Commercial Real Estate

Zac Ruiz [0:00] The Ruiz Report, and we're gonna kind of go over the past year, and we're gonna compare it a little bit into coming into the same time last year to show what's going on. So I run the Ruiz Report, and I also run a real estate data software called REMC.co. So a lot of the data and most of the information that we're gonna get tonight, except from our speakers, obviously, comes from my little side projects. And so, Rodrigo and I teamed up on this together, because basically, if we had to use a word, we're kind of haters, right?

Like, a lot of these meetups have a lot of fluff, and everyone's trying to sell you something, and we wanted to bring everyone together with nothing but the best information from the best people we could find, with nothing for sale, just so that the community could become strong, everyone could network, and we can improve everyone. And teach them the things. So, with that, we do data driven education and networking, part of the stress of, well, let's talk about this. It's our 10th AVLmeetup, right? So, nice round of applause. Thank you very much. So to give you an idea, these are the topics we've talked about to date. This is our first year in business, so to speak.

And so we opened up with owner financing. We had lead management. We had short term rentals, funding without banks, hybrid agencies. We had a panel of agents who were also investors. I've seen Colin and some of the other speakers in somewhere around. Affordable housing, we had people come speak from the city, co-living spaces. We had rehabbing homes, state of the economy last week, with Bryce, this gentleman standing here, and standing out, as always, and then we have December, which is now commercial real estate. So here is the Hall of Fame. These are all the speakers that we've had come.

And basically everyone on that wall, other than looking exactly like their bobblehead, is at the top of the game in Asheville. They're all locals, right? You might notice the bobblehead sitting at the back there. So we've got some community shout outs this time. So people have been on the board a couple times here. First, we're going to start with, uh, Docalicious, nacho hicks, a.k.a. Duke. Unfortunately, Ms. Ray Ray over here, lost her longtime friend. And so we wanted to pay honor to the young man. And, uh, a quick moment of silence for Mr. Duke. And when one door closes, another opens, we have Andrew Lanteri group joining Nest, so Andrew's around. Taylor's at the back there.

These are some of our community members that are making moves into different brokerages to make sure that it aligns best with their business model. Rodrigo and I actually closed on our very first mobile home park. So, yeah. Talk about your next deal being one conversation away, you know, we weren't in business before we started on this adventure, and now we are, for real. Because, you know, we're doing this together, but it's free, so... It's not the best Mrs. model. And then finally, Steve Hodgens in the house. Where is this legend? Unfortunately, he didn't make it. Steve decided to comment.

One question, how do you stop inspectors from making you do needless crap during construction in Asheville? And so, this was just on the announcement for the events. And then, you know, we had Keith Davis join in. Hey, you could leave. And, uh... we thought that was great. Usually, funny enough, we get a lot of hate. We got a lot of flame. If you ever want to see, like, it makes no sense, but if you go to our comments, they're often fun. Right? So does anyone care to share an accomplishment? Has anyone got anything good going on? There we go. Hey, congratulations. Look at that. Awesome. Well, now no one can top that, so we'll move on. So let's see where the room is at. Do we have what?

Oh, no, that's coming up here. So, we're gonna start asking the same questions every time, more or less, so we can compare. So we started that last month, and this month, we said, you own any investment property, and look at that, the majority of you do, right? One thing I will call out, if you keep coming to here, you'll notice that there are more than 25 people sitting around. So this is why we ask you to come in, right? We gauge the crowd and get the survey response. Last month, 50 responses, and it was broken half and half. So half the people here were investors the other half were trying to get into the game. So have you purchased any real estate recently in the last 3 months? No, right?

And so we're going to see the numbers kind of say the same thing when we go over the reports. And then of those that did, look, the overwhelming majority of them purchase an investment property. So just who's sitting around you? Have you sold anything recently? The numbers kind of agree? No, overwhelmingly, and of those that did investment again. So we got some movers and shakers in here. Do you think now is a good time to invest in real estate? Overwhelmingly you do. And so last month, it was the same. Not actually a little bit different, but basically, you know, if you were to be a betting man, you'd bet on this. This is a good idea.

So will mortgage rates be above or below 7% by the end of quarter 1223. And that's an interesting breakdown, right? So nobody knows. Right? Well, I would go with 66-ish percent, say about the same or above, right? You could look at it both ways. I have full, half empty, but we'll go with interesting. Interesting. We're going to talk about that coming up as well. Do you think we'll get inflation under control in the next 6 months? The overwhelming majority of you said no. If you're following the nose, there was a very cute, or the news rather, excuse me. They said inflation reduced, but it just didn't increase as much. There's some great reporting right there. Last month, same thing.

No, we're not getting that under control. And then do you think home prices will start to come down? If so, by how much? Sal? You'll notice that, yes, and only a little is the overwhelming majority, but no one said no, onward and upward. Last month, we had a brave soul, or at least a couple of them. They were like, it's happening. So it's fun to see that as this progresses, maybe people are tempering their ambitions as we move on. So how many realtors in the room? Please, raise your hand if you're a realtor. A couple of you. All right, so of the realtors who are SVP'd, right? In this room right now, there are 48 active listings for $41 million, basically. It's almost a $10000 listing.

So there's some high value listings in here, right? And in the past 12 months, the people in the room who RSVP closed $132000000 in business. So we're bringing together some good people. And that powered by the REMC.co down there. So the community is strong. Now, who's ready to learn? Everyone came tonight. They're like, yeah, let's learn, right? I wanted to drink and learn. And so we're gonna go over the market. This is the Ruiz Report. And so the Ruiz Report obviously comes out the month after, because the month has to end for you to know what happened in that month. So we're going over November, and we're gonna kind of touch on the last couple years.

So, there's 1st 3 slides, and those slides are basically the added glance, like very quickly, what happened, right? And so you'll see the way this works. Oops. Actually, let's do it for fun. The way this works is, so look. On the left is the amount for the month. On the right, at the top is the change versus last month, so October. And at the bottom, it's the change versus this same month, so November, last year. All those slides are the same, right? So you can see that there's 33% less new listings than last month. 33%, less people thought it was a good idea to list their home. And that's 26% less than last year. So that's how we're reading that. Okay?

So I'm going to go through with it, but we're going to make it a little bit more complicated than usual. So, look, on the left is November of 2022, at the top row, as we continue, that big number is November, right? On the bottom right is versus November 2021. Now, what I've done is, on the bottom row, I put November 2021, because we've been running this report almost 3 years now. So I still have that data. Right? So we're comparing it to November 2020 at the bottom. So stay with me here. The focus is on the bottom line of each row. This compares the year over year change.

So what that says at the top is saying, at the same time last year, we were 33 or, well, this year we're 33% down from last November. But at the same time last year, if you go to the bottom, we were 6% above the previous November. So our market this time last year was going up, and this time this year is, you know, not going up, but we won't say going down necessarily. So we're going to get to that, all right? So hopefully everyone understands this crazy pattern that's going to keep coming, right? So, new listings. Last year, seasonally, and we're gonna see this in the charts, we were coming down. It's winter, that happens, right?

