From Selling Houses to Owning 987 Units: Why Operations Beat Renovations

Steven Weinstock (00:00) My guest today spent years selling houses for other people. Then he decided that wasn't the game he wanted to play. And he started buying multifamily property himself. Today he owns close to 1,000 units across Texas. And he was just named Independent Rental Owner of the Year. And he's about to tell you why the renovation everyone shows off on Instagram isn't what actually makes a deal profitable. Welcome back to another episode of the Wealth Clock. I'm Steven Weinstock, and today I'm talking with Luis Frias, founder and principal of Caltex Capital Group out of San Antonio. Luis started in real estate in 2015 as an agent. He made the jump to owning and operating multifamily, and he has scaled to nearly a thousand units. And again, in 2025, he was named Independent Rental Owner of the Year. He now serves as the education chair for the San Antonio Apartment Association. We're getting into exactly how this transition happens and what it actually takes to run a thousand units well and why he thinks operations, not renovations, are what actually drives returns. Luis, welcome to the show. Luis Frias (01:08) Hey Steven, well thank you so much for having me and and greatly appreciate the warm introduction. Steven Weinstock (01:13) My pleasure. take me back to twenty fifteen, when you were still working as an agent. What made you get into real estate in the first place? Luis Frias (01:21) Sure. So family has some years in the business. My mother has her own real estate team, primarily doing residential and some commercial, doing tenant representation and landlord representation. right out of college, I I came in and joined the the real estate team. got licensed in twenty fifteen and and joined Keller Williams under the Friesa League Group. then, you know, I started doing a lot of residential sales, working with buyers, sellers. of course a couple of investors at the time. And in twenty seventeen, my team lead asked me, Hey Luis, do you wanna go and do some property tours for commercial real estate? We're gonna go towards some medical office space. I said, You what? That beats doing about two hours of cold calls to some expired listings and getting told pound sand. But I said, You know what? Sure, let me go ahead and go out there. And literally it was about 15 minutes with the client walking in. it checked the boxes and they said, let's draft the LOI. so I just fell in love with the the the aspect of the business that it's not tied to emotion, but more of budget returns. Does it meet what we're what we're needing for you know operations? Does it meet our our our revenue or you know what we're gonna be projecting for our overhead, right? So that that's where I really like that approach. Then very next day I went to the commercial director and said, I wanna go ahead and and start you know, practicing commercial brokerage and That's where he told me, you know, you can't really be a jack of all trades. If you're gonna be moving from residential to commercial, commercial is a night and day difference compared to the residential field. there's so many asset classes. With that, every asset class has had its own nuance and depth of knowledge. So he he recommended to me go out of the market, interview a ton of brokers, review their offering memorandum, see their listings, and gain a perspective of what their their niche is, what their discipline is. And then why, you know, investors would gravitate more more towards those asset classes over others. so you know, naturally I said everybody needs a roof over their head. That's how I started, doing residential, helping families move into their next home. That demand is never gonna go away. No matter if we, you know, move to the moon or the Mars, we're always still gonna have potential lunar property managers or operators, right? So that's where my next move was was multifamily. I got some offering memorandum from a broker out of Georgia, and it was about a 240-unit multifamily property out in Stone Mound, Georgia. And I said, Man, this this pro broker has one listing, and on one listing, he's gonna move over 200 units. It would take me, you know, close to a year in residential just to hit about 25 homes sold, units sold. So I said, just follow the number. I'd rather work smarter, not harder. And in twenty seventeen I started brokering multifamily investment sales. So did a lot from then till about nineteen. And nineteen was when I, you know, I would say gained a good Rolodex of investors, lenders, property managers, you name it, the whole list. And I said, you know, we've been helping a lot of other investors, operators, invest, buy, sell in multifamily, but we're just still brokering, you know, I'm still doing earned income. I want my seat at the table. I want my slice of the pie. of these investments. So I already knew how to operate these well not operate but underwrite these properties based on how is the business performing today, what you know improvements could we make, you know, in operations being income expenses, the way that we finance potential properties. So I said, I know how to evaluate these properties, let's go ahead and start investing in them. And that's when I founded Caltex Capital Group in 2019. had