Aug 28, 2022
In today's episode of How To Scale Commercial Real Estate Podcasts, we are joined by Anthony Walker.
Anthony Walker is the CEO and
managing broker of Buckingham Investments Anthony started his
career in business school, working as a corporate insurance officer
before deciding to become an individual commercial real estate
investor. Anthony is a big believer in helping new investors get
started on their real estate journey by teaching them the basics of
real estate finance and how to write an investment plan.
let’s dive in and hear more of Anthony’s
journey.
Highlights:
[00:00 - 05:17] How to Scale Your Commercial Real Estate Business
- Anthony Walker is the CEO and managing broker of Buckingham investments, a Southern California investment brokerage that helps clients learn to plan and invest in real estate.
- He's been investing since 2006 and owns about 150 multifamily units in the area.
[05:17 - 10:38] Southern California's Opportunity
- There is a niche for brokers that do educational work, but few that do both.
- Anthony notes that he tries to put the needs of his clients first, but will still take on a good deal if it comes across his desk.
- Anthony feels that the environment in California makes it difficult to be a property owner, but also says that there is business being done and people are making money.
[10:38 - 15:57] Southern California's Rent Control Markets: Difficult, but With Potential
- The market is very varied and has a lot of opportunities for investors, depending on the area they're in.
- Rents are high and continue to grow, making it difficult for tenants to afford to live in Southern California.
- Interest rates are rising, making it more difficult for people to borrow money and buy homes.
- There is an increase in multi-generational households and roommates, making it harder for people to afford rent.
[17:39 - 19:21] Closing Segment
- Reach out to Anthony
- See links below
- Final words
Tweetable Quote
“We've got to keep an eye and see changes in the economy that seems to be happening daily right now. What sort of impact does that have on rent or affordability? It's definitely becoming more common for people like to get roommates, multi-generational households, and stuff like that. It's becoming a lot more difficult for people here to afford the rent. So, you've got to keep an eye on that.” - Anthony Walker
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Connect with Anthony Walker by visiting www.buckinghaminvestments.com
or email him at anthony.walker@buckinghaminvestments.com
Connect with me:
I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
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Email me → sam@brickeninvestmentgroup.com
Want to read the full show notes of the episode? Check it out below:
[00:00:00] Anthony Walker: So you have to kind of take what you're reading in the papers with the grain of salt. A lot of that I think is geared towards a single family marketplace. But , this is definitely an environment where you've gotta be a good operator. You gotta be able to select tenants. Well, you gotta be able to run your buildings.
[00:00:12] HTSCRE Intro: Welcome to the how to scale commercial real estate show. Whether you are an active or passive investor, we'll teach you how to scale your real estate investing business into something big.
[00:00:24] Sam Wilson: Anthony Walker is a CEO and managing broker of Buckinghamn investments, a Southern California investment brokerage that helps clients learn plan and invest in real estate. He's been investing since 2006 and owns about 150 multifamily units in the area. Anthony, welcome
[00:00:38] Anthony Walker: to the show. Thank you.
[00:00:40] Anthony Walker: Great to
[00:00:40] Sam Wilson: be here. Hey man, the pleasure's mine, Anthony. There are three questions. I ask every guest who comes in the show in 90 seconds or last, can you tell me, where did you start? Where are you now? And how did you get
[00:00:48] Anthony Walker: there? Oh yeah. Great question. I started in business school, I guess at the very beginning.
[00:00:55] Anthony Walker: I was working a corporate job almost 10 years in the insurance industry and realized that was never gonna get me where I wanted to be from a lifestyle or finance perspective. So went to business school to figure out what kind of business I could work for myself. And took a real estate investing class there in the MBA program at Loyola Marymount here in the LA area great program by the way, and just needed to figure out how to get in.
[00:01:16] Anthony Walker: I wanted to start buying buildings. It seemed like that was a, a great business model. You could No need to learn how to code or make some Avention right. This is a centuries millennia, old business, I should say. So, after committing to doing commercial real estate there, I got introduced to a.
[00:01:33] Anthony Walker: 50 60 year company called Buckingham investments that I run now started as a client first bought a personal duplex about 12 years ago And have been scaling my portfolio up ever since then refinancing doing exchanges I joined the company as an agent about 10 years ago Got my broker's license opened Our Torrance office took the
[00:01:53] Anthony Walker: company over as CEO about five years ago And along the way have been slowly developing a portfolio of small and medium sized buildings here in the LA area. Now we are a company of about 45 agents, three offices. We are the number one buy side brokerage company in the long beach and ports submarket in co-star here in LA.
