What Does “Recession-Resilient”Actually Mean?

If you’re ready to change your life, it might be tempting to simply jump right in without a clear blueprint in mind. However, setting goals and organizing your life is one of the first steps to changing your situation and reaching for success. Dave Allred is a real estate investor who started his journey knowing where he wanted to go, which helped him achieve the extreme success he has today.

Dave Allred started his adult life knowing little about money and how to manage it. He began his career doing door-to-door sales before moving to manage 100 teams in 41 states with the world’s largest smart home security company. However, he knew he wanted to achieve more; he just had to figure out how to accomplish it. So he started out by outlining his goals for real estate investment. At the age of 30, he set a goal of owning 40 rental doors by the age of 40. “I really internalized this goal and made it my mission to achieve it,” Allred says. “I lived by it and thought of it as one of the most important things in my life.” He reached this target by 36, and decided to set the goal of 1,000 rental doors by age 40. Through sheer focus, he’s already achieved it, and now plans to own 10,000 rental doors by the age of 45. “It’s all because I knew what I wanted and how to set realistic goals.”

In order to achieve success like him, Allred recommends a “lifestyle design,” which is a blueprint for exactly what you want in your life. You can outline your core values, mission statement, non-negotiables, and other key areas. This will help you prioritize your time and know what you’re working toward. “Many people spend more time planning a vacation than they do planning their life,” he said. “You need clear-cut goals before embarking on a journey. Without them, you’ll find yourself floundering, unable to really accomplish what you want.”

To do this, you should write down your goals for the next year, five years, and 10 years. Many people overestimate what they can do in a year, but underestimate what they can do in five or 10 years. “Writing down your goals is one of the most important things. Studies have proved that simply writing them down improves your accountability and makes it much more likely that you’ll succeed.” You can track your progress along the way and change the steps you’re taking to achieve your goals. It’s normal to get off track and have to change your path; just work to focus and find your way back. Allred also recommends having fun while you make your goals. “If you’re not enjoying moving toward a goal, maybe it’s not the right one for you. Pay attention to how you feel every day. If it’s a slog, you won’t achieve your dreams and won’t be happy with your life!”

Dave Allred loves setting goals for himself before he starts a new project. He thinks that you’ll be able to find similar success if you too follow the same pattern.

The perils of social media are well known, from the fear that Instagram is creating unrealistic body standards to the dangers of cyberbullying. While these fears are based in fact, the positive effect that social media can have on our lives is often overlooked. Social media has greatly evolved since it first emerged as a tool for making connections and building friendships; it is now considered to be a formative part of modern life. Financial expert and advisor Dave Allred is familiar with demonstrating people how they can reap financial rewards and see the value in every situation. Here, Allred shares his insights on how social media can be used to add untold value to people’s lives.

According to Dave Allred, social media has brought value to people’s lives in two very definitive ways: by providing access to information and by allowing them to network and create connections. Using the world of finance and investment as an example, Allred states that within the Internet age, people’s lives have been enhanced through access to information on stocks, trading, and investment, thanks to Facebook Groups that share vital tips on how to build wealth. He adds that this greater access to knowledge through social media has brought concepts and ideas to the attention of people who otherwise wouldn’t have had access to this knowledge and information. 

Networking, Allred says, is one of the greatest advancements that social media has brought to modern life, as it allows people of any background or social standing to connect without barriers. Expanding on this insight, he says, “Social media platforms are launch pads for any career that a person would like to pursue. Through the power of social media, you can reach out to leaders of any industry, engage with them and benefit from their knowledge.” Allred explains that the concept of using social media to add genuine value to people’s lives has grown with the rising popularity of personalized branding and ethical marketing. Expanding on this, he says, “Ethical marketing puts an emphasis on honesty and authenticity, and brands using social media today lean into these traits and seek to share content that can render genuine value to people’s lives.”

Allred began his professional life within the sales industry, though he has always had an interest in the world of finance and investment. The leadership skills that he developed while overseeing over a hundred sales teams across 40 states laid the foundation for his career as a successful financial advisor. Allred brought his collective experience and expertise in both leadership and finances to Foresight Wealth Management, a company that provides its clients with support in every area of financial planning and investment management. 

Social media is no longer just a tool that can be used to connect with others. Dave Allred believes that the power of social media to add value to people’s lives is now greater than anyone could have ever predicted. 