Less people think it's a good idea to list their homes every year, basically. Come this time of year. But significantly less people than the previous year. And as you see last year, just a little less, right? Under contract. So under contracts is those people who put in an offer and were accepted during this month. They thought it was a good idea to buy a home. So 24% less people thought it was a good idea to buy this month versus last month, and 33% less versus last November. Going down to the bottom line, 6% more people than November 2020 thought it was a good idea. So we see how we're jumping up and down, hopefully. Right? So now we got home sold. Home sold is a lagging metric. Okay?

The home sells like 45 ish days after it goes under contract. So November home sales aren't, I mean, they are November home sales, but it's really what happened in October and September. So it's a lagging metric, right? Last year, up and up this year, 36% less home selling. So that means 3 months ago, kind of times with rates going up, right? Three months ago, people were like, hold on, let's see what's happening, and we're seeing the after effects of that. So that's activity, and now we're going to look at a chart. This is why it's like, let's keep everything in perspective.

If you look at the chart at the bottom right, you'll see that there's a little green box around November, and then there's a little red box around November at the left. And so it's 12 months, so year over year. And then I give 2 extra months. So it's 15 months, so it's seasonality. So you can see what's going on. Seasonally, as you see, far on the left, it's kind of, it goes down, right? The red bar is the total active listings. It's how many homes were for sale at any given point in time. So less homes start coming for sale in these months. That pattern is a normal thing. These are seasonal things that are happening to an extent.

It's the magnitude, like how much of the change is where we want to be looking at what's happening. So listings and pendings. This is very, very, very, very telling. Okay? The green bar is the homes that went under contract in that month, or the green line, excuse me. The red bar is how many people thought it was a good idea, enlisted their home. When the green line is above the red bar, we're taking off more inventory than we're putting on. Right? We're gobbling up homes. That's why they're only lasting a day last year and all that stuff. More people were buying it.

So what you should have been telling people, or you experience yourself, is even though sellers thought it was a bad idea to sell because winter, I want to wait for spring and all that, the buyers didn't care. They kept coming. They were buying more homes than were being put on. This year, that is not the case, right? This year, they're going down, right? But you see the green line is a little bit less than last year, and the red bar is more than last year. So you have to keep everything in perspective. Doom and gloom isn't happening just yet. If it is going to happen, it's just relative to what has been happening.

And that's why these graphs kind of give you the holistic little bit more of what's actually going down. Right? So velocity, how fast is things are things happening, excuse me. Median days on market. So the median is if you take everything up, you line it up from smallest to largest, and you pick the middle number. So 50% of homes sold in 15 days or less. That's what this is telling us, right? And last year, if you look down, last November, they were selling in 8 days. So it's 88% increase over last year. But as you see going back to those 2020 times, it reduced, right? Last year was gangbusters. These are some of the best years that ever happened on record.

So when you notice that there's a lot of red on that top chart, it's like, yeah, but from crazy, crazy numbers, right? Is it really, is it really that crazy to think that we would come down from all time highs? I don't think so. personally. Right? So month active listings. If you were to log on right now and look for a home, There'd be like 12 or something like that, but that's not true. That's at this one moment in time. What I do is I track how many homes are for sale every single day, and I tabulate everything that was ever available for sale. So that tells us how much real estate's actually happening. So how much real estate actually happened in Buncombe County last month?

1,300 homes were for sale at any given point in time. Last year, 13% more homes were available for sale. So we are seeing less happening, right? And then months' inventory. This is the kicker, basically. Month's inventory is essentially, hey, if we stopped adding homes, but continued selling them at this rate, how many homes do we have? How long will it last? So 5 to 7 months, call it 6 is a balanced market. Anything above that is a buyer's market, the buyers have all the power. They're like, oh, you won't sell? I'll buy your neighbor's home. And anything less than that, as we've all experienced, is a seller's market. 1.7 months is not a lot. Right? So my favorite thing is supply and demand.

Right? There is not a lot of supply, and there's a lot of demand. And that's going to play in really, really, really... I always like to use cookies. You love your cookies, you got a big jar, you're very gracious. You can have a cookie, right? You only have, like, two left. Kind of hold onto those a little bit more. So let's talk about it. Days on market. Yes, it's increasing, and yes, it's an 88% increase, but man, from nothing, right? So it's not that nuts, right? The green line, again, is the median. So 50% of homes sold in 15 days or less, and the red is the average. So on average, they sold in about a month.

Unknown [13:31] Let's look into that.

Zac Ruiz [13:33] So the average price of a home in Buncombe County was in the fives. I think it was 531. Right? So let's look at this. Right now, this was as of today. This is from the REMC.co software. There are 50 active listings. The average days on market is 95 days. The median means 50% of those homes have been on for 83 days, or less, but or more, right? 48% of them have had a price reduction, and on average, it's $44,000. People are really having to come to terms with what's happening. So let's keep those, let's keep those numbers in mind, because right now, at this very moment, the at, or the median, days on market for the homes that are under contract, is 22 days.

50% of the homes under contract in this price range right now went under contract in 22 days or less. So pricing is extremely important. Look, only 23% of them had to do a price reduction. They are more in tune with reality. They're making more money and they're moving on with their lives. Right? So this is how you show either yourself as a perspective investor or a client. Like, guys, get what the program. It's changed, right? And we're going to talk about why here in a second, but good houses are still selling. The market might be slowing down, but it's because it's taking people a while to adjust to the new market, I would say. Right? So this is a fun slide. So, average list to sale.

If I listed a home for a 100000000 bucks and nobody bought it, and then I listed it for a $100 and it sold for a 100, I would get a 100% list to sale. But my original list to sale would be garbage. What, like, you know, 100 out of a trillion is not even a number, right? So the average list of sale and the original list of sale, you'll notice, are lower than last year, because last year was wild. Everything was selling above esque at some point in time. right? The average sales price, 531 this month versus 534, but we're going to talk about that. So home prices, I like to say home prices are decelerating. They're simply not appreciating as quickly as they once were.

And the numbers kind of tell us the same thing. That is the trend line. Right? So there's fluctuations month to month, of course, but remember, those homes went under contract a month or 2 before. And month to month up and downs is like kind of, you know, hopefully you're not timing for a month. If you're a flipper, then that's another thing. But if you're buying your home to live in for a while to hold, the month to month doesn't matter. The overall trend tells you that it's still up until the right. Real estate's still doing okay thus far. Right? So this is broken down by price range. You don't have to worry about all the numbers and everything.

The point is, the month of inventory bar there is green. That is super, super, super sellers market, right? And then that original list to sale. You'll see green there. People are still selling at 100% or more. But homes are significantly more expensive. And this is the reality. This is the nuts and bolts, right? Your purchase price may be going up and down, but it's about how much comes out of your pocket every month. It's your debt to income ratio that allows you to buy the home when you talk to an originator. When you're trying to get that loan, yes, the purchase price is a reflection, but it's a reflection of what you can afford. Right?

So if you had purchased your home around 4% for a $550,000 home, which is about the average price in Buncombe County, your monthly payment was $2,600 bucks. Depending on your credit, if you're paying around 8% right now, your monthly payment for the same $550,000 is $4,000. People are gonna have to come to terms with this, but that's where supply and demand comes in. Tough luck. Right? And if you're in the home at 4%, are you going to pay 54% more for the same amount of house? I don't think you are. So you're probably not gonna list your home, unless you have to. So inventory's probably gonna be pretty low.

