In this episode, I talk with Chris Salerno.
Chris is a former top real estate team leader who has personally transacted more than $40M in real estate volume and helped lead the #1 real estate team in the Carolinas to produce over $140M in annual sales.
We discuss how he’s now a multifamily investor and has transacted over 1,400 units. We also highlighted how he went from a solo real estate agent to multifamily investor and his advice to Realtors wanting to invest in real estate.
Chris shared his first multifamily deal and view on the current real estate market.
Whether you’re a seasoned real estate investor or just starting out, this episode is packed with valuable insights that you won’t want to miss.
Don’t forget to like, share, and subscribe to our channel for more inspiring stories and informative content.
Transcript:
Chris Salerno 00:00
Look at Tony Robbins. You know Tony Robbins, right? He has over 100 businesses 100 But I can ensure you to get to that level. He focused on one business, and then he started diversifying.
Chris Bounds 00:15
In this episode I talk with Chris Salerno. Chris is a former top real estate team leader, who has personally transacted more than $40 million in real estate volume and helped lead the number one team in the Carolinas to produce over 140 million in annual sales. He’s now a multifamily investor that has transacted over 1400 units. We discuss how he went from a solo real estate agent to a multifamily investor his advice to other realtors who want to invest in real estate, his first multifamily deal in the real estate market. I hope you enjoy. Now onto the show. How’s it going, Chris?
Chris Salerno 00:53
Phenomenal. How are you doing, Chris?
Chris Bounds 00:55
Good, good. You got started investing in real estate in a little bit of an, I’d say, unique way. And it’s definitely a way that I feel a lot of folks should and that is you started off as a real estate agent, right?
Chris Salerno 01:11
Yeah, that’s right. Yeah, I have been in the real estate industry for about nine and a half years. But I started off as a residential real estate agent here in Charlotte, North Carolina.
Chris Bounds 01:20
Yeah, so a lot of real estate agents. And I preached this a lot. And really, I didn’t know because I started off the complete opposite way. I was a real estate investor first, and then later on, got my license. I wish I got it sooner. But in any case, that kind of a mentor of mine was like, hey, look, if you’re gonna be a professional, like, you’re gonna be in this long term, make it official
Chris Salerno 01:41
get your license to, you know, mine as well. Yeah.
Chris Bounds 01:44
So what I ended up getting my license, I’m like, Man, I should get that sooner. And there was a lot of noise out there saying, Oh, no, don’t do it. Don’t do it. And it’s definitely not a prerequisite to success. But it can definitely be a valuable asset to your business. But you got to start as a real estate agent, a solo agent first and then moved on to a team leader, right?
Chris Salerno 02:04
Yeah, so I’ll give you the full background. So nine and a half years ago, got into the residential real estate game. And in my first year and a half, I did 40 million annual sales. I did that with doing over 75 open houses, I mastered the art of cold calling.
Chris Bounds 02:20
And that’s as an individual agent, right? Individual agent. Yeah, that’s phenomenal. The
Chris Salerno 02:24
end of that year, the thanks. Towards the end of that year, I started, I started starting to build my own team. Now keep in mind, at that time, the median income home price for Charlotte was like 275. So we’re not talking Miami, we’re not talking New York, LA,
Chris Bounds 02:41
there’s a lot of volume. A lot of volume, numbers.
Chris Salerno 02:45
Correct. It’s cranking it out. And so and I’ll tell you guys, actually one thing that I’ve never told anybody here coming up on a never told anyone this on any podcast episode, but I’ll tell your listeners, something that really opened my eyes coming up here soon. But I started building that team towards the end of that year and a half. When I did that, I was approached by the number one team in the Carolinas. And at the time, when I joined, or when I was bringing them up to where they were at. We ended up being fourth in the world with Keller Williams, and I was approached to them by merging our businesses, we came to terms merged our businesses, and then I fell into their operational roles, their CEO, I ended up coaching everyone that came on they had to go through my coaching program to get them up and running at an 18 year old student who sold over 76 houses his first year, and he now has his own team that he runs with eXp here in Charlotte, we still stay in touch, because he was actually the one who on top of paying quarterly taxes, and I needed a tax deduction, not knowing if I was a real estate professional, I can utilize 100% of these tax deductions that large multifamily real estate assets provide. He was actually a huge part in my transitioning to leaving everything, selling it all. Letting all my licensing go to then creating QC capital towards the end of 2018 and beginning of 2019, and then grow in QC to what it is today, upwards of 250 million AUM over 1000 are really over 200 units in our portfolio just within four years.