Dave Allred is a textbook example of a people person. He is also a self-described lifelong student who pursues knowledge and personal development. His natural skills were on full display as he excelled in the challenging job of door-to-door sales. Today, Allred applies his impressive interpersonal aptitude to real estate, and has just come off a record-breaking year.

To achieve this success during a global pandemic, Dave Allred took an unconventional approach that yielded stellar results. The years of door-to-door sales laid the foundation for his mantra: relationships are the new currency. While networking is heralded as one of the most important facets of any business, Allred has realized it can seem forced or even come across as a gimmick in some situations. Instead, he taps into his uncanny people skills to build authentic and relevant relationships. 

Allred defines networking as prioritizing the relationships that he calls the “new currency in business.” Like any relationship, these take time and effort to cultivate. Allred has learned how to conquer tough situations by learning how to be comfortable even in the most uncomfortable of situations. He sees this as an opportunity to truly get to know a person and secure rather than shy away from a potentially valuable relationship. It also keeps Allred ahead of the competition and provides an effective tool for overcoming challenges, even one as formidable as COVID-19. It is these very challenges which make strong relationships more important than ever.

Allred has seen firsthand how relationships translate to currency. His best deals and partnerships have stemmed from close friends and his social networks. The key word is close, and Allred has learned how to duplicate this closeness across virtual platforms. The pandemic limited personal interaction, but Allred was more than up to the challenge of cultivating strong relationships through social media. Viewing this as yet another opportunity to connect with people on a meaningful level, Allred uses Facebook Groups and Instagram to share purpose-driven content he hopes will add value to people’s lives.

Allred is inspired by numerous people on social media. He follows those he respects and deems social media platforms powerful tools for not just communication but also for collaboration. There is a strong sense of community where members can find motivation in each other’s success and learn how to translate such achievements into their own organizations. Here again, we see the real-world application of Allred’s belief that relationships are the new business currency.

Financial gain, and the freedom it offers, is an effective motivator but Allred considers it a byproduct of the things which matter the most to him: memories, relationships, and experiences. To Allred, the most precious of resources is not money but time – specifically, time that is devoted to fulfilling the lives of others and in turn finding self-fulfillment, which is indeed priceless. Allred devotes a great amount of time to building relationships that transcend currency by adding purpose and value to people’s lives, thus allowing him to enjoy his own to its fullest.

We all aspire to gain financial independence and personal freedom. It offers a sense of relief, comfort, and space and provides a safety net against the hassles of unanticipated crises. However, having complete control over your life and finances is not a get-rich-quick scheme; it is the result of hard effort, sacrifice, and time. There is much to learn and consider as we actively navigate this route to financial and personal independence. We spoke with Dave Allred, a prominent real estate investor, on a few pointers to help you achieve personal and financial freedom faster.

Dave Allred is the founder of Axia Fund and a real estate investor with over 17 years of investing experience. At age 21, he decided to become a lifelong student of finance and investment. Dave knew he wanted more for himself regarding financial understanding and freedom because he had never had those critical conversations about money or money management. He desired true freedom, and he saw that money promotes and accelerates the pursuit of personal independence. He recognized he’d have to improve his financial knowledge dramatically. While he still actively pursues knowledge and personal development, he attributes much of his personal and professional success to that commitment made so early in his life.

According to Dave Allred, some people may achieve their financial independence by focusing on the numbers and planning out their financial journey, but it also extends beyond an autopilot strategy of saving, reducing expenses, and maximizing profits. “It’s about learning, refining skills, and mindsets and seizing opportunities while growing through the process,” he affirms. Firstly, Dave has always braced the comfort of going uncomfortable in order to achieve enormous success in what many would consider a very difficult field. He’s mastered and accepted the concept of “being at ease with being uncomfortable.” Many people avoid discomfort, but Dave sees this as a terrific opportunity to really lean in and double down in order to find success and gain a leg up on the competition. With the enormous challenges of 2020, Dave believes that this approach, more than anything else, has been the driving force for his record-breaking success and personal independence.

Networking has also been key in his journey to financial freedom. Dave rethinks networking as truly prioritizing relationships. It’s the authenticity and relevance that distinguishes the development of relationships from mere networking. “I feel like relationships are the new currency in business. I’ve always loved the expression of ‘who you do business with is naturally who you do life with,’ and real estate has allowed me to accomplish this. Relationship building has never been more critical than in our ongoing environment, where how those relationships are built has had to be rethought due to the current COVID-19 pandemic.

