(intro)

Welcome to The Gold Collar Investor Podcast, with your host Pancham Gupta. This podcast is dedicated to helping the high-paid professionals to break out of the Wall Street investments and create multiple income streams. Here’s your host, Pancham Gupta.

Russell Gray

Hi. This is Russell Gray, co-host of the Real Estate Guys Radio Show. And you are listening to The Gold Collar Investor Podcast.

Pancham Gupta

Welcome to The Gold Collar Investor Podcast. This is your host Pancham. I really appreciate you for tuning in today. My guest is Brendan Chisholm. He is the Principal of BKC Holding, a private equity real estate firm based in Stamford, Connecticut. His firm focuses on heavy value-add and distressed apartment deals. He is the lead sponsor for three syndications, totaling 169 units. Those assets are located in Atlanta, Charlotte, and Hampton Roads MSA. He is also a limited partner in multiple real estate partnerships.

(interview)

Pancham Gupta

Brendan, welcome to the show.

Brendan Chisholm

Thank you, Pancham. A pleasure to meet you and be on the show. Pardon the background noise right now. My youngest is home sick, with my wife and myself today.

Pancham Gupta

No, you’re totally fine. I have my kids home today, too. They have off here in Florida for some reason. I know it’s for the President’s Day. Well, thank you for your time here. Before we get started, are you ready to fire up my listeners break out of Wall Street investments?

Brendan Chisholm

I am. Let’s talk about how I buy bricks.

Pancham Gupta

Awesome. Good. So, let’s talk about your background, and how you got started in this business. What were you doing prior to you started this company?

Brendan Chisholm: Sure. A background, I graduated from Syracuse University in the teeth of the great financial recession. I worked for corporate America, and I still do for the past 15 plus years or 15 years, doing various jobs through operations, business development, program management. I’ve been doing that for a few different companies over the past 15 years.

How I got started in real estate? My background wasn’t in real estate when I first started. The best way to put it, I started reading BiggerPockets. They said go to investor meetup. I’m like, “This is great. I’ll go to this.” I think the first or second meetup that I went to, there’s a gentleman by the name of Charles Dobbins who was speaking at the event. He said, “Let’s own 1,000 units in five years. And I’m going to teach you how.” I’m like, okay, I am listening right now. He talked about the power of the cap rate, and how buying multifamily real estate is like buying a business. You’re buying a business, but it’s real estate. And just can you do it better than the person that you’re buying it from?

And so, after that talk, I just started reading books, listening to podcasts, and giving myself an education on what I needed to do to be able to get into multifamily investing. That was my singular focus from an investment perspective, as well as how do I get into this full time as well. Not to bore everybody with the details, but that’s the short story of how I did it in where I am today, and how the snowball has really been rolling.

Pancham Gupta

That’s awesome. So, how long ago was it when you heard Charles Dobbins?

Brendan Chisholm

About four and a half years ago.

Pancham Gupta

Four and a half. Wow. Are you in this full time now, or are you planning on to be full time?

Brendan Chisholm

I’m planning to be. I still work a nine-to-five job. However, this is consumed. Everything I do now, it’s my adult dream job. I really enjoy it. I think there’s awesome advantages to being able to do what we’re doing, and being able to educate my friends and family on the ability to buy commercial multifamily real estate, bigger properties that most people think is unattainable for them, and being able to provide them the opportunities for alternative investment classes while educating them. It’s been fun.

Pancham Gupta

So, let me ask you this. So, you heard him four and a half years ago. What happened next? How long did it take you to completely be consumed by the books and podcasts and all that? You were doing that. But how long did it take you to get the first property under contract?

Brendan Chisholm

I got a couple properties under contract in 2019, four and a half years ago. When I saw him speak, it was mid-September of 2018. I went to his conference in Boston, and then signed up for his teaching course just educate to myself as much as I could. So, this was like, let’s call it late 2018, early 2019. I just took his principles and applied them. It took me a little bit because I was looking in Connecticut to try to buy a property where I’m from. I got a couple things under contract. Nothing really struck out. Stuff happened during the ED that at the end of it, we just walked away from the deals. And 2020 happened.