And since supply is gonna probably stay pretty low, and people still want to live somewhere, demand will still try to go up. I personally don't see prices going too crazy down. So that's just kind of how I feel about it, right? So, with that great note, if you could take the next 5 minutes to digest and discuss what we just talked about, a little force fun, a little networking, then we're gonna get into the panel. All right, everyone. We're gonna get going with the panel here. If we could please get your attention once again. All right, and speakers, if you could please approach the stage. We got Mr. Wes over here, who's enjoying a beautiful beer. Almost that time. All right, Mr.

Austin, who is at the back there, close to it. So just very quickly, um, so these reports, part of these reports are available online at ruizreport.com for free, if you want, and we just launched a new website. It's not totally done, but it's done enough. So if you do happen to go to the Ruiz Report, and you have some feedback, I would love to hear it, because we were trying to make that better. But to recap, basically, it's real out there, right? So, prices are decelerating, but homes are more expensive, right? And the market is adjusting to this new rate environment. Nevertheless, demand is strong. Right?

So now we're gonna move to Rodrigo and our commercial real estate panel, and if they could please join the stage and sit under their heads, that would be great.

Unknown [24:51] All right.

Rodrigo Afanador [24:54] So, as our panel's joining us. Show of hands. It's commercial real estate, seem kind of foreign, raise of hands. And it's something like a comfortable topic for you when it comes to real estate raising of hands. So, like, one third of people didn't answer. Good. Matches our ability to get the sign in sheet, so we'll take it. Um, great. Well, for me personally, I know that commercial real estate, starting out, has always been this, like, unknown dark matter, just, like, over the horizon line. And so personally excited to kind of dig into it and maybe normalize it for myself and everybody else. To get started, guys, each 2 microphones, you'll have to figure out the sharing a little bit there.

But if you can just start with your name a little bit about your background, how you got into real estate, and then we'll get started with some harder questions after that.

Unknown [25:47] And Wes, why don't you start us off?

Wes Reinhardt [25:50] All right, thanks. Thanks for having me. I am Wes Reinhardt. I have a company here called Altimus Property Management. We're about an 8 year old company. I've been in commercial real estate for 18 years, um, having relocated from New York, um, 18 years ago, and, um, stepped into commercial real estate, having never had, um, any knowledge, really, of real estate having moved here. That's sort of a long story that I won't bore you with, but... that's sort of my background.

Chris Gragtmans [26:25] All right, hey, everybody, Chris Grotman's, very stoked to be here. I'm with KW Commercial. I run our commercial department over there, and get to kind of socialize with our 400 plus residential agents as well. I got into commercial real estate seven years ago, and it was kind of on the tail end of a athletic career in Whitewater kayaking and paddleboarding, and I was looking at buying multi family properties, and quickly realized that I had no idea what I was doing. And, uh, but I was very intrigued by the asset class, and decided to just kind of commit to it, and have a bit of a history of that for better or worse. And that's my story. It's been baptism by fire ever since then.

Austin Walker [27:10] Hey, everybody, Austin Walker, Whitney Commercial Real Estate, thanks for having us tonight. I have been in the commercial real estate world since 2001. I was working for a developer out of the Detroit area and moved down here for quality of life in 2003 and moved down here primarily to work with a gentleman by the name of Chuck Tessier, who had, at that point, just won the RFP with the city to redevelop the basilica property. As you know that that has not happened at this point. But I was going to help him on that.

And as that project got stalled, I did some property management for him and leasing and then eventually shifted over to Whitney commercial real estate and had been there since 2006.

Rodrigo Afanador [27:58] So Wes, I would like to go back to you. Chris and Austin kind of mentioned how they got started. You said, you got started, long story short story, but what was the, like, what got you into the game, I guess.

Wes Reinhardt [28:09] So my background, I spent 12 years on Walt Street in New York. And I was looking literally for quality of life change. I spent 3 hours a day commuting. My children were 5 and two, and my wife is a native of Asheville, and we have been living in New York suburbs of the city for 12 years. And the reality is I, jokingly, tell people that I had an early midlife crisis in about the mid 30s, my mid 30s, and I basically pulled up stakes in New York. My wife is a long-term childhood friend of John Spakes, who owns Spake real estate, and I met him. I didn't know him and this was in 2004 and he said, if you ever moved to Asheville, you'd come work for me.

And I said, well, what's a commodity futures trader gonna do in real estate? And long story short, I sold my house. I bought a house here, relocated my whole family, enrolled in real estate school, and went to work for John Spake in commercial real estate, spent 3 years working for him. Then I got recruited away by a developer, um, who had moved to Asheville and had very large ambitions for development, and that was 2007. So I spent 3 years in brokerage. And then I spent another 7 years working for a developer. And then in 2014, formed a partnership with Eddie Dewey of Dewey Property Advisors to start a commercial property management company focused on property management.

And so now, we're crossing all paths of property types right now. So we have multifamily. We're not just commercial. But we're not single family residential, and we're not VRBO management.

Rodrigo Afanador [29:57] Awesome. Thank you. So, as I hinted at earlier, I think there's a lot of like misconceptions that can exist out there for what what commercial real estate is. Obviously, each of you guys might have your own opinion on what those misconceptions are, depending what your areas of focus are, but maybe Austin will start with you this time, if you could kind of start what some of those misconceptions are that you run into often.

Austin Walker [30:19] Yeah, misconceptions. I mean, it's just a different business for me, and I have owned several homes, but I have only sold one of my own homes. So I typically lean on residential folks to do that because it is, for me, such a different business. Um, you know, there, there, uh, the financing, um, in the financial relationship and the economics of financial, uh, commercial real estate is quite a bit different, um, and the emotion is quite a bit different as well. However, in this market, we deal with, I deal with a lot of owner occupant, business owners, and so there can be some emotion, but it's just a kind of a different game in that realm for me.

Chris Gragtmans [31:07] Yeah, it's interesting. I often equate it to doctors and dentists. You know, you're not gonna go get a root canal with your primary care physician, and vice versa, you're, you know, it's the appropriate practitioner for the business. And everybody in this room, I'm sure, is very ambitious, and I know that the 3 of us are, and I personally have to often pull myself back from being a mile wide and an inch deep, because it's very tempting to try to, you know, understand a lot of different things about the different types of real estate. The reality is, in this market here in Asheville.

We have to be a little bit generalist as commercial real estate practitioners, because in the major metros, you'll have agents who will be in charge of a particular 10 block radius for industrial sales or office leasing, maybe even in a single building. Whereas in this market for commercial specific practitioners to eat, we need to know a little bit about a lot of different product types in commercial real estate. And if you were to add residential into that as well, It would be very difficult to be able to serve the clients the way that you'd want to.

Wes Reinhardt [32:25] Yeah, Wes. Yeah, I mean, ditto what these last 2 guys just say. I mean, I don't really I can't really add to that.

Rodrigo Afanador [32:32] What about from management? Would you say are there any big differences going from residential management to commercial management?