Beyond a continuous, relentless drive to learn also lives a yearning to document and measure success. Dave spent a significant amount of time creating what he calls his “Lifestyle Design,” which is a blueprint for exactly what he wants in his own life. By clearly outlining his core values, mission statement, non-negotiables, and several other vital areas, he’s found this to be extremely helpful as it provides him with clarity, confidence, intentionality, balance, and perhaps most importantly; how to prioritize the most precious resource of all, time. Dave Allred believes that financial gain is a strong motivator. If we can get crystal on what we really wish for in the long-term and have the right habits and behavior, we can accomplish amazing, significant things, but it takes time.

Diversified funds that include multifamily assets as part of their investment strategy offer passive investors exposure to a wider range of real estate sectors. RV Parks and Self Storage are two real estate types that have seen tremendous growth alongside multifamily.

Dave Allred, Managing Partner for Axia Partners joins the show to share his investment strategy which includes multifamily, RV parks, and self storage.

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Episode Highlights

• Why funds with a diversified mix of real estate assets can offer investors unique exposure and return profiles.
• How risk levels differ among the multifamily, RV parks, and self storage.
• Which markets offer notable upside across these real estate sectors.
• What improvement strategies add the most value to RV parks and self storage assets.
• Notable trends changing the acquisition and investment landscape for RV parks and self storage properties.
• What “experiential investing” really means, and how it drives Dave’s projects and investments.

Show Transcript

Scott: Hi, and welcome to another episode of The Multifamily Investor Podcast. Scott with you here and excited for today’s show because I am joined by Dave Allred, who is the managing partner with Axia Partners. And he’s going to be joining us to talk about his experience with multifamily, and also talking about RV parks, and self storage, and a bit of his story there, and the great things that they’re doing at Axia Partners.

And these are very different types of assets and they kind of bring them all together in their fund, which I just find fascinating. So, really, covering I guess the diversity there of those assets and more. So, without further ado, let’s dive right in. Dave, welcome to the show.

Dave: Thanks, Scott. It’s an honor to be here, man. I’m excited. Let’s do this.

Scott: Absolutely. Thank you again for being here. Let’s just kick it off. I was looking over your fund and it contains a really diversified mix. We’re talking multifamily, we’ve got apartments, RV parks, you’ve got self storage. What’s really the strategy there with a fund with these types of assets, if you could kind of speak to the overall strategy?

Dave: Sure. So, really, it’s kind of my own personal investment thesis that I’ve been operating with, you know, over the last 17 years in my real estate career. And, you know, I realized a long time ago that, you know, everything is cyclical and it’s not a matter of if but when there will be, you know, choppy waters or recession or correction, whatever that might look like.

And so, you know, it’s really just trying to always mitigate downside risk while optimizing upside profitability. And trying to look for that asymmetrical return profile, right, again, with oversized outsized upside while really mitigating downside risk. And to me, you know, I look back a lot in, you know, historical cycles in the last two big corrections, and the three asset types that were the most recession resilient were multifamily apartments.

You know, it’s bread and butter, right? It’s a necessity. It’s not… Again, it’s food and shelter. Like, we have to have that.

Scott: People need homes, right?

Dave: That’s right. And then also, you know, RV parks have been huge cash cows with the really strong cap rates. And they’ve actually were very resistant throughout those downturns. And even more so today with COVID and kind of the new, you know, landscape we live in, people want experiential travel. They want to get out.

You know, right now, you can’t even find an RV. And it’s a 6 to 12-month backlog to buy an RV in an RV park. Any good RV park is completely full already for the 2022 season. You know, and then we look at self storage, which is such a great product type. You know, it’s actually, I would say it’s the most recession resilient asset type. We look back in ’08, 2010, and the last housing collapse, and self storage, as an industry, overperformed by 2 points.

So, it actually did better during the downturn. And so, you know, really looking at those three asset types. They’re all strong cash flow, they’re recession resilient. And yeah, so that’s really why I focused on that. And so, and then, you know, a few years ago, so I started out doing a lot of fourplexes and, you know, smaller multifamily, then moved up into larger multifamily.

And then I started doing syndications, did about a dozen different syndications, mostly in multifamily. And then the next step for me was to launch a fund. And, you know, my whole life’s always been, you know, you get one thing and what’s next? Like, what’s the next level? And…

Scott: Right, right. What’s the next step?

