Insider Secrets Podcast Season 2, Episode 39
Guest: Daniel Huffman
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Guest Bio:
Daniel Huffman is a highly accomplished professional with a strong background in the multifamily construction industry. Holding a Georgia General Contractors Unlimited license, Daniel brings a wealth of expertise and experience to his role as Vice President of Huffman Group. His educational foundation in the field, with a B.S. in Building Science from Auburn University, has equipped him with comprehensive knowledge and skills. With an outstanding track record, Daniel has successfully overseen the construction of over 200 units, encompassing both new construction and rehabilitating single-family residences. His hands-on approach and unwavering attention to detail ensure that every project meets the highest standards of quality.
https://youtu.be/Ne-aPPwW3is
SHOWNOTES
Key Takeaways
Start investing in real estate now to build long-term wealth.
Don’t wait for the perfect market, building during slowdowns positions you ahead.
Passive real estate investing offers strong returns without day-to-day involvement.
Look for distressed properties and turn them into high-performing assets.
Vertical integration gives you more control and better margins; build it into your business.
Build to rent is one of the smartest plays in today’s high-rate environment.
Standout Quotes
You don’t have to be a genius in this business; you just have to understand the market cycles.” – Mike Morawski
“Love is what gets me up in the morning. Love for building, for people, and for what I do.” – Daniel Huffman
“When you build during a slowdown, you’re the only one coming to market when demand returns.” – Daniel Huffman
“Passive investors get the best of both worlds, return of capital and long-term cash flow.” – Mike Morawski
“If it’s safe enough for a life insurance company, it’s safe enough for your capital.” – Daniel Huffman
“The sooner you get into real estate, the better off you’ll be. It’s a long-term game.” – Daniel Huffman
Episode Timeline
[00:01:00] Mike opens with market outlook and introduces Daniel
[00:04:00] Daniel defines himself with one word: Love
[00:07:00] Daniel’s early start in construction and real estate
[00:12:00] Discussion of Atlanta’s market slowdown and interest rate impact
[00:15:00] Build-to-rent vs. build-to-sell in the current market
[00:20:00] How returns work for passive investors
[00:28:00] Case study on a distressed multifamily asset
[00:33:00] Final advice: real estate is a long game—start now
Contact
Website: Huffman Group
Project Website: Cedar Walk
TRANSCRIPT
Kristen: [00:00:00] Welcome to this edition of Insider Secrets, the weekly podcast that turns real estate investing goals into reality. Each show we interview guests who are seasoned real estate professionals, actively closing and managing real estate deals. Mike is the founder of My Core Intentions and would like to help you make your real estate investing dreams a reality.
Mike coaches you to buy investment real estate, creating short term cash flow and long term wealth. Your host and real estate coach, Mike Morawski, has more than 30 years of real estate investing and property management experience. Here’s your host, Mike.
Mike Morawski: Hey, good morning everybody. Welcome back. I hope that you are having a great weekend. I hope you have your coffee in hand. And, thank the person that invited you this morning if you’re new to the show. But I appreciate you listening in and being here.
I think you’ll be excited about my guest this morning and the ride we’re on in this wild [00:01:00] world of multifamily. I think right now that the market environment that we’re in is interesting. There’s some distress going on. Maybe a little bit more than we wanna see. There’s some volatility in the world.
But I believe that the timing is perfect. The timing is perfect to be in front of this market shift. I say a lot, my best friend in the world tells me that you don’t have to be a genius in this business, you just have to understand the market cycles. And we are switching from coming out of the down cycle, we’re gonna head into this new upward cycle and we’re gonna start to see this market change.
And if the wind is at your back and you’re in the multifamily business as an operator with assets right now, if you can make it through this little peak of a storm, you’re gonna do really well. You get involved in assets today, whether you’re an active investor or a [00:02:00] passive investor, you’re gonna see a lot of opportunity and a lot of growth.
Hey, if you are just following us for the first time, we’d love for you to smash the subscribe button, like us, love us. Share this podcast with somebody else. Okay, my guest this morning, good friend of mine, a coaching client of mine, Daniel Huffman from Atlanta, Georgia.