Wes Reinhardt [32:38] Yeah, a lot. And I do not profess to be an expert in residential property management, ironically. Although we are, you know, our toes are in that water as it relates to a few multifamily. But I would say the biggest thing from a property management perspective, is from a commercial versus a residential perspective, is actually the real estate law as it relates to commercial versus residential. And, um, certain powers that landlords have over, uh, over a commercial tenant versus a residential tenant when it comes to delinquencies and when it comes to least default. The law really leans heavily on the commercial side towards a landlord.

having a lot more power in their ability to deal with a delinquent tenet. And that is not the case, as I'm sure many of you know, as it relates to a residential property management. There's there's a lot of latitude and um, and, and a wide birth given to um, to residential folks that and tenants that are perhaps delinquent. And so that's an interesting nuance to the difference between those two. Awesome. Austin, yeah.

Austin Walker [33:58] Yeah, from a property management standpoint, I would I would suggest that in a residential property management standpoint, that tenant is going to be with you one year because that's what they're signing. And your, you know, your commercial tenant is anywhere from 3 years to 13 years, 12 years. Wes and I did a deal a couple years ago. That was 12 years. Well, the conversation, the relationship is different in those scenarios, because your partners, your partners for the next 5 years, 3 years, 12 years, whatever it might be. And so as a landlord, your desire is about making sure that what you're doing on the property is going to improve their business environment.

So that might be paint, it might be carpet, it might be landscaping. It might be something that improves the business atmosphere for them. Whereas the residential tenant, you're like, you're living here. You're, you know, I'll make sure the snow's moved and the grass is cut, but, you know, don't trash the place. So it's a different relationship, I think.

Rodrigo Afanador [35:04] Yeah, it makes sense. The conversations you're going to have with a 10 year horizon is very different than one or 2 years. Sorry, Chris, are you going to add anything?

Chris Gragtmans [35:13] Yeah, the only thing that I would add is that you come to learn very quickly that this is a very small town. And by town, I mean, Western North Carolina as a whole. And you treat people right. or it's really bad for you in the long run. So that's what I would add to that.

Wes Reinhardt [35:32] No, I would also add to that. It's very unique in this real estate community here, especially on the commercial side, I think. I've always found it to be like incredibly refreshing because, yeah, we're all competitors. You know, Austin's a competitor. I've done a lot of brokerage over the years, although I'm focused on property management, but, um, we compete, but we collaborate, and, um, it's really very unique. I don't really have anything to compare it to guys, but I would say that I love that about this market. I love seeing Jessica, you know, at the at the monthly Sierra meetings that I attend, and so, you compete, but you collaborate, and that's huge. It's huge.

I mean, honestly, the best deal I ever did was with Austin on the other side of the table. And it took over a year to get that deal done. And it was on life support, literally flatlined 6 times. literally. I mean, I'm not even kidding. And I needed to make that deal happen because I was in the middle of June brokerage and starting a property management company. And so it's a funny war story that I'm glad to have shared with Austin, I'll tell you that. And he probably knew it, that you had to get it done. It was a win, win, win.

Rodrigo Afanador [36:55] On that note, I've always heard that commercial deals do take longer to get done than residential deals. Is there any sort of typical like timeline horizons that you expect when you're going into putting an offer in or negotiating any, you know, leases or whatnot?

Austin Walker [37:09] No, there's nothing that's typical. That is. And it's also kind of a slow ramp up too, to really get your book a business underneath you. As an agent, to get started as an agent. Yes, as an agent. And I mean, I think we've probably all had transactions close in, you know, 10 days, but we've also had transactions specifically land transactions that have, you know, been 18 months, 24 months. So I don't think there's anything that's typical, leases typically will be a shorter duration than a sale, but the, and it depends if you're representing the tenant or not as well. So.

Wes Reinhardt [37:57] I tell you, it was a lifetime ago, but 18 years ago, John Spake said to me, before I even moved, I mean, I was in the process of moving. He said, it's gonna take you 12 months to close your 1st deal in commercial real estate. And I heard them. I mean, I heard them as clear as I'm speaking today, but man, I landed here in Asheville and I thought I was going to be, and you know what? I'm 10 months in and I was like, 0 my gosh, I've made the biggest mistake of my life. I literally, like, I'm like, call the broker. We're moving back to New York. I hadn't closed the deal in 10 months, 11 months. I mean, I am sweating and honestly, it was like the 12 month mark and boom, the 1st deal landed.

And then it was the 14th. I was like, oh, okay, I think I got to see some daylight. So the incubation period on, you know, if there are residential folks and brokers in the room that want to get into brokerage. Of course, we've had a very, you know, frothy market and that's great, but overall, I think it takes a little bit more time than what we've seen in the last couple years. Excuse me.

Chris Gragtmans [38:59] Yeah, you definitely need to have the ability to hold your breath for a period of time while you ramp up. And exponential curves exist many places in the universe, they exist in investment and compounding returns, and they definitely exist in brokerage income as you get into the business. And I remember actually, you mentioned Sierra. One of the 1st Sierra meetings that I went to, Austin said, it's a slow burn, man. And it was true.

Rodrigo Afanador [39:28] With commercial, is there a consistent way that you guys look at valuing a property? I think there's probably consensus when you're looking at a house, how to arrive at what the retail value of the house is, but it seems like commercial, there might be a couple more moving pieces, or is there a tried and true method that all brokers agree on?

Austin Walker [39:51] You hear people comment on cap rates and, you know, or cap rate is a snapshot of what's happening right then and, um, you typically in the commercial realm, we are using the income of a property to set a value. And if there is an existing income, there's a question of what can be the income. Um, and frankly, you need somebody that's really understands what's happening in the market and what the opportunities are to be able to put those values and that potential income on that. The intricacies of actually underwriting it are pretty deep. So, um, CCIM has some classes. They're phenomenal. I think there are other resources out there.

However, that's like a, you just dive into that week long class and it'll get you pretty pretty sharp pretty quick.

Chris Gragtmans [40:46] Yeah, I would say a lot of folks from out of town have trouble understanding this market for a variety of reasons. And it's really difficult to come up with a uniform valuation technique for this market. And it ultimately comes down to, I think, where the sum total of our experiences and close transactions that we've had. And then it comes down to psychology and behavioral finance to have your the opinion that you are doing your absolute best to be accurate with, be received by your client and them being willing to move forward.

Rodrigo Afanador [41:27] On that, and Wes, you can chime in on this. It sounds like there's a fair amount of personal opinion that goes into this, that that's kind of undershadowed or overshadowed by, like, numbers. And is there a way that you would ratio that personal, like, experience versus using numbers to come up with valuations, or is that very deal specific?

Unknown [41:54] Hmm.

Wes Reinhardt [41:56] I think it's deal specific. I think it's property type specific, uh, specific. And, um, I mean, yes, you know, you want to look at comparative, uh, cap rates, whether it's an industrial property versus a, um, a retail property versus an office property and see, and see where those cap rates are, that's maybe just a starting point. I think Austin makes a great point in saying, you know, there's a lot of analytical nuance to things, especially in this market, especially when you're looking at the geography, the location, um, you know, Arden versus Asheville, Black Mountain versus Swananoa. I mean, those things, there's some nuances to that.

Austin Walker [42:48] Yeah, there's obviously we have databases that are not nearly as accurate as the ones that you guys are working off of. For me, being 20 years in this market, doing X number of deals, I have a bit of a gut reaction because I'm doing so many deals that there's just knowledge of what's happening right now. where the ball is right now. And I think we all have that because we're in it. So it's hard. Some of it is gut, and then you follow that up with some comps. You dig them up, you call. I mean, again, in our market, we do not have good lease comps. We do have some sales comps, but they're not accurate a lot of the times and the value is a little deeper. It's just under the surface.