Pancham Gupta

We all know what happened then.

Brendan Chisholm

Yeah, we all know what happened there. But at the end of 2020, I was asked by a friend who I met at another real estate meetup who was local to the Fairfield County area. He asked me to be a GP on one of his deals in Newnan, Georgia. That was right around Thanksgiving of 2020. We closed on our first deal late February of 2021. It was a 53-unit distressed deal in Newnan, Georgia.

Pancham Gupta

Yeah, I happened to know about that deal. Whatever is inside, you know. So, let me ask you this. You did that deal. Since then, you’ve done more deals. What is it that you’re looking for now? Is there a goal that you have in your mind that you want to achieve before you quit your job?

Brendan Chisholm

7 to 10 deals under contract. And about half of them, I want cash flowing. The reason I say half of them is because my core investment thesis, when it comes to multifamily real estate, is heavy value-add, distressed or some form of value-add deals. Typically, in the markets that I’ve got three deals under, they don’t cashflow right away because it’s capital intensive. And we’re doing the $20,000 to $30,000 per unit. So, yeah, 7 to 10 deals, and making sure I can replace my W-2 job income and make sure nothing changes. I have two kids both under. One is three, and one is one and a half. So, I want to make sure they’re productive just as much as myself.

Pancham Gupta

Got it. So, it’s seven to eight deals in a contract. And also, the cash flow part of it, right? Would it completely replace your W-2 income, a part of it, or a fraction of it?

Brendan Chisholm

It will replace a fraction of it. But it would at least afford me the opportunity to allocate all of my time to doing this like I plan to do. I think there’s other ways in which I can — I’m persistent. I’m a hustler. So, I’ll find other ways to be able to make money in real estate one way or the other. To your point, it’s cash flowing and making sure there’s a good face underneath to allow me to transition fully into multifamily operations, asset management, and capital raising.

Pancham Gupta

Got it. All right. Cool. So, let’s switch gears. Actually, before we do that, I have one question which usually I ask people who have already quit their job. But you’re about to or at some point, right? Do you have any fears or any negative talk, either by your friends or family telling you, “Brendan, what are you thinking, man? You’re going to leave this paycheck and these benefits and all that for doing real estate?”

Brendan Chisholm

Yeah, at first, yes. I’ve been floating this idea for a while now. But now I actually have a date on a piece of paper, which I’m looking to achieve. Two years ago, people told me I’m crazy to do this. To your point, yeah, you have the golden handcuffs. You have a full-time job. You have benefits. You have all of this stuff. But those people have been few and far between since that time. It’s just proving a track record to people.

The second I went into Charles Dobbins’ class in late 2018 and really started going into this, all I talk about when it comes to my professional career, and words become — it’d be put your words into action. People actually would be like, “Oh, this kid isn’t BS-ing me. This kid is actually not full of stuff. He’s doing what he’s saying he’s doing.” I take pride in it. I don’t want to just talk the talk. I want to walk the walk, too.

Pancham Gupta

I love that. So, let’s switch gears. I want to talk about, like, to anyone listening right now and getting fired up by maybe attending a webinar or a seminar or doing something, after you read and did all those things that you mentioned, how do you go about finding these deals, these distressed deals? Is it just talking to brokers, creating connections? What did you do to find these deals?

Brendan Chisholm

I wasn’t the one who was the lead on the acquisition’s aspect of it. But I can speak to what we’ve done.

Pancham Gupta

Sure.

Brendan Chisholm

I handle more of the capital raising management. This is direct mail marketing, the whole calling. We’re reaching out to brokers, just establishing relationships with people. The first deal that we got was an off-market deal. It was a direct to seller. The second was a broker deal. We worked the deal after. You don’t want to say it, but it was a broken sales process. That happens. We were in one of the deals. Two or three months after, it was first awarded to the first group. Then the third deal was a direct from seller again. Two other three deals that I’ve done so far are off market. It’s just establishing relationships. You’re proving to people that you close. You say you’re going to do and make sure you honor timelines, and you have good discussions with people to say this is how we’re doing it. We’re making sure the money is in escrow or in title by the time the date says it. So, it’s a whole litany of different ways in which we try to find deals. But yeah, there’s nothing that we do that is — we’re not reinventing the wheel. It’s the same that most people are doing.

