ERIC DINICOLA  0:00  

We sort of put the brakes on that a bit because we started to say, look, we know our market better when we’re actually seeing more aggressive cap rates down there than we are appear in some cases. So why don’t we sort of reel that in a bit continue to focus will still keep an eye on any market in the country that there’s an opportunity. And if we can make something work, we’ll jump into it. But right now, we still see our knowledge allows us to see you know, sort of the best opportunities for us are up here because we can enact all these kinds of parts of our business and development, the property management, the rental, and then also working with our home local City, Boston to do some of these affordable development projects.

Announcer  0:41  

Welcome to CRE PN Radio for influential commercial real estate professionals who work with investors, buyers and sellers of commercial real estate coast to coast whether you’re an investor, broker, lender, property manager, attorney or accountant we are here to learn from the experts.

J Darrin Gross  1:00  

Welcome to Commercial Real Estate Pro Networks, CRE PN Radio. Thanks for joining us. My name is J. Darrin gross. This is the podcast focused on commercial real estate investment and risk management strategies. Weekly we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio. 

Today, my guests are Nick Earls, and Eric De Nicola. Nick and Eric are full time real estate investors, developers and founders of winterspring capital, a private equity firm based in Boston, Massachusetts. Together they have developed over $56 million in multifamily assets with another $40 million in the pipeline. And their work includes value add affordable housing development, and luxury multifamily condo developments in the southeast us. And in just a minute, we’re going to speak with Eric and Nick about their experience and how you can learn and identify and, and grow your multifamily portfolio. 

But first, a quick reminder, if you like our show, CRE PN Radio, there are a couple things you can do to help us out, you can like, share and subscribe. And as always, we encourage you to leave a comment, we’d love to hear from our listeners. Also, if you want to see how handsome Our guests are, be sure to check out our YouTube channel. You can find us on YouTube at commercial real estate pro network. And while you’re there, please subscribe. With that, I want to welcome my guest, Nick and Eric, welcome to CRE PN Radio. 

NICK EARLS  2:42  

Hey, thanks for having us on.

ERIC DINICOLA  2:43  

Thanks a lot.

J Darrin Gross  2:45  

Well, I’m looking forward to our conversation today. But before we get started, if you could take just a minute and share with the listeners a little bit about your background.

NICK EARLS  2:56  

Yeah, so Eric, and I’ve actually been friends for almost 20 years now we’ve met each other on where kids in high school did a lot of team oriented stuff together football powerlifting played, you know, competitive video games. Kind of got a good, you know, Team report from a young age, always had that sort of rebellious streak didn’t want to work for someone else. Didn’t know how we would do it at that young age. But we had this idea that maybe we’ll start a company someday. And when I was separate ways for a few years in college, and a couple years after that, and I was working in real estate, I got my real estate license and 2011 was selling smaller commercial apartment buildings and Massachusetts and Connecticut. And I said, Eric, I think this is you know, this is a realistic way that we could kind of break out of the machine, you know, get financial freedom, something I think a lot of your listeners probably interested in. That was our original goal. And we thought, why don’t we buy a rental property, save up some money for a few years, and buy a rental property. And over the course of saving up money, we’re saving up money for maybe three or four, maybe even five years. I forget the exact amount at this point. But we decided that I had seen a really good opportunity in the Boston Market for condominium development. Boston’s a unique market number one of the either the number one or the number two Life Science city in the country. depending on who’s ranking it San Francisco’s right up there, but Boston’s right up there as well. And over the past 1015 years, we’ve had a huge influx of high income, life science industry workers. So we’re talking you know, biotech. You know, Maderna one of the vaccine producers is located in Cambridge right outside of Boston. So these people are high income. The population is kind of boomed. We’ve already surpassed our 2030 projections. And a lot of these people People go for nice luxury rentals, but a lot of them also want to own condos. So there’s a good niche in that market for condominium development. And we found our first project in 2015. So small project, it was a dilapidated existing two family, where you could add a third unit. So we added a third unit fixed up the existing part of the building, added that addition and then divided into three condos and sold those. And we’ve been doing that ever since it’s one of the main fronts of our business, but that’s kind of how we got into real estate. Yeah, and we’ve been doing it ever since.

