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  • Chris & John

Ep 18: What it’s Like in Dallas With Sam Bates

We hare happy to welcome Sam Bates, principal at Trinity Capital Group, on our show today. Trinity is a multifamily development and acquisition company Sam runs with Daniel Morgan and Michael Walkup. After Sam got his MBA in financial planning and the market tanked in 2008 he left the finance world for good. He then started investing in real estate in 2009, and this paved the road to where he is today. Sam shares his journey which interestingly rotates back and forth between single and multifamily. He tells us about why he left multifamily initially through investing in a Dallas deal during the crisis. Sam got out relatively unscathed though and shares some of the good lessons he learned from it.

We talk about a variety of topics on the show today such as letting go of deals, a new openness to young investors, Sam's properties in and outside of Texas, investor return appetites, zoning laws, and the ins and outs of buying and managing vintage developments. We also get more into the challenges that municipalities can present to developers, the impossibility of meeting high insurance and tax rates, and the difficulty of squeezing out profit from third-generation renovated deals. Toward the end of our conversation, we swap some stories about the value of priming investors and sticking to the deal types that you have on your track record. Tune in for all this and a whole lot more today!

Key Points From This Episode:

  • Sam’s experiences moving back and forth between single and multifamily deals.

  • Why Sam moved away from multifamily in the first place.

  • Expired bridge loans, an absent GP, and why the Dallas deal didn’t go as well as it should.

  • The fact that it is unrealistic wishing to have held onto properties sold during the crisis.

  • Long term debt and why having it will help weather the correction.

  • Challenges Sam had raising capital for multifamily due to seeming too young.

  • Changes in perception regarding the age of investors in the present climate.

  • Why it is unlikely to find distressed deals in a top 25 market, even through development.

  • Typical investor return appetites for new developments in Texas.

  • The benefits of keeping one investor and developing out of Dallas city limits.

  • Why it’s impossible to make money off 3rd generation renovated deals.

  • How rents can’t be raised to meet high insurance and taxes, let alone exceed them.

  • The proliferation of using old market statistics in underwriting.

  • Some of the locations of Sam’s properties around Texas and also on in Horn Lake.

  • Challenges and strategies in managing, buying, and raising capital for vintage deals.

  • What Sam looks for in new deals as far as expense per unit and expense ratio.

  • IRR, cap rates, cash on cash, and what returns Sam wants to see in different deals.

  • Why underwriting and cap rates for 10-year deals is irrelevant.

  • Perspectives on the importance of priming deals for investors to dodge future problems.

  • Why investors might be wary about deals that don’t fit a syndicator’s track record.

  • The challenge of working around municipalities and how they jeopardize IRR.


“Most people in 2007/2009 got smoked because they were not educated and they did some really dumb stuff. But Sam got the benefit of really learning. The world crumbled and he got to make a couple bucks.” — @johnc429 [0:11:07]

“Everybody talks about when is the correction going to happen and how bad it is. Well if you have long term debt you’re going to be able to weather any storm.” — @SamBatesIV [0:11:43]

“There is a stupid, stupid, stupid amount of stupid money out there.” —@ChrisGrenzig [0:18:01]

“Where are you finding a super distressed deal in a top 25 market. I don’t know if that even exists, no matter how many rocks you turn over.” —@johnc429 [0:18:36]

“I feel like all the brokers are sending deals that are second and third generation renovated products. It’s really hard to find much value.” — @SamBatesIV [0:20:39]

Links Mentioned in Today’s Episode:

Sam Bates —

Trinity Capital Texas —

John Cohen on LinkedIn—

Chris Grenzig on LinkedIn —

Lincoln —

Tikijian/Cushman —

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