebody or you're going into business with somebody, or even you're looking for like a romantic partner, scarcity mindset, if somebody has a scarcity mindset, that's Hey me, there's not enough to go around. Run away from that. If you find people that are giving that believe in abundance, and this isn't some woo thing, this is, Hey, I'm going to share my knowledge with you. I'm going to share opportunities with you. And then. That's going to lead to more opportunities and more abundance for everybody. That's what I think you should look for. Run from scarcity to abundance. 

[00:35:36] Tim Little: Yeah. And you're absolutely right. I used to think it was woo stuff too. Until I started, until I shifted my own mindset, it's not just, talking to yourself in the mirror and telling you what a great person you are. It's about. Positivity and, finding solutions and all that stuff. So absolutely great. What is a myth about this business that you would like to set straight? 

[00:35:59] Chris Larsen: Ooh, a myth about the business. I would, I would Yeah, I mentioned earlier, I said, real estate's a get-rich slow business, and if people are like, Hey, you can come in and, be a multimillionaire in a short period of time. It's certainly possible, but I think if you set a reasonable timeline, with. And have, as I mentioned, in my investment thesis, you want something that's going to work over say 10 years or even 20 years, versus like short and quick because if you have a game plan like that's going to work and say, Hey, I can be financially independent in 10 years. If it happens in five, great. If it happens in seventh grade, if it happens in 15 years, is that the end of the world? No, but you want a consistent plan. And as I mentioned there's one other thing that kind of falls into that. I think that this is broader, but we talk about how when you're young, you should take risks early. I think that's, excuse my language. I think it's bullshit. I think you need a plan that's predictable when you're early. Tim, if I can say when you were 21, if I could pull you aside as 21-year-old, Tim, and say, Tim, I got a plan for you to be financially independent by the time you were 30 now, it's not sexy. It's not even that exciting, but it involves real estate, but it's predictable. Now you're 30, you're financially independent. How much risk can you take as much as you want, right? If you spend, five, 10, or 20 years swinging away, trying to hit home runs and striking out, you're 35 or 40 years old. You got a family, you got student debt. Then you can't take risks, have to make it happen, take, make a predictable plan early, get it to work, and schedule that risk into your life later on. And then that's, to me, that's how you can really create massive wealth. No, I think 

[00:37:44] Tim Little: that's a great myth that I don't think has been busted on here that, you should take all that risk when you're young because you're right, it's about phases in our life, like when I was young, I didn't have any money to risk, I didn't, I couldn't jump in big on anything. It wasn't till I had that good income and I was stabilized financially that I was able to take those risks. Awesome. All right. The final question. What does success? look like to you? And that could be personal, financial, business, whatever. 

[00:38:17] Chris Larsen: Yeah, success is freedom. And I don't mean that just from financial freedom, right? Like I can write a check for it, it's not a problem. That's financial freedom, right? If you can write a check for it, not a problem. Who not how? Dan Sullivan is back there over your shoulder with his partner, Ben. Dan Sullivan says if you can write a check for it, it's not a problem. But also, can you, are you free to operate on your principles? Novak Djokovic just won the US Open. Now, I might be getting a little political here, but he didn't get vaccinated and for two years he sat out of coming to the US Open. I'll never forget his first US Open when I watched him live. It was amazing. The guy's an amazing player. He stood on his principles. Can you do that? And you may not be able to do that, even if you have money. So a guy like that brought me to tears. I was very impressed by his principles, whether you agree with them or not. And to me, that's true. Freedom. 

[00:39:08] Tim Little: Awesome. All right. Hey, Chris, I think this has been a really interesting conversation. We covered a lot of ground, and I think you dropped a lot of value on this call. Hey, please tell our listeners how they can get ahold of you. And if there's anything else that you'd like to share with them. 

[00:39:24] Chris Larsen: Yeah. Tim, thank you so much for the opportunity. Love, love what you do. Love what you've done as well with your service to your country and what you're doing for your fellow countrymen as well. If you want a free copy of our book, go to nextlevelincome.com. You can click on the book link. If you put your address in my team, we'll even send you a copy here in the next day. If you want to learn a little bit more about the investments that we have, Tim, I know you do a ton on the multifamily side, but if you want to learn about car washes, if you want to learn about mobile home parks, or upcoming senior housing offerings, you can click on the invest link and schedule a call with our team. We'd be happy to share more about what we do in that 

[00:39:56] Tim Little: space as well. Great. We'll definitely have all that information in the show notes for our listeners. Again, appreciate you coming on and look forward to continuing to see you do big things on your journey to multifamily millions.

 


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TIM LITTLE (FOUNDER/ CEO)

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