[00:02:15] Anthony Walker: So,, we're the first stop for buyers looking to get started on a, on a multifamily portfolio. And we use my experience to help people understand how to do that.
[00:02:22] Sam Wilson: That's cool. Can you break down, buy side versus sell side for our listeners?
[00:02:26] Anthony Walker: Yeah. So a lot of brokers actually learn how [00:02:30] to focus on building their business through getting listings.
[00:02:33] Anthony Walker: That's kind of the gold standard. , when you start as a broker, you're always taught, go meet sellers, try and convince them to sell. That's better. That's better business than working with buyers. Cuz if you get a listing it's almost a guaranteed paycheck. You can use the marketing materials for the listing to advertise your own services.
[00:02:50] Anthony Walker: Well, , our founder Jack Buckingham way back in the 1960s realized that most brokerages. Give all the buyers to their junior people with no experience. And so buyers, generally the experience has been pretty bad. When you walk into your average commercial real estate brokerage company, you're working with new people, and generally they're only gonna show you their own listings, or if they show you other people's listings, they're just not taking a very sophisticated approach to it in a lot of cases, obviously with some exceptions.
[00:03:17] Anthony Walker: So, , our company was started at the very beginning to help people have a more holistic approach. And get great representation, whether you're on the buy side or the sell side. So a lot of clients start with us as a buyer. A lot of clients are buying their very first investment property with us or their very first apartment building.
[00:03:33] Anthony Walker: And we've got all kinds of systems and educational materials in local research. We do ourselves to help people really understand what they're doing before. They're in a high pressure. Hey, you need to buy this property type situation
[00:03:45] Sam Wilson: It's it sounds like, and I know this is a wrong probably a wrong analysis here, but it sounds like you guys have a way of onboarding clients.
[00:03:54] Sam Wilson: Maybe that don't have a deep bench of experience in the commercial real estate
[00:03:57] Anthony Walker: space. Absolutely. Yeah. That's our specialty. Is helping people get started or maybe they've bought a couple buildings on their own and don't really know how to scale up. And they haven't taken, , they never took a finance class in school and they're just not taking a, a sophisticated kind of structural approach or really have a strategy in mind.
[00:04:16] Anthony Walker: Right. So we'll help people write an investment plan, understand time, value, money, all that kind of stuff. Yeah. That's absolutely our specialty.
[00:04:22] Sam Wilson: That's really cool. I mean, what you guys do is, is it's unique. I think in. That it's a blend of a lot of what we do here on the investment side. Like one of my jobs is obvious to educate our investor.
[00:04:33] Sam Wilson: It's to educate, , just putting out loads of content. You don't normally find the brokerage firm out there going, Hey, here's how you invest in real estate. And here's all the educational content and oh, Hey, here's also by the way, our meet up and then also we'll help you buy and, , help you write your investment plan.
[00:04:49] Sam Wilson: I mean, that's a pretty, a pretty robust operation. Has it always been that way or has this kind of been an iterative process for. It
[00:04:57] Anthony Walker: actually has always been that way. We've been [00:05:00] operating that way since the 1960s. And I can't believe people O other brokerages haven't really done this. It, everyone still just seems to focus on kind of going after transaction by transaction.
[00:05:13] Anthony Walker: And there's very few companies that do what we do. So there's some other brokerages that do great research, which is part of what we do, but not very many that do a lot of educational stuff. And it's great for people. , wanna actively invest. They want to go find the property, maybe manage themselves, maybe not go get the loan, but there's not, good service for people that are looking to do that out there.
[00:05:33] Anthony Walker: And so it, it's still, , 70 years later almost now fits a niche. Believe it or not that nobody else is really doing, man. I
[00:05:41] Sam Wilson: think that's super cool. Tell me this. How do you balance cuz you're an active investor as well. How do you balance putting your clients' needs ahead of your own? Because I think they'll be very, I'm just, again, I'm just speaking.
[00:05:55] Sam Wilson: Totally. I mean, when a great deal comes across my desk, I'm not calling you Anthony about it. I'm like, well, shoot, man. That's that's, I'm gonna go work on this. So tell me how, how do you balance that?
[00:06:05] Anthony Walker: Yeah, totally. I mean, first of all, , most of my investments are just personally for me. So with that being said, I don't have the ability to buy every good deal in the market.
[00:06:14] Anthony Walker: I wish I did, but I, I just don't, you know, I can probably buy two, maybe three a year. Right? Last year I bought four, which was an exception and, you know, you'd be surprised how many different people have. A really a different criteria set that they're looking for in a building, just because the building's a great deal for me doesn't mean that it's the right fit for another one of our investors.
