The Capital Stack
Q&A with Hoereth Holdings
Enjoy this week’s guest interview with Zach Hoereth, we were able to catch up with Zach at the most recent networking event we attended in Austin, TX. Zach is the owner of Hoereth Holdings a real estate investment firm focusing on multifamily and self-storage opportunities in the Midwest and Southeast. We met Zach ~3 years ago at an event hosted by Real Estate lab. Zach is one of the key partners on our condo conversion project in Austin, Texas, the Raintree Condos.
- Tell us about yourself and why you choose to get into real estate?
- I simply did not want to work for someone else. My last year in college I made a promise to myself that if I could just make $50,000 my senior year, I wouldn’t go look for a “real job.” I was able to hit that goal and haven’t looked back.
- Can you describe your most profitable real estate transaction?
- I have had a couple of nice wholesale/flip deals in a relatively short period of time. In 2021 I flipped an 8 unit for just over 70k profit in about 2 weeks. Recently I flipped a duplex that I bought for $1,500 and sold the next day for 60k.
- What type of deal do you consider to be your “bread and butter”?
- 1970-80s single level brick-built apartments in the Midwest. I want a million of them.
- What marketing strategy has proven most successful to your business?
- Tried and true organic cold calling.
- Focusing on relationships has served me well over the years.
- Targeted specific areas has helped me forge relationships with sellers that allow me to be top of mind when they are ready to sell.
- Tell us about the first property you purchased?
- Absolute madness. Had very little idea of what the heck I was doing. 10 units for $125,000. Predominantly 1 bed 1 bath. 1 gas meter, 1 water meter, 1 electric meter. No inspection upon purchase. You could say I did almost everything incorrectly. Some college buddies and I would literally stay in the unit’s mid rehab so we could work longer. This property got my feet wet with how to add value and what kind of impact that had in relation to the value. After about 2.5 years of ownership, I sold for just shy of 200k. Not a ton of profit but the lessons learned were invaluable.
- How has the current market (increased interest rates) affected your business?
- Current market has certainly made a difference in getting deals to pencil. That being said, I have been more aggressive with throwing out lowball offers to see how sellers are reacting. Noticing several other investors/groups are pumping the brakes on purchasing right now so there can be opportunities for more seasoned operators. That said, hitting the relationships point again and how important it is. I have been under a contract for about 5 months on a portfolio that I am closing in January. The solid relationship I have established with the lender has allowed us to work closing on a number of deals and they have been gracious enough to honor the rate they originally quoted pre rate hikes.
- Can you share three important things you have learned being in real estate?
- Don’t be afraid to pick up the phone.
- Walking a fine line between patience and having an extreme sense of urgency.
- Never stop learning
- What about your job do you find the most challenging?
- It can be easy to get shiny penny syndrome. When first starting out I was trying to do too many things as opposed to finding a niche I was good at and running with it. Sticking to the bread and butter has proved to be a tried-and-true model for me in my wealth building journey.
- Can you share one of your goals for 2023?
- Getting some condos sold down in Austin, TX!
10. Tell us about one of your favorite deals:
- A 19 unit I came across one evening while doing some driving for dollars before a date! This thing was beautiful… late 1970s build brick apartments tucked away in a nice neighborhood. There was a for rent sign that I contacted the owner on and asked if he was interested in selling. Turned out he was ready to go and about 5 months later we closed the sale. In 2019 purchased for $450,000 with conventional financing from a community bank. 75% LTV, 5.3% interest on a 5-year balloon with a 25-year amortization. At the time I had about 40k saved up, so I brought in partners in the form of a joint venture for down payment. Typical story of under-market rents and tired landlords. Went in, rehabbed units, and pushed rents to market. In Feb of 2022 the property appraised for $950,000. I refinanced into a 30-year term/am loan fixed rate at 4.25%. Now, holding on for dear life.
We hope to partner with Zach on many deals to come. You can follow his success on the following platforms.
Major Market News
RealDeal Networking Event
According to the RealDeal’s Instagram the RealDeal recently hosted a large networking event for “4,500+ real estate pros”. According to the post the event was in South Florida and included “major developers, top brokers and industry moguls”. We haven’t participated with this event but will consider it in the future. Link to the post below for more information.
Tips and Tricks
Prioritize Networking Events:
We make a point to attend several networking events on a yearly basis. This year we attended the Re-convene conference in Santa Monica, California, the Multifamily Meetup in Tampa, Florida and the Real Estate Lab conference in Austin, Texas. Through these events we have made many valuable connections with others like Zach in the multifamily industry who are valuable partners and friends.