What does it take to establish your credibility? According to Zach, there is one thing people are failing to do for this, which is the key ingredient to better position themselves in the real estate market.
Zach Haptonstall is the CEO & Co-Founder of Rise48 Equity & Rise48 Communities, which has completed $924,191,000 in total transactions since 2019. He is also the host & founder of The Phoenix Multifamily Association, #1 Best Selling Co-Author, a Forbes Real Estate Council Member, and a Greater Phoenix Economic Council (GPEC) Director’s Council Member.
[00:01] – [04:26] Opening Segment
- Zach’s story from journalism, becoming the director of marketing, then getting burnt out
- Living off savings for over a year to figure out multifamily
- Catching momentum after 14 months after buying the first deal
[04:27] – [11:40] From Bootstrapping to Scaling
- The power of working with people with complementary skill sets
- Bootstrapping to make the first deal work
- Zach shares how he grew his network and growing leads
[11:41] – [16:38] The Key is Being Relentless in Building Relationships
- The right attitude in dealing with brokers for better positioning
- Being hands-on and cranking the volume to rise from the competition
- Winning relationships through interaction and consistency
[16:39] – [18:05] Closing Segment
- Reach out to Zach
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- See links below
- Final words
Tweetable Quotes
“It was good to give us that firsthand experience. And then from there, we were able to kind of continue to learn and grow and scale.” – Zach Haptonstall
“I think this is the biggest component that people don’t do. And it’s why people are not buying deals, and they’re not breaking through. You have to relentlessly attack these broker interactions.” – Zach Haptonstall
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Connect with Zach Haptonstall on Linkedin. Visit Rise48 Equity and email him at zach@rise48equity.com
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I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
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Email me → sam@brickeninvestmentgroup.com
Want to read the full show notes of the episode? Check it out below:
Zach Haptonstall [00:00]
The biggest component that people don’t do and it’s why people are not buying deals and they’re not breaking through, is you have to relentlessly attack these broker interactions. Okay, so what I did before I had any track record, I had no business partner, I barely know anything. I started cold calling all these brokers put on a suit, go meet with them in person, all the top brokers in the space that I wanted to be in, and I would tell them what my criteria was. And I was terrified. By the way, I was very nervous. My hands are shaking. I try to show it because it’s very intimidating.
Intro [00:33]
Welcome to the How to Scale Commercial Real Estate Show. Whether you are an active or passive investor, we will teach you how to scale your real estate investing business into something big.
Sam Wilson [00:45]
Zach Haptonstall is a multifamily syndicator in Phoenix, Arizona, and since February of 2019, they have taken down over $700 million in multifamily assets with another I think what you say 300 million on the books here to close here shortly. Zack, welcome to the show. I’m really looking forward to this call today.
Zach Haptonstall [01:03]
Hey, what’s up, Sam, thanks so much for having me on. Really appreciate it man look forward to providing some value for the listeners here today.
Sam Wilson [01:09]
Absolutely. You guys have had meteoric growth here in the last, I guess three years. There’s three questions. Speaking of three years, that I asked every guest to come on the show. Where did you start? Where are you now? And how did you get there?
Zach Haptonstall [01:21]
Yeah, so I’ll try to summarize as best I can. So I was born and raised here in Phoenix Fletcher my entire life, you know, just come from a lower middle-class family, you know, didn’t have anybody, no family in real estate, no rich uncle or anything like that. I have a journalism degree. So I was a live news anchor sports reporter for Arizona PBS for a short time, which was cool at first. And I quickly realized you can’t make any money doing that. I needed money. So I had school that so I went into got into journalism or into healthcare marketing, working for a hospice organization, worked my way up as director of marketing. And then eventually president and co-owner of a hospice organization was making really good money, you know, over 200k a year, got my MBA, bought a house. So by the time I was, you know, 23, I was making more money than both my parents combined was in a good financial situation, just following the Dave Ramsey plan killed all my debt in no pay for my MBA cash. So I did that for about four years, and then just got burnt out, you know, I mean, I was just constantly grinding, what have you done for me lately, and wanted to create some type of passive income and, and so in January of 2018, I resigned, sold my equity in the company and lived off of savings for well over a year, to figure out how to get into multifamily. It was a really tough time for me, you know, mentally, emotionally trying to figure out how to dive into this. And not knowing anybody not knowing anything about I didn’t even know what the word syndication meant I had no real estate contacts. But anyways, 14 months passed, finally bought the first deal, put all my money I had left into it, I met a couple partners, we bootstrapped that thing, and closed it with a tenant in common type of structure. And then from there really was able to catch momentum, and start syndicating deals. And so, you know, since then, since February of 2019, when we bought the first deal, which again was about a little over a year after I quit the job, you know, just burning through cash burn, saving the whole time, we’ve now acquired 24 assets, all here in the Phoenix metro across five different cities worth over 700 million over 3600 units, we have over another $300 million contract to close the next few months here. And so we’ve been very fortunate, you know, to kind of build this out and scale it on the rise for US equity, we have 20, full-time salaried employees that are focused on asset management, Investor Relations accounting, and we are now completely vertically integrated with our own property management company, rise 48 communities, we have over 70 full-time employees on full benefits on our management company. So we manage all of our own assets, you know, all the leasing maintenance on-site management is all of our staff got over 90 employees full time now, across the two companies, that’s given us a lot of control inefficiencies. And we have just been very fortunate and blessed to continue to build the momentum and scale from there. So we’ve sold five deals so far, Sam, gone full cycle on those, we’re in the process of selling an additional five deals when those drop drastically exceeding expectations. And so that’s kind of you know, our directory is just focused here in the Phoenix market and building out the value add multifamily syndication business.