So we call each other. Hey, what comps do you have? You know, we there's a good collaboration.

Rodrigo Afanador [43:48] Awesome. Thanks, guys. How much do demographics and kind of macroeconomics trends do I'll pay attention to for Western North Carolina or Asheville? Obviously, there's been some big names that have moved into town recently and how much of that is because they're following the trends and trying to anticipate where things are going or do the trends follow the big names that go to markets?

Chris Gragtmans [44:10] Yeah, it's a good question. And for a lot of these brands, there's national brokers that will kind of crawl the markets in each specific MSA or area. And we kind of don't add up because we've got, you know, these topographical challenges, we've got utilities going to certain places and not others. We have a relative inability to sprawl out the way a city in Texas might be able to. And then we have a tremendous amount of public lands and we have a, you know, 8,000 acre private owner here, another very large private owner right next door. And so it kind of throws off all the demographics to a degree.

And so I think it's part of what keeps us competitive with the international flags, the international commercial real estate flags, is that we kind of understand that matrix of why the numbers may be saying what they're saying, and also the political backdrop to it all as well, and how to execute a successful project. Either you guys want to add on that?

Austin Walker [45:20] Yeah, I think the big players, I mean, the big players, I think Pratt and Whitney is probably the biggest player that we're talking about, and that is the economic impact that that will have for the next 50 years in this town is amazing. I mean, we all might have certain opinions about what they do, but the number of jobs and the higher wage paying jobs that are going to be in this market will help many generations to come. So, and that's just not even mention what else could happen sort of when they come in sort of the ripple effect that's happening. from that.

Wes Reinhardt [46:05] Wes, are you gonna jump in? Yeah, I was just going to say, you know, the ripple effect, and the downstream or, you know, what's coming behind these, the suppliers and some of the other vendors that may be servicing, the Pratt and Whitneys, I think are, are, are going to come. And, um, I think there's a generally a, you know, a desire to, to land in a place like Asheville. I mean, we're on everybody's top 10 list, whether it's place to retire or mountain bike and everything in between. And I think, you know, from a corporate perspective, companies are looking about looking at that and trying to figure out, you know, where's the quality of life for their workers and where's the workforce?

And I think it's, I think it's a great opportunity that we've got a Pratt and Whitney here. I think that's going to create huge momentum for us. And also create an economy that is well more balanced than just hospitality, restaurant and craft brewing. I think it's really, really important for us.

Rodrigo Afanador [47:03] Do you think then it sounds like there's consensus, but just to not make any assumptions here is that other companies of that nature will start to follow? If they see Pratt and Whitney have success here and be able to have a good workforce, et cetera, that other people continue to look at this as a good spot to relocate or build new infrastructure?

Austin Walker [47:23] Yeah, the 2 analogies that I would say is BMW for Greenville, Spartanburg, you know, that spawned all these other suppliers. I'm not sure, you know, Pratt and Whitney will have a forge there and they'll do kind of soup to nuts on site. But other folks will be coming into the market and that'll be a, it's a feather in our cap. The local example that I would use is the brewery market. You know, we had a couple breweries that were very noticeable, plant their flags here, and that sort of kept putting us on the map and stated to the world, to the nation that we are a place to brew beer. So.

Chris Gragtmans [48:11] Yeah, it seems like, you know, in terms of R&D manufacturing, the Pratt and Whitney deal work because there was a legacy property owner who had a lot of property that they could execute this massive project on. And aside from, you know, those those multi-hundred-year owners, there's not a lot of suitable sites for similar such projects.

I would think, but one prospect that seems interesting for our town, uh, if, you know, um, the brewery revolution was 2.0 for Asheville, then perhaps 3.0 might involve some integration of technology, because we're culturally very aligned with Palo Alto, people are suddenly, there's all these crazy trends going on with remote work, and though we have a pullback in the tech sector right now, with, um, you know, a lot of layoffs and stuff, but it seems with our arterial trunk line to the federal building, we might be positioned for an expansion in the technology space. But time will tell.

Rodrigo Afanador [49:19] As you guys are seeing and following these trends, it sounds like it would be fair to say that the meat and income in this area should go up as more and more of these type of names, technology or whatnot. Come in. Is that a fair assumption to make if you project looking forward? Yeah. I mean, we don't need a commentage, just could be nods, but...

Austin Walker [49:39] Yeah, and it needs to because the houses are so expensive, I think. Yeah.

Chris Gragtmans [49:43] Well, go for it, Chris. Yeah, it's almost like it may or may not because we've got, you know, our primary feeder markets are Florida, New York City, New Jersey, Connecticut, um, Texas and California, and a lot of those folks are not necessarily coming here and working. I mean, we all know that we have a large retirement community who's coming here. There's people, you know, we've seen the outbidding of local workforce with cash deals on homes. You know, it's difficult to get your foot on the equity ladder in this market. And one of my mentors called it the aspenization of Asheville.

So whether this actually does move the needle with income, you would think that it would, but there's, you know, it's a different market, if you just looked at the at the at the labor force, you wouldn't predict the success that we're having.

Rodrigo Afanador [50:36] So, I guess that kind of leads me to my next question is we've talked a lot about the benefits of these companies coming in. Would you project any downsides or anything to that could have some unintended consequences of them being here? other than maybe, I don't know, affecting income or whatnot, otherwise this Chris kind of referenced.

Austin Walker [51:00] I mean, the labor pool is just so small right now that that, um, losing employees to these new companies is, it may be a problem.

Unknown [51:12] Anything, Tad?

Chris Gragtmans [51:15] I would say that we're continuing to struggle with affordable housing on all spectrums, of the income scale. I have some involvement in one relatively large affordable housing project right now that will be receiving some county grants, and it's given me an inside perspective into just how difficult it is to get a project done anywhere on that spectrum, and especially for those most in need, but also for kind of more workforce style as well. And in our town, with the best of intentions, we like to shut projects down. And I'm not saying that all development is good, but the answer shouldn't be no development, because, you know, supply and demand works a certain way.

If you have less units, apartment units or single family or whatever, if you have less units, affordability gets worse. And, and, though I, I think I agree with many, many things that are, many arguments that are used, the, I think there's an unexpected negative impact to this particular problem of affordable housing, when people just wholesale, try to shut everything down, which is what we do in Asheville. I'm opening a can of worms there. I'm gonna open it wider. Our Facebook friend is missing out.

Wes Reinhardt [52:47] So no, I totally appreciate those comments, Chris. I mean, what I would say, What could kill the golden goose of Asheville is failure for our municipality to stay as innovative as the people that are coming here. And I really, I'm more worried about that than anything. You know, not casting any aspersions that, you know, government, but I would say that they are not typically outliers in innovation. And I think we need to be. Asheville is outliers in so many areas. And I would just encourage people in the room, and all of us to think about not just simply retreading the same policies and the same strategies that have really not changed anything in our marketplace.

And so it takes innovation, takes people in this room. And it takes people having a voice and being willing to stand up and really say something that is meaningful and demonstrate that you've got some skin and expertise. I could go on, but I don't think I'll defer..