a lot of investors that were From California and of course a lot in my own backyard in Texas, hence the name Caltechs. And we started underwriting and sourcing properties to acquire. So we didn't source our first acquisition till about 2019. I'm sorry, till 2022, just because the market was so competitive with other buyers in the space bidding up properties. I myself, with my broker's lens, knew how to underwrite these properties to see what the value was based on today's market, where the performances. And realistically, what would be a justified price for it? so given that there was a lot of bidding wars, you know, a lot of buyer activity between 19 and 22, debt was super cheap, you had fundamentals, you know, were roaring, you know, rent growth was was on its way up, occupancy was extreme I'm sorry, vacancy was extremely tight, so occupancy was very favorable for a lot of operators. So it looked like the roaring twenties were you know coming back to us. but I kind of felt something was off, and I said, you know what, I'm gonna continue underwriting. We're gonna continue to be conservative in our approach. we closed on our first property in 2022. that's when rates started to tick up. So at that time we started being a lot more conservative as far as additional properties that we were buying, and we scaled from 41 units as our first acquisition to now over 987 apartment units spread across five different apartment communities. That's on the equity side. for investors that are seeking, you know, the cash flow from our distributions, the benefits of depreciation for their tax efficiency, and then profits when we come to a capital event, whether we refinance or or sell. Then we also have investors that say, that's good and all. I really want to just focus on my cash on cash. So I'd rather what? fixate on an income type of investment where we could be a lender. So essentially they're we're giving our investors an interest payment where we're also doing debt opportunities to other multifamily operators. And then in that fund, we're we're invested in about over 17 different apartment communities spread throughout San Antonio, Austin, and Houston. So investors looking for, you know, consistent Steven Weinstock (06:56) Yeah. Luis Frias (06:56) in interest payments or distributions that are just focused on cash flow, the the the debt op option might be their way to go. But those that are wanting more of the upside appreciation and tax efficiency. equity might be. So we we cater to different types of investors and then as you mentioned, heavily focused on operations. You know, I I would say I cut my teeth on on on brokering, but when it came time to making sure that the assets were operating as they needed to be, that's when we started to focus on okay, now let's start operating these properties efficiently. The market's starting to correct, it's starting to soften, occupancy starting to trickle down a bit, rent growth starting to go negative. so at this time it's not gonna be easy operations, it's really gonna be who is the most hands-on operator. so that's why we are very big believers in self-management. We don't third party assigned our properties, we're fully vertical in that we have construction management, property management, asset management all under one roof. So that gives us a lot more flexibility and benefit to the investors. And because of that, a lot of other firms, you know, right now are putting out fires or or stopping acquisitions just to focus on immediate operations. We're actively growing property acquiring property. So right now we're actually in the process of of acquiring potentially a sub hundred unit property out in North North San Antonio, New Bromfels, and then also an property out in Alamo Heights that's over 220 units, mid-90s. So we're evaluating the market. We're operating in the market and then we're growing in this market today. Steven Weinstock (08:29) Okay, wow. Okay. So for those who are not watching the video, Luis, I I really let you just speak over there because you were speaking so clearly, but you really took up just about every question that I had prepared. So thank you very much. that sound you heard was me crumbling up my prepared notes. And I think I'm just gonna really shoot the breeze over here with Luis since he really succinctly and perfectly answered like my next Forty five minutes of questions. when you purchased your first property, how long from the time you purchased and closed did you c purchase and close your second property? Luis Frias (09:04) Yes, sir. So we closed in January of 2022 on our first acquisition. It wasn't until the following year that we closed on our subsequent investment. And on those it was three other properties as a portfolio purchase out in Houston. so that one was later in I would say Q three of twenty twenty three. And that was just because market conditions started to tighten up a bit, rates started to increase. you know, rent rent performance started to suffer a bit. So it took us a lot of time, you know, we underwrote thousands of units in between that time frame and it was quarter three of the following year 'til we we acquired sub more more investments. Steven Weinstock (09:44) Got it. So you're coming from a brokerage background, and just to backtrack, you were