Daniel is a home builder, multi-family acquisition operator and in the property management space. We’re gonna talk a lot about a lot of that today. So, buckle up and get ready for this ride. Hey Daniel. Good morning.
Daniel Huffman: Good morning, Mike. How are you doing?
Mike Morawski: I’m good. How are you?
Daniel Huffman: I’m doing pretty good.
Mike Morawski: Good. I know you have your coffee, right?
Daniel Huffman: Oh yeah.
Mike Morawski: Early enough to be holding onto that, that’s for sure.
Daniel Huffman: Yeah.
Mike Morawski: Hey, what’s the world like in Atlanta today?
Daniel Huffman: Atlanta’s a pretty good market in it. [00:03:00] I was just watching this quarterly webinar for Market Insights and they talk about how Atlanta kind of follows the average of all across the US as far as multifamily starts, pricing and everything.
They showed a lot of different graphs from all the different major metrics and we just kind of follow the norm there. And so, I’d say over the past six or eight months we’ve seen some softeness. And the space trying to keep tenants or gain new tenants has slowed down for sure.
We’ve had to adjust some of our pricing on many of the assets that we’re managing in the Atlanta area, and I think that’s happening in a lot of other markets as well.
Mike Morawski: Yeah. I think, and we’ll get into that a little bit. You said something I wrote down that I want to go circle back to, but before we jump too deep in this and get caught in some rabbit hole. I always start my show by asking one question, and I’m in the process actually of writing a book called The One Word, and what I’m doing is taking the top 100 words that were said [00:04:00] by this question and putting it into a word and talking about ’em. But tell me in one word, what best describes you personally and professionally?
Daniel Huffman: I had one in mind and I think I’m gonna change it last minute here. I think I’m gonna say love. I know that sounds maybe a little corny, but I think it applies to so many different things. To be motivated and to get up and do something that you love every single day is one of the most important things that you can do.
And so I think it’s super important that you love helping other people in the multifamily space. That’s what you do, Mike. I think you’re passionate and love that. And I love all kinds of aspects around multifamily real estate, built for rent and different things like that. So that’s what gets me up in the morning, gets me excited. And, a lot of other things that I could go into, where love is a huge part.
Mike Morawski: That’s awesome. So I’ve probably asked that question 300 times. And I can honestly say that you’re the second person that’s used the word love, and both times it’s been used [00:05:00] within the last eight weeks here.
It’s crazy. So it caught my attention. The last, I had a woman on my show over the last eight weeks here, over the last couple months. And she said love, but she had a tone more towards really relationships with people and that more so that type of love.
And I like what you said about it because it’s more of a give back. And love what you do, be passionate about what you do. I think that that’s just awesome. And boy, I have to say that probably makes the book too. ‘Cause I’m gonna have to say, the only two people out of 500 times I’ve asked this question.
Daniel Huffman: Oh wow.
Mike Morawski: Yeah, I think that’s great ’cause that’s one of my favorite words.
Daniel Huffman: I just started this book called A Return to Love, and, it’s kind of what brought me to my answer earlier. It’s a great book and I only started reading it because of a reference that I saw in another book called The Miracle Morning, and it actually referenced this book and this passage in it. And, it’s got some biblical references in it. It’s a great book. I’m about halfway [00:06:00] through, so encourage anybody to look it up.
Mike Morawski: Who’s the author of that book?
Daniel Huffman: I don’t know. I’d have to go back and look. It’s a woman, but I don’t remember her name.
Mike Morawski: If you get a chance later, could you text it to me?
Daniel Huffman: Yeah.
Mike Morawski: That’d be awesome. Miracle Morning is a great book too, by the way. And, for somebody who is trying to put together maybe a daily routine and start their day right, it’s a great place to start, for sure.
Hey, why don’t you jump in. Let’s talk to the listeners about who you are, what you do, what you’re currently working on, and let’s start there.
Daniel Huffman: Okay. Yeah. So family company, the Huffman Group, started by my father many, many years ago. He’s been in and outta real estate, I guess since like the seventies. He built his first apartment complex in Auburn, Alabama, kind of right outta college. So, I’ve been in and out in the tech space some, and then back into real estate, did some hard money lending and basically, I grew up around construction and real estate my [00:07:00] whole life.