Chris Bounds 04:28
Was that the catalyst? The the real estate professional, the tax benefits, just realizing they’re like, Hey, you’re you’re crushing it, but you’re paying so much in taxes and you realize, Hey, there’s this other world over there where you can crush it over there too and take more home was that the catalyst for the transition?
Chris Salerno 04:46
It was a big part of it. I got a tax bill saying you’re late, and now you owe fees. And I’m like, what, what do you mean? Like my CPA, you know, covers all that. So I called my CPA up and like, what is this this document? She says, Well, you’re now in an Tax bracket. And now you have to pay quarterly taxes where you get penalized. I said, Are you serious? I said, this is ridiculous. And so instead of going out and buying cars and and depreciating assets, I wanted to buy appreciating assets that are going to give me tax benefits and build my wealth.
Chris Bounds 05:17
And what sparked so that is, it’s phenomenal revelation. So you got to you got to that point, mentally. But what sparked that, because most agents are completely oblivious to that?
Chris Salerno 05:30
Yeah, no, I agree. What sparked that is one, I didn’t want to pay those quarterly checks to Uncle Sam.
Chris Bounds 05:36
How can I get out of this? How can I avoid this?
Chris Salerno 05:39
How can I get out of this, but I’ve always wanted to grow a big company. I mean, I took the the team from 92 million in annual sales to 147 million, just within another year and a half. And I’d let all of that go because I saw the bigger picture of private equity. If you look at all these billionaires, their hedge funds, their private equities accompanies, and they’re buying all these larger real estate, buying all these opportunities, that your average Joe who’s just driving on the street, or your average individual who’s making 500 to a million a year may not have the ability to have access to. And so that is another reason why I wanted to create QC capital to then give that ability in that access to all of the investors, even if it’s, you know, using your 401 K to invest in these deals.
And we have a client, or an investor who just emailed me saying, I want to transfer you everything in my 401k Because you’re offering a 4% annual interest on investor’s money while we wait for you guys to find a deal. And I’m like, well, let’s, you know, let’s talk slow your roll there, you know, so at offering these type of opportunities to investors, and now, you know, to real estate agents, to use the tax benefits that this offers, and also build their wealth as they’re building their company, and helping other people buy real estate is our main passion here. Yeah. So
Chris Bounds 07:06
I talk a lot about pattern interrupt. So you’re crushing it as its production agent, now part of it, one of the top teams in your market, everything’s going well, then you have this pattern interrupt of this tax bill. And you’re like, hey, let’s, this is a problem. But you’re in goal was always to build something great. And so so at that point, you’re like, Hey, how can I build something great. Maybe it’s not what I’m getting. Maybe it’s not continuing what I’m going to what I’m doing now, maybe it’s something else. So you’re looking at this investing? What was it immediately over into multifamily? Or did you be like, hey, I need to buy some single family properties or go wholesale some houses.
Chris Salerno 07:47
I had single family I had fix and flips. Me personally, yes, you can make money. My girlfriend flew Tomes. But I and I’ve opened her eyes to multifamily. I had those single family rentals, it doesn’t make sense. It does not make sense on single family rentals, you have one tenant, one person paying the rent, if something happens, you have to come out of your pocket. If anything happens large H fac, roof, you name it, that right there can wipe out your whole profits. And so I let all my single family portfolio go I sold everything I had. And I’m a firm believer of the book, The One Thing wrote by Gary Keller, I believe he’s still the CEO of Keller Williams. But the phenomenal book, it tells you to focus on your one thing. And now, some people may say, Well, Chris, sometimes you contradict yourself, because you say diversify. There’s two different things.
In my opinion, you have to focus on that one thing, if you’re a business owner, which is your business until you grow it to a certain level, and then you can seek diversification with other investments. I’ve grown, I’ve grown QC capital to a certain level. Well, now we’re now I have experts in the early stage startup companies where I can invest passively, and focus still on my one thing, but I can still diversify, which is super important. So I am a firm believer of diversification up until a certain point, but to get to that certain point, you need to focus on one thing.