selling people their homes. most residential real estate are single-family homes. Obviously, there's a subset, there's a couple of variables. There's luxury homes, there's the two to four unit homes. obviously, you have a mix of investors who are buying these types of properties as well, compared to the commercial asset class, you could have apartment buildings, different vintages, different types, development, retail, warehouse, self storage, land. You know, commercial really runs the gamut. You're dealing less on emotion. It's mostly numbers and business and you're really, you know, networking and speaking to repeat or the potential of repeat buyers. It's not selling somebody their first home or their third home and maybe they'll Refer me to their uncle and their nephew. So, Luis Frias (10:39) Mm-hmm. Steven Weinstock (10:40) you know, you have this background, you're selling your brokering commercial real estate. you're obviously focused on the apartment building complex, the apartment building asset. same rules apply. People need a roof no matter where Luis Frias (10:53) Yeah. Steven Weinstock (10:53) they live. Maybe they don't need an outer parcel of a mall, maybe they don't need self-storage, although all these are good asset classes. When you went out to buy and to seriously look for your first apartment, what besides your experience, and obviously, you know, you probably had a huge network of other owners and banks and and walking other people through their closings, what what what did your team look like when it came to purchasing this first property? It it might look different today, with the way you scaled up, but when you first purchased this property, What did your team look like? Were there multiple people? Were there multiple roles? Did you focus on a certain role? Did other people who were partners in the deal focus on specific roles? walk me through that. Luis Frias (11:39) Yeah, no, definitely, Steven. And and I'll I'll say it, you know, from right now, real estate is definitely a team sport. It wasn't any solo effort or Herculean effort I would say it was Herculean efforts daily compounding, you know, over years. it was definitely you having to put in the the consistency right to get the result. But to answer your question, the first acquisition it was a group of of individuals, a group of in d investors that I had cultivated over the years is my time brokering. with that I said, you know what, I know you guys already operate multifamily, invest in other asset classes. Let's go ahead and put all our brains together, our list of investors together. And at that point, you know, once we understood what the overall business plan was, I said I would start sourcing properties, underwriting them, networking with my list of you know connections, whether that be property owners, brokers, property managers, and lenders, and we sourced the very first one off market through our lending source partners. So that's how that that deal took shape. I I was the one that sourced the deal, underwrote it, put the business plan together, did you know, got with our team to do the property tour financing, and then my other partners, they were able to assist us with other you know, I would say other buckets to get the transaction done and get to cross a finish line. So others were, you know, more focused on the investor relations. I also helped put together from the underwriting, my business partners put together the deck. So they took my data and then they were helping craft the story. other you know my other partners were making sure that the lenders had all their timelines, you know, requested documents turned in in in a timely manner. So just think of the same timelines that you would work on a residential contract. You your title, you have your you con what is it the due diligence period or active option period. we call it DD due diligence. And then you have you know title search, all that stuff is still going on On the commercial side, maybe just a little bit bigger magnitude, right? But at the same time, you're also raising capital from your investors. So you're wearing so many different hats. You're verifying, you know, updated financials every month or week that we're we're moving towards closer to the closing date. You know, maybe the month just ended, so we're requesting last month PL or or profit and loss or trailing 12 months now and rent roll. We're updating our f our underwriting, we're sending that underwriting and new financials over to the lenders so they could do updated sizing and all throughout the time speaking with investors and letting them know, answering every question that they have and letting them know exactly what the business plan is, who's operating what, who's in charge of you know, what type of different role. and then of course, you know, how they would be able to participate. What are they getting into? What's the project? What would be, you know, the minimum or what would there be in their investment? And then from that, we're tailoring, you know, what their you know, investor economics would look like. What would the distributions look like at our preferred rate of return? Or what is our year one cash on cash? And then what does that look like once we start amortizing? Once the interest only period burns off for our