So, when I was old enough to come out of the job site, he’d bring me out and say, Hey, this is how you shoot a level. This is how you do this or that on the job site. He’d spend a few minutes with me and then he’d be like, okay son, go clean up the trash. And so then I’d have to go around and clean up the trash on the site.
And, as soon as I was 16 and old enough to drive, he got me a beat up old truck and I think he may have been as excited about that as I was, so he could send me off to Home Depot to pick up materials. So, long background in real estate and residential construction. And then, I started when I was younger, I started up a little trim crew on the summers and I do trim work and new construction homes, renovation work and things like that to try to make money and one point, he like farmed me out to work on a gutter installing crew for the summer.
Like we finished up a house and it was about summertime and I think he wanted to gimme something to get outta the house. And so he went and talked to the crew and said, Hey, my son’s like a great worker, you need some help this summer?
And [00:08:00] basically they just kinda like hired me on. And so I went and installed gutters for the summer. And, so after I got outta college, 2009 it was, I went in for construction management. I was also at Auburn, for building Sciences it’s also called, there was really no construction jobs whatsoever.
So I came back with a family. They had started basically buying up single family homes in the Atlanta area. Super cheap. I mean, we were literally buying stuff for 30 to $40,000 a home. And we would renovate it and then rent it out. And we had like a line of credit that we were working from. And so we basically kind of just try to rotate through.
We’d buy four or five houses, we’d fix ’em up and rent them, and then we’d take them out to some investors. They’d invest in what we purchased the home for basically. They get a first lean and then we pay them, back then it was like 12% interest. And so we kind of rotated and we purchased a little over a hundred homes over a couple years and kind of [00:09:00] grew.
That’s where our entire kind of multi-family company grew from. And so we’ve continued to acquire assets since then. We were vertically integrated. We have our own property management company that manages our properties as well as third party. And then around 2016, 17, we started getting back into new construction as the market improved. And so we’ve done some for sale product. As well as some for rent, bill for rent type products.
Mike Morawski: That’s awesome. I love that. Your dad used to take you to the work site. Okay. Go clean up now. That’s awesome.
Daniel Huffman: Yeah.
Mike Morawski: It’s kind of funny though, how you were talking about the different jobs within the construction business. You learned how to trim, you learned how to frame, you learned how to put gutters up. I remember when I went into the construction business, I had worked for all of these people, in like six months for an electrician, six months for a plumber, six months for a concrete contractor.
And I remember my mom getting [00:10:00] mad at me one day going, why can’t you keep a job? And about six weeks later, I opened up a general contracting business of my own. But I’d learned a lot from all these different disciplines I worked for. So kind of jack of all trades master of none.
Daniel Huffman: No, I agree that’s the greatest thing if you’re trying to do general contracting is being able to do all the different traits. Otherwise, it’s hard for you to manage people if you don’t know what they’re supposed to be doing. So yeah, you’re right. I did a little bit of electrical, a little bit of plumbing, a little concrete work and it was good.
Mike Morawski: Hey, so early on when you were talking about Atlanta, when I asked you what’s it like in Atlanta today, and you were talking about the Atlanta market, you said new construction starts. And I wanted to circle back to that comment because what in your world are new construction starts like today?
And I know you’re getting ready to bring an asset to the market to start to go [00:11:00] vertical on. How do you feel about where we are in the environment and being able to do that?
Daniel Huffman: Yeah, so I referenced that Market Insights, which is a great company that does kind of research for builders in the Southeast. And I think twice a year they do a free webinar. Some great information. They’ve got an economist that kind of talks whole picture, across the country, what’s going on and internationally as well. And then they have another guy who kind of digs deep into number of lot transactions and at what they sold for and what markets around Atlanta and the Southeast.
He goes to a lot of different markets. They’ve branched out to Texas and some other areas. And, basically Atlanta itself is seen a slow down if new construction starts. New sales are down, not tremendously, but they are still down some from last year, and last year was still slower than the prior year.
And so we’re still seeing what they call basically a rate driven market, talking about interest rates being above 7%. And, from their [00:12:00] research they see that you see people start really transacting when you get to around the 5.5% mortgage rate. If you can get somewhere around that rate, you see people start moving out and transacting more basically.