[00:06:35] Anthony Walker: I tend to work on a little bit of the larger side purchases in our market versus a lot of our investors probably are not chopping in the same price range that I'm looking in for the deals that we do syndicate here. Those are also on the larger side too. And so generally we're not competing with most of our investors in that space and that's deliberate.
[00:06:52] Anthony Walker: So I'm not out there buying two to four unit building. Me personally, , I tend to buy 10, 12, 15 unit properties, 20 plus for the syndicated stuff. And it's pretty rare that there's really a conflict that being said, you know, as a broker, I want my clients to have a great experience. And so if somebody's ready to go or they're in an exchange, you know, I can wait and I'll get the good deal over to the client.
[00:07:14] Anthony Walker: I'd way rather. A good relationship with them, a great reputation, get some more referrals out of a good experience on their side. And especially, you know, if there's a timeframe that they need to hit, there's always more deals for me. And I kind of know the long term of it. I'm not that focused on [00:07:30] stealing every deal that I can, you know, so it it's worked out most of the time and I really haven't run into conflict of interests a
[00:07:36] Sam Wilson: lot.
[00:07:36] Sam Wilson: No, that makes a lot of sense. And I appreciate you breaking that down. I mean, when there's, when there, like you said, not every deal is for every. investors Just, I mean, and just, yeah, it's just like every passive investment isn't for every investor. Yeah. Like it's, everybody's got their own flavor of what works . For them.
[00:07:53] Sam Wilson: You're in Southern California. You say there's opportunity for the people that are outside of your state You guys have a bad rap. I mean, it's like everybody just says, Hey, we'll invest everywhere. Except for drum roll California. What do you say to
[00:08:08] Anthony Walker: that? Surprise. Surprise. Yeah. You know, it's it's funny how that's been the, just the sound bite over the last five to seven years and I get it.
[00:08:16] Anthony Walker: I mean, California, I think most of that stems from the, you know, legislative environment, the regulatory environment here, it is difficult to be a property owner in California. Not gonna sugarcoat that. We have more tenant protection laws, more rent control type, you know, laws to worry about here than probably anywhere else except for New York.
[00:08:37] Anthony Walker: And so you need to understand that to operate here. On the other hand, the reason that environment exists is also sort of a chicken and egg dilemma, right. They have to legislate here to protect tenants because it's so good to be a property owner. That the free market alone would probably not deliver even results for residents.
[00:08:59] Anthony Walker: Now, you know, obviously the best way to solve that is actually let us build our way out of supply crisis that we have right now. And we're not doing a very good job of that, but barring that these sorts of this environment is more a symptom of what makes investing here work so well. If you unpack it at a much broader level, We've lost a little bit of population here in the LA over the last year.
[00:09:19] Anthony Walker: I know that's a favorite thing to point at, but it's somewhere around a hundred, hundred 50,000 people, you know, in a Metro area with over 10 million, right. That's not gonna move the needle. And the people that we're losing are the people at the very bottom of the income spectrum and the people that we're gaining are coming here for very high paying jobs.
[00:09:36] Anthony Walker: And so when you look at what we do have, we have a gross metropolitan economy that delivers over a trillion dollars in gross metropolitan product a year. That's the third, most productive in the entire world. And it's the second largest commercial real estate. Market only after the New York area here.
[00:09:52] Anthony Walker: So, there's obviously business being done and people are making money at LA. So the idea that everybody's living leaving is just ridiculous [00:10:00] to me. But you need to know what you're doing to operate here and, you know, honestly, that that supply constraint is what's gonna just do you a ton of favors over the long run you're going in.
[00:10:07] Anthony Walker: Cap rate might be low, but over time, These properties, your rent growth is incredible here. You're almost never gonna have issues with vacancy or leasing. There's always gonna be demand for your units. And the fact that it's very difficult to add more supply there's no extra land makes it really good to be a long term landlord here in Southern California.
[00:10:28] Anthony Walker: Although obviously you have to learn how to operate in this environment.
[00:10:31] Sam Wilson: Well, yeah, that's it. I mean, it, cuts both ways. And I think people right over overlooked that it's wait, The very thing that creates such a favorable, favorable. If I could speak today, investing environment is the, is the very thing that can make it very challenging.
[00:10:46] Sam Wilson: So , learning how to navigate those, the nuances of that particular market, I think is the the trick there. Is there anything that comes to mind when I say that when, you know, I say navigate the nuances of the market, that you're like, man, here's some things that if you were to invest in Southern California, that I think you should absolutely know.