J Darrin Gross  5:38  

But the the condo thing I don’t think that typically people think that way. I think most often, people I talk with they they’re thinking more of like a build, or buy and hold or some sort of a, you know, you’re controlling the the entire asset kind of thing. But there was a time upfront remembering the timeline, but I want to say it was maybe even earlier back around 2000. Remember, as an insurance broker, I was dealing with a lot of people that were converting apartments to condominiums. And that was a, I think it went through, like, up until, like 2008 or so. But there was a fairly significant move to take some of the multifamily assets out of rental, convert them to ownership, assets, and then sell them and there was a delta in there. And, and I think that was a big play for developers. So So you got in basically on on a condo, and it would be development because you you did convert the use from one and then you also added square footage. Is that been your primary vehicle then, since then it has been more condo development, or do you also do traditional multifamily buy, hold the value, add, etc.

ERIC DINICOLA  7:02  

We do a little bit of everything, because we’re pretty opportunistic. But that’s that’s really the meat and potatoes of our business, it has been more continuing to expand a bit where right now we have a deal that we’re going to be converting actually from an old office building into apartments that we’ll hold on to, but the condo development where we sell at the end of the development process, maybe like a typically like a two year period at this point, Boston, that’s really where all our you know, build and sell condo development projects are up in our neck of the woods or Boston. And we’ve we’ve kind of seen that from the start as this is our niche, this is what we are good at this is where we can add a lot of value. Once we kind of got our foot in the door, which is really hard in this market. We see a lot of other developers kind of struggle with that first step. And so once we got our foot in the door, and we saw how to do it, we understood the process, we understood all the variables, you know, for the most part, there’s always something new every project. And we’re always learning stuff from other developers and other experts in the field. But once we saw that, we said, Okay, this is a pathway to making, you know, quick profit, sort of, you know, relative to typical real estate profit. And we can use this as a boost for our business long term to start compiling assets. So we had that first project where we added a third unit sold the three condos individually, we ended up selling them for a higher price per square foot than we had even projected when we started so that the market, you know, is a good place at that point. So then we were able to get into our next two projects simultaneously. One was going to be three units, three very large luxury units in a city right outside Boston, ended up being only two, which was a long sort of process and fight with the city and neighborhood. And then simultaneously in the same neighborhood as our first project. We built a seven unit condominium building, which we sold all seven individually, the majority or under agreement before we even finished construction on that building. So we really said okay, this is something we’re good at, we know what to do we know how to add value here, we know what to look for. So you know, over the last five years, those opportunities have continued to shrink, because there’s more developers trying to do it. More parcels that had opportunity have already been snatched up and redevelop the least, you know, in Boston, but there’s still a lot of opportunity and we’ll see it and we’ll think creatively. But to get back to the point of your question. It’s kind of now just one of the components of our business. We’re also working with the city on an affordable housing project, which will be six homeownership units and one rental unit, and they’re capped out at certain AMI area median income rates. So you work with the local government on that, which is its whole kind of own process, still our development niche, and then we’re working on this office conversion, like I mentioned. And then we also have some pure multifamily rental properties that we own on the side as well.

J Darrin Gross  10:17  

Gotcha. And in the seven unit, you mentioned was at a ground up development then or was that same kind of a conversion or, or change of occupancy from a rental to an owner.

ERIC DINICOLA  10:33  

It was a was a prior to family. And since we’re still kind of early on in our business, we actually lived in the two family while we’re permitting it, and then we knocked down the two family and built the seven from the ground up.

J Darrin Gross  10:46  

Got it? So I’m kind of curious, you know, from the working with an existing structure as opposed to a new ground up? What are some differences? And some lessons or some even be curious? Just on the numbers, do you find, you know, I’ve talked, you see, like, most of the the conversations I’ve had was mostly with value add people. But occasionally, I have conversation with new construction, guys, and it’s kind of a reminder of that, you know, the original value add was new construction, I mean, you know, you start with a bare piece ground and put something out, I’d be curious to hear what your your kind of thoughts are on, on the comparison between the two, the, the, you know, working with an existing structure as opposed to starting new.

