The Capital Stack
Q&A With Toupin Holdings
Enjoy this week’s guest interview with David Toupin owner of Toupin Holdings. Toupin Holdings is a real estate investment firm focusing on providing quality housing and generating cash flow for its investors. According to their website over the last 6 years Toupin Holdings has “acquired and developed over 1,100 apartments, multiple self-storage sites, and 10,000 SF of commercial space”.
We met David about 5 years ago. After seeing his success in the multifamily space, we wanted to pick his brain, so we asked if we could take him to lunch. He agreed. A few months later, we sent out our first mailer and got a call from an owner wanting to sell his 232-unit portfolio in Oakland County, MI. We brought David in as a partner on this deal not knowing that this would be the first of many successful transactions together.
Since our start in multifamily real estate we have used the software program created by David’s company, Real Estate Lab. The model he built is excellent and continues to provide us with the pertinent information needed to determine which deals we should or should not purchase.
1.) Tell us about yourself and why you choose to get into real estate?
- I always wanted to run my own business. After I discovered how fun and rewarding real estate investing was, I became passionate about the industry and went all in. For the past 6 years now, real estate has consumed my life in a great way and opened a lot of doors, opportunity, and financial freedom that I otherwise would not have had in the traditional corporate world I was leaning towards during college.
2.) What type of deal do you consider to be your “bread and butter”?
- I love existing value add apartments. If it is a C class deal in an A or B class area, I’m interested. I love taking rundown buildings and improving the quality of living for tenants, changing the neighborhood around, and seeing a huge transformation of a property.
3.) Tell us about the first property you purchased?
- I purchased a 12-unit property when I was 20 years old in Garden City, MI. Had no money myself, so I raised $150k from investors and borrowed $450k from the bank to purchase it. Earned a strong return for investor after flipping it in 1-year and kept that business model rolling.
4.) How has the current market (increased interest rates) affected your business?
- We are being a lot more conservative on our underwriting and being more patient on finding the right deal. We are okay if we only do 2-3 deals in 2023, as long as they are home runs. It’s important to focus on buying well below market value in these volatile times. Interest rates are making it harder to buy and are cutting into cash flow on any of our floating rate loans. Fortunately, we sold most of them prior to the rate hikes.
5.) Can you share three important things you have learned being in real estate?
- Buy right. This will solve almost any issues that arise.
- Pick the right partners. Partners can make or break a deal.
- Don’t be afraid to take a little risk. Investing is inherently risky. Make calculated risks and they tend to pay off if you’re diligent and follow through on your plan.
6.) Pick your favorite deal: Royal Oakland.
- How did you find it? Mailer – Tory Sheffer brought the deal to me!
- What did you like about it? It’s in a fantastic location in Royal Oak.
- What was the business plan? Put $20-25k/unit into the property and turn from B class to A Class. We intended to raise rents $200-400 and ended raising them anywhere from $500-800/mo.
- How was it financed? Bridge loan originally for $1.8M. After 12 months we pulled out $2.5M on a 5-year bank loan and paid investors back 100% of their capital.
- How’s it going today? Cash flowing well. We bought for $1.4M and it’s now worth around $4M with no investor cash in the deal anymore and a $2.5M loan.
*See photos of Royal Oakland Below*
David’s success in the multifamily space inspired us to blaze our own path into multifamily real estate. We hope to partner with David on many deals to come. You can follow his success on the following platforms.
Newsletter Growth: Road to 5,000
Current Count: 1,877
+35 in the past week!
We are looking to grow our newsletter subscriber list. Currently we have 1,877 subscribers and the goal is 5,000. Since last week’s newsletter we have added 35 new subscribers. Let’s keep it going! If everyone gets 3 people to sign up, we beat the goal and will have something new to reach for. If you can get 3 people to sign up, I am happy to consult or answer any questions for 30 minutes on whatever you may be working on, or interested in. If you hate the idea of talking to me for 30 minutes but enjoy the newsletter, then just share it out of the kindness of your heart! Either way, the sharing is greatly appreciated!
*Have the new subscribers put your name or email in the “How You Found Us” section. *
Major Market News
David is one of the partners on our 16-unit condo conversion project in Austin, Texas. As of 12/13/2022 we officially received the permit approval we have been awaiting for months. This won’t make national news, but we could not be more excited to finish construction and get the condo sales underway. We purchased the property in August of 2021. We have gutted all the units down to studs, repaired foundations, gated the community, and have 4 units nearly completed. In a few short months we will take 16 beautiful turnkey condos to market with an asking price of $300-$400,000.
Tips and Tricks
“Buying Right”- On the Toupin Holding website and in his interview with us David mentions the importance of “buying right”. Toupin’s website quotes “The key to our success is buying right, which is where the money is made in real estate”. We could not agree more. We feel that buying properties under market establishes an extra “safety net” that may come in very handy especially when instituting a value-add strategy. Finding deals direct to seller and buying under market can be challenging and has proven significantly more time consuming then purchasing an on-market deals for market rate. However, the “safety net” is worth the extra time and effort.