They also said something else that was pretty, and they said that this kind of like lock in effect that we’ve had people that have got lower interest rates is starting to burn off. And I think what’s happening is that people that were on the fence and said, I’ll wait it out, are tired of waiting.
And so they’re seeing the resale market pick up. And so what’s kept the new sale market alive for the past few years is the fact that there hasn’t been as many resales. And so the resale market, they say is starting to pick up. They’re starting to see more sales come out of those. And right now it’s kind of in the buyer’s favor as far as the market goes.
Mike Morawski: Yeah.
Daniel Huffman: And translating to our project for build for Rent, we have such a long horizon [00:13:00] from when we start to when we deliver units. From my perspective, I want to be trying to start when there’s not as many other starts happening. If I start when everybody else starts, like somebody did back during COVID when interest rates were low, they all kind of came out at the same time.
So we’ve had a flooding of the market, of new product, and it’s been hard for them to get stabilized. And so it may be a little bit more difficult to get them started right now, but if you can get one out of the ground, I think two to three years from now, you’re gonna be in really good shape.
Mike Morawski: So what’s the difference between, and I want to do this for the audience that’s listening. What’s the difference between build to rent and build to sell? Now, I don’t mean fundamentally, what’s the difference? What I mean is when you talk about new construction starts, does it make more sense to do a build to sell or a build to rent in the market environment we’re in or moving into?
Daniel Huffman: Yeah. I mean, I think everybody [00:14:00] understands the fundamental difference. I mean, one’s for sale, one for rent.. You’ve got classes of for sale assets as well as full rent product. You’ve got garden style apartments, you’ve got cottage style, small little units. You’ve got full size single family home for build for rent products.
So there’s lots of different product types within each sector. And, the biggest issue that’s going for for-sale right now is affordability. And to be honest, I think it’s one of the biggest problems that we’re gonna see as a generation going forward is affordability of basically homes.
And, they talk about it and I’ve talked about it a lot in the past and this missing middle product that’s so hard to get approved, and the municipalities that is really needed is something that’s between an apartment complex and a full single family home. So most people think, okay, town homes, but it can be a lot of different things besides town homes too.
It can be small cottages, like a project that we’ve [00:15:00] got approved and upcoming. And so take the same product for sale and for rent. And generally right now your price is about two to $300 higher to purchase it than it is to rent it. And that differs from market to market, but how much money am I having to pay every month to be in this home?
It’s cheaper to rent right now. And so that’s why I think it’s a great idea. Bill for rent’s needed, it’s growing. I think more and more people are realizing that purchasing a single family home is a long term investment is not always the greatest idea. I know that many of our parents, it was their largest asset. And over time it grew. But it takes work, it takes upkeep, there’s a lot of stuff that goes into owning a single family home.
Mike Morawski: Yeah. But the product that you build also say that in 10 years from now, you guys wanna sell off that asset, and a developer [00:16:00] actually could come in, or an operator could come in and buy that and they could do a conversion on those units and sell them off individually then, couldn’t they?
Daniel Huffman: Yeah, that is a great point and something that we love and a lot of people, investors and lenders like about bill for rent. So if the markets were to change dramatically, and all of a sudden it’s better to purchase. Interest rates are low and maybe prices of single family homes have gone up, but the monthly price to own ones gone down, then you could convert all your units over and sell ’em.
Mike Morawski: Yeah. Always interesting. I remember when the condo boom, a number of years ago happened and people were taking apartment stock and they were converting them to condos and selling off condos, and people were buying ’em, and investors were buying ’em by the dozen, in a building to rent them and that build to rent building like that became the condominium boom of [00:17:00] the mid nineties.
Daniel Huffman: Yeah.
Mike Morawski: So that was interesting. I wonder if we’ll ever see a opportunity like that in the market cycle again.
Daniel Huffman: Yeah. I don’t know. So hard to predict. I just think that low interest rates like we had and got used to are not gonna be around for quite a long time.
Mike Morawski: Yeah. What do you see interest rates doing, by the way?