NICK EARLS  11:39  

So it’s definitely cheaper. You know, assuming there’s no major issues with the existing structure, definitely cheaper, because you’re removing all your excavation, your earthwork, your foundation, all those components are removed, and then the building envelopes, hopefully a lot of that can even stay so you a lot of your costs can be cut down, you’re probably looking at anywhere from 50 to $75 a square foot in savings, when you’re renovating an existing structure. The trouble is, when you’re doing like the the projects that we do for these luxury condominiums, a lot of them are urban infill. And these densely packed neighborhoods where you’ll find these odd lots that are maybe a double or triple lot, you know, they’re much bigger than the surrounding lots, but all have this little two family on it. And it’s not really practical, you’re going in there, you’re trying to build something that’s five times the size of that building, it’s not really practical to keep it so in those situations, you just knock it down and you start a new one, you could try to add to it. And sometimes you’ll run into historic boards that say, Hey, why don’t you just keep it and add to it. But you know, that’s in those situations where you’re trying to square peg round hole something and force it through, that doesn’t really make sense, your costs will actually increase because you’re gonna have to do a bunch of funky engineering and all sorts of stuff that’s really unnecessary. So it depends on the situation. You know, when we’re looking at a nice big building, like this office building, Eric was mentioning, it’s a 50,000 square foot existing office building. That’s all the space we need. And it’s configured perfectly to just convert it into apartments, whereas when we’re trying to build a large condominium building, and there’s just as little shack, single family or two family on it, just knock it down, and that sort of a situation.

J Darrin Gross  13:40  

Yeah. On the office conversion there any issues with zoning or any kind of, you know, change abuse issues with the local municipalities? Or?

ERIC DINICOLA  13:55  

That’s a very good question, because it is it is kind of central to this project. But almost like more central to our condo development, we have so many zoning hurdles, because most of our projects in Boston are require zoning relief require variances because they’re building a nine units and a two family zone, for example. And it’s very difficult, very long process, very political process. But what we’ve noticed with this office conversion, it’s in a city outside of Boston, sort of a satellite city and old manufacturing hub, they actually seem to welcome it. They like developers, they’re unlike Boston, it’s very pro business pro developer, they want you to come in and upgrade the city, they don’t force you to do a certain amount of affordable units. You can do all market rate. And so kind of the point I’m getting at is you do need a special permit. Yes, there’s zoning because you’re, you know, converting from one use to another and in our case, it’s going to be mixed use. We’re going to keep retail on the first level, there’ll be an office component and then the rest will be residential. But they’re much easier. to work with than what we’re used to in Boston, so they’re really willing to help guide you through the process, it will be a shorter process it has been so far. As long as you meet certain requirements and kind of uphold the historic nature of this building based on where it is, they will likely grant you the special permit, you need

J Darrin Gross  15:21  

to track the development compared to like an ownership, kind of a long term play. How do you guys look at that? I mean, you mentioned in the beginning that the first development of the three unit kind of you recognize the the opportunity to get the money and you could maybe recycle it or put it into your your next projects. Net, but you know, that the the mindset and just kind of be curious to see how you guys think of the the short term versus the long term kind of thing is between the two different types of opportunities.

NICK EARLS  16:03  

We both prefer the long term. And that’s why we got into it. But we were, we were young guys, when we started our business, we’re 25 years old, we had scraped up the money to start the company and do that first investment. But it wasn’t realistic for us to pursue. You know, we’ve seen people do great with the buy renovate refinance strategy. But we’re kind of similar to that, where we didn’t have that much money starting, and we needed to build up a pool of capital. And then we figured out, Hey, we’re pretty good at this condominium development thing, we’re doing a 32 unit, luxury one, right now it’s our biggest project. So we’ve scaled up pretty successfully in that niche. But all along, we’re, we’re after that passive income, you know, that that people want, we want to own rental properties and, and build up a team below us that can help us manage these rental properties interface with our property manager, eventually get to the point where a few years from now, Eric, and I don’t have to work that much. And we have financial security, you know, that’s what we’re, we’re really doing this for. So it was just kind of a life circumstance thing that this condo development became a pathway that we embarked on. But, you know, right now we’re very actively pursuing things for our rental portfolio, that’s what that office to apartment conversion is, we have another one that we’re looking at another office to apartment conversion deal we might be putting an offer on this week. So that’s, we’re getting to the point now, where we’re almost focusing on that a little bit more. But we really like the condo development for a quick kind of influx of capital that you can then put into longer term investments,