Rodrigo Afanador [54:19] Assuming Austin does not want to jump into the can of worms then? On that note, I mean, this can be a quick answer, but do you feel like the, I think there's anybody who's done projects in Asheville, probably agree with that assessment that it's not exactly an easy process, is there winds of change one way or the other that you might create hope in developing becoming easier? There have been a few good things that have happened. I would point out, like, allowing mobile homes back into the city limits and a couple things like that. And I know lot sizes were reduced a few years back. So, is there anything on the horizon that you're looking to that would be a beacon of hope on that front?

There might not be any beacons of hope and that's okay too.

Austin Walker [55:08] Yeah, my my opinion on it is, uh, for my 20 years here in Asheville, it's it's always been building department's always been challenging at the city of Asheville. They've made some strides. Um, I talked to architects and developers from other markets, too, and it's it's hard in other markets, too. It's not, we're not unique in that perspective. And that's just sort of the reality of where we are.

Wes Reinhardt [55:41] Just to follow up on that. Actually, and I'm not talking out of both sides of my mouth here. I think, you know, the city staff is exceptional at what they do, especially in the development offices that I've been a part of, and I've been a part of some really pretty awesome projects. So, um, I just, my comment is really about where the leadership comes from, to steer, um, that staff, those staff people, to think outside of what is just, you know, the trend of the day.

Chris Gragtmans [56:11] And necessity is the mother of invention. And people are not stopping their immigration to this area. And to city and county staff's credit, it's difficult managing this amount of attention. I mean, especially from the hospitality perspective. So, yeah.

Rodrigo Afanador [56:32] Well, it's good to maybe a little bit of an easier question. So there, you know, obviously with residential real estate, there's been a big change in the way you would approach the business, say, in the last 2 years than you did it 4 years ago, and wondering if, uh, there is anything that, like, you guys could shed on us, like, how you were doing business in 2019, 2018, has it changed at all, or has it just been, you know, busier?

Chris Gragtmans [56:55] And that's the only difference? I would say that we have a we have an economics class unfolding before our eyes. I mean, all these different, I call them shrapnel from COVID, things bouncing back and forth in the macroeconomic setting, and then you, you know, you layer all these other, these other more local forces on top of that. Um, and so speaking personally, the 1st thing that comes to mind is that I'm grateful for the fact that I've always been a student of uh, creative financing, and different financing mechanisms than banks. And I've learned the most from personal deals, and I've then applied those to 3rd party brokerage deals for my clients.

And those, that knowledge has come in handy during this, this time that it's been difficult to underwrite risk. which it has been very difficult for the credit markets.

Austin Walker [58:02] Yeah, I mean, the interest rates are sort of turning us all on our heads a little bit because, um, I mean, a year ago you could you could borrow money for 10-year money at 3%, maybe 2.75. So to be now where we are at 5% money. I'm sorry, 5 year money at, uh, 7 and a quarter. And the prices haven't really changed too much at this point, they're going to need to. But, um, yeah, that is the biggest piece that's sort of thrown us off. The idea of people downsizing their footprint of office space. Sure, that's a reality. We're able to sort of juke and jive around that. The industrial demand is still crazy. We're still way low on inventory and industrial, all in industrial space.

In the retail, in 2019, you know, the idea that retail was kind of going one direction, and then COVID happened, it was going to accelerate even faster. Retail is crazy right now. It's very, very good.

Chris Gragtmans [59:10] One thing that I would add that I'm very curious about, I'm interested in both the perspectives here is we've seen a lot of logic defying math in terms of multifamily deals, probably across the country, but definitely in this market. And I'm quite curious, as interest rates increase, and we saw these, these transactions occur at 4% or below capitalization rates in this market. Um, I'm just kind of curious about the long game there and and what occurs upon debt maturity with those with those assets. And it may just be that this is patient money, pension funds, or other low LTV principles, but I'm interested to see how it all kind of plays out in the long run.

Rodrigo Afanador [1:00:06] So, If somebody was to be wanting to get into commercial real estate or maybe advice you to give yourself back when you were starting, other than patients, which seems to be a common theme so far, what would be the advice you'd be giving?

Unknown [1:00:25] Don't just be a broker.

Wes Reinhardt [1:00:27] If that's if that's the question about getting into commercial real estate. Um, I'm looking at it, you know, I'm looking at that question from when I stepped into it, you know, enrolling in real estate school and then and then becoming a commercial broker, never having practiced residential. And what I learned early on is you've got, especially in this market, you've got to hold the hand of your client, especially if they're an out of town commercial practitioner, because this market is so unique. So it's not just about getting the deal done.

You have to handhold that client, literally, through the city process, through the technical review committee, through planning and zoning, through all those things. And you're side by side with that client, if you're thinking about being in a brokerage realm. That, to me, is one of the most important things. I think a new agent that wants to get into this and understand how to help that client navigate through. It's not just like, okay, I put the property under contract. We're gonna get through the DD, and, uh, in 45 or 90 days, I'm gonna collect my, my fee. That's not how it works here.

And that's, you know, your greatest success is gonna be, um, if you understand the process and can consult that person through the whole thing. Awesome. you.

Chris Gragtmans [1:01:54] I totally agree. A mentor of mine told me about maybe 2.5 years into my commercial real estate career that there's many people who have the hard skills, the understanding of how the underlying math works and just how the deal works, but the soft skills and ability to interact with and to a degree manage and buffer, between the different stakeholders in the transaction is probably more important. And if you can become a student of that, then you're representing your client well and you're setting that transaction up for a better chance of success. And so that would be the number one thing is learn about real estate, but also learn about people.

Austin Walker [1:02:49] Just real quick. I'll do something different than them. Return your phone calls. That's not specific to commercial real estate. Oh, it's not okay. Okay. Well, sorry for you guys too. No, that's a good one. But in all seriousness, know the product. No, know the product, and the only way to really know the product is to wear the rubber off your shoes and and be out there with people doing deals.

Wes Reinhardt [1:03:17] Just one other point. And this is what I tell my people, I'm pivoting towards property management, which is what I really do day to day now. And what I tell my people is, especially in a business like commercial property management, which is, let's face it, highly commoditized skill, right? I mean, we're not putting a man or woman on the moon here. This is property management, and that's exactly what I tell my people every day. And that is just do the simple stuff. Property management is actually really, really easy if you execute them what you say, follow up with the phone calls that need to be made. If you don't know the answer, tell them you don't know it, and find it out.

I mean, it's simple. But I'm telling you people don't do it. It's why I'm in the property manager business right now. Great advice, yeah. Chris, go for it.

Chris Gragtmans [1:04:10] I would add authenticity as another one, an important component, so just whatever you're passionate about, whatever your interests are in. Personally, I, you know, come from kind of the outdoor industry background and network. And at this point, 60% plus of my third-party brokerage transactions are in that space, which is extremely fun, because, you know, we do deals on the chairlift or on the kayak shuttle or on the mountain bike trail. And that's just like what you were speaking to about the lifestyle component of this place. I mean, that's what draws most of us to this place.

And if you're kind of, I don't know, we might as well live inside of our own skin, you know, because that, from a relationship perspective, people are gravitated, or people gravitate towards that more than, um, being a robot.