Sam Wilson [04:27]
Right, man, that’s an intense business like that takes not just not just an intense business, but it takes incredible organization and planning to not just execute the plan, but also to bring on the people to make sure they’re hired and trained and organized in the right way. I mean, have you done this all yourself? Do you have multiple partners? What does that look like?
Zach Haptonstall [04:46]
Yeah, good question. No, not at all myself. I have two partners. So I’m the CEO and co-founder. My partner Vic Cron. Sandu is our CFO co-founder background has an economics degree. CPA worked at Price Waterhouse Cooper for a number of years as a corporate auditor, so very strong financial analysis background, he’s really overseeing all the operations underwriting deals on the front end. Then we have a third partner, Robert chef chick, he’s our chief construction officer, you know, he has a master’s degree in architecture, strong construction background. So among the three of us, you know, we found very complementary skill sets, I’m focused primarily on acquisitions, dispositions, sourcing, capital, forming partnerships, you know, overseeing the high-level operations. And so in my background, you know, as running a hospice organization with over 110 employees, you know, it was good to give me that experience to kind of manage people and bear Cronan really has all the financial analysis and skills like that is really good at building back-office processes. And so you know, the cool thing is, is initially it was the three of us doing literally everything, we just hired our first employee, last March of 2021. And here we sit in February of 2022. So it’s been about 12 months since we hired our first employee. And we’ve scaled since then the first two and a half years, we had no employees, because we didn’t have the revenue to pay anybody to cover that, right. And so we were doing everything ourselves every little nitty-gritty detail you can think of, we were doing just grinding it out, you know, spending 6070 plus hours a week. And the good thing is we learned all those details so that we could then start hiring people and training them to do all those roles and start delegating, and then build out infrastructure from there. And so see, that’s kind of given us we really took like a hands-on approach, learn everything from the inside directly. And then from there, we’re able to kind of grow the business and build infrastructure.
Sam Wilson [06:35]
Yeah, man, that’s really, really intense. I mean, tell me about how you know, the first deal you said was a tenant in the common deal. So just can you break that down for our listeners real quick, and then have a follow-up question to that.
Zach Haptonstall [06:46]
Yeah. So it was 36 units, three and a half million here in central Phoenix. And basically, my partner, Robert, and I got under contract, we were each 25k, non-refundable, for earnest money. And we had planned to syndicate that deal. But you know, 30 days past 40 days pass our money is non-refundable. We talked to all these people who said they were interested in the previous months, and then they’re nowhere to be found, right, because we don’t have a track record. It’s hard to raise money. You know, contrary to what people say, it’s very difficult. It takes time. And so basically, you know, I had earned through a lot I had about around 300k, that I had relentlessly saved for years and got apart from the sale on the equity company side, about 300k of cash. When I quit the job in January of 18, I was down to about 165k, because I had blown through money, even going to conferences, joined a mentorship program, all this stuff, right, I put 160 in the first deal. So I put all my money in the deal, I had five grand left, Robert put about 275. And we were scrambling, I found a 1031 exchange to bring in about 650, which was a big chunk of it. Then I met Big Ron, while we were in escrow, our third partner convinced him to put in 150. And then we found a couple of other people to throw in 150. And we bootstrapped it and made it work. And so that’s why it was a tenant in common because we brought in a 1031 exchange for those of people who are from another tenant in common, very similar to like a JV or a joint venture, but you can bring 1031 exchanges in it or out of it. But we did not do a syndication and we did not have, you know, any passive investors. And so that was the first experience to get the deal closed. And it was very scary, very stressful, but it gave us a lot of experience, not only going through the acquisition process, but going through the asset management process, you know, renovating the units, I was out there literally managing subcontractors, which I had never done, you know, like chewing out plumbers and asking guys where they’re at, and things like that. And so figuring that stuff out. So it was good to give us that firsthand experience. And then from there, we were able to kind of continue to learn and grow and scale.