loan and now we're starting to pay principal and interest, what does that cash on cash schedule look like? Because it's gonna be a little bit soften now that we're making principal payment, right? So throughout that entire process, I would say those sixty days are like a madness. you know, we're we're verifying everything, we're touring The property several times with different vendors, investors, lenders. you name it, and then we're also re verifying the data. And then dealing with investor relations, any question that they may have, making sure that they get receiving their PPM operating agreement, subscription documents, everything ready to go. And then, of course, coordinating with their council and CPAs. that way, you know, we're dotting their I's or they're dotting their I's, crossing their D's, performing their due diligence and asking, you know, right questions. So that typically, you know, takes place with I like I said, 60 to 90 days on every transaction. So it is definitely a team. Sport every team member is gonna have you know their their own, I would say, desks that they're managing. For instance, a construction manager might just be in charge of while we tour the property of verifying all AC units or just making a quick run around the property and saying, you know, out of the population of the HBAC units, we could say that X amount would warrant you know replacement immediately, or that we would have to budget now for a roof replacement potentially because now this is a although it's a 30-year roof, you know, it looks like. It's been you know closer to 40 and it might need to be replaced here soon. so a lot of different things that go into it. It's not gonna be just myself going, you know, kicking a little bit of tires. It's a full team doing a full property audit. Myself, when we're when we're in due diligence, we're auditing the lease files, making sure what the broker and owner provided to us on the rent roll is exactly what ties into every individual lease document. with our construction managers and And course, our general partners, we're inspecting every single unit. So if it's 224 units, or if it's 41 units, we're walking all those units. So it could be a one-day kind of occurrence where we're there at the property from nine to close, or it could be a multi-uh-day, even up to a week, until we could complete that due diligence. Steven Weinstock (16:40) Okay, so you mentioned real estate as a team sport and I agree with you. there is an argument to say that you know, a small investor who's buying you know, one to four unit types of properties can do it all on his own. You know, he could handle the fi the finances, handle the the bank, the sourcing, even the management. and when it comes to repairs or any big project he could always just hire a vendor to do that. When it comes to multifamily property, a team sport, having a team is key. And like you said, your expertise came. you know, you were a broker, you were great at sourcing, you were great at meeting a bunch of other investors and dealing with the timelines of, you know, to get to the closing, whether that's the bank, appraisal, environmental due diligence, etc. Building code violations, anything like that. but you had a team and obviously your team was split among you know their expertise, whether it was somebody who has a big black book and they could bring LP, I'm assuming LP investors into the deal, limited partners into the deal. you might have had somebody who's closed quite a few deals or maybe had a finance background. That knows how to prepare the file and keep it going to the bank, to the lender, being in touch with the lender, possibly even weekly, throughout the closing to get it to the finish line. so yeah, it's it's a team sport is so right on in what you said about that. And and picking the right team just to get to the closing is is so crucial. talk to me about after the closing. About the roles of the team of what's happening when it comes to actually managing the property. And managing the property is not just collecting rent. It's not it's not even just tenant-facing issues of collecting rent or maintenance or leasing. there's compliance with the bank on a regular basis, or at least some lenders have this compliance with insurance companies, especially as of recent. Insurance companies sometimes will visit a property. I I've had it once a quarter just to come in and give you a list of items that they want you to fix, whether you planned on it or not. So, you know, I know there's challenges with that. but as far as after how does that team look? is it the same people, have people's roles evolved after your after the purchase? Luis Frias (18:55) No, absolutely and and great segue, you know, as far as from Acquisitions to asset management. So after the acquisitions, you know, we do asset management and that's gonna be, you know, weekly we're checking in. As mentioned, we self-manage. So especially on the onset, we're we're communicating with the on-site staff, property managers, the regionals, almost on a daily basis, just to make sure that the systems are onboarded correctly, intakes done properly, all our systems are live and ready to go. It's the foundation portion that we're setting apart for the next, you know, potential. 