J Darrin Gross  17:52  

Yeah, no, absolutely the ability to get your money back out and, and be done with something as opposed to the ongoing kind of curious, the, you know, a lot of times I talk with people and kind of come from like a flipping mindset, you know, and in, there’s almost like a light bulb that finally goes off that they recognize all that money’s going through the system, but not a lot of it’s staying, you know, kind of thing into exactly, the way to really, you know, grow wealth or accumulate, is through acquisition and holding kind of thing. And I think so many, so many times, I think people are chasing shiny objects will be the stock market or real estate or whatever the hot topic is. And in there, they’re expecting a quick, you know, quick buck kind of thing. And, and there’s plenty of stories, I mean, you can you always find the the story about the guy that bought something for nothing, and, you know, turned around and sold it on the same day for, you know, millions or whatever. And it might be a lawsuit after but but there’s that, you know, those stories are out there. And, you know, and then you look at, there was somebody that read something or something, but it was basically saying most of the wealthy real estate, investors are older. I mean, it was basically because it took time, you know, you you start off with something and you maybe you scraped in you’ve, you know, you’ve got into it, and maybe it didn’t cash flow in the very beginning, but over time, everything kind of settled and it you know, it turned into a nice portfolio there. So, but now, it’s good. kind of curious if you guys are in Boston. You know, a lot of times people get dissuaded by their local market based on the challenges and they start looking elsewhere. What were you able to find was it was it your local knowledge that gave you an advantage? Was it the fact that you were working in real estate that you were able to, to find and recognize the opportunities or what What kept you in that market? And then also be kind of curious to hear, you know, how you how you look for other markets? It sounds like you’re starting to work outside of Boston a little bit.

ERIC DINICOLA  20:14  

Yeah, I mean, we’re so familiar, obviously, with the Boston Market, this is what we grew up on, we’ve lived most of our lives. That yeah, I guess we have some more insight. We’re very familiar with, you know, the geography where high populations are, where you know where the jobs are. So that that gives us a little bit of a leg up, we’re just used to it. And then just dealing with the real estate industry and data that we see and people that we know, and talking with other developers over the last, you know, five to 10 years, it has given us a leg up. But we did kind of what you said, We’re alright, let’s let’s kind of expand a bit outside of this, because there’s other markets out there. We talk to guys who own property, you know, all across the country, they don’t have to be right on top of it, maybe we don’t develop somewhere else remotely, but we can still own and have a great property management company hired that’ll handle the property for us. So we had been working the last year really in the southeast of the country. We had a few deals that we put in loi Zhan got the best and final, and these would have been larger value add apartment deals as part of our diversification strategy. There wouldn’t be you know, major construction or anything like that they would be really managerial value, add inefficiencies that we saw from afar, built up a lot of relationships with brokers down there, Florida, North Carolina, South Carolina, Georgia. And we just really liked a lot of the population trends, we’re seeing the demographics, we saw rent numbers, but it almost started moving really fast, where it got to the point where Cap rates were compressing so quickly, on some of these deals that you are paying for two or three years out. And if you didn’t enact your strategy very quickly, and it didn’t all go to plan perfectly. I mean, you might be in this thing in year two, or three, and you’re not even at, you know, what you’re hit the point that you really should have paid for it in the first place. So we sort of put the brakes on that a bit, because we started to say, look, we know our market better when we’re actually seeing more aggressive cap rates down there than we are appear in some cases. So why don’t we sort of reel that in a bit continue to focus, we’ll still keep an eye on any market in the country, that there’s an opportunity. And if we can make something work, we’ll jump into it. But right now, we still see, our knowledge allows us to see, you know, sort of the best opportunities for us are up here, because we can enact all these kind of parts of our business and development, the property management, the rental, and then also working with our home local City, Boston to do some of these affordable development projects that we think this first on working on will really get our foot in the door with the city and just add another vertical, you know, to our business. And that probably wouldn’t be as feasible or possible when we’re operating, you know, from 1000 or 2000 miles away.

