Just before Christmas, we had a lot of good news to share. We officially closed on a 284-unit value-add apartment deal in Andrew’s hometown of Austin, Texas. One week before closing Apple announced a new billion dollar campus just 10 miles away (what timing!). This deal represented our biggest complex to date, and marked our 4th acquisition of 2018 (see one,two and three). It also strengthened our portfolio to over 1,100 units and $100,000,000 in market value.
Normally, when we close on a deal we write an article highlighting our lessons learned from that acquisition. We do this in the hope of inspiring other (potential) operators looking to get started in the business, and sharing with our investors a little “look behind the curtain” on how we conduct our business. Given the milestones mentioned above, and the timing of closing this just before the New Year, we are in an especially reflective mood. So today, we are going to highlight our lessons learned from 2018, across closing 4 deals representing 925 units in Texas.
Our business is built on momentum As Newton’s first law of physics states, an object in motion stays in motion. For Wildhorn Capital, 2018 was all about momentum. Our first acquisition was under contract in the first 10 days of the year, and as soon as it closed we had identified our portfolio deal. As the portfolio has grown and each acquisition has happened, the next one has been lined up and waiting for us. We haven’t forced things, and are staying true to our conservative underwriting. What is happening is the law of inertia. We are in motion, and are staying in motion. By being active and consistent in our activities, communications and owner/broker outreach great deals are coming to us. This single thought, and immutable law of the universe, has us super excited to see what 2019 has in store for us.
Always be hustling The day we closed on this Austin based deal, Andrew was in San Antonio checking on our assets in San Antonio and making some design decisions on site. This marks the second time in a row that we’ve been on the road the day we closed on a new deal. The last time we were in Houston meeting with brokers and networking with owners. This current deal was actually a direct result of that trip, as we had the chance to have dinner with the seller, where we started a conversation that eventually led to us closing on this deal. The big takeaway in all this–never stop hustling. Rather than sit back and celebrate getting deals closed, we’re consistently and constantly out there hustling. This ties back directly to point #1.
Find good deals and capital finds you For our Austin deal, we had to raise $16,000,000, and going into the deal the equity was our biggest question. Could we find and raise $16mm in 45 days with both Thanksgiving and Christmas wedged in there? It was a big question the team had to consider. This deal takes our total equity raised for the year to over $36,000,000– all sourced from individual private investors. Ultimately, we did decide to move forward with the deal and successfully sourced the equity, and that ended up being the easiest part of this transaction. This leads us to the big lesson from this deal–and all the deals in 2018; if you can find and uncover a good deal, there is investor appetite for Multifamily. Given the bear market territory the stock market now sits in and a bleak projection for 2019, we think there will continue to be investor demand for the consistent cash flowThe money that is left over each month or year from the property's income after paying for operating costs, mortgage, taxes, and other expenses. Positive cash flow occurs when the income exceeds the expenses, while negative cash flow indicates that the property's expenses are higher than the income it generates. View Definition Multifamily provides and will be working diligently to find those opportunities for our investors.
We are in the relationship business If you’ve read any of our other articles, this lesson won’t be a surprise to you. And we couldn’t write an article about this deal (or 2018) without mentioning it again. Every dollar we’ve raised has come from investors with whom we’ve built a relationship. Every deal we’ve looked at (and been awarded) has come from a relationship with a broker and/or owner. With that guidance, everything we do in 2019 will be geared towards deepening the existing relationships we have with our ecosystem of stakeholders. This business has never been about bricks and mortar. It’s about the families that live in the communities, the staff that works there, the investors that partner with us to bring it all to life. We’ll never lose site of that, and will keep harping on it in this space going forward.
So Happy New Year and thank y’all for a great 2018. The team at Wildhorn is looking forward to continuing to learn and grow together with you to make 2019 the most prosperous and successful year yet. We look forward to continuing to share the lessons we learn along the way.
Written by Andrew Campbell
Andrew Campbell is a native Austinite and Managing Partner at Wildhorn. He is a real estate entrepreneur who first broke into the business in 2008 as a passive investor. In 2010 he transitioned into active investing and management of a personal portfolio that grew to 76 units across Austin and San Antonio. He earned his stripes building and managing his personal portfolio before founding Wildhorn Capital and focusing on larger multifamily buildings. At Wildhorn, he is focused on Acquisitions and maintaining Investor Relations, utilizing his marketing and communications background to build long-term relationships.
