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Cash Flow Champs

Cash Flow Champs Real Estate Podcast

David Meilan is an Investor Relations professional skilled in leading commercial syndication funding processes under tight deadlines and pressure. He has a strong understanding of financial markets and can convey complex topics to investors. David is hard-working, team-oriented, and excels in a professional environment. He is also experienced in leading teams to deliver results.

What You’re Going to Learn:

  • The Benefits of Passive Investing in Real Estate
  • The Key to Building a Long-Term Business Relationship
  • The Process of Acquiring New or Existing Investors
  • The Best Practice for Communication in Real Estate
  • The Best Piece of Advice By David Meilan

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Show Highlights

The Benefits of Passive Investing in Real Estate

The Benefits of Passive Investing in Real Estate

Prashant Kumar- We interview professionals who have been creating value in their respective fields for some time. Please share your experiences and knowledge with our listeners and us. Welcome to the show, David. Thank you for accepting the invitation despite the short notice. We are thrilled to have you on board. Do you prefer to start with a general introduction or specific topics? Please share your background with us and tell us more about yourself.

David Meilan- Thank you for summarizing my background. I have been working in the investor relations and multifamily real estate industry for six years. Originally from the Bay Area in Northern California, I moved to San Diego seven or eight years ago and joined Equity Street Capital, where I gained my first real estate investment experience. Although I was new to the industry, I learned the basics quickly and worked my way up the ladder. After about two and a half years, I joined Michael Blanc and his team at Nighthawk Equity, where I currently serve as Director of Investor Relations. Real estate investing has been my passion for the past five to six years, and I find it fulfilling to help investors achieve their financial goals. It’s not just about selling a product, but rather making a positive impact on people’s lives. That’s what motivates me every day to reach out to investors.

Prashant Kumar- That’s awesome. So what do you consider to be the advantages of passive investing, and what are you doing to help your investors gain financial freedom? What sets your approach apart?

David Meilan- In a broader context, the advantages of passive investing include the ability to generate passive income. This can mean various things to different individuals. For some, it means having the freedom to allocate their time as they wish, without worrying about their W-2 job or answering anyone. Once you can generate a certain amount of passive income, you can choose how to spend your time. This is highly valuable to many people. Additionally, passive investing allows you to use your time in more meaningful ways, such as spending quality time with your family or pursuing hobbies that you are passionate about but never had the time to pursue. This creates new opportunities for many individuals. Now, moving on to a more specific response regarding the value of passive investing in real estate.

We always advise investors that real estate has several different “profit centers,” so to speak. It’s not just about the overall return on investment, but rather the various baskets of income that you can receive. First, there’s cash flow, which is passive income that you receive either monthly or quarterly, depending on the operator. It’s money that goes straight into your pocket without any effort on your part, which is fantastic. Then there’s appreciation, which is the increase in value of the property over time. All real estate properties tend to appreciate, but you can also enhance appreciation by renovating a property, which is what we do at Nighthawk. Tax benefits are another aspect to consider, though I won’t go into too much detail since I’m not a professional tax advisor. But suffice it to say that there are opportunities for bonus appreciation, which can significantly reduce your tax bill. All of these profit centers add up and eventually create a snowball effect. If you keep investing over time, even small amounts can compound to the point where you achieve financial freedom. It’s a powerful tool that can benefit people in different ways, whether it’s freeing up their time, allowing them to pursue hobbies, or simply giving them more financial security.

The Key to Building a Long-Term Business Relationship

The Key to Building a Long-Term Business Relationship

Prashant Kumar- That’s great, thank you for explaining that. I always ask this question on my podcast, and now I would like to discuss some specific things about your role at NightHawk Equity that make it unique. Could you share your thoughts on this?

David Meilan- Yes. There are a couple of things that set Night hawk apart for me in terms of what we do and how we handle our investors. Firstly, it’s the way that we take care of our investors. Despite not being a big company, with only about eight employees, we have cultivated this mom-and-pop-shop feeling for our business. When investors we work with have questions, they can reach out to me directly, rather than being put on hold in some generic business line waiting for an automated response. They get my number and the partner’s number and work directly with us. I feel that this kind of direct communication separates us from other big syndicators or operators who may have grown a lot and scaled, but may not have the same personalized approach.