J Darrin Gross  23:10  

And I think that that’s, that’s well said, I think that, you know, it’s with the the internet and Google and, and Google Maps and all that it’s so easy to be wild by something so far away, when you don’t know the words, or the where all the bodies are buried or, you know, whatever those might be kind of thing. And, you know, just to have some sort of a local, or just base knowledge. I mean, it doesn’t necessarily have to be local. I know plenty of people that do it remotely. I’ve got some, you know, properties myself that are remote and stuff, but having a base knowledge. I think more importantly, is having a team, you know, that that you can trust, I’d be curious to know if you can kind of describe who are the members on your team and in how you you know, how you see that, as far as a level of importance when you are looking in these other markets?

NICK EARLS  24:06  

Yeah, so I mean, we, as developers, we have a big team. Within our company, we have a couple employees, we have kind of a third junior partner, another friend of ours, Kyle, and he’s really good with investors. He kind of handles our investor network. He also finds deals off market and kind of interfaces with, you know, people, when he’s we’re getting a deal off the ground. He’ll get, you know, kind of the initial research going. So he’s a very valuable team member. And then we’ve got a virtual assistant. We’ve got a social media manager, and we’ve got a graphics guy on our team. And that’s kind of our in house team. But then when you expand to relationships you have with other people. We have a huge broker Network. And that’s extremely valuable. You know, people talk a lot about off market prospecting, which I think is valuable. We’ve gotten deals from that. But the best deals we’ve gotten have been from brokers. And I think it’s, it’s just more talked to a bunch of brokers, rather than talking to a million property owners and dealers will come to you, you know, so I think it’s a more efficient pathway. They do that full time. Obviously, they take their cut, but they deserve it. So that’s kind of our mentalities and everyone wins mentality. So we have a lot of brokers in our network. And then for development jobs, we have a big team, we have a couple different architects we work with, we have a really good zoning attorney for our Boston projects. And then we have zoning attorneys that we work with in other markets, because that’s kind of a very local knowledge based thing you’ll a zoning attorney will usually only deal with one municipality or two municipalities, because the rules can be very different the regulations and laws and all the and then also, we need engineers, we come from a sales background, Eric and I both, he has his real estate license, I obviously got started in sales. And then our other partner Kyle has his license as well. But now we we’ve been working with good brokers on the sales and for our condominium units, our upcoming project a 32 unit project, this is projected to be gross sell out of around 25 to 26 million. So we really want to bring in, you know, Top Best in Class brokers for that. So we brought in a really good brokerage, Charles gate, again, local experts, they’re not, you know, worldwide or nationwide, they’re really focused on this sort of product that we’re developing luxury condominiums, top of the market 800 to 1000 plus dollars a square foot. So we have confidence with them. And they work with, you know, during the design phase, and the planning phase, you know, they’re there every step of the way. So they’re really a team member as well. And they’re different, I would say, you know, they could bring us deal. But we also have brokers who just shop us development deals, they’re not on the sales. And so there it is kind of two different buckets. And then also you’ll have, we’re working with an interior designer. For our projects, they do a lot of legwork up front, they look at lead times for, you know, appliances and plumbing fixtures and lighting fixtures. Super important in today’s you know, supply chain issues economy that we’re in, and they look at the local market, what sort of design you can get away with while still fitting with your budget. So they’re extremely important. We’ve got a bunch of different types engineers, so the list goes on. But as a developer team is number one, it’s you know, it’s the most important thing. No man is an island. And that’s especially true, you know, in this in this business.