Chris Bounds 09:14
Yeah, there’s this. There’s the phrase, I’m sure you’ve heard it many times, like most millionaires have like seven sources of income and, and the whole thought behind that is or at least the message behind that is is hey, you need to go out and get seven streams of income when that’s not really how it is like those millionaires made their money on one or two streams and then they went out and added others later on.
Chris Salerno 09:37
But I mean, look at Tony Robbins, you know, Tony Robbins, right. He has over 100 businesses 100 But I can assure you to get to that level, he focused on one business, and then he started diversifying into resorts into multiple coaching programs, you name it.
Chris Bounds 09:57
So what do you think more Real estate agents don’t do or I’ll say this in talking with agents over the years, most say, hey, I want to invest in real estate. But they don’t. Why do you think that is?
Chris Salerno 10:15
They don’t have enough knowledge. Even though they are real estate agents, they outsiders, correctly help people during a transaction on buying and selling. They don’t have enough knowledge to buy apartment complex. And I say that very nicely, buy an apartment complex analyze a t 12. A p&l, which is also the T 12. Some people don’t know what a t 12 is, or the rent roll and to understand, well, there’s a high loss to lease, you know, how can we clean up that loss to lease what’s going on with the vacancy here, you know, when you analyze a rent roll, whatever the efficient rents, what are the gross rents, all of that plays into a factor, which they may not, they don’t know at the end of the day.
And there they are, they may be phenomenal sales agents, they may have a team which I’ve hung out with the top teams, top 25 with Keller Williams, when we were when I was at Keller, Williams, Gary Keller’s top 25 in the world, top individuals in there, and they are laser focused on growing their business that one thing, which is great, but diversifying, actually think of this as a real estate agent. If you diversify and invest, invest with credit, bulk Christmas, invest into real estate, and you utilize those tax benefits, because you’re already a real estate professional. And so it wipes out your taxes. What can you do with that extra money to grow your business? Yeah.
Chris Bounds 11:42
Yeah, most Realtors don’t know that they’re sitting on one of the greatest tax benefits that the IRS allows the real estate professionals
Chris Salerno 11:54
agreed and the IRS is not going to write you in an email or send you a letter with bold 50 font saying, hey, there is a tax exemption option for real estate professionals. If you buy real estate, do a call set depreciation on it, you can depreciate the asset and utilize that as a depreciation off your taxes, you’re not going to put that it’s going to be in a little fine print, where we’re going to have to zoom in 250%. So it’s it’s advantageous to help you to grow your business by investing into real estate, and then using that excess cash to grow your business. On top of that, you can also give a another type of service to your high net worth individuals who are buying expensive homes that they can also invest into real estate. Yep, yeah,
Chris Bounds 12:44
it goes back to what you’re saying. Education. 100%. So what advice do you have for agents that they would like to make that treasure transition? And let’s be clear here. A lot of agents, especially successful ones, they love what they do. They may not want to do it forever, but they love what they do. Now, they don’t really want to be a full time. They don’t want to do what you do. They don’t want to do what I do. They want to still be an agent, run their team or whatever. But they would like to invest part time. And then there may be others that you know, maybe they’re a little tired of it and they want something new and they would like to go full time as an investor. But what’s your advice to agents that want to make that transition over into the investing side?
Chris Salerno 13:28
start educating yourself. If you go to QC capital group.com, we have a free book, I hand sign a free book, we mail it out to you it’s free, you don’t have to pay for shipping, nothing. And it comes in the mail. You can read through that it takes less than an hour and it helps educate you on the next steps of multifamily investing and getting started what questions to ask what to look for the ins and outs. Start with education. Just like if you were becoming a real a real estate agent, what did you start with? You start with education, you had to take the state test you had to take the the national test, and in you have to study to answer those questions. And then once you answer those questions, and you sign up with the brokerage, what do they do? They put you through a training program, just like you went through that. You have to do that when it comes to investing your own personal finances. Love it,
Chris Bounds 14:19
love it. So in multifamily um, how’d you get your first deal? What did that look like?