Daniel Huffman: Well, it’s interesting you asked. So they made a prediction in this last call, and I think it’s pretty accurate. They’re suspected to lower their funds rate about 200 basis points over the next year. So they’re gonna start aggressively lowering by about 50 basis points per meeting or so, but they don’t suspect the tenure to correlate directly with that.
So, they’ve got it coming down later this year into like the high threes. And then next year kind of coming back up into the four kind of range, not far from where we’re at right now. And the reason being was they were talking about all the debt that we’ve currently had, that the [00:18:00] federal government has it they have to service right as they issue more bonds, more treasury bonds, they’re mostly bought by foreign governments, that basically they’re becoming less attractive.
And so this idea of them, the rates coming down, they don’t foresee that happening. They think the demand’s going to be reduced, and so the interest rates are gonna have to come up in order to get to entice people to purchase them. And same thing, the 10 year doesn’t correlate directly with the 30 year mortgage either.
And so they’re not predicting much lowering. They don’t suspect the 30 year mortgage is gonna lower, one-to-one, to those reductions in the overnight treasury rate. So they said it should come down some, but this is their prediction. And I think they do a pretty good job. They’ve been pretty accurate in the past, and I think they’re right. I think that our treasuries are not as attractive as they used to be maybe 10 years ago.
Mike Morawski: And I think that’s a really good segue into talking about raising capital. And looking for that [00:19:00] investor who would love that 5% interest rate, 4%, 10 year treasury rate, secured investment.
But it’s not that attractive anymore. If you have inflation at 4%, even 3%. But you’re making 4% on a t-bill. What are you really making? First of all, if inflation’s at four and the t-bills at four, you’re not making anything, you’re zero. All you’re doing is preserving your capital.
And, there was a period over the last year and a half, that inflation was like eight or 9%. And if you were involved, if you were invested in a tea bell, you were actually losing 4%, on your money.
Daniel Huffman: Oh yeah.
Mike Morawski: That tends to make alternative investing in real estate more attractive. I know your group raises capital for your new build assets and actually even for assets that you buy and own and [00:20:00] operate. What types of returns can the passive investor look for or be able to say, maybe I can get this in this type of a product or asset class?
Daniel Huffman: Yeah, generally I think preferred returns are somewhere between seven and 10% depending on the project. And then generally higher. I mean, that’s kind of your yearly cash flow that you’re trying to reach and then hire once you refinance or sell the product. We’re trying to get into the high teens, to twenties, depending on the product type.
So when we buy existing multi-family, depending on what the plan is, we’re buying something that’s cash flowing. Well, it’s a great asset your iRR returns are a little lower, versus something that’s a new build. Like the build for a project we’ve got coming up. Those returns are in the mid twenties, IRR, but basically you don’t see any of the continual cash flow because we’re building the asset for two years and renting it up for another year. So most all of that comes towards the end.[00:21:00]
Mike Morawski: Yeah.
Daniel Huffman: You’re right though. I mean, unless you’re just trying to like set your cash somewhere until you find another real estate deal, you can make 4%. It’s safe, but yeah, a lot of times you’re losing money in that way.
And a bunch of banks that got caught holding t-bills. That went down in value because the Fed kept raising rates. And that’s how some of those crashes, there’s a couple banks that basically went under. So if you hold a t-bill and you bought it at 3% and all of a sudden now they’re paying 5%, your T-bills not worth the same amount anymore.
Mike Morawski: Right, yeah. It’s interesting how that whole bond market works. So in your product when you raise capital from investors, you build your product, are there different places that a passive investor earns money in your asset? Are they investing and getting any cash flow along the way? When does cash flow start? What does cashflow look like for them? And and [00:22:00] what about equity? How does that work?
Daniel Huffman: Yeah. So when I first talked to you about what we were doing with the houses, it was a debt based investment. And, we’re doing equity based investments now.
So the investors do get ownership in the project. It depends. So if we purchase a cash flowing asset and existing multifamily deal, then we expect to make distributions on a monthly basis, monthly or quarterly basis, from that asset. Then, on the other side, if we’re building something from scratch, it’s not making any money yet. We’re just plowing money into it as fast as we can to build the asset and get it rid up.