Certainly, I completely agree with you. There are certain advantages to being part of a smaller team, where investors receive a more personalized experience. This is especially important because investors trust us with significant sums of hard-earned capital. It means a lot to us when investors trust us enough to wire us a considerable amount of money to invest in them. Consequently, we want to take care of them and communicate with them often. As we discussed earlier, we send regular reports to our investors, and we host investor update webinars to keep them informed about what’s happening with the property. We make sure that they are never left in the dark, and we provide them with multiple ways to communicate with us if they have any questions. Establishing a trust factor with investors is crucial if we want to stay in this business for the long term.

Prashant Kumar- Essentially, what you’re saying is that the connection with investors is paramount, and they need to feel like they’re not just a number sending an email into the void. By providing them with our contact numbers and making ourselves readily available, we’re able to establish a strong sense of credibility and trust. This means that investors can easily reach out to us with questions or concerns, and we’re able to communicate with them regularly through reports and webinars. All of these efforts are geared towards ensuring that investors feel informed and secure in their investments, which is key to building a long-term business relationship.

David Meilan- Absolutely, you hit the nail on the head. It’s not just a matter of a simple transaction where we take their money and update them occasionally. We strive to establish a genuine connection with our investors and build a sense of community. Trust is a crucial element in this relationship, which is why we want to be available for them and provide personalized experiences. By doing so, we not only create growth opportunities but also cultivate loyalty in our investors, ensuring they keep coming back.

Prashant Kumar- David, I’ve noticed that you do a lot of marketing, and I would love to learn from you. Could you please share some information about the different avenues and approaches Night Hawk Equity uses for investor acquisition? Specifically, could you tell us more about your mindset regarding marketing?

David Meilan- Yeah. So, to be quite honest, we’re in the early stages of our marketing engine and marketing initiative. It’s something that we’re figuring out and testing different methods to see what works. We’ve started to see a lot of success in building our social media programs. This is probably obvious to everyone listening as we’re in 2020 and social media is huge in terms of building up any following or investor base. So we’ve started experimenting with that. We launched a YouTube channel about a year ago, and it’s in its first twelve months of existence, the same with LinkedIn and Instagram.

Our approach is pretty basic, reaching out to people on social media, and producing lots of great content that people want to hear. We try our best to put ourselves in the shoes of an average potential investor, understand their questions and concerns, and provide them with the answers they are looking for. We have certain metrics and people in our marketing team that know how to tap into them. They monitor which keywords are being searched frequently, and based on that information, we create content that engages investors, piques their interest, and eventually leads them to schedule a call with us.

The Process of Acquiring New or Existing Investors

The Process of Acquiring New or Existing Investors

Prashant Kumar- Could you explain how you encourage listeners to take advantage of your offerings? When you have a deal, what process do you follow to take it to the market and acquire new or existing investors?

David Meilan- So, honestly, the thing that Nighthawk does when it comes to marketing new deals is that we’re pretty relentless in sharing information about them with our investors. For context, we do 506B offerings, which means that we can permit both accredited and non-accredited investors into our deals. However, there are limitations on how much we can advertise to people due to these regulations. Therefore, we have to establish a relationship with investors before we can market to them. Whenever I have an intake call with a brand new investor, which usually lasts around 30 minutes, I get to know them, and they’re automatically added to our marketing list. 

Nighthawk is relentless in sharing information about new deals with investors. We do 506B offerings, which means we can permit both accredited and non-accredited investors into our deals. However, there are limitations on how much we can advertise due to regulations, so we focus on building an established relationship with investors.

We currently have around 2,500 “deal-ready” investors on our marketing list. As soon as we go under contract on a new opportunity, we launch an all-out blitz to notify our investors. We send out emails, and texts, and provide a high-level overview of the investment. Over the next two weeks, we host a webinar for the investment, during which the partners answer questions and provide detailed information.

During these two weeks, we touch base with investors almost once a day, unless they have already registered or indicated they are not interested. Our goal is to drive people to attend the webinar and ensure they have all their questions answered. This approach is a very aggressive marketing technique, but it helps us build strong relationships with our investors and ensure they have the information they need to make informed investment decisions.