Dave: That’s right. That’s right. And so, the evolution of that was to launch, you know, our own fund. And so, we launched the Axia Partners Fund, and we chose those three asset types for the exact same reasons. Again, you know, we were 12 years into this amazing, you know, housing market and just saying, “Okay. Hey, how can we go and create strong upside yield for our investors?” And we have 150 investor capital partners in our first fund and just launched our second fund a few weeks ago.

And, you know, but still that really mitigate risk. And, you know, I think that like Warren Buffet says, rule number one in investing is don’t lose your principal. Don’t lose your money. Rule number two is don’t forget rule number one. And so, you know, it’s really just how do we still create that upside without taking out too much risk.

Scott: Right. And you mentioned risk, and I’m curious when you have these kind of different asset types, how do the risk profiles, I guess, differ between them when you’re looking at, you know, a multifamily apartment asset versus an RV park versus self storage and that kind of mix there rather?

Dave: Sure. You know, that’s a big question. I would say the biggest difference in risk is… Well, and there’s so many ways to answer that question. I think, you know, with multifamily, you’re locking in your rent rates for usually a 12-month period, you know?

So, there’s a little bit of risk there where you can’t necessarily have that dynamic pricing like you can in self storage and RV parks. We can literally change the pricing daily, right, our daily rentals on an RV park. So, if inflation’s going up and our demand is going up, we can literally change those prices day over day. You know, and same thing on self storage, usually on a month-to-month basis.

So, that’s a little more of a risk on the multifamily side. You know, one thing that I always invest in is cash flow. And so, we’re only going to assets that are either stabilized or very close to stabilization. You know, all of the friends that I have in my network that really got hurt in the last housing downturn is where they didn’t have any positive cash flow, but they had the negative debt servicing costs.

Right? And so, that’s where they really got damaged. And so, for me at this point, now being, say, 13 years into this housing cycle is, you know, it’s really looking for cash flow. I think that mitigates so much risk. But between those three asset types, I mean, frankly, I guess I don’t really see a ton of difference in the risk profile.

And that’s why, you know, we selected those three asset types specifically. And I did want to mention one thing, on our second fund that we just launched, we actually opened up a little bit wider on the investment thesis to also include industrial. And the reason why is because, you know, if you look at most of the forecasts and the projections for the next say five years, they actually project that industrial will have the greatest upside and the greatest overall demand.

And so, we’re actually very excited about that sector as well.

Scott: Absolutely. And kind of speaking to that, you know, so you’re looking for assets, you’re looking for, you know, mostly stabilized, that cash flow. So, when you’re looking at the sort of value add side, is it not very heavy lifts when you’re sort of evaluating something to really explore there, or to kind of mitigate some of that risk?

Dave: Yeah. So, great question. And I’ll say two things on that one. The first one being when we talked about recession resilience, I still believe that value add is a great approach because we’re literally strategically increasing the NOI of the asset, the performance, right, and therefore creating insulation where if the market does turn, you know, take a downturn, we still have created such a buffer or an insulated position on the asset.

So, you know, every one of the stabilized assets that we are buying is definitely with a value add approach. With that being said, it’s not just the traditional approach of, you know, putting, you know, new paint, granite countertops, etc. It’s a little more of an innovative approach where we still do that, but we also are coming in and adding searching and optimization.

We’re adding a social media presence. Which, it’s very surprising to me, you know, that we have a lot of these assets with no online or social media presence where a lot of people nowadays actually go to social media to find literally everything. And so, you know, also adding, you know, dog parks or dog spas. You know, adding in WeWork type shared office spaces.

That’s been very well received as well. So, there’s more of an innovative approach to the value add process. But to answer your question, on our first fund, it was, you know, more of a light value add. Our second fund that we just launched is actually called a Value Development Fund. And so, we are open to doing more of a heavy lift on the value add, and even some new development. You know, one thing we love right now is to find a self storage asset or an RV park that has adjacent acreage that we can acquire and then to expand and add more units to that as part of our value add process.

Scott: Wow. So, not only, you know, improving the RV park and adding, you know, more amenities or what have you, but then literally expanding it.

Dave: That’s right. And our RV parks are fun on the value add because you can get so creative, man. You know, putting in clamping, putting in, you know, tiny homes, you know, adding boat docks, adding actual boat rental… All the RV parks we’ve acquired thus far are actually Lakeside. You know, they’re on a lake. And that really allows us to be more creative and really monetize the asset even better.

You know, whether that’s putting in boat storage, even a boat concierge service, where we’ll actually take the boat, we’ll service it in the wintertime, you know, put it in the water for the family. It’s all teed up, ready to go.