So they don’t see any cash flow on a new build for probably two to three years as we start running up, there may be a little bit that comes off. But it’s gonna be at some sort of event where we refinance or sell a stabilization to where they’re gonna see a big cash event.
Mike Morawski: So when your investors come in. Are they just there for that couple year period to get [00:23:00] the project built then you go in and refinance that project? You take those investors out, or do you keep?
Daniel Huffman: They still keep their ownership, but our hope really is that at refinance we can pay everybody back their initial capital. So if they put a hundred thousand dollars in, when we get stabilized, at least on our upcoming one, our performance states that when we pull that cash out from the refinance, we’re able to pay back the loan, our construction loan, and give equity back to our investors at that time.
Mike Morawski: What do you do? A return of capital, their initial capital, and then do they stay in the deal?
Daniel Huffman: Yeah.
Mike Morawski: So that’s a pretty sweet deal for passive investor on the new side. On the build the rent.
Daniel Huffman: Build the rent, yeah.
Mike Morawski: So they get to invest. Not see anything for a couple years, but at that couple year point, they get a return of principle and then they can stay in and continue to get cash flow along the way?
Daniel Huffman: Yep.
Mike Morawski: So it’s like building an annuity.
Daniel Huffman: Yeah, that’s a good analogy. Yeah.
Mike Morawski: Yeah. It’s [00:24:00] pretty funny. I was talking to somebody the other day. They said, well, I can go make three, four, 5% in an annuity depending on how much money I invest in. I said to ’em, I said, where do you think annuities make their money with your invested money?
They go, what do you mean? I said, well, the insurance company takes that life insurance money, takes that annuity money that you put in there, you buy that policy, you invest in it, they take your money and they go invest in real estate. He looked at me kind of funny and I said, they have to invest that money somewhere.
They’re gonna go try to get the biggest yield that they can get. So why would you not just bypass the annuity? Or the insurance company go directly to the real estate yourself and get the whole yield versus just getting a portion of the yield.
Daniel Huffman: Yeah, they’re lending, like I said, I was talking to a lender just the other day who does life insurance, who’s looking at our deal. So yeah, they’re lending into the market. They’re investing in projects, but you’re right, that’s where they put their money. For the most [00:25:00] part it’s in real estate.
Mike Morawski: Yeah.
Daniel Huffman: Northwestern Mutual, all these big groups.
Mike Morawski: Yeah. I remember being a kid growing up and asking my mom one time, Hey, who owns that big apartment building? And she said, oh, I don’t know, some insurance company. And it never made sense to me until a number of years later, I do a deal, an institutional deal with a life insurance company, and they become our private equity investor in the deal. And all of a sudden it clicked for me. I was like, holy cow. My mom was right and she didn’t know anything.
Daniel Huffman: That’s a good point though man. If it’s safe enough for the life insurance company, it’s just about as safe as it can get. I mean, it’s existing multifamily that’s cash flowing, in my opinion, is one of the safest assets. It’s a real asset.
It’s not paper that’s getting pushed around. It’s not a company that can have something happen and all of a sudden they got losses. It’s our money, all of a sudden the dollar goes to zero. Like it’s still there. It’s still worth something. So [00:26:00] you can’t say that for public companies, they can go to zero.
Mike Morawski: Yeah, absolutely. Hey, so I know you do build a rent and, you raise capital for that, but don’t you also do some, you guys buy existing property right? And, talk a little bit about your thesis around that.
Daniel Huffman: Yeah. I’d say that we’re opportunistic, like most people that are trying to buy multifamily, there are some good opportunities out there right now in distressed areas.
I mean, just take for instance, how we first started. I mean, that gets about as distressed as it gets, 2009. And so we see a lot of opportunities and those kinds of situations for us to come in and pick up assets at a discount basically. And a lot of times they need work. And so a lot of times what we’re looking for is something that we can use our construction background to improve the asset.
And then we’ve got a great operational team for property management that can step in and improve occupancy and get the asset running well. [00:27:00] So most of the time, we’re not looking for a class A apartment that’s 95% occupied, that is built a couple years ago. Most of the time we’re looking for stuff doesn’t have to be super old.
But, there’s some opportunity there for us to create value. And, that gets us into a good basis. If there is a downturn in the market and prices come down, that still gives us some buffer room there to keep us safe, basically.