[00:11:01] Anthony Walker: Absolutely. So you you've gotta understand local jurisdictional differences in rent control regulations. So the whole state of California is rent controlled. Now that started at the beginning of 2020, and the statewide version of rent control is pretty vanilla. It's actually pretty easy to operate here where that's all that you have.
[00:11:19] Anthony Walker: You can increase rents by 5%, plus the change in CPI every year with a maximum of 10. So currently with inflation running so hot, we can increase rents 10% right now. Which is plenty, you know, I don't know if I wanna make an increase more than 10% anyway, without causing a whole bunch of vacancy that goes hand in hand with just cause for eviction protections for tenants you know, you've gotta have a reason to vacate a tenant and you can't just give somebody a 60 D notice and get 'em out, but there are different.
[00:11:46] Anthony Walker: Cities in the area that have more restrictive rules, you need to be aware of. So for example, the city of Los Angeles, if you're in the city of Los Angeles, they have a much more restrictive rent control called the rent stabilization ordinance or RSO. And if you're a local investor here, you know, that that only applies to properties built in 1978 or earlier.
[00:12:05] Anthony Walker: So that makes it very difficult to operate on those buildings, but it creates inefficiencies. That can be. Exploited for lack of a better term. If you're an investor, if you really, you know, have the capital and you know how to, how to work with these tenants and you can roll your sleeves up, it's mostly cash for keys, but you can buy buildings with rents, you know, a hundred percent upside in rents and [00:12:30] priced accordingly.
[00:12:31] Anthony Walker: And so if you think about it that way, yes, it's difficult to work in that sort of environment. But if you're really good at. You can do really well. On the other hand, if you buy stuff in the eighties in LA, you don't have to deal with that. And you only have the statewide rank control to worry about. So it's really different.
[00:12:44] Anthony Walker: So understanding the differences there and there's even county differences and all that kind of stuff is really, what's gonna set it apart when you're considering investing here in the local area. And then the fact that our market is so varied. I've got the map behind us on this map. You've got cap rates in the ones and you've got cap rates in the fives, or even in the low six's, depending on where you're.
[00:13:04] Anthony Walker: So within a one hour drive of where I am right now, you can have anything you want on the risk return spectrum, which makes it a great market to participate in as.
[00:13:13] Anthony Walker: well
[00:13:20] Sam Wilson: That's really interesting. You know, that you say, I mean, all the nuances, both from the city, from the county.
[00:13:25] Sam Wilson: I mean, you're going one to six in cap rates. Yeah. That is the easiest way or the best way. Maybe not the easiest, but what's the best way for an investor to educate themselves before they take that. plunge
[00:13:36] Anthony Walker: Well, shameless plug time. You, you can give us a call. We specialize in helping people make sense of this.
[00:13:42] Anthony Walker: Maras here in the local area. Our companies called Buckingham investments. We've got a ton of free educational materials online, whether it's our YouTube channel our monthly seminars, we've got downloadable guides. We also just. Completed a, graphical market research dashboard on our website. So you can drill in even by unit count area, zip code.
[00:14:04] Anthony Walker: And this is just in Southern LA county that we have active right now, but we're flushing that out to make it larger and you can see, okay, where's the, where are the cap rates in the ones and the twos, right. And where are the cap rates higher and, and you know, what corner of the market do you wanna work in?
[00:14:17] Anthony Walker: So there's a lot that you can do to kind of understand that a little. Big differences in, in the metrics on the two to four unit properties versus the five and up. And of course that's because of the financing differing so much between those two. But there are a lot of people transacting here.
[00:14:31] Anthony Walker: There's a lot of business being done. The idea that it's, it's a ghost town here is just not true.
[00:14:37] Sam Wilson: It's not true. And if you're looking to
[00:14:38] Sam Wilson: invest there, that might be a might be a prime time to start looking in Southern California. Tell me this. What are some risks, I guess that you see you know, in the market in general right now that people maybe you're taking on that they could otherwise avoid.
[00:14:53] Anthony Walker: Yeah. I mean, I think the big question on a lot of people's minds is affordability you know, for tenants. So we have interest rates [00:15:00] rising aggressively. It's becoming more difficult for people to become first time home buyers, which of course puts additional pressure on the renter market. Rents here are really high and continue to grow.
[00:15:12] Anthony Walker: So, we've gotta keep an eye on that and see. Changes in the economy that seem to be happening daily right now. What sort of impact that has on, on rent or affordability? It's definitely becoming more common for people to, you know, get roommates multi-generational households, stuff like that. And it's becoming a lot more difficult for people here to afford the rent.