J Darrin Gross  28:12  

And there’s two things that come to mind. One is, you mentioned supply chain, have you seen much change with with, you know, where you started versus where you’re, you’re ending up? Whether it be budget, or just having to make some modifications based on availability or, or delays? Or can you speak to any of that?

ERIC DINICOLA  28:37  

Yeah, we have, we have seen not not a major change, we’ve kind of timed stuff and budgeted properly. We’ve talked to a lot of other developers who might have been, you know, mid order, when kind of COVID started and sort of the supply chain issues that followed that, you know, we’re still in. So we are seeing issues, but we’re kind of working around them where we say, Okay, looks something like lumber, which is a major component of any construction job we do. And of course, you know, as you probably know, and audio listeners know, that’s been a hot topic and construction, the cost of it, the availability, so we plan for that, you know, we give a contingency, you know, we add a contingency into our budget of a decent chunk above what it should cost what it has cost in the past. Our total cost per square foot has gone up a bit. sale prices have to so we can kind of work with that. And then we times sort of the biggest thing is Nick just mentioned the interior design firm we’re working with, when they’re making suggestions even on appliances or finishes there. They’re actually factoring that in, they’re going to that level where they’re saying look, you know, we think for this market for the buyer for this unit that you’re trying to sell this high end condo, we would probably go with this, you know, appliance package, but it’s made in Turkey. And we’re probably should choose this one instead it’s equal quality, but you’re going to get it probably in six months instead of 10. So even a little things like that we’re just trying to be right on top of right away. And it hasn’t really cost us yet. We’re because because we’re so kind of prepared for it. But I could easily see those becoming major issues if you don’t prepare on the onset.

J Darrin Gross  30:26  

Yeah, no, I just hear all these stories about the house, that’s all done except for the, you know, the stove or whatever, you know, the, the specific guidance kind of thing. And it’s, it’s, I think it’s affecting everybody in some way, shape or form, but part of it. The other question that that I was kind of curious about, you know, is, is you guys are working with these brokers. I was kind of curious, what is the, the investment parameter are the criteria that you guys are, you know, because you, you have kind of a wide range of, of things you look at is that, basically, what you explained to the brokers is what we’ve done this what we’re interested in, or do you have kind of more of a narrow, narrow view of what you’re, you know, you’re asking them to look for.

NICK EARLS  31:16  

I think I generally, you know, if a new broker approaches me with J has happened, like, in the past few days, actually. And I think what I told him was, we’re very interested in condominium projects in the Boston area, development ground up, that’s what we’ve been doing for years. But we’re also heavily pursuing value add apartment deals in the area. And this office to apartment conversion we’re doing we consider kind of a value add plus where we’re using our development, and then teittleman skills to add value. So that that would be the way I would answer that question to a broker pretty straightforward. We like either permit pre permanent deals, and Boston right now, just because of the political situation, or deals where the owner is open to entitlement contingency zoning contingency. So we don’t have to purchase the property, we can tie it up for a year or two, while we get it permitted, which removes risk for us, which is something that’s very important. So that’s kind of what I would how I would steer them. We’re not going to go after anything that’s completely speculative, on the condominium development side, just because those projects are so hard to get permitted. So either have to have pre permitted or a contingency, and then office apartment conversions or other sort of value, add plays where we can leverage our development skills.

ERIC DINICOLA  32:46  

And sort of to add to that, I mean, when we get some of these deals from brokers, and we meet a new broker, sometimes we can tell pretty quickly, we know the local market, maybe that that is in the borrow of Boston. And we might be able to look at it 10 minutes and say, well, they’re trying to sell this thing for 5 million for this many units. We just analyzed a property yesterday, for three and a half million that couldn’t work there was almost identical. So we know this is just way over the top, you know, we can sometimes make kind of quick decisions like that, on deals, which is how we can review so many.

J Darrin Gross  33:20  

No, that’s that’s definitely useful. Again, one of the the benefits of knowing the market, as opposed to trying to make the numbers work, as opposed to knowing what numbers work. And I think so that’s, that’s good. I’m curious, also, you mentioned investors, are you guys syndicating these deals? Or how are you going about? What’s your relationship with investors? What’s the opportunity that for investors in with winterspring?