60 to 120 months that we're holding this potential property. So we want to make sure, you know, from the outset we do our our amount of you know work. We roll up the sleeves, we're in the office, we're making sure we're we're verifying, you know, you know, assume you know, we're trusting but verify that all the work is done correctly. So during that time, you know, we start to cycle off once or back off a bit once the on-site staff has you know more of a reoccurring this is what normal reoccurring business looks like. and once We get that consistency, you know. We're we're doing weekly meetings with them. We call them our weekly flashes, where we're meeting with the staff, regional property manager leasing, hearing what they're seeing on the front lines, and then translating that and actually bringing it all together to say, okay, well, this is where we bought the property, right? This was our acquisitions when we when we went out to buy the property. This was the business plan, this is our pro forma. Now this is how operations are. How do we meet the middle? Because operations today is not gonna be what year one is on our underwriting. We gotta make that transition, we gotta make that reposition, and then we gotta stabilize the property. so that's what we're doing. Weekly, we're com com constantly communicating. If there's anything that goes up as far as on an escalation that you know our our on-site team can't handle, that's when it gets kicked over to the asset management team. The asset management team will notify its correct leadership, and that's when we're able to make an immediate adjustment on on-site to the staff instead of waiting for you know the weekly call. But then we do the weekly flashes, we're just checking KPIs, house occupancy collection. What's our marketing traffic or traffic look like from our online listings? What does foot traffic look like? And then from those leads from you know people calling, what is the ratio between calls to actual tours from tours to closed actual leases? So we're we're constantly making you know adjustments based on those KPIs. Then we'll put together a monthly report for the investors and then the operators, and then every quarterly we're issuing this a distribution or that's monthly, and then also the financial statements. And in regards to our obligations to our lenders, you know, every lender is gonna be unique and different. They're gonna have their own type of you know, due diligence and and recurring Examination of financials. But for instance, typically our lenders they would request every quarter a rent roll just to make sure that the actual property itself is occupied at a healthy number, that they're collecting at a healthy number, and then that way they can make sure what? That they were able to still maintain what's called break-even occupancy and that they're also monitoring what's called a DSCR debt service coverage ratio. Most lenders require it to be about 1.25 X. So every time that where they're Getting the rent rule, they're just rerunning the formulas just to make sure that hey, are they on track to hit 1.25x? if they are, signed off, good to go. We'll see you in the next quarter. If it's not, hey, now we're gonna put you on a watch list and we're gonna be you know, Steven Weinstock (22:25) Right. Luis Frias (22:26) requesting a little bit more documentation until you guys stabilize. and what is the 1.25 DSCR? What is that? So a 1.00x DSCR just means that you're able to make your debt service. That's just that you're able to meet your obligations of the property in addition pay the lender. Thereafter is your spread as return, right? So the lender wants to see a good return or a good margin between the investor getting you know some dollars in his pocket before it actually starts to affect you know the lender being paid. So that's why they like to see not just a 1x but they like to see at least a 1.25x. That way there's some margin to give the the business you know room to operate and breathe. Steven Weinstock (23:08) a lot of our audience, you know, they want to hear the meat and potatoes which you've told us about the business, but they also wanna always get to know the the actual person I'm interviewing. Tell me a little about yourself, tell me where you're from, where you grew up, you know, tell me what what you do before you got into real estate in twenty fifteen. Were you a paper boy? Were you a programmer at Google? Luis Frias (23:31) Yeah, so before that did quite a bit. So before I got into real estate, I was still in college and whatnot. one of my first jobs was working in a mail room. at an insurance company. So that's what kind of gave me that introduction to corporate America, even in the mailroom, scanning, and it was an insurance company, scanning old clothes claims, taking out the staples, the you know, the sticky notes from the adjusters and all that jazz. I was still suit and tie, that was the required uniform from 8 a.m. to about five. During the summer. So that was when I was supposed to be, you know, being a knucklehead and whatnot and going out and getting into trouble. but no, I my father said, You're gonna go to s you're gonna go to work. If you're not in school, you're gonna go to work and that's what really gave me that understanding that, you know being able to be successful