Mike Morawski: So, where do you see most value today? Do you see more value in the build to rent or in the buying existing and reinventing what you’re buying?
Daniel Huffman: I don’t know that I would pick one over the other. I think it’s probably just on a case by case basis, but, we put an asset under contract a while back that just operationally was not being run well and the asset itself was an old, was built in like 2005. And there’s some out of country owners that were trying to basically self-manage [00:28:00] themselves by hiring a couple people to put on site and after a while it just got really bad.
They had tenants, I mean, there’s like nine. When we came in and took over management, there was nine tenants who had signed a lease and put their deposit down and never made a month’s payment.
Mike Morawski: Oh.
Daniel Huffman: Not one monthly payment. And so mismanagement can be an opportunity for us to come in and improve things. And then just the asset itself, we’ll look at the asset itself. Does it need a new roof and what about renovation of units? I mean, these are all things that we do very well and do quickly. And so those are the big things that we’re looking at.
Built for rent, whole new animal. We’re really focused on this kind of cottage style built for rent, which is this upcoming project’s got basically little small single family homes and duplexes. We’ve got the full range of unit types that you’d see in a garden style apartment.
So we’ve got one bedrooms, two bedrooms, three bedroom units, broad range of rental prices. [00:29:00] And it gives people a side yard or they’re centered around green spaces. We’re really concentrating on trying to create, i’d call kinda like new urbanism type of developments that make things a little bit more walkable.
You get to know your neighbor. You’ve got some green space. You can walk your dog out in front of you. You’ve got a little front porch off your unit. It’s got a full set of amenities, so we’ll have a clubhouse and a pool, fitness center, all those kinds of things as well. But you don’t have somebody that’s living above, below and beside you.
So you get rid of noise. If you got a dog, you can walk ’em right out your door to your yard. Even some of ’em have their own fenced in side yard. We’re gonna have a little dog door there. They can let their dog out while they’re gone. Go to the bathroom, come back in. So there’s a lot of advantages to this new bill for rent type.
It’s not a full three bedroom, two bath home, that’s gonna have to rent for two or $3,000 a month. We can get two bedrooms that are under two grand per month and one bedrooms that [00:30:00] are like 15, $1,600 a month in this market we’re in. So something that’s very affordable, but it’s a much better product than they’re gonna see in many, many other places.
Think that the product is not going away. It’s gonna continue to grow. Of course it’s gonna be in suburban areas. This is not something that’s gonna be in your inner like city core, those kinds of areas, ’cause of land price and other things. You’re gonna have to go vertical to try to get more density. But this type of unit type, we’re getting anywhere between 12 to 14 units per acre. So it’s pretty dense.
Mike Morawski: Yeah. Yeah. It is pretty dense. Well, that’s awesome. And now Huffman Group itself, you guys do all your own construction, you do all your own management. You are totally vertically integrated your company?
Daniel Huffman: Yes, that’s true. So at least up till now, we’ve built all of our own projects and all the GC license, we put some guys on site and we’ve got great subcontractors and people [00:31:00] that we work with in the markets we’re at.
And we feel like having that control through the entire process. And also a big thing that we do is we typically purchase land that’s already been zoned. So we like to try to go directly to an owner and put a piece of land under contract. We go through the rezoning process and basically get that upside that somebody else would typically try to take that was gonna resell the property.
So on this last one, we put it under contract and spent eight months taking it through the zoning process, getting a site plan done, putting the whole kind of project together and getting it approved. And, that gives us a basis in the land that’s extremely low.
Mike Morawski: Yeah. So there you bring more value to it that way, so that’s awesome. What would you tell a new investor today coming into the market on the private side? So the passive investor, the investor looking to invest in real estate, but doesn’t want to build [00:32:00] himself or take care of day-to-day activities. What would you tell that investor today?
Daniel Huffman: Yeah, I think, like we spoke before, there’s opportunity and distress and so I think right now is gonna be one of the best times over the next year or two to start new construction projects.
There’s so few being started that you’re gonna be one of the few that’s coming up when you’re done. And because it’s got a long life, there’s a long period of construction, you’re still two or three years out before it’s done. Some people see more risk in new construction versus an already existing asset that’s cash flowing, but your returns are much higher.