ERIC DINICOLA  33:51  

Yeah, we are we’re syndicating our deals. Early on, you know, we started with our own money. And we kind of gave the anecdote about that smaller kind of development we did to start but as we grew, we obviously realized, the way to do this is you have to bring it outside capital. So yeah, we syndicate our deals, we have investors who have been with us now for several projects, a lot of them reinvest. We have kind of unique structures, sometimes where we might with something like the office conversion, will actually be able to pay out all the investors when it’s done a preferred rate of return that we agree on initially. And then they’re completely out, they get all their profit, they get their initial principal back, even if we decide to hold on to the building, as a long term investment. With the condo developments, you know, it’s a balloon payment at the end. But just because the nature of how that business works still get a prorated share of every unit sold as we go. So yeah, we’ve had a lot of success syndicating you know, we have a lot of people who are interested in when we have a new deal, investing in it initially We started with sort of smaller relationships that we had in the industry, and it’s really kind of ballooned from there.

J Darrin Gross  35:08  

No, no, that that relationship you mentioned, were you in the one where the investors will be cashed out, and you’ll have the opportunity to, to hold that. That’s one that’s always kind of appealed to me just just from understanding that because it especially if you’re a long term, hold as you can, you can, you know, satisfy both the investor to get their, their return. And also, you know, if you can create something for yourself to hold it, that’s always been. I’m so so that’s kind of a neat way to do it. So I want to ask you, questions here.

I think there may be, is there anything that I haven’t asked you about? I mean, you, you basically just on that refi thing? Is there anything that we didn’t address that you you feel like are important to kind of what you guys are doing?

NICK EARLS  36:13  

Yeah, I mean, we could talk all day, because we’re doing so many different things. But I think we we’ve covered a lot of the important topics, I think while we’re on the topic of syndication, lots of people want to get into real estate. And it’s really you got to figure out what fits your lifestyle best. You know, for us, when we were getting into it, we’re kind of young and ambitious, we didn’t have a lot of capital, if you have a lot of capital A deploy, it might make more sense to just be a passive investor, where you have, you know, a high income job, you invest a little bit every year into a long term investment, you invest a little bit every year into maybe something a little riskier, with a higher return, like a development job like the condos, we do. So really, that’d be just advice that I would give to everyone actually wrote a book about it, retire early through passive investing, it’s on our website, but it just goes into kind of looking at your situation. If you’re trying to get into real estate, and deciding what fits you best, should you be an active investor? Should you be, you know, a developer like we are? Or should you be kind of somewhere in the middle where you’re buying rental properties slowly while you’re working? Or should you just go completely passive, because I think there’s a lot of different options to get into real estate. And if I had the opportunity to just be a passive investor, and from the start, I think I would have chosen that route. So just trying to spread the word on that. We’re accepting investors, but there’s a lot of syndication companies out there doing all types of different real estate investments, every asset class, every type of risk level. So something more people should learn about, I think the message is getting out there nowadays, but it’s still it’s a little untapped and unknown. So just want to mention that.

J Darrin Gross  38:07  

I appreciate you sharing that, because I do think that, well, you know, there’s definitely an opportunity to be an active participant, the the passive one is available to, you know, everybody, and especially, you know, higher income earners that are looking for opportunities. I think that’s, that’s, you know, definitely a great great to remind people of that. If we could guys, I’d like to shift gears here for a second. By day, I’m an insurance broker. And I work with my clients to assess risk and determine what to do with the risk. And there’s, there’s usually one of three strategies that we look to try and employ. The first we look to see is if there’s a way we can avoid the risk. If we cannot avoid the risk, and we look to see what there’s way to minimize the risk. And when neither avoidance nor minimizing the risk is an option, then we look to see if we can transfer the risk. And that’s what an insurance policy is. And I like to ask my guests if they can take a look at their own situation could be their clients, investors, tenants, the market interest rates supply chain, however, however they want to frame the question or however you want to frame the question. But if you can take a look at your situation and identify what you consider to be the biggest risk. And for clarification, while I am an insurance broker, I’m not necessarily looking for an insurance related answer. But if you’re willing, I’d like to ask you, Nick curls and Eric de Nicola. What is the biggest risk?