Pancham Gupta

Got it. So, let’s talk about the capital raise side. That’s one thing that a lot of people, when they’re starting off, they don’t want to do, or they feel very uncomfortable with. Or even if they’re comfortable, they don’t have that kind of process or anything in place. So, how did you go about raising capital on your first deal? How did you convince whoever it was peers, or family, or friends to invest with you?

Brendan Chisholm

I’ll put the caveat out there. The first capital raise did not go as planned. You think that your stuff is so hot, because you got a deal under contract. But what I did though was, I created a newsletter really early in the pandemic just to let people know this is what I’m trying to do. I’ve just built up a top of the funnel that I had. It got to a point where I wasn’t getting the commits that I expected to get. People were, “Yeah, I’ll think about it. Send me the deal. I’ll review everything.” Then push came to shove, it was my first syndication. People were still skeptical. I picked up my iPhone. I looked through every single contact that I had there. I just started texting people. “Hey, I have this deal. This is the returns.” A few people came in. I’m truly blessed that they did. They took the leap of faith to do it. The second deal is similar thing. It’s like you think you’re—

Pancham Gupta

On the first — sorry to interrupt. I have a question. So, you said that it didn’t go as planned. Just for the listeners, can you talk about, if you can, how far were you from the race that you wanted to do? And how did you then end up closing that gap?

Brendan Chisholm

There were six GPs on our first deal. Everybody had a capital amount that they said they were going to bring in. Some other people brought in more money than they thought they would. I didn’t have much expectation for what I was going to do. Because I didn’t have a real feel for what my investor network was. The way in which we were able to bridge the gap was, other people were able to push on more of their investment network to be able to bring in more money to the deal.

You refine your processes there afterwards. You put in new new things, and you just get a good feel of, A, how do you educate your investor network to do all of this? It’s a way in which you cultivate it. Most of my deals are 506 B. So, it’s just tapping into my family and friends just in front and center. I think after doing three of these, you understand who’s actually going to do it. So, you know who your investors are. Those are the first people you go to. Then you have other people like, “Oh, you know what? I’m thinking about it.” You don’t count on them. If it comes through, great. But it’s sales. You went fast. You lose fast. How much time and effort do you want to put into people who are less than 25% probably willing to invest into a deal? It’s just like now you reduce the network of people, and you focus on the people who are most likely going, who are 50% or higher.

Pancham Gupta

Got it. I’m sure you probably had your fair share of stories where you had thought that this person is definitely going to invest, but they don’t. Then there was this person who you thought would definitely not invest but actually invested.

Brendan Chisholm

Yeah, that’s exactly it. I remember it was this one guy who I worked with a company years ago, or three companies ago. He’s like, “Yeah, I love real estate,” or, “I’m definitely interested in doing or investing in real estate, to get away from the stock market.” It was like, I would have never guessed if I didn’t go through my phone and started asking people. But I was in a couple mastermind groups and a couple of the people that were part of the mastermind knew my focus. They’re like, “We’re definitely in.” So, it made it easier and more palatable.

Pancham Gupta

Got it. Cool. Thank you for sharing that with the audience. So, let’s talk about your deals. Just one deal. Pick any deal, if you can share numbers on that. What did you buy it for? If you feel comfortable, what did you buy it for? How much did you put in in the deal? Where do you think you would exit at?