Chris Salerno 14:28
Excuse me, first deal. The best thing I can say is that utilizing my ability as a broker or previous broker at that time, really connected with the commercial brokers. I was fortunate to really get close with the commercial brokers in the Carolinas and I started networking with them building relationships. It’s all about relationships in this business of building of the commercial brokers. Once I started building those relationships, I was able to then secure the first deal and from there or it kind of snowballed. So
Chris Bounds 15:04
it’s very important because relationship is very key in real estate, especially actually on both sides of the aisle on production and investing. From a multi family standpoint, it’s very much a team sport. So was this a deal that you went in? And you were lead? Or you partnered with another operator to take down? How many units was it? What did that look like? Yeah, so
Chris Salerno 15:31
the first ever deal was actually here in Charlotte, North Carolina here in our backyard. And that was a partnership. We were lead on it. That was a partnership, it was a 44 units, we bought it for 44 point 4 million, and definitely very difficult for the first deal to raise capital. From there, once we acquired that we then partner and try it learned and really grew, progressed, and perfected the art of raising capital. And then from there, we we raise capital for a couple of groups. And then we started just solely focusing on our own deals. That’s all we focus on right now is acquiring our own assets or JV opportunities.
Chris Bounds 16:12
Yeah, and I think that’s really important. I made the mistake on my first multifamily as a 29 unit. And I’ve told this story before that I was going in Lone Gunman now. I bought it at such a ridiculous price that I knew I could afford to make mistakes and still make money. Fortunately, I made a lot of mistakes until made money. But you hadn’t partnered? Yeah, it would have been a lot more. I mean, we bought the same for this sounds insane. Today, it was like $17,000 a door. It was in pretty rough shape. But yeah, by partnering not only are you leveraging their success, their Rolodex, their experience, their balance sheet, it helps fast track your education, maybe you make a little less, but quite honestly, you probably actually make more, because half of a lot is much better than zero of not 100% of nothing. But really, they’re going to be able to help fast track your success not only on that deal, but on subsequent deals, right?
Chris Salerno 17:13
Yes, very much. So very, very much. So it’s a T for it’s a team sport, we all have to work together to acquire these type of assets. It’s very difficult to just do it on your own. Unless you’re a billionaire. You have the cat, you can just do it on your own.
Chris Bounds 17:28
So how many deals? How many units? Have you closed? Over the years?
Chris Salerno 17:33
We have closed over the years over 1500
Chris Bounds 17:37
Okay, so, yeah. Okay, so quite a bit of units in one on your, are you still partnering and collaborating with other other operators?
Chris Salerno 17:48
We are we’re only doing JV opportunities or doing our own deals. And that’s with partnering as well, co sponsors and things like that.
Chris Bounds 17:54
Yeah, because that’s another thing that I noticed. Um, so with single family, it’s, it’s very easy just to be a lone gunman. Most single family investors are like, there’s not a lot of need to partner, except for maybe your first deal or whatever. But in multifamily, especially large multifamily, it’s a completely different game, you typically see one to three operating partners, which with their own teams, all performing various different aspects, whether it’s the asset management, property, property management, construction management, acquisitions, finance, KP, there’s, there’s just a lot of very crucial jobs that you screw up one of those, and it can really, really mess up a deal for everyone.
Chris Salerno 18:45
Oh, it can? Most definitely, it can mess up everything.
Chris Bounds 18:48
What are your thoughts on the current state of the market?
Chris Salerno 18:51
Well, it’s a fun, fun environment. I think it’s definitely separated the big boys from little boys in this current market environment. I think feds are gonna raise interest rates a little more, and then they’re going to taper down. We got a very large presidential election coming up in about a year and a half. So, you know, politics do have something to play with in the market. And so I think they’re gonna watch out very closely. People are still spending a lot of money.
You know, so it’s a very interesting times, the more they raise interest rates, I think, the more benefits for multifamily because people need a place to live. It’s a necessity. It’s not going anywhere at all. And and it’s a business that I truly love. And I try, we’re I’m actually in the process of starting another business, and that business is in necessity. And I was thinking, you know, I love businesses that are necessities, no matter the type of downturn you’re in. If if it’s a necessity, people need it for their health for to live. It’s always going to be around.
