EP.27 // How to Buy $1 Billion of Apartments in 3 Years w/ Zach Haptonstall
On today’s episode we welcome onto the show the Co-Founder of Rise48 Equity and Rise 48 Communities: CEO & Real Estate Investor Zach Haptonstall, out of Scottsdale, Arizona. Zach has a mind-boggling track record, completing over $1.6 billion in transactions over the past three years, present in over 6,000 units. On today’s show Zach gives insane amounts of value, including the nitty-gritty details of building a fully integrated company comprised of an entirely in house team of 135+ employees, his one-at-a-time model of raising capital for deals, and how he sets larger-than-life goals to make sure he never gets complacent. This is one heck of an episode!
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Key Points from This Episode:
Zach doesn’t have any connection or background in real estate; he grew up in the lower middle class, taught that he should go to college etc. in Phoenix, Arizona. He was a live news anchor with a journalism degree. He quickly realized that he couldn’t pay off his student debt with that career path. After getting an odd job as a hospice marketing cold caller, he quickly excelled in the marketing career. He was financially stable but was ready to change paths.
Zach tried to get into multifamily after reading Rich Dad, Poor Dad. He tried buying a mobile home park through cold calling, but then found out about syndication in multifamily. This finally clicked and in 2019 he began his journey in Real Estate by closing his first apartment deal. It was a 36 unit, 3.5 million deal and a value add plan.
Since then he’s acquired 35 toal properties, over 1.3 billion dollars, 6,000 units, and drastically surpasses expectations. He’s gone full cycle and sold 11 of those deals. 135 full time employees. Completely focused on Phoenix value-add multifamily.
Rise48 focuses solely on Phoenix. He owes some of his performance focusing on this one market in a strong market cycle. Completely local, full team in house 5 days a week. They buy their own materials wholesale and control their own supply chain. Relationships with local real estate brokers have helped immensely; there are brokers that control 90% of the entire city’s inventory. The first 4 deals were on the market and they had to compete by building a track record. Since then they’ve gotten off-market deal flow with no competition directly through these brokers. Because of this they’re performing more efficiently than even their models.
They’ve seen a 90-95% conversion rate for investors; if you can grow money quickly and defer capital gains, investors will come back. As you perform better and better, the more you’ll get preference from brokers. This will then make your track record even stronger. And referrals start pouring in. There is a snowball effect so he makes sure you have to scale responsibly by building infrastructure and hiring in advance. It helps that all properties are within 40 minutes of each other. Property management, asset management teams etc. are all in the same building as well. They just rinse and repeat the same business plan for each project.
In their first year he owned 35 million in real estate but was broke in credit card debt. All of the cash flow was going to the investors during the holding period. He went BACK into healthcare after his first year in Real Estate!
Their first hire was a director of asset management, managing their management company. They then hired a construction manager and took their construction in house. Then a transactions coordinator, loan transaction paperwork, communication, etc. So this freed up Zach’s time and energy.
They give their employees very competitive rates and benefits, this helps recruiting and retaining the best talent, from Class A companies. They also give them autonomy to work as they need to. They’ve purchased a 21,000 sqft office themselves that they can grow into instead of outgrowing leases.
They believe in incentivizing good performance to align the desires of the employee with the company’s success. They make custom incentivized bonus structures. 2.5% of their salary for the first three quarters, and the fourth quarter is reflective of company performance. One year everyone earned 20% of their annual salary plus their benefits.
Rise48 never raises money for more than one project at a time. 2 week of cushion of no deal launching in-between each deal. Launch a deal, get docs signed and funds in, then 3 weeks later the next deal is launched. This doesn’t allow investors to change their mind between deals.
Their investor relations team is 5 full time staffers; when they launch a deal, the marketing team does an email blast with the template, Monday.com feeds soft commitment to Update Capital and feeds it to the investor team. They review each PPM to make sure it aligns with what the investor committed to in the form.
Zach wants to be a billionaire by 40, he’s currently 30. He wants to set such a large goal that he doesn’t become complacent or mediocre. He wants to be challenged and grow.
Zach’s advice is to not take advice from anyone who says you can’t do it. If someone haven’t put in the work it takes to achieve your goals, you don’t need to take their advice.
Relevant Links from Today’s Episode:
ABOUT ZACH HAMPTONSTALL
• CEO & Co-Founder of Rise48 Equity & Rise48 Communities
• Rise48 Equity has completed $1,665,551,000+ in total transactions and purchased over 6,000+ units since 2019.
• We currently have $1,224,986,000+ of Assets Under Management, all in the Phoenix MSA.
• 135+ Full-Time Employees on Full Healthcare Benefits
• 11 Full-Cycle Dispositions
•Apartment Investor General Partner/ Syndicator
•Host & Founder of The Phoenix Multifamily Association
• #1 Best Selling Co-Author
• Forbes Real Estate Council Member
• Greater Phoenix Economic Council (GPEC) Director's Council Member.