or have some money in your pocket requires, you know, hard work. doesn't matter whether you're in the mail room, doesn't matter if, you know, you're doing brokerage or or you know doing asset management or private equity. It's gonna take some, you know, some hard work. It's gonna take late nights. It's gonna take times where you don't want to go in. so I think that's what instilled it to me early in addition to, you know, you know, my background, as mentioned I Based out of San Antonio, so I went to Central Catholic High School. They had a JROTC program. all four years did the JROTC and became, you know, NCO and non commissioned officer through their program and finished off as a company first sergeant. So all those little things I would say in addition to playing football, gave me a good amount of discipline. Good amount of discipline to making sure that my ribbons were one fourth of an inch, you know, over from my my breast pocket, or making sure that I'm watching the football to make sure I don't jump off sides, you know, and timing it perfectly. just a game of inches, you know, anything off, you you're gonna have to cost your team a five yards or ten yards, or you're gonna blow your grade because you didn't get your your measurements on the uniform correctly. I think all translated well into the professional career. I did go to college. I I played a little bit of football and special teams. I was the long snapper for a small college out in Iowa. so that really also reinforced that, you know, a hobby now is a profession. So really saying, yes, I played football and you know in high school and you know, we did two a days in Texas and all that jazz, but now someone's paying for my scholarship. Now there's, you know, a a school that has invested capital into my education at the same time my family, so I couldn't let them down. So I really took it as okay, the the football program's investing me, the school's investing, my family's investing, I can't let them down. So I was there, you know, every morning, every time that we had to do weightlifting till, you know, film in the late evening, and then of course studying after hours from that, you know, was able to, you know, almost get a perfect GPA of four point and mainly doing business classes and that's where I got my You know, I my main focus was in in business management. after that came back, finished it off at UTSA. It was just too cold in Iowa. I just said, no, sir, I I would rather be in in San Antonio when it doesn't get below about 40 degrees. so I came back to San Antonio, finished it off at UTSA. and then after that, that's when I jar I started in real estate with my my mother's real estate team at at Keller Williams. Steven Weinstock (26:41) Got it, got it. So you have real estate in the blood, a little football in you Luis Frias (26:44) Yes, sir. Steven Weinstock (26:45) and you chose real estate instead of playing for the Dallas Cowboys or whatever team was near you. Got it, got it. Texas football, Luis Frias (26:53) Yeah. Steven Weinstock (26:54) that's a big deal, right? Luis Frias (26:55) I I'm still waiting on Jerry's call, so when he calls me that they need a long snapper, you know, I'll be there, but I I had to make sure that I wasn't putting all the eggs in one basket. Steven Weinstock (27:05) Got it, got it. Okay, so I have a we're running late. I have a few more questions. Let's try to get some quick, fast answers. So here's one question. you were named Independent Rental Owner of the Year in twenty twenty five. What do you think that you did that actually earned that? Luis Frias (27:19) So great question. last year I really, you know, got involved heavily at the San Antonio Apartment Association. Why they offer very good informative classes. they offer a lot of you know, also designation or certification courses as well. So there's just a lot of low-hanging fruit of knowledge that you know, that I went in, and I would say that. Being a broker gave me a certain type of lens, right? But then being a property manager, actually executing on the in the the front line is different from you know doing the asset management, two different types of fields. So going into the the association really gave me the introduction of what is leasing agents' responsibilities, what is an assistant property manager's responsibilities, what is a day-to-day of a property manager regional. so it really gave me the corporate approach of Operations, property management, the structure. so I was there, you know, like a a bad fly on the wall, every single class, every single thing that they had available. I was there networking, also growing my Rolodex of good property managers, leasing professionals. that way, once we made our own acquisitions in this market, we already had, you know, our go-to rock stars that we would be reaching out and cultivating. But I would say The love for operations, the love for taking care of our residents, you know, making sure that we're providing proper housing, but leading with white glove service. So making sure that I also gave feedback to those people that those other members that were in those classes, the instructors of how myself as an independent rental owner approached the business. So we were also giving different ideas. They were coming from you know larger