Scott: I love it. I love it. I love it. So, really, you seem to have like a firm approach and then you kind of apply it to these different assets. I’m curious, when you are looking at the different sectors in 2022, is there one that has maybe, I don’t know, offers the most value right now?

Obviously, you’ve got a blend. But when you look at these three, you know, very different areas, is there one that has…that’s just a tremendous amount of value that you’re seeing currently?

Dave: Great question. Honestly, I’m really excited about all three of them, and industrial as well. So, I think all four of those have a lot of opportunity. Yeah, I’m going to say I’m equally excited for each of them. You know, my bread and butter’s always been multifamily.

Like, that’s just something that’s it’s so simple. It’s so needed. There’s a true, a real housing gap right now, you know, in our country.

Scott: Oh, the housing shortage is incredible.

Dave: Right?

Scott: Yeah.

Dave: And, you know, speak about inflation, like, there’s not a better inflation hedge, in my opinion, in real estate, than multifamily, you know. You have a locked-in debt service, we’ve got rent rates going up, the market value of the asset’s going up as well. And it’s a beautiful thing. And so, I’d probably lean towards multifamily just because I know it so well.

And again, it’s a necessity, right? Like, people could cut out an RV park or even self storage. But at the end of the day, people have to have shelter. So, I would lean towards multifamily. But to expand on that, I think that, you know, more importantly, it’s the markets that you’re going into. You know, it’s more of the kind of the macro approach to how we acquire the asset that’s going to make the biggest difference.

Scott: Absolutely. Kind of speaking of markets and maybe the geographic location of a lot of these assets, are there locations that you tend to focus on and that you find really offer a tremendous amount of value and upside to you? Like, what kind of areas do you look at?

Dave: Absolutely. So, one of our key criteria, when it comes to acquisitions is net positive migration. And, you know, basically, it’s, you know, if we’re going to be in markets where there’s going to be continued demand of people coming into the market, we’re probably going to be in a pretty good place. And so, you know, it’s kind of like Wayne Gretzky says, it’s not about being where the puck is, you want to be where the puck’s going to be.

Scott: It’s going to go. Yeah.

Dave: And so, we actually study the U-Haul data, you know, monthly, quarterly, and it shows exactly where people are moving to. It’s fascinating data, by the way. And you know, so, and we also, frankly, really love and only have gone into red states. And it’s not a political statement, but it’s, you know, it’s hard to account for government intervention, the free markets, on your proforma.

You know, if there’s going to be eviction moratoriums or rent control, or even, you know, states where they’re not very landlord-friendly. And so, you know, the markets we really love right now are Texas, Florida, the Carolinas, Georgia, Tennessee, love Tennessee. You know, we like Idaho, Arizona, Utah, Nevada. So, I think I was 10.

Those are our top 10. You’ll notice all of those are very landlord-friendly. They’re all red states and they’re all enjoying a lot of net migration currently.

Scott: Right. Yeah. And I mean, I think that really speaks to something we’re seeing when we talk about migration is lots of migration is going to red states. It’s going to those states that are maybe a little more business-friendly, where there’s maybe a little more job growth, where the cost of living is a bit lower. That’s what’s happening, right?

Dave: Absolutely, 100%. Nailed it. So, those are the markets we love. And, you know, we’ve come across some really good deals in New York and California and some markets we’re just like, “Hey, it’s just a hard no. It’s a hard pass right now.” So.

Scott: Right. Just not for you.

Dave: Yeah.

Scott: Makes sense. Can you speak a bit about your capital base, your investors? Who are they, what are their goals, and what do they really seem to enjoy about your fund and kind of your whole approach and strategy?

Dave: Sure. So, our average investor avatar, if you will, I would say is a high net worth individual, accredited investor only, right? We don’t work with anybody that’s not accredited. And really it’s people that are looking for financial freedom through passive income. And I’d simplify it to that.

So, they want more freedom, whether that’s simply financial freedom or time freedom, which in my opinion, is even more valuable, and they wanted to achieve that through passive income with real estate, and tax-advantaged passive income. You know, I actually have a lot of investors that come in on our offerings even more so motivated for the tax benefits than they are for the cash flow, which is interesting, you know.

I think that it’s actually… Anyway, that’s another rabbit hole down on the tax side. But I would say that’s our main avatar. You know, one thing that’s interesting and one thing I’m really proud about is, you know, out of the, you know, 400 plus investors that work with me, they’re all my friends. They’re my social network.