Prashant Kumar- When do you go into the hard commit with investors? Do you get into a soft commit first or directly into the hard commit?

David Meilan- When I first came on board with Nighthawk, we did soft commits for the very first deal that we worked on together. However, we eventually decided to move away from it for a variety of reasons. Nowadays, we only do hard commits, which gives us a better idea of which investors are coming in. Once we receive their funds, we finalize their investment and don’t assume anything before that. While we do have a relationship with certain investors who have a track record of following through, we still operate on hard commits as our standard approach.

Prashant Kumar- Can you tell me what marketing tools Nighthawk uses for its campaigns? For instance, do you use Active Campaign, Cart, SMS messages, or any other tools that could be helpful for new syndicators? What are some best practices that you follow?

David Meilan- The primary tool we use for marketing is ActiveCampaign. It’s an incredibly powerful tool and we have around 70,000 contacts in our database that we can reach out to seamlessly with just a couple of clicks. It not only helps us follow up with leads and reach out to them, but it’s also great for managing and making notes on them. Although there is a learning curve involved, and it’s a complex tool, we have a tech guy on our team who helps us out with that. He’s kind of a wizard when it comes to breaking people up into different segments. For example, when we have a new deal, we communicate with investors very often about it. So we have to make sure that during the second communication that goes out, we filter out the people who are either not interested or already registered for the webinar because we don’t want to risk bothering them. We want to maintain a professional appearance and avoid appearing sloppy by emailing someone who has already registered for the webinar. Overall, ActiveCampaign is an excellent tool for managing our marketing campaigns.

The Best Practice for Communication in Real Estate

The Best Practice for Communication in Real Estate

Prashant Kumar- So you do take the input from the investor and based on that input do you choose to send them a second email or not? 

David Meilan- Yeah, it’s a tagging system where once an investor registers for the webinar, they automatically receive a “webinar registered” tag. Then, when we draft the second communication that goes out, we can segment it to go out to all “deal ready” investors, except those who have the “webinar registered” or “not interested” tags. We also tag people who are out of the deal because we don’t want to bother them anymore. It may seem unprofessional to do so, but it’s all based on the tagging system that Active Campaign provides, and it helps maintain a professional image. Investors are impressed that we are on top of things and that we know who has registered and who hasn’t, which ultimately helps build trust with our investors.

Prashant Kumar- Do you ever find yourself in a situation where you have multiple deals going on at the same time and are unsure if you’ve sent a particular deal to a specific investor or not? How do you handle that scenario?

David Meilan- Yeah, that’s a good question. We haven’t encountered that issue before. Historically, we’ve had about one deal per quarter that overlapped. However, as we continue to scale up at Nighthawk, we may encounter the issue of raising capital for multiple deals simultaneously. In such a scenario, we would set up unique tags for each property. For example, one tag would be for the property X webinar registered, while the other would be for the property Y webinar registered. It’s important to create specific tags for each property to avoid confusion and ensure that investors receive accurate information for each deal.

Prashant Kumar- That is super helpful. I think it would be especially useful for new syndicators. We use a similar system in our company called Kartra, which is also a marketing platform, although not a CRM like Active Campaign. We have been using Kartra for a long time and it is powerful and self-contained. To send out text messages, we use an additional service called Twilio or Slight Text. Other than that, everything else is handled within the Kartra, Zoom, and text systems. So, we primarily rely on these three tools: Kartra, Zoom, and the text system.

David Meilan- Yeah it is from the same company as Slybroadcast. We use that for voicemails. That’s another element of the marketing engine you asked about, so I’ll touch upon it. We use Slybroadcast, which may be from the same company you’re talking about. It allows us to leave voicemails on all investor phones without having to call 2,500 investors about a deal. With the software, we can pre-record a voice memo and Slybroadcast automatically leaves a voicemail on their phone. Using this approach is very powerful because it hits investors from three different angles: email, text, and voicemail. Some investors may not check their email or text regularly, but they might check their voicemail. By using all three methods, we increase the likelihood of them hearing about the deal.