ERIC DINICOLA  39:49  

I think in the business we’re in and because we’re in, you know, a few sort of real estate verticals, if we focus say just on the condo development They’re, I feel like there are two major risks. One is sort of the political and municipality risk in the city or building. And I’ll get into that a little deeper in a second. And then the other one is sort of a macro risk right now or in potentially, you know, the Fed raising rates over the long term, it does, you know, potentially reduce buying power for individuals, and we’re selling condos. So the way we kind of, we don’t necessarily think at our firm, that’s going to happen. So at least not in the immediate future, there’s potentially too many consequences for that on a macro scale. But these two things that we see, so when you’re dealing with a city like Boston, there’s so much red tape, that if you get into a project, without sort of a backup plan, or a worst case scenario, still kind of breaking even, for example, a very simple way to put it would be you buy a property in a three Family Zone, you should make sure if you had if you get denied for your variances, you get denied the Zoning Board of Appeals, you could still develop a three unit property, that would always break even the worst case, because by the winter, the why you can do that you don’t need special permission, you’re in a three Family Zone, you’re allowed. So look at that scenario, if that scenario loses a lot of money, then you probably shouldn’t get into it without protecting yourself and minimizing that risk either by having a contingency that Nick spoke about, or some sort of backup plan. So that’s kind of the local political municipality risks, because in Boston is just very difficult to develop. And it’s getting harder and harder, you know, not even every year, it seems like every month, there’s much more red tape. And like I said, the other thing would be more interest rate risk, when you’re selling condos. Buying Power does go down for buyers as interest rates go up. So one way we kind of, you know, try to eliminate that is we say, okay, look, where’s the market at right now, a lot of developers project out oh, you know, the markets increased at this rate, this is the value of homes, you know, a year ago, this is what they’re at now continue with that project that I’m going to sell them for this this much higher than they are now. We don’t do that we project as is, even if it’s two years old, even sometimes with like a 10% hit to see what this still work. And if it doesn’t, you know, we second guess that project. So that’s kind of how we try. That’s how we see to the biggest risks we see. And those are kind of the ways we would eliminate them in our business. But also just the idea of diversifying within real estate where you have the different asset classes that we had, and the different types of verticals that were involved with, is sort of another way or to risk minimization.

J Darrin Gross  42:53  

No, I think those are both well said the, you know, definitely the political thing. And then also, you know, just being conservative in your numbers, make sure that your numbers are going to work, regardless, rather than counting on those historical ups. I mean, it’s, it is funny how, you know, it doesn’t matter what market it is, whether it be the real estate or stock market, whatever people people don’t seem to remember their, their memory of, you know, markets, reversing or forgotten when it’s in a Go Go up, up, up, up up kind of things. But well said, Nick, and Eric, where can listeners go if they would like to learn more connect with you

NICK EARLS  43:38  

Yeah, you can check out our website; winterspringcapital.com. We’ve got a lot of educational articles about development and all topics about real estate really. Then we also have some investor guides, I wrote a book about the condominium development strategy. You can get that at https://winterspringcapital.com/development-book. And then we’re on social media, pretty active on LinkedIn, just under our names Nick Earls and Eric De Nicola. And then we’re also on Instagram where you can kind of see project updates, videos of the buildings were developed and going up. Lots of good stuff like that.

J Darrin Gross  44:19  

Awesome. Well, Nick and Eric, I can’t say thanks enough for taking the time to talk today. I’ve enjoyed it, learned a lot. And I look forward to doing it again soon.

NICK EARLS  44:31  

Hey, thanks so much for having us on.

ERIC DINICOLA  44:33  

Thank you, Darrin. Appreciate it.

J Darrin Gross  44:35  

You got it. For our listeners. If you like this episode, don’t forget to like, share and subscribe. Remember, the more you know, the more you grow? That’s all we’ve got this week. Until next time, thanks for listening to Commercial Real Estate Pro Networks. CRE PN Radio.

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