You know, I’ve never paid for a lead. I’ve never marketed, you know, on social media. I’ve never done any of that. It’s just it’s repeat investors or it’s people that I’ve worked with previously and created value and trust with them that now want to increase their own passive income. And, you know kind of my journey, I think, resonates with a lot of people where I grew up in a very poor home, you know, very, very low-income household, went out and started knocking doors selling home security systems door to door.

Right? And which frankly is the hardest thing I’d ever done in my life.

Scott: Hard work but honest work and good work. Right?

Dave: Oh, yeah. And it was so many lessons learned too. I mean, talk about, you know, where the rubber meets the road. You’re a little out cold contacting trying to sell a home security system. Right? And anyway, but it turned into a leadership career, you know, managing 121 sales teams across the country in 41 states in a 17-year career with 2 companies that sold for multi-billion-dollar evaluations when it went public.

And so, I’m actually very grateful for that incredible experience. But you know, I was taking that active income from that job and aggressively putting it into passive income real estate. And, you know, it’s been fun to then start teaching my friends about that as well. And you know when I was 30 years old, I said, “Okay, I want financial freedom.” And I reverse engineered the equation and it was I needed to have 40 rental properties by age 40. And there was a lot of intentionality behind that.

And so, I wrote it all down, you know, made a game plan, a blueprint, and just went to work on that. And, you know, I measured it every single week. I changed all my passwords to 40 by 40, you know, just to always be thinking about that goal. I was able to hit that goal when I was 36 and I was like, “Okay. Well, what’s next?” And it was to have ownership in 1,000 rental properties by age 40.

And I was able to hit that goal. And then it was just like, what’s next? You know, what’s next? And you know but circling back, you know, so my mission, my goals has been to help, you know, I want to help everybody I can to also achieve that passive income and have that time freedom in their lives. And so, you know, my personal goal is to help, you know, 1,000 people become, you know, millionaires through real estate and to be able to add direct value for 10 million people in my life.

And yeah, so just, you know, being able to focus on that. And, you know, I think a lot of people, when they think about raising capital from their network, they really worry about…it’s very stressful to them. I would just encourage your listeners to maybe change the mindset there where, you know, the way I look at that is if I love real estate and I believe in these deals, I’m going to put my own personal money into the deal, why would I not share that opportunity with those that I care about, right?

Why would I let some credit union or lender or institutional money come in versus my brother, my family, my friends, the people that I really care about? And so, that’s been really a fun way to be able to go and create value for people. You know, at the end of the day, real estate itself is not that sexy, for lack of a better word, right? It’s just brick and mortar and lumber, right?

But it’s the experiences and the value we can create together around real estate that’s really been fun for me. You know, in my opinion, at the end of the day, when you look back at our lives, what really matters is really simply it’s the relationships, the memories, and the experiences that we were able to create. And so, it’s been fun for me to be able to take, you know, a pretty boring asset and to be able to really focus on the relationships, memories, and experiences that we can create around that.

And so, anyway, that was kind of a long answer but, you know, that’s my average investor. And sorry, just to add, Scott. You also asked, you know, what’s kind of a maybe competitive advantage or, you know, what’s compelling about, you know, the way that we operate. And I’m really proud of this, and I just want to share it, you know, with Axia Partners, our motto is experiential investing.

And I love everything about this, and it’s just a unique way to create value for our investors. And so, you know, I believe that nowadays that the new economy really is experiences. I mean, people want experiences. Whether it’s millennials or baby boomers, people are willing to pay for experiences. And so, you know, with our fund, not only do we create experiences for our communities and, you know, our tenants and people that we serve, but for our investors, we’re really focused on that as well.

And you know, I not only focus on an ROI, but also an ROE, a return on experience. And so, you know, every month, we have an experiential webinar with the top real estate guys in the country coming on and speaking for 45 minutes, followed by half an hour of Q&A. You know, every time we do a site visit, we invite our entire investor base to come out with us. They can actually see how we do what we do.

You know, when we close on an asset, we do a full underwriting webinar, and we show them exactly how and why we got that asset, our business plans, you know, our next steps, how are we going to operate the asset disposition? So, just really pulling back the curtain and showing people how we do what we do. And, you know, I’ve yet to see another group that takes that approach. But it’s been received very, very well.

And I think, you know, a lot of people want to be doing these large commercial deals, they just lack the confidence or the competence. And so, to be able to help create value in a unique way has been really fun for us.