third. party property management companies like Graystar, you know, and different companies like Fishman and Wakefield and whatnot. so it was just a different approach to the business that, you know, I think it gave me a little bit more of A view of how other companies approach the business, and then from that picking what works best from every single type of operation, how every other operator comes in it, and then implementing those into my own own core business or to our own business. So of course we know the numbers, we know how to underwrite, right? But now we're adding more depth of knowledge of operations into that. And from that, you know, we were able to outcompete a market metro average of 86% occupancy of San Antonio, our property and just sound. Of San Antonio, the previous quarter was posting a 93% occupancy with positive rent growth in a market that has negative 3.2 percent growth. So leading through customer service, leading through taking care of our residents and focusing on resident retention and experience has been able to allow us to outperform and and out compete the market when it's dealing with so much supply concessions, occupancy woes, to the point that we did get recognition. You know, last year we did get best community in in Medina County for one of the properties that we managed based on our Google reviews this year we won it as well. so it's just making sure that we make That our residents feel valued. And with that, you know, it everything else takes care of itself. If you take care of the residents, they'll take care of the apartment. They make sure they renew, they make sure they pay on time, your rentroll stays healthy. And because of that, operations stay healthy, distribution stay healthy. So that's a big full circle. I mean, it's a full stop that it comes back, that you take care of your residents, your residents take care of the investor. Steven Weinstock (30:46) Yeah, well said. I mean the residents are the key to or one of the major keys to having a successful execution of the business plan. retention is so important. Keeping them in there, you know, every year that they stay saves money on potential renovations or fixes, vacancies, et cetera. yeah, that's key. Okay. last questions, but I'm just gonna merge the two. two things, and then you could answer. one is how could everybody here get in touch with you? tell us all your social medias, websites, etcetera. We'll put it in the show notes. but at the same time, you specialize in passive investment opportunities for others, not just direct ownership. Walk walk me through how someone invests with you without them having to become a landlord themselves. Luis Frias (31:35) Yeah, sure things. So ways that you guys can get in contact with me. Steven mentioned he'll be providing my website. The website is www.caltexcapitalgroup.com. You could also find me on LinkedIn, Facebook, and Instagram just by searching my name, Luis Frias. You should see me pop up. I post Monday through Friday, and then Saturdays we have a bi-weekly newsletter on LinkedIn called the Multifamily Wealth Report that gives you some information just on you know how the markets. trending new education on different things as far as you know how we're approaching a changing market just keeping our investors in the know and then as far as how they could get in contact with me on a potential investment that would be through our website on our website we have a resource center so they could get acquainted you know with what the the business plan is and once they feel a little bit comfortable of what we have to offer of course we have one-on-one conversations with them they're able to sign on to the investor network From that, they will receive our welcome email, and then we put them through our Caltechs bootcamp just because this isn't an alternative investment. It's not, you know, a 401k, it's not a CD. so a lot of people, this is their first time being hearing that they could invest passively into a syndication that it that owns multifamily. so the ways that they would be investing into this is that we would put together an entity that owns the property from that on each and every investment is its own LLC, right? Then we bring in what's called LPs, as you mentioned, limited partners. So those are gonna be just equity partners in the deal where they're wanting to benefit for multifamily exposure, commercial real estate exposure, but don't want to deal with the burden of dealing with leaky toilets, dealing with the tenants, and then dealing with pest control, like dealing with the termites. I call the three Ts, the toilets, the tenants, and the termites, right? We deal with that. We're we're the operator for you. Essentially, we're your client or we're your you're you're we're yeah, they're our client and we're operating the property on their behalf. half they're one of the co-owners. with that when we structure a deal, let's just say we get ABC USA, Main Street under contract at that point. We say we need to go raise out $10 million. We would go seek that out from our limited partner database. And right now we are working with retail investors. so you could be non-accredited or accredited investor. And then we are also working with family offices. We have been working with several family offices