So, if you’re okay with not receiving a monthly check for two to three years, and putting that money away, it’s a great, great investment. We love putting together new construction projects. It’s something that I’m super passionate about. We get into all the details of the site planning everything with some great architectural teams and city planners to try to create a great product.
Cedar Walk was the one that we finished last [00:33:00] year. It was 47 town homes. We got a website, that project rented up really well. Some beautiful town homes. cedarwalk.info is a website for that one. It’s in Carrollton outside of Georgia, the west side. It’s better than stocks.
Mike Morawski: Hey, that’s funny you said that. I did a webinar this week, earlier this week with a group that raises capital. And the whole webinar was based on that premise that traditional stock and bonds is not the place to be today.
There’s a bubble. The S and Ps too high. It’s overrated. And when you start to see those fundamentals, people start to draw back from the markets and look for alternative investments. So, putting some money with the Huffman group in an alternative investment could be the next mover. Good opportunity for people. But I like the comment, you made a comment that made me think, it’s risk versus reward.
Daniel Huffman: Yeah.
Mike Morawski: You don’t get that early payout on the new build stuff and the returns are higher, but it could be a [00:34:00] little bit painful along the way for a couple years, but the returns are higher.
Daniel, how do people get ahold of you if they’re interested in talking to you more about your group, what you guys do, possibly even investing with you?
Daniel Huffman: Yeah, so our website, huffman.group talks a lot about our company as a whole. You can submit a form there and we’ll reach back out to contact you.
I’m on Instagram @d.huff. You can direct message me there. And we can go back and forth and talk some more about some of our products and, get on our email list. We send out projects on a regular basis that we’re trying to raise money for.
Mike Morawski: Awesome. Well, listen, I appreciate you being here today and, any closing thoughts or comments?
Daniel Huffman: Well, you’re thinking about stocks and people talk about investing in like the s and p over a long period of time, 10 or 20 years. And I just think that if you’re in something for the long term, you can generally get more trended returns.
But stock market is so up and down from year to year [00:35:00] and volatile that it can be dangerous and pull money back out. And so real estate to me is a long game. I mean, we hold our assets for, we’ve got some that we’ve held now for, 15 years or more, and you just continue to see increased returns the longer you hold. And so the long term, the sooner you can get into real estate, the better off you’re gonna be down the road.
Mike Morawski: A hundred percent. I couldn’t agree more. Well spoken. Hey, thanks for being here today. I appreciate you. I appreciate what you guys do in the real estate world, and I would encourage people to reach out to you.
I’m gonna move you to the back room. If you hang out with me for a minute, I’m gonna say goodbye to everybody. All right?
Daniel Huffman: All right, no problem. Thanks, Mike.
Mike Morawski: You bet. Hey everybody. Thanks for being here this week. Hope you picked up a couple of golden nuggets this week. I think there was a lot talked about. We covered a lot of ground on a bunch of different topics.
So if you’re looking for a place to [00:36:00] participate in real estate as a passive investor. You like new construction, you like existing construction. Reach out to Daniel. He’s got some opportunities. He’ll give you some insight on some markets, some market returns.
Hey, I just wanna remind you that our main sponsor for today’s show is Sync VA. If you are somebody who’s looking for a virtual assistant and you need somebody to help you support maybe on your transaction team, maybe on your property management team, maybe, an executive assistant, whatever you need, reach out to Sync VA, and they will help find you somebody that will meet all of your needs.
Hey, thanks for being here. Look forward to seeing you next week. Have a great week and a great weekend everybody.
Kristen: Thank you, Mike, and thank you for joining us for another great episode of Insider Secrets. As always, Insider Secrets is brought to you by My Core Intentions. Wherever you [00:37:00] hang out on social media, you will find Mike and My Core Intentions. Please like and follow us to get the most up-to-date real estate investing trends.
Visit mycoreintentions.com where you can get expert coaching on all things real estate investing and property management. If you are looking to become an expert, Mike’s coaching will help you scale your real estate investment business. We’re looking forward to having you back again next week for more Insider Secrets.