Chris Bounds 19:54
Yeah. Food, shelter. Shelter being real. statement is not going away anytime soon.
Chris Salerno 20:02
It is not know very much. So we all need water, we need shelter. You know, it’s very important to make sure that we can, you know, utilize that and live with it. And we’re going to have to because we need it.
Chris Bounds 20:15
Yeah, there’s definitely something to say something to be said for interest rates, they’ve gone up. So high over the last 1824 months, it’s shocked a lot of investors that didn’t do proper due diligence. But beyond that, it’s created another problem for affordable housing, which is going to force a lot of homeowners to stay put some of those actually, quite a lot of homeowners are staying put just because they’re not letting go of their 3% mortgage. So there’s that a lot of those folks may never ever sell their house.
Chris Salerno 20:50
You know, it depends.
Chris Bounds 20:52
It all depends on that it’s, they’re gonna be a lot more reluctant to sell their house. Then there’s the first time homebuyers which I mean, if they were pricing mortgages two years ago, and then pricing it now like it’s, it’s a problem for them, and then you get the price of homes, something’s got to give, they gotta make more money, or they got to really start adjusting their, their expectations on the quality of home, which goes plays into multifamily. So if they’re not buying, then they’re going to be staying somewhere. That’s either because they own a home, they’re just not moving or they’re going to continue leasing. So that’s the stimulus and really the only way I personally let me know your thoughts. I see out of that rut other than interest rates falling is new construction, which has been from a single payment standpoint very slow.
Chris Salerno 21:54
Nationally, right. So Margaret tell you here in Charlotte, single family companies like Dr. Important that a very large companies are building these single family homes and townhomes here in Charlotte with aluminum instead of lumber. Because of the price of lumber. I guess it’s more expensive than aluminum. Wow. Like aluminum or beams or something? Yeah, yep. All aluminum.
Chris Bounds 22:21
Kind of like the retail strip centers. And yeah.
Chris Salerno 22:26
Oh, and office space. They’re using that now. Because it according to the rep here in Charlotte, it’s a lot cheaper than lumber right now, the moment I’m shocking,
Chris Bounds 22:37
can you imagine trying to hang out hang a picture? So the stud you hit the aluminum beam?
Chris Salerno 22:41
I know you need a metal detector or something, you know, to try to find it.
Chris Bounds 22:48
That could be a new, new hot product. So instead of those, what do they call them? The the magic hook things you put on the wall and you just have one so like a super magnet or something? I oh there,
Chris Salerno 23:00
you can pull back. But yeah, you know, you’re changing things are different. I think also, you know, the price of labor is astronomically high. So you know, it’s different.
Chris Bounds 23:13
So that’s one side but but the other side of the high interest rates is it very much impacts valuations of all housings. Single family is a little different. Because it it it has home owner actual owner occupant utility multifamily doesn’t, you know, it’s it’s a business, it’s purely a leasing business. So investors buying in or buying on yield, and higher the debt costs. It impacts their yield.
So it definitely impacts valuation, which over the past 1218 months at bid, ask prices, it’s been wide, I don’t know that it’s really narrowing maybe a little bit. How do you see that shaking out? At least over the next say, like 12 months or so? Don’t you think we’re gonna still see a wide wide gap? Or is it gonna start closing up?
Chris Salerno 24:09
You know, being an agent, and I’m sure everyone can relate to this. If you’re a true listing agent, you know, that when you go into a listing appointment, and you talk to a seller, and the seller thinks their homes were 600, but you got to break the news to him and say, hey, the market, your neighborhood, here are the comps your what your other properties you have going for them is that 525 And you know, you’re gonna get the seller’s know You’re ridiculous. Get out of my house, blah, blah, blah, blah, blah. I’m listing with that agent who told me 600 And it sits on the market for 90 days, then they come back to you and say, you know, why is this not selling? And you said, Well, Mr. Seller, I told you it’s not selling because there’s a huge price gap.
And they may say well, you’re still wrong. You know, I’ve had that happen all the time. I’ve had some come back and say we want to listen with you. And I’m like well, that by 25 is no more For FY 25, and sport ad, you know, that’s just the market. And you know, I’m a messenger, I’m not, I’m telling you what buyers are doing right now, that is happening in the multifamily space, we are trying to buy assets, and we there’s a far gap still, sellers don’t want to sell however, up until 2025, there’s about 1.7 trillion, I believe a little more, or excuse me 1.2 5 trillion, because I looked it up the other day of deals, or of loans that are come due.