Sam Wilson [08:51]
How did you go? Or what did you do? Because I mean, that’s a common problem that people have in, especially starting out is the capital raise side of things. I’ve been talking to somebody here recently. It’s like, man, we’re a couple 100 grand short on this deal. I’m like, man, like, that’s painful, right? Like, that’s really, really stressful when you have a good deal, but not the money to back it up. So tell me what have you guys changed? You said, Okay, we did do 136 units, get the money together sucked. What did you do in order to make sure you never ended that problem again?
Zach Haptonstall [09:20]
Yeah, it’s a good question. I mean, that honestly, the first five to seven deals were all scrambled, they’re tough to make zero, you’re trying to do it and it takes time and it’s stressful, and every single time you’re worried you’re going to lose your earnest money. If you can’t get this money. In close. It’s it hasn’t been smooth those first five to seven deals. I mean, the last, you know, 15 deals or so had been pretty automatic. Now, we’re fortunate for that. But it was really, you know, a matter of just continuing to get out there and going to conferences and trying to network and, you know, relying on other people’s experience and partnering with them so that you can demonstrate you have a credible track record but you know, once we went full cycles and sold the first deal. And then you know, after that started selling multiple deals that we had successfully execute the business plan on, we then started to see a lot of momentum, right, because the investors that were in those deals, you know, started to see the results firsthand, and then started to really refer their friends and co-workers in calling. So again, I didn’t have a high net worth network, this was like, starting from zero, right and grinding it out, flying around the country, going to conferences, trying to meet people, I started a meetup event, my wife and I started a meetup event and really tried to build that up, we had over 100 people at one point coming to that I started getting on podcasts, there’s like your SAM and, you know, started doing a lot of podcasts, and that helped to generate leads. And then you know, that the biggest thing has been the referrals now from other investors, and colleagues, and now we have like a lot of physicians, IT consultants, engineers, and they’re referring a lot of their colleagues. And then my wife, Grace, you know, does all our online marketing, and she’s really good with that. So you know, she runs like my LinkedIn, for example. So we’re constantly doing, like, update videos on the properties and providing content that’s SEC-compliant. The whole goal of all this content is to drive people to a calendar link to set up a call with me who and these are, you know, vetted leads qualified investors, that I can set up these compliant previous relationships to then add them to our investor database? So there’s a number of things, you know, we invest in SEO to try to, you know, get your name out there, too. So there’s a number of things that we’ve done. But I think, you know, we’re fortunate to have my wife Grace, and then her marketing team, we’ve been marketing coordinator Cassidy, they do a lot of stuff online, which drives a lot of leads to us too.
Sam Wilson [11:41]
Right. Man, yeah, that’s really, really intriguing. As a newer investor. I mean, at this point, yes, you guys have developed a name you have closed on enough deals, you have industry credibility. What did you guys do coming into the market that gave both your sellers and your brokers the confidence that you could actually get a deal done?