Prashant Kumar- Awesome, that’s a great tip. It’s important to reach out to investors through multiple channels instead of just relying on emails because typically email open rates are very low, sometimes less than 10%. Even with all the other efforts we put in, emails can still end up in the spam folder and go unnoticed. That’s why utilizing text and voicemail in addition to email can enhance the effectiveness of your deal marketing efforts.

How often do you reach out to investors once the deal is closed? What is your best practice for communication? Do you send monthly newsletters or webinars? What is your approach?

David Meilan- We have a specific approach that we use for all properties. Once we close on a property, we send out an email or two to say, “Hey, we’ve closed. Thanks so much for being a part of this investment. Here’s what the timeline looks like.” That’s our initial email. Then, for each of the first three months, we host what’s called an investor update webinar. During these webinars, we provide all the information investors need to know, such as how renovations are going, what to expect with distributions, and maybe some financial information as well. We also talk about how the closing went. In the latter part of these webinars, we host a Q&A for investors, allowing them to ask any questions that come to mind, and we answer them live on air. So, many investors appreciate those webinars. We host them for the first three months after closing, and then we move to quarterly reporting for the remainder of the investment cycle. The quarterly reports are sent via email and include a three-bullet point summary for quick details, as well as a link to a PDF with images of the property, financials, distribution updates, and property narratives. We also provide our personal cell phone numbers in those reports, so investors can call us with any questions. That’s our communication cadence post-close.

Prashant Kumar- What financial systems do you use to calculate returns? Do you use anything specific like IMS or any other software? Please share your thoughts.

David Meilan- Well, to calculate the returns, we use Michael Bonk’s SDA, which is a dedicated deal analyzer in our underwriting process. For providing visibility to investors, we store all the necessary information on our investor portal. We did use IMS previously and are familiar with the software, but we switched to IDR, which is Investor Dealer, about two and a half years ago. It’s a great platform that shows investors what’s going on with their investments and makes it easy to communicate with them through bulk emails or specific property updates. IDR was recently acquired by Redmond, and we are very satisfied with their services as our portal vendors.

Prashant Kumar- So does that portal take care of the property management financials or is it your portal for financial reporting to investors?

David Meilan- Yes, it’s more focused on financial reporting to investors rather than property management financials. I’m not the best person to ask about the property management financials as we have an asset manager who handles that area. However, I do know that we use separate software for that purpose.

Prashant Kumar- That’s great to hear! You have provided some valuable insights and information for our listeners.

The Best Piece of Advice By David Meilan

The Best Piece of Advice By David Meilan

Prashant Kumar- Now I’ll ask you a few lightning questions. What is one piece of advice you would give to others that have benefited you in your life? What is something you have that has taken you to the next level?

David Meilan- Okay, I would say, invest in yourself. While it’s important to focus on investing your capital, it’s equally important to invest in your personal growth and development. This can be done by educating yourself through reading developmental and financial books, for instance. Remember that the best investment you can make is in yourself, whether you’re 18 or 45. There’s always room for improvement and striving to become a better version of yourself that will pay off in the long run. You’ll thank yourself for it years down the road.

Prashant Kumar- What is one book that is at the top of your list that you would recommend someone to read? Can it be any book in any genre?

David Meilan- That’s a good question. The book that I most recently finished and would recommend is a popular anthropology book called “Sapiens” by Yuval Noah Harari. It’s a big book endorsed by famous figures like Obama and Bill Gates. But what I love about it is that it breaks down important events in human history in simple terms. As someone who enjoys anthropology and history, this book is one of my favorites. It can also change your perspective on a lot of things.

Prashant Kumar- Well, David, you have been a great guest. You have provided a lot of valuable insights for our listeners. We are honored to have you on the Cash Flow Champs Real Estate Podcast. How can our listeners get in touch with you? Please share your contact information.

David Meilan- If you want to reach me by email, you can go ahead and reach me at david@nighthawkequity.com.You can also call or text me at 808-500-7135. Or if you want to learn a little bit more about us, just take a look at our website, nighthawkequity.com. You can also book a call on my calendar directly from there.

Prashant Kumar- David, thank you so much for your time today. It was so helpful and I’m sure our listeners would learn a lot from your experience.