Episode 11: Sam Bates: Experimenting with the different facets of Real estate and finding passion in Multifamily

The Real Path to BYOB(Be your own Boss)

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4y ago 45:50

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In this episode, we have invited Sam Bates as he shares his experience of starting out in his real estate journey. Sam Bates is the managing partner of Bates Capital Group and a partner and co-founder of Trinity Capital Group. Sam has been directly involved in the acquisition, rehab disposition, and management of around 100 million dollars in multifamily and single-family real estate since 2009. In this episode, Sam gives a glimpse of how he started out in the multifamily space, the mistakes he made along the way, how he built his team, and the journey from buying multifamily until they decided to do ground-up development as a way to distinguish their company.

Key Point Summary

Sam has always been interested to get into real estate but he never really understood real estate investments until 2009. Now, he has plans on getting a master’s degree in real estate and thinks of pursuing a career as a loan officer, lender, or anything along those lines after finishing his degree.
Over the last 10 years, real estate has been the darling child of investments. But through the help of social media and podcasts, people now have a working knowledge of what real estate can do compared to two decades ago. The general audience now understands how investing in real estate can help create generational wealth.
After reading a few books about real estate, Sam decided to invest in real estate. He also joined a mentorship program in Dallas.
Sam’s first bad experience as a limited partner in a deal that never got under contract. Through the due diligence process, his partner found out there are some issues that he didn't realize early on, so he backed out but couldn't find another deal. His partner took 13,000 of Sam’s $100,000 investment.
During his second experience as a limited partner, Sam Started investing in single-family simultaneously which he did about 20 single-family acquisitions. At that point, Sam realized that he needed to move to a multifamily. Single-family is great and he made good returns on it, but it's very hard to scale and very labor-intensive.
There are four classes in multifamily or just commercial real estate: Class A is your core plus. Class B could be in a good location. Then you have class C, which is usually a workforce of blue-collar housing, is usually out more into the suburbs further away from city centers. Class D is by far, the worst, if you have a bad tenant base, the delinquency will usually be pretty high and it's hard to collect rent, and years later, the location may not be desirable.
For Sam and his business partner, anytime they start a project construction, they will hire third-party consultants to do their own surveys or market studies. They don't have to spend hours of research because they hire professionals to do it. They are confident that if they build a product, there's going to be demand because the worst thing you could do is build property and nobody wants to live
Sam and his business partner talk to brokers and realtors about buying different lands. Lands have different types of zoning. They we usually buy it where it's not zoned multifamily, and they have to go through the process of zoning multifamily because that adds value.
They both have pros and cons. Sam loves the construction aspect because they get to have a brand new building. You have a great tenant base that, at least from their standpoint, has always paid.
One of the books that made a huge impact on Sam’s life was Miracle Morning.
Sam’s family has always pushed him to have a good steady job. And I listened to them for a long time. But then he finally realized that he just needed to do it. He saved up through the single-family through the multifamily through just as his career salary going up and at that point, he was making six figures.
When he was young, Sam envisioned himself being a doctor because he

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