Zach Haptonstall [12:01]
Yeah, good question. So I think this is the biggest component that people don’t do. And it’s why people are not buying deals, and they’re not breaking through, is you have to relentlessly attack these broker interactions. Okay, so what I did, before I had any track record, I had no business partner, I barely know anything. I started cold calling all these brokers put on a suit, go meet with them in person, all the top brokers in the space that I wanted to be in. And I would tell them what my criteria was. And I was terrified, by the way, I was very nervous. My hands are shaking, I try to show it because it’s very intimidating, right? It’s intimidating, being in this industry with big buildings, big numbers, and you’re so afraid that they’re going to kind of figure you out, right, that you’re full of it. And I wasn’t lying, but I was trying to portray confidence and portray credibility, and say, Hey, I come from healthcare, you know, I have a group of investors, we’re looking to acquire value. And what I did was, I tried to use whatever I had. So at the time, I had a few 100k of cash, I literally brought a bank statement with me. And at the end of every meeting, I showed the broker, this is my personal cash, I’m gonna use this as earnest money, we’re gonna syndicate the deals, blah, blah, blah. And some of them probably didn’t take me seriously. And some of them did. But I met with all these brokers, and then it’s like, okay, then what? Then what do you do after that you can’t just keep bugging these guys? Well, you need to relentlessly be touring properties, okay, so you get on all their email lists. So you’re seeing their deals, and start emailing them and calling them, and touring properties. And go in there, take notes, ask insightful questions. And I’ve done this so many times, Sam, where I’ll tour properties that we have no interest in buying, I’m doing simply to get in front of the broker, or rekindle the broker relationship, right, and just make that in-person connection. So I viewed it as I was marketing to these brokers, okay. And that’s, and I always stay in front of books, I run all the acquisitions to this day, every single week, I’m touring multiple deals, we’re sending offers on multiple deals, I have four offers to send in the next two days, okay, three of them are best and final, we’ll probably lose all of them. We lose like 95% of deals we’ll make offers on, but we crank the volume. So you have to constantly stay in front of these brokers, you need to be touring the deals. And you need to be submitting LOI, and I get it. It’s scary. And most people probably think, man, I’m not doing this underwriting correctly, because my purchase price isn’t even close to what they’re asking. You might be doing it correctly. The pricing is crazy, right? It’s insane. And you have to have a very high-level understanding of financial analysis now to compete in these markets across the country. And you know, for me, I have the MBA, the accounting classes, blah, blah, blah. I underwrote the first few deals, but I hate doing it. I’m not nearly as sophisticated as my partner, Bic Ron, who has an economics degree CPA, he likes sitting in front of spreadsheets all day and diving in. So you need to find like an acquisitions person who’s really going to be out there in front of the brokers touring, building those relationships. You have to find an underwriting person if you’re one of the same, more power to you, but you have to be constant cranking, touring, underwriting, and sending offers and even if you’re 5 million below, where they’re asking prices, just keep sending in the offers, because even if you don’t win it, these brokers need to show their sellers that they’re getting traction and activity, right? They’re doing something and so the more offers they get, the more tours they get. That’s good. And you’re going to stick out to them. So anyways, to answer your question, Sam, the first four deals we purchased, were all on the market, fully marketed, we went through best and final competed, we won the deals, okay. And the broker, and we had no track record for the first one, obviously, but we put in the offer the highest price, and they took it, you know, what’s the broker going to do? It’s ultimately up to the seller. And so we closed that gave us some momentum and credibility to then buy the next couple you don’t need and then you just kind of keep building from there. And now, the majority of our acquisitions have been sourced completely off-market with no competition for anybody else directly through broke relationships. So the top between like the 20 to $70 million purchase price space in Phoenix, we really do get the first look at most of these deals from the top five, six brokers in the market. You know, it doesn’t mean we can win them all or be passed on a lot of stuff. But we maintain these relationships, and they know that we’ll perform so that’s what you have to do is you have to be in front of these brokers, and you’re going to be scared to do it. But so many people who have been trying to do this for two, three years, I see him again and I say hey, you know, how’s it going the call? I haven’t had any luck? Yeah, I say how many brokers have you talked to? Or tour on? None. It’s like, well, then what are you really doing? You know, when you have to talk to and I know it’s scary, but that’s what you have to do the brokers run every market. Okay, you do direct mailers, you might get lucky, not saying it can’t work. We’ve never done it. It’s all been brokers that they run the market. So you have to build those relationships.
Sam Wilson [16:39]
Man, I love it, Zach, you’ve dropped a lot of really, really valuable information today of just Yeah, again, you guys have had meteoric growth in a short time frame. I love it. Love everything you’ve shared your listening, this has been absolute gold. So thank you for taking the time, out of what I know is already a very busy day to come on. And really just pull back the curtains on your business and tell us how it’s done. So thanks for doing that. Let’s jump here. And actually, the final question, which is if our listeners want to get in touch with you or learn more about you, what is the best way to do that?
Zach Haptonstall [17:08]
Yeah, thanks so much, Sam, for having me on. Really appreciate it, man. And thank you for listening. So you can go to our website, rise 48 equity.com ri, SC four, eight equity.com You can shoot me an email, Zack Z ACH at Rice 48 equity.com. If you’re interested in learning about opportunities or investing, you can go to our website and actually set up a call with me and I’m happy to get on a call and help however I can and answer any questions. But yeah, that’s how you guys get in contact with us.
Sam Wilson [17:35]
Awesome, Zach. Thank you again. I do appreciate it.
Zach Haptonstall [17:38]
Thanks. I appreciate it, man.
Sam Wilson [17:39]
Hey, thanks for listening to the How to Scale Commercial Real Estate Podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcast, Spotify, Google podcasts, whatever platform it is you use to listen If you can do that for us that would be a fantastic help to the show it helps us both attract new listeners as well as rank higher on those directories so appreciate you listening thanks so much and hope to catch you on the next episode.