Rodrigo Afanador [1:05:06] All right, so we'll do audience questions after this one. So just super quick if you're like projecting forward. What do you feel like the real estate commercial market has for commercial, kind of same questions we had at the upwards and onwards? Or do you expect any, you know, ups and downs or bumps through the road moving forward? And then audience questions next, we'll get your questions ready, y'all?

Austin Walker [1:05:26] Asheville's insulated on a commercial level, so onward and upward.

Unknown [1:05:33] Thank you.

Rodrigo Afanador [1:05:38] Wes, you can jump in while Chris thinks if you want.

Wes Reinhardt [1:05:41] I'm processing. I think the immigration demographics are going to continue to provide a baseline floor for our market. But as an armchair, economist and somebody that spent a lot of time on Wall Street. I'm also a bit of a contrarian to the masses. And so I'm constantly fighting this struggle in my own head about business. I am bullish on our own business. on property management. Um, and I think that will continue to grow because we're going to continue to see a growing population here. That's going to need, even on a small scale, office with home, with working remote. Let's call it office retail.

And we haven't seen a whole lot of new development in retail, but as those products, lines come on board and new industrial as well. They need to be managed. And so I feel generally pretty positive about the trajectory of that realm in commercial real estate in general, mostly because of the demographics that are pushing it in the right direction. Awesome.

Unknown [1:06:54] Thanks Wes.

Chris Gragtmans [1:06:54] Yeah, I would say that the coronavirus shockwave humbled me personally because I was kind of hyperanalyzing on the front end and looking back at 2008 and saying, oh, okay, here we go. we're gonna create liquidity and I'm gonna syndicate capital and buy distressed assets, and the exact opposite happened, you know, and it's an exercise in humility. And that was a good experience to go through because I realized that the more I thought I knew, you know, it's time will tell. There's a zigzigler quote, expect the best, plan for the worst and capitalize on what comes. And so I'm optimistic about our market and our attractiveness to capital from a variety of places.

I think that the macro trends are gonna drive continued multifamily health. And so that's where I am personally, you know, looking at. I already own some hospitality assets, and so I would like to look at the multifamily and industrial space, and we will all just react as commerce continues to shift. Awesome.

Rodrigo Afanador [1:08:20] Thank you. All right, so we'll do some questions from the audience if anybody has them. Just raise your hands. I'm going to try to repeat the question, then let you guys answer. Yes go for it.

Unknown [1:08:28] So would you do an appraisal? get the value to sell property.

Rodrigo Afanador [1:08:35] Would you do it yourself or would you recommend this So I think the question would just be like, what's your thought processes on appraisals for selling property?

Chris Gragtmans [1:08:46] We love it when there's an appraisal there. And sometimes we'll critique that appraisal or provide counsel slightly against that appraisal to a degree, often on the upper side. In the absence of an appraisal, we'll use the same methods to underwrite that property and put a number on it. Um, and Austin spoke earlier about relationships between brokers. I personally, and I imagine these 2 guys do as well, retain relationships with every appraiser that I speak with, because you never know when you might need that. And so I personally come at it from a couple different angles, and if I can get some continuity from those different valuation techniques, then that's great.

If I can't, then I might be calling a friend, calling an appraiser and say, here's what I got. And, you know, we pick up their calls, and then they pick up our calls when we reach out.

Unknown [1:09:53] It's not exactly because sometimes it might not, what you think, the value is, but at least you have a ballpark of. That's the value problem. That's what you sell for.

Chris Gragtmans [1:10:02] And the difficulty, right? Absolutely. And the difficult thing with that is that that's kind of a, you know, that's a sacred act of, you know, you're a fiduciary. saying, hey, your property is worth this. And if you're overvaluing, it's going to sit. If you're undervaluing it, they're leaving money on the table. That's serious business, and it requires attention, and it takes time. So you almost learn to develop an instinct of people who are just running you around because you got to put hours into that, to do it properly, at least I do. Um, so, yeah, uh, It's definitely an important part of the process. One of the most important.

Rodrigo Afanador [1:10:40] Do you guys have consensus on that or anything, Ted? Yep. There's a question in the back. Yes.

Unknown [1:10:46] Okay, let me see if I can get this out.

Zac Ruiz [1:10:50] You guys are brokers, your property managers, and you're leasing agents, and that's a lot of whatever today, and I'm interested in directing into the personal business.

Unknown [1:11:01] Why would I do that? Why would I invest in that instead of I have apartment houses? But I'm interested in retail and industrial and things like that. Why would I do that?

Rodrigo Afanador [1:11:13] So is the question, why investing in retail space would be a good or bad idea?

Unknown [1:11:17] Or industrial?

Wes Reinhardt [1:11:20] Well, I think you just, you gotta do your market analysis, you gotta do your analytical research, and you're gonna find that the industrial market here, I think, has a, you know, vacancy rate that's under 3%. So that might be a reason why you might want to be an investor or a developer in industrial. I think if you look at rent growth over the last 12 months, you could see what those are like in the different sectors, and I'm including retail in that and industrial. I mean, I think those are some, the data is pretty compelling. Um, you know, my question is, you just got to be careful when the music stops, right?

You don't want to be midstream, and then all of a sudden figure, you know, have a COVID event. But, you know, I don't believe this guy is ever falling. I think, you know, anybody that puts risk out on the table. and is calculated in their risk, um, will be rewarded.

Rodrigo Afanador [1:12:15] Awesome, thanks. Questions? Yes.

Zac Ruiz [1:12:20] Chris, you talked about creative lending, you know, not the traditional style earlier. We got a lot of multipamily investors in the brain, I feel like.

Austin Walker [1:12:29] Let's say, if any of y'all were looking to invest in a 1020 unit and you were trying to dodge going traditional, what's the 1st couple things that you think would be the slam dogs as far as buying something?

Chris Gragtmans [1:12:43] One of my one of my mentors has always told me that negotiation comes down to 3 things. information, power, and timing. And the information component is very important. And so the more that you can learn about the desires of the seller, and the different variables impacting their, you know, willingness to dispose of the asset, the more you can structure something that is creative, that accomplishes things that help them and help you. You know, the goal is win-win, always. And so, um, I'm a total, total quote, quote, nerd, my favorite real estate quote is Henry Ford. I'll let you set the price if I can set the terms.

And in this current climate, it can be helpful to have multiple levers that you can pull on in a negotiation other than just the purchase price. And so seller financing, you know, there's ways to layer it on top of conventional lending or to go entirely that route. But there's untold ways that you can adjust an agreement to reflect and honor the your counterparts situation. Hopefully that's an acceptable answer, Crom.

Unknown [1:14:04] Thank you.

Rodrigo Afanador [1:14:05] All right. Any other questions or anything you guys want to add on?

Unknown [1:14:11] Yes.

Rodrigo Afanador [1:14:12] I want to just throw out there because I know it's been a topic of conversation in other places, but with, we talk a lot about government and things like that, influence in Asheville, right? depending on to talk to, city council a lot of times we do as like a popularity contest. especially having more mobilized groups like this, again, send a message out. Have y'all thought about any type of involvement within city council to have a little bit more of an influence to help direct the town that we all live in to go towards a more sustainable type of direction? So, in summary, have you considered getting involved in politics? No.