Scott: Absolutely. Absolutely. I want to talk a bit more about the RV parks. You mentioned that sort of how you look for assets, you have them all thereby by lake, right?

Dave: Correct.

Scott: And then, are these, are you also looking also in red states and in places of that geographic nature as well?

Dave: Yeah, with a strong preference for that, but it’s not quite as, you know, as important because, again, we have…it’s a short term, you know, it’s usually a one day rental for the tenant and there’s really a lot more autonomy and less, I guess, regulation over that space. So, ideally, yes, though.

We’d still prefer that it’s in, you know, in a red state. But there’s also other indicators, right? So, it’s just high growth. And, you know, there’s a lot of things to look at there as well. And the one thing on RV parks is it is very fragmented. And you know, and so it’s pretty easy to go and find mom and pop operators that maybe are just, they’re getting older, or they just are tired of managing the asset.

They haven’t done anything strategically to improve the asset for years, if not, you know, decades sometimes. And so, if you can find those diamonds in the rough, there’s some really incredible opportunities in that space. And I, you know, a lot of times when I talk about RV parks, I think people kind of put that in the same category as mobile home parks.

It’s actually quite different. And, you know, I’ve noticed that mobile home parks, they can be great, fantastic cash flow. But there’s been so much institutional interest in mobile home parks now for the last 8 to 10 years, it’s becoming very difficult to find great deals in that space. Whereas I feel like RV parks have been looked over and there’s going to become more and more interest there, especially now that Freddie and Fannie, you can now get traditional lending on that asset type.

Scott: Yeah. Actually, can you speak more to that? Because, you know, again, we’re talking about these different types of assets. You know, how do the financing, the capitalization requirements really kind of differ when you’re looking at, you know, a multifamily versus RV parks versus self storage?

Dave: Sure. I’ll talk on that lightly. I’ll be honest. I’m not a great underwriter. I hired some great underwriters from Goldman Sachs and a few other ones, but it’s not necessarily my strength. But I will talk on that a little bit. The biggest difference has been on the RV parks.

It’s a little bit more difficult to find, you know, great financing. You know, they’re usually a little bit smaller asset types, smaller acquisition costs. You know, the cash flow is a little bit more inconsistent with the seasonality.

Scott: Right. Because you have kind of those bursts. Yeah.

Dave: That’s right. That’s right. Also one of their downside has been usually they’re going to require a full recourse guarantee on the RV park financing. Whereas on self storage and, you know, apartments, that’s usually not the case. But besides that, you know, LTV is usually pretty close, you know, 60% to 70% and, you know, rates are somewhat the same.

RV parks may be a little bit higher. But you know, you talk about cap rates, and I’d say self storage and apartments are generally, you know, somewhat close to each other. However, on the RV parks, the cap rates are, I mean, we’re looking at 8 to 12 cap rates pretty consistently. So, a lot more upside there.

One more contrast there though is what we’ve really learned about RV parks is it is very operational intensive. It’s really more like operating a… You know, it’s an operations business. And whereas with self storage, it’s very, very hands-off, right? There literally… There’s very little interaction with the client. It’s just, it’s a very, very simple…

So, it’s actually very different in terms of the bandwidth and the operational needs between those two asset types, and self storage is definitely the most hands-off.

Scott: Sure. And from self storage, you know, when we’re talking about value add, what is the value add for self storage? Is it just creating more units, or what kind of improvements, I guess, can be made there when you have an asset?

Dave: Yeah. That’s a great question. So, as I mentioned previously, one of our favorite things to do is to be able to acquire additional land adjacent. You know, if we have high occupancy and a high demand, and then we simply add on to the asset. You know, we just closed on a, you know, $10 million asset 2 weeks ago. And that’s exactly what we’re doing. We have got about two acres next to it.

So, we’re just going to build that out. And we’re going to also add boat storage and RV storage next to the traditional self storage units. So, that’s a great way to do it. You know, other opportunities are to add U-Haul, you know, to the self storage locations. We actually have onsite U-Haul trucks. Also adding, you know, shipping materials, boxes, tape, etc., on-site.

Another one is to add, you know, climate control, although that can be cost-prohibitive. Also adding in, you know, just automation. So, an automated gate where you have access 24/7. And there’s a few other small things there too but, again, you know, it’s not rocket science. It’s actually pretty straightforward.