And so you’re going to have to sell, you probably can’t refinance, if you do, you’re gonna have to bring more money down to refinance, but you’re going to have to sell. So what happens in that scenario, what do you do in that scenario, you’re gonna have to either talk to your investors and say, Hey, you’re gonna take a little loss, or, Hey, we can break even, or you may be able to profit a little money off of it. But that is going to be opportunity. If you can stay strong during this market cycle, you have to stay strong, you have to underwrite correctly when it comes to these deals,
Chris Bounds 26:07
that the debt is one thing that keeps commercial real estate moving, because 30 year fixed, very common in single family, not quite as common in commercial finance, they’re typically fixed for a period of time, shorter period, 23457 years, whatever, 10 years. And then after that they’re floating, if they’re not floating date one. But even if they are floating, there’s rate caps, and those expire, and you get to buy new ones in the restaurant astronomical now.
So it’s a lot more complex with commercial, but that can force a hand and I think there’s a record amount of bridge loans this year that are coming due. And a lot of those books, if you bought it over the past couple of years, you’re probably not in the best position to refi it to meet, you know, debt coverage ratios, that agency debt will require
Chris Salerno 27:00
a good rate and you know, it’s all different. The lovely part about commercial debt is you can negotiate, I mean, you have fixed, floating rate, you also have some bite down options of the rate, which we’re doing right now at the moment. So there’s so many multiple options that you have, you just have to know how to negotiate.
Chris Bounds 27:18
So um, last question, what what kind of close it out? Do you see? Um, see both sides of this. So in Houston, you’ve probably heard about, there’s a large foreclosure large portfolio that was foreclosed on, they had floating rate debt didn’t purchase rate caps, coupled with bad management was a bad situation for a fairly inexperienced operator. unfortunate, but do you foresee a lot more of those, because there’s those that are saying, Hey, this is the tip of the iceberg, there’s a lot more of that stuff come in there like thinking to those names again.
Chris Salerno 27:50
I mean, I’m seeing it, I’m seeing it right now, I’m seeing groups cap are doing capital calls, raising additional equity, because they have, you know, their rate caps up, we just bought an extension on our rent cap to be safe till 2025. And we did that to make sure that our property is well positioned. And you know, so it’s very important to have options, some of these groups are raising, I’ve heard four to 5 million just to pay off that difference.
And investors are still not getting distributions, you know. So that is not our group or our deals. But that is what I’m hearing in the space when it comes to some of these other deals, because they were buying $100 million property and getting 90% leverage and only bringing $10 million to close it. And now they’re realizing well, you know, those good old days are not really here.
Chris Bounds 28:45
I mean, I look at it from a different angle I’m looking at from the capital angle and really bridge that was almost the only way you could get deals with last couple years. So maybe it was, yeah, it was it was just ridiculous. But I was looking at it from the standpoint of, hey, this is cool right now, but like when the music stuff like this is a really, really dangerous game to play. Because it’s
Chris Salerno 29:09
it’s a famous saying of when the tide goes out, you’ll see who who does not have pants on?
Chris Bounds 29:14
Yeah, so it’s like, I mean, I think everyone knew there’s no way that we’re gonna have astronomical rent and price growth in perpetuity, it’s clearly not going to happen, yet still making aggressive decisions. I don’t I don’t know. I don’t want to say that most of them I’m sure most of them were doing it very prudently from from their standpoint. But there’s also a lot of syndicators out there that they work off feeds like that. That’s how they make their money because waiting for five years to take get paid. I mean, you gotta you gotta pay for your team now. But um, how are you approaching? Underwriting now to and this is kind of a last question on where we close out. How are you? Coaching underwriting to make sure your LPs are in the total project is in the best position to win. Yeah, in this market,
Chris Salerno 30:09
we’re really not going over 65% leverage. We’re buying great quality assets. Starbucks has any suckered. And I’ll tell you, it even has my three and a half year old son suckered more than me, because my son will get in the car will pass a Starbucks and he says eight bytes that that and I’m like, oh, go, here we go. And so they have one I had this morning too. So it’s really good. And the reason why I say Starbucks, Starbucks is a publicly owned company. It’s traded on the stock exchange, however, it is corporately owned, which means it is not franchised like dunkin donuts or McDonald’s. So before a Starbucks goes into a location they go into they do a tremendous amount of research on demographics. Have you ever seen a Starbucks in a Walmart?