Austin Walker [1:14:59] A colleague of ours, Jeremy Goldstein ran. I don't know if you guys know Jeremy, sharp, sharp guy. He is, he's a tough negotiator. He thinks through problems. He solves problems, and he got crushed at the polls. I mean, that just, that was... Well, maybe so, but I mean, he there was that was disappointing for, I think, the business community. My particular involvement in the business community has been primarily through the chamber and a little bit through Cebo. But I'm the current chair of the board of the chamber. And so that's where I'm trying to make my impact.

Chris Gragtmans [1:15:37] Yeah, I don't think the cowboy hat did him any favors on that run either, though. Great guy. Love Jeremy. He's the man. But, uh... There's other ways aside from city council that are more appealing to me personally, uh, at some point when there's not a life phase misalignment, like right now, I have three young children, um, but Board of Adjustment or other other ways to contribute and be of service to the public with a depth of knowledge and experience that informs that. I've certainly considered it. It's not necessarily the right time, but yeah, one day.

Wes Reinhardt [1:16:21] I have given it some thought. I live in the county, though. I was about to say we were going to have breaking news, but now, no, I jokingly say it because I kind of do like politics in general, but, um, uh, it would be a nasty divorce. And I'm not up for that. So, no, I mean, look, I think it's important to have a civic mind and contribute in various capacities, maybe at some point, but we'll see.

Unknown [1:16:58] Cool.

Rodrigo Afanador [1:16:59] All right, I think we got maybe like one or 2 more questions and then probably be time if there's if there are questions.

Unknown [1:17:05] Oh yes. What would you recommend to, like, a small time investor.

Rodrigo Afanador [1:17:11] For example, I'm coming in into Asheville and from Massachusetts where we have a lot less apartment complexes and a lot more multifamilies to 3 families versus here, you know, I'm seeing these big guys coming in and building these huge apartment complexes versus me, I'm a small guy, and there's no multi-is, whether I'd have to, you know, develop or, you know, there's none for sale really. what would you recommend?

Unknown [1:17:34] What would you say to that?

Rodrigo Afanador [1:17:35] So how do you break into the residential multifamily game? Yeah, no competition with the bigger guys.

Unknown [1:17:40] Like, you know, is there any?

Wes Reinhardt [1:17:42] I think I think it's tough because I think I think the economies of scale are working against you, right? If you're a small player, I mean, that's not to say that you shouldn't take a shot, I mean, it comes down to the deal, comes down to, you know, what makes economic sense and what your projections are. But the economy's a scale you're against are against you a little bit.

And even though we're seeing in, you know, an increase in interest rates, and a slight downtick, I think, in the cost of construction, those 2 really have not really, um, uh, the equilibrium has not really been struck there, I think, cost of construction, I've seen some deals that have actually just not gotten off the ground, and it was a deal actually that I was working on myself, that I was trying, and I looked at this particular deal. literally 8 different ways for about a 30 unit residential complex that we were gonna hopefully develop and um, I couldn't make the numbers work. So I don't want to be discouraging. I just encourage you to be realistic.

And, you know, it's all about, you know, you don't make money buying something or you don't make money selling it. You make money, buying it.

Rodrigo Afanador [1:18:58] I'm going to chime in. I would look at mobile home parks, but as you know, anybody's talked to me, I'm a big fan of anything with mobile homes. So, yeah, Colin.

Chris Gragtmans [1:19:07] What are some ways you guys would suggest to reduce bureaucratic red tape for the development process in Asheville.

Unknown [1:19:14] I know we touched on it earlier, but over any particular action steps that you guys have pregnant.

Rodrigo Afanador [1:19:18] So I'm going to repeat that. Is there anything we can do to help eliminate or mitigate the red tape for development here in Asheville?

Wes Reinhardt [1:19:30] I actually think the development process has gotten better than it was 10 years ago. It's the rules are a little bit better defined. And, you know, at least that has been the trend, I think, taking this back to maybe 2010. But now I'm starting to see like, I'm starting to see all this great work that back in the day when there was transparency and there was a better definition for how the development was going to evolve. And now I'm starting to see tones of regression in that realm. So I don't know. I don't know.

Rodrigo Afanador [1:20:08] You guys want to chime in on that one?

Austin Walker [1:20:11] I know that there's been some staff turnover at the city. So I think I think some of the the pillars of the the folks that were over there that were really guiding the process and sort of giving some stability to it are not there to provide those same interpretations. I know that we're seeing that on the building permit side, comments come back where, you know, there's a lot of blood on those plans and there shouldn't be. So I think I think that's a collective effort to voice our concerns about things and and um, debate those with with the, the, the plan reviewers that we're dealing with and, and um, yeah, it's probably about it.

Rodrigo Afanador [1:20:51] So I guess to that would be going directly to the plan reviewers then to kind of give a little clarity to the answer for Collins question is talk to them specifically, give them feedback and kind of push back gently as needed. Cool.

Chris Gragtmans [1:21:04] Colin, I'll tell you a couple ideas in private. But in general, these are tough questions. to kind of give you an example. I ran into a multifamily development deal, maybe a year and a half ago or so where property was under contract. I was representing the seller, and the question was, uh, it was an opportunity zone property, and deal. And the question was, um, city city council wanted 20% affordable for 20 years to say their blessing over the project. And the buyer could do 20% affordable for 10 years because there had to be an ability to dispose of the asset at that 10 year mark. And so the question for, you know, our public decision makers is, is it better to have 20% for 10 or zero?

And it really is a tough question. Ultimately, that deal was terminated because of that. And I'm not necessarily saying, I'm not voicing an opinion because I understand all the perspectives, but that's the kind of, that's the kind of situation that our, um, you know, our public servants are grappling with. So none of these are easy answers necessarily.

Rodrigo Afanador [1:22:24] All right, we'll do one more, if it's an easy one, and if not, we will. say thank you to our panel. All right. Thank you guys so much, big round of applause. All right, so a couple of house cleaning things real quickly for you all. First off is please take your glasses when you're done. Just drop him on the counter. for anybody. Don't forget to tip. Well, guys. you know, you don't want bartenders to think that real estate people are jerks, so take that into consideration. And then, I know we got a couple other. Oh, yes, we'll go for it. Oh. Well, so January will come, we'll do caffeine and closings again.

So if you didn't know, we've done it 2 months now, we're gonna do it again in January, we get together, drink coffee, and talk shop, essentially. So it's a lot more low key. Just basically, if you have a deal, if you're negotiating something. If you have something under contract and you're looking for funding, come, bring it to the table and kind of mastermind effort to try to get deals pushed across the finish line. Oh, and so January, I don't know why I forgot this. So Zach and I are going to be doing a town hall.

We could basically laying out the vision for what we see for AVLmeetup for next year, what we hope to accomplish, what we hope to do, and we're also gonna be sharing some of, like, internal numbers that we've been tracking, as you all know, dad is a big part of this. And so we're going to share some of that and maybe talk a little bit about what we're using that data for as far as decision making goes. And hope to see you all there so you can see what's coming next. Is there anything else?

Zac Ruiz [1:23:55] Thanks for coming to the 1st year. Quick question. How many of you is your 1st time?

Unknown [1:24:00] Amazing.

Zac Ruiz [1:24:02] How many have you been to more than one? The rest? Hey, that's a good 1st year. Awesome. Well, thanks for having us. Thanks for the speakers, and we'll see you in January.