Brendan Chisholm

Alright. So, I’ll do on one that we actually have a case study on. It’s the deal in Newnan, Georgia. It was a $4.2 million purchase price with just over a million dollars, with a CapEx that we plan to do on it. We bought the property. It’s just under 80% occupancy at the time. There were nine down units initially, and another 14 units that needed to be renovated. So, 23 in total that we needed to do. We purchased this in late — today is the 17th. Six days from today, it will be the two-year anniversary of our acquisition for this. This was before rank growth just went through the roof. So, we had some tailwinds at are back. But I think my core belief is, the business plan was sound. We did the renovations pretty quickly, because we had nine readily available to do. So, we got the first nine units, the down units, done within the first three, four months. And we started renting those.

Throughout the course of 2021, we finished the remainder. In early 2022, we got those 23 units completely finished and then rent it. Part of this property is a 53-unit property. At the time of acquisition, that was 52 — two beds, one bath, and then a one three-bed, one-bath. It was very awkward type of layout. But there was the defunct leasing area or a defunct office space, however you want it to have in there. We took it upon ourselves to take the remaining of the capital and create a 54th unit at that property.

We worked with a zoning attorney down in Coweta County who had experience with it. It got approved. By mid-summer of 2022, we added an additional unit to the property. We started going through the refi process. It was either Memorial Day. We started going through the refi process, knowing that we were starting to trade out units. This is Q2 2022. And interest rates, as we know it, are doubling at a fast pace. We stabilized the property, had everything going. We queued ourselves up for a refinance. We executed upon that refinance in September, mid-September of 2022. Still holding on to the deal right now. But at the time of refinance, in lump sum, we returned all our investor capital back to everyone. We turned our distributions in late 2021 because the deal was performing so well. We’re looking at two plus equity multiple with high teens, high IRR for our investors. The debt we put on it, we got a 10-year Fannie Mae loan on the deal, five years of IO. That also offers a supplemental with a 5.05 interest rate. Now we’re going to hold it and reap the rewards of hard work for the remainder of it.

Pancham Gupta

That’s awesome.

Brendan Chisholm

Yeah, it’s been a good deal. I’ll tell you. I’ll revert to how tough it’s been to raise capital. After going through that refi, more friends have reached out to me asking me when’s my next deal.

Pancham Gupta

Yeah, exactly. You do one and you do a good job, which is what you did, you’ll just get more and more people. Thank you, Brendan, for sharing that. Anything you would like to add before we move on to the second part of the show?

Brendan Chisholm

No, that’s it. Looking forward to the next part.

Pancham Gupta

Awesome. All right. We’ll be back after this short message.

(break)

Pancham Gupta

Do you ever feel overwhelmed by the thought that you have no time after work and find no time to learn about investing? Do you feel left behind that you are not putting your money to work for you? Do you want to create passive income, but you do not know where to start? If so, I have good news for you. I have created an investor club which I call the Gold Collar Investor Club for Accredited Investors. I will be putting together investing opportunities exclusively for this group. These are the opportunities where I have done my part of the due diligence for you and will be investing my own money alongside you.

If you are interested, please sign up on thegoldcollarinvestor.com/club. I repeat, thegoldcollarinvestor.com/club. I will reach out to schedule a 30-minute phone conversation to discuss your investing goals once you sign up. This can be a good opportunity to diversify and take some chips off the hands of Wall Street to produce some cash flow.

In case you are wondering what is an accredited investor, an accredited investor is someone who has earned more than $200,000 as filing single or more than $300,000 filing jointly for the last two years. Another way to qualify as an accredited investor is if your total net worth is more than $1 million, excluding your personal home. It includes your stocks, 401ks, IRAs, cars, et cetera—just not the equity in your personal home. If this is you, I would highly encourage you to sign up.

(interview)

Pancham Gupta

So, Brendan, let’s move on to the second part of the show which I call Taking the Leap Round. These are the four questions I ask every guest on the show. My first question for you is, when was the first time you invested outside of Wall Street?