throughout San Antonio, Austin, and throughout the greater state of Texas. But of course, we'll be more than happy to talk to family offices nationally. so we do cater to the individual as well as to the larger equity groups out there. From that we would be offering shares of the comp of the entity that owns the property. They would get the the the the The ownership of those shares, I'm sorry, and then they would be getting the monthly communications from us. And then depending on how we structure the distribution schedule, if that's monthly or quarterly, they would be getting the distributions from the performance of the investment. And what does that look like? That's gonna be from the rents that we collect, the other income that we collect, and that could be in form of pet fees, application fees, ballet trash, parking, and all that jazz. But the business of operating a property. so monthly or quarterly, we'll give them the distribution. distributions and as mentioned to you monthly we're keeping them informed with our financial statements we're keeping them informed with the quarterly the annual and then through that we're also hosting webinars just telling them about how the properties being purchased how the reposition like renovations or the business plan plans being implemented and then that way the investors are what staying informed throughout the entire process annually we give them what's called a K1 so that way they could go ahead and and share that with their CPA when it comes tax time and And I call it the one, two, three punch with multifamily. A lot of investors that invest in traditional means, you know, as far as like the stock, they're used to dividends, right? Well, and that's just kind of one return. So we get a lot of investors. Well, why would I invest in multifamily when I'm getting about you know nine percent through JP Morgan Chase? you're Steven Weinstock (35:30) Yeah. Luis Frias (35:31) offering a six percent cash on cash year one. Why would I invest with you? So when you look at those headline returns of six percent and a nine percent, you know, the obvious day is you go with. with JP Morgan, but that's where I come back to is the one, two, three punch is it's just not that one return. So that's just the baseline, you know, that from the rents that we collect and the other income that we're collecting that we distribute. Steven Weinstock (35:51) Thank you. Luis Frias (35:51) But then you factor in what's called depreciation. So because these are larger commercial assets, we do what's called a cost segregation study. So we bring in professionals to the property where they essentially depreciate all the appliances, all the big ticket roof, you know, the different big ticket items that would cost us quite a bit of money to replace. We depreciate all that and it's in a faster schedule than the average 27 and a half year schedule for the depreciation schedule the IRS has. We're able to front load. most of the write off in the first initial years of the investment. And because of that, Typically, depending on how their their tax situation is, the cash on or the distributions that we issue every quarter or monthly, they don't get taxed. Because most of the time that we issue those passive losses, they offset the the actual income that we've been giving to the investor. And in most cases, it's a little bit over the amount that Steven Weinstock (36:38) True. Luis Frias (36:45) we distributed. So what what happens then is that they could use that residual loss and apply it to the other portfolio if it's applicable. so that in a way it's also juicing up your returns of the overall portfolio. So that's the two-punch there. The third one is when we do the a capital event when there's a sale or a refinance, we're Steven Weinstock (37:02) Okay. Luis Frias (37:03) also giving our investors the profits from that. So investors benefit a lot of ways. And I'm not saying hey, this investment is better than you know mutual fund, a CD or stock. at the same time, I'm not saying that this is better than a fix and flip or a triple net property, but Multifamily is a great complement to diversify the portfolio. And that's what we tell our investors is look, you might be rocking and rolling on the fix and flip, you know, BTR Bill to rent or Airbnb, but it doesn't hurt just to diversify the portfolio a bit. That way, if one part of the business Steven Weinstock (37:35) Okay. Luis Frias (37:35) or one sector of the real estate market starts to suffer, the other portfolio could supplement that shortfall. Steven Weinstock (37:41) Okay, Luis, thank you very much. This was great talking to you. I appreciate it. I'll put every all your contact info in the show notes. this was a real master class and happy to hear that you're doing well and that you've been able to scale and maybe in a year from now or two years from now we'll have you back and we'll see what's going on. thank you everybody for listening to this episode of the wealth clock. Please share, like and subscribe. And Luis Thank you so much for coming. please, everybody look him up. Luis L-U-I-S. Last name spelled F-R-I-A-S. look him up on LinkedIn, look him up on the web. you should be able to find him. And thank you very much. I appreciate him. Luis Frias (38:23) Thanks Stephen for having me.