[00:15:33] Anthony Walker: So, you've gotta keep an eye on, on that. I think in our area the class a stuff. It is tricky, you know, you're, you're top of the market rents on that, on those type of, of products, B and C apartments are a little bit easier to work with. Other risks I would keep an eye out for, you know, are obviously our interest rate risk, but everybody's talking about that right now.
[00:15:53] Anthony Walker: You're, you know, average commercial real estate. Loan's gonna reset in three or five years. So we have to think about where interest rates are gonna be during that time and where we can get rents to so that if it's modeled out, we're still gonna be able to do okay with the properties that we. own but I don't think you've got any supply side risks whatsoever here.
[00:16:09] Anthony Walker: We can't really add it. You know, to the extent that increasing interest rates affects demand, maybe that will balance out our market a little bit. We just finished our second quarter research and it hasn't. Been reflected in the pricing metrics yet. We're just not seeing that. And I think multifamily is gonna remain a really popular space to be in.
[00:16:28] Anthony Walker: So you have to kind of take what you're reading in the papers with the grain of salt. A lot of that I think is geared towards a single family marketplace. But you know, this is definitely an environment where you've gotta be a good operator. You gotta be able to select tenants. Well, you gotta be able to run your buildings.
[00:16:41] Sam Wilson: Well, that's it, that's it. And, and if somebody else I was speaking to earlier today the term, he. Was pocket economics or pocket economies. That's what he says, pocket economies. He goes, man, you know, once you get to know your market, he goes, I don't really care. What's going on on the macro scale.
[00:16:57] Sam Wilson: I don't care. What's being, you know, blabbered across whatever your news channel of choice is about what the, what the economy's doing. He's you gotta know what's going on in your very local market. Even down to the street by street, he goes, cause it's those pocket economies that totally will you determine the success or failure of your investment?
[00:17:15] Anthony Walker: absolutely. I, I think you can't emphasize specialization enough and you know, that's something I'm personally totally on board with. I I'm very specialized. My favorite market is long beach, which is a pretty small little market and I know it block by block. [00:17:30] I know exactly what I'm gonna be able to get for rent.
[00:17:32] Anthony Walker: I know exactly what I want to do for renovation on a unit at this area versus another area. And I think, you know, as the cycle kind of rolls over this time around. People are thinking it's gonna look more like it did in 2007, 2008, right? That's what everybody expects. Right? Systemic crisis. Everything goes down 30 to 50%.
[00:17:51] Anthony Walker: There's gonna be blood in the streets. It's gonna be great. I don't think that's what's gonna happen at all. I think to your point, it's gonna be very localized. So you know where there was a lot of additional demand over the last year. Maybe that's gonna come back down. Some markets got super heated over the last two years in the pandemic.
[00:18:07] Anthony Walker: Some didn't our. It kind of experienced the opposite. Right? We had people moving outta large cities. Now they're getting comfortable moving back in our, market's been a little more of a stable up into the right thing where some of these other markets that were really overheated are, are coming back down faster.
[00:18:24] Anthony Walker: So I think just like you said, to the extent, you know, your own local market, you're gonna do really well. That's
[00:18:29] Sam Wilson: awesome. Anthony, thank you for taking the time to come on the show today and really share with us your expertise there in the Southern California markets. I certainly enjoyed it. You've shared a lot of very valuable information with our listeners.
[00:18:41] Sam Wilson: If they wanna get in touch with you or learn more about you, what is the best way to do that?
[00:18:45] Anthony Walker: Absolutely. Check us out@buckinghaminvestments.com, all kinds of free stuff there To your desires and then I'm sure you can find me on LinkedIn. Anthony Walker, Buckingham investments. There's lots of Anthony walkers, but I think only one with Buckingham investments.
[00:18:58] Anthony Walker: So feel free to shoot, be a message or an email and I'm always available.
[00:19:03] Sam Wilson: Yep. And we'll certainly put all your contact info there in the show notes as well. Anthony, thank you again for your time. I do appreciate
[00:19:09] Anthony Walker: it. Thank you.
[00:19:10] HTSCRE- Outro Hey thanks for listening to the how to scale commercial real estate podcast If you can do me a favor and subscribe and leave us a review on apple podcast Spotify Google podcast whatever platform it is you use to listen If you can do that for us that would be a fantastic help to the show It helps us both attract new listeners as well as rank higher on those directories So appreciate you listening Thanks so much and hope to catch you on the next episode