No offense to anyone that shops at Walmart, but you’re not. You see a Starbucks and target? Why target? Is it the higher priced product, then Walmart is we like to look Where’s Whole Foods where it’s fresh market? Where’s target Starbucks, and where’s Chick fil A. So we’re buying in great quality locations that have higher median incomes, where those tenants can absorb any type of market correction. And so that’s what we really like to target. Piggybacking on the debt, we make sure that we’re buying great quality debt, low lower leverage, where we’re having to bring a little more money down, but the debt is gives us options to sell to refinance in the future, if needed.
Chris Bounds 31:39
Well, one quick final thought, because you were talking about, you’re having to bring more equity to the table, raise more capital, have I How have LPS adjusted to that. So when you’re bringing more money that does impact yield, impacts or returns, depending on the asset? So are they becoming was there a little bit of sticker shock at first, because there’s definitely a lot of LPs that will throw the money at an IRR. Dangerous shouldn’t do that, because it’s all risk adjusted returns. But however, LP has been IRR.
Chris Salerno 32:14
It’s like, when an investor says what’s my IRR? I said, What do you want? If you want 25%, I can hit a couple numbers and get it for you. It’s so misconstrued it and I tried to preach that so much IRR can be so misconstrued because it takes some consideration time. But to really watch that question or to answer it, the market has changed leverage or leverage, one has came down, but the purchase price has also came down in certain markets.
And so with the purchase price coming down, and the leverage the quality of the deal, will increase the net operating income. So you’re actually seeing more cash flow on these assets now than you did back then back then you’d see a three to 4% average cash flow. Now we’re seeing 68% Because the purchase price is coming down. And it just has to in the current market environments.
Chris Bounds 33:09
Have it high. The last four questions I asked everyone. First one is, if you could give your advice to your 20 year old self, what would that be?
Chris Salerno 33:20
If I could get advice to my 20 year old self and my 20 year old self wanted to create a private equity company like I did, I would say become an unstoppable, unstoppable, unstoppable capital raising machine. Learn how to raise capital, find a mentor as soon as possible and learn how to raise capital.
Chris Bounds 33:42
What book or books have greatly influenced your life?
Chris Salerno 33:44
Oh, that is a good one. I would say there’s a handful here. I would say traction is a great book. The code of extraordinary, extraordinary mind is another good book. I truly love Primal Branding. And then thinking Grow Rich is a huge book, the current book I am reading, which was actually referred to me by a billionaire friend of mine, out of Houston, I’m pulling it up right now on my Amazon I am currently reading it, it is called die with giving all you can with or with from your money zero and your life. It’s a very, very good book also wrote by a billionaire. But it’s a phenomenal book about working hard, racking up as many zeros but also enjoying those zeros. experiencing life along your way.
Chris Bounds 34:35
Love it. What, in the last five years what new belief behavior or habit has most improved your life? Mindset,
Chris Salerno 34:44
my mindset, really meditating. So that’s a habit now as a matter of meditation, and being able to under highly stressful situations, be as calm as possible. I’ve had investors I’ve had my team say I don’t understand how you are so calm under this stressful situation. So no matter what I can I’m very, very calm, the world can be exploding, and I will find a positive solution out of that negative situation. But I will also stay very, very calm,
Chris Salerno 35:16
loving, how can people reach out to you
Chris Salerno 35:19
please go to our website, QC capital group.com. You can, once you get there, you’ll see right at the very bottom and throughout our website, you can get a free copy of a book that I wrote, I will hand signed it, we will send it to you it is no shipping. It is honestly a free copy that we send to all of our investing partners are future investors who just want to gain knowledge. So go to that website, QC capital group.com, one of our team members will also reach out to you to see if you’re a good fit for a partnership with us. Love it. Thank you very much, Chris. All right. Thanks so much.
Chris Bounds 35:50
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