Scott: Standard blocking and tackling, as I always like to say. As we, sort of, wind down our discussion here, I always like to turn the attention to the future. You know, I think there’s a lot of economic uncertainty. Some people are saying, you know, specifically when we look at the housing markets, like, “Oh, is the bottom going to fall out? What’s going on?” We’ve seen rent rates increasing incredibly.

Last I looked, NAR, they had a report in February 2022, I think it was 11%, you know, across all the markets there. A tremendous amount of, you know, rental increases that people say, you know, “That’s not sustainable.” I’m curious, to your perspective, what do you think the future may hold when we’re talking about multifamily, when we’re talking about RV parks, when we’re talking about self storage?

Dave: So, man, that’s like we could do a whole another podcast on that one.

Scott: Yeah. That could be a whole another episode.

Dave: We might have to go around to you on that one. But I’ll say this, I think that, first of all, nobody knows. Anyone that acts like they really know, I would…it’s actually almost a red flag of me if they’re, like, they’re pegging something really specific there. I think that it’s a fool’s errand to try to really time the markets. What I can say is, at least my personal opinion is, my personal approach is it’s all about a diversified allocation.

And so, I mean, for me personally, this is getting kind of personal, but whether you have $1,000 to invest or $100 million to invest, you know, I can have 1% of my investible net worth in cash, 1% in precious metals, gold and silver, you know, 5% in cryptocurrency, 5% in hard money loans, right, to flippers.

I like to have 10% of my investible net worth in stock market equities, 15% in private equity, 25% in residential real estate, and 33% in commercial real estate. And it’s not exactly, you know, those numbers, but it’s pretty close to. And so, for me, that’s what I can control. I can control where I’m investing my capital into what bucket. And so, I call it an all-weather portfolio where I realize everything is cyclical.

And I don’t know when the market might tank, I don’t know when stock market might run it. I don’t know when cryptocurrency is going to go to the moon, right, or what gold and silver are going to do. So, instead, I just want to have exposure to all those asset types and realize that things are going to go sideways sometimes. But across the board, I’ve got a lot of diversification.

So, that’s kind of my 2 cents there. I will say I used to be heavily vested in the stock market. I have been actively divesting out of the stock market. To me, it just seems disconnected from reality. It seems, you know, quite frosty. And we’ve seen a lot of corrections in the last few months here. You know, looking back during COVID, you know, I slept like a baby with my real estate portfolio.

Honestly, like no concerns there at all. On my stock market accounts, I had a lot of anxiety, man, even though somehow it actually did incredible, right? Which again, disconnected from reality a little bit there. But you know, and then maybe last point here, Scott, is, you know, there’s a statistic that 40% of all the dollars in circulation were created are printed in the last 2 years.

That’s a… And I’ve heard that from several, you know, economists and respectable sources. That’s a crazy statistic. And so…

Scott: It’s mind-boggling.

Dave: It really is. And so I’ll make a bold prediction here. And again, nobody really knows, and I’m not trying to [crosstalk] markets here.

Scott: Sure. You don’t have a crystal ball there.

Dave: But to me, I think we still have quite a ways to go with, you know, multifamily, RV, self storage. I think that there’s just so many dollars that are chasing yield and tax-advantageous yield that… and even international money pouring in as well, that I actually don’t see… And the huge shortage in housing.

You know, I think we have a long ways to go still personally. I think that… I don’t think it’s going to run the way it has in the last, you know, 5, 10 years. That’s been pretty wild. But personally, I believe it’s going to continue to climb, but maybe at a more, you know, moderate pace going forward, at least for the next couple of years.

Scott: Absolutely.

Dave: With some volatility mixed in there for sure, but.

Scott: Oh, there’s going to be volatility. Dave, thank you so much for joining me on the show today, sharing a bit of your story and your perspectives, and the great things that you guys are doing at Axia Partners. And if our listeners want to find out more, maybe want to connect with you, find out a bit more about your fund and the things going on there, where can they do that?

Where should they go?

Dave: Yeah. Great question. So, personally, I’m most active on social media. Instagram’s probably the most used. It’s simply Dave Allred, should be pretty easy to find. Email is dave@axiapartners.com. Axia is A-X-I-A.

And then our website is axiapartners.com. And so, feel free to reach out, love to keep the conversation moving forward. And Scott, I want to say thank you for having me on, man. I love your podcast. I have been listening to a few of your episodes over the last couple days here and love the value you’re creating for the community.

Scott: Oh, thanks so much. And, of course, we’ll have links to all of those great resources there in the show notes. Thanks again, Dave.

Dave: Thank you.