Brendan Chisholm

The timing on this one is interesting, in that I bought my first condo in 2016 with the intention — my wife and I, we’re moving from Hoboken, New Jersey. We moved up to Stamford, Connecticut with the intention of renting this condo out after we purchased it. We stayed there for four years, I think, until we got a house under contract in Stamford, where I now reside. In April of 2021, nobody was buying houses. This was before asset prices just went through the roof, too. So, we bought that one. We did a live-in flip, and then rent it. We moved into our new house right around the night before Thanksgiving of 2021, and then rent it out. So, we moved into that. We rented out our condo in early January, and then closed on Newnan in February. In a matter of months or less than a month, 60 days, to do live-in flip that for 3.5% percent down. When I went through it, it appraised. It allowed me to have 20% of the home I live in. I rented out my condo. That was cash flowing from day one. Then I closed on a syndication less than 30 days later.

Pancham Gupta

Wow. Look at you. So, that condo that you bought in 2016 after moving from Hoboken, did you have any fears that you had to overcome when you bought that condo?

Brendan Chisholm

No, because I think my wife was happy with buying a condo. We didn’t want to pay Hoboken rental rates anymore. At the time of it, this was 2016. Interest rates were in the low threes. Interest rates are going to go any lower than this. So, we might as well just lock something up.

Pancham Gupta

Yeah, that was a good call, right?

Brendan Chisholm

Yeah.

Pancham Gupta

For people who don’t know, Hoboken is one small city in New Jersey, next to Manhattan, right across the Hudson River. Great place. If you’ve never been there, definitely a good bar scene over there.

Brendan Chisholm

Great bar scene. Great for young couples, people just leaving college, and people who just want to have a very close commute to New York City.

Pancham Gupta

Yeah, I actually lived in Newport for almost three or four years.

Brendan Chisholm

Nice.

Pancham Gupta

Yeah, cool. Well, my third question for you is, can you share with us one investment that did not go as expected, if you have any?

Brendan Chisholm

Yeah, investing in Wall Street. I thought, after leaving, this was the great wealth creation — of being able to do stocks and all the invest in stocks, do all of that. I can name a few. I mean, I’ve done well with stocks if you look at it from—

Pancham Gupta

Over a portfolio.

Brendan Chisholm

But there’s a few that haven’t done as well. I don’t want to go off of individual names. But yeah, I won some. I lost some. I haven’t been investing in real estate to necessarily show a loss on any of these deals yet. But yes, investing in something that I didn’t have control, total control over of what the outcomes of some of these companies.

Pancham Gupta

Got it. Cool. My last question for you is, what is one piece of advice would you give to people who are thinking of investing in Main Street that is outside of Wall Street?

Brendan Chisholm

For anybody who wants to invest on Main Street — and I was like, in retrospect, I wish I did this — buy a duplex. Buy a triplex. Buy a fourplex with an FHA loan. Put down 3.5% and house hack it. I wish I did that. I didn’t. But I think that’s the best way to get started with it. After that, go into multifamily. Because once you build a track record with it, the economies of scale become so much greater for you. It’s a wonderful investment class. It’s a great way to be able to truly manage and see the work that you’re doing. You’re putting in the sweat equity with all this stuff, and you’re seeing the fruits of your labor.

Pancham Gupta

Got it. Well, great. Thank you, Brendan, for sharing that. How can listeners connect with you if they want to find out more about you and what you’re up to?

Brendan Chisholm

Sure. You can reach out to me at brendanchisholm.com. The best way is email, brendan@bkcholding.com or shoot me a text at 978-835-9376. I’m on all the LinkedIn, Instagram, Facebook. Just find me. I’m happy to have a conversation if you’re ever interested in investing in multifamily.

Pancham Gupta

Well, great. Thank you, Brendan, for your time here today.

Brendan Chisholm

I appreciate it. Thank you so much for having me.

Pancham Gupta

Thank you for tuning in today and listening to Brendan’s story. If you have any questions, do not hesitate to reach out to me at p@thegoldcollarinvestor.com. This is Pancham, signing off. Until next time, take care.

(outro)

Thank you for listening to The Gold Collar Investor Podcast. If you love what you’ve heard and you want more of Pancham Gupta, visit us at www.thegoldcollarinvestor.com and follow us on Facebook @thegoldcollarinvestor. The information on this podcast are opinions. As always, please consult your own financial team before investing.