Christine Hsu is the co-founder and COO of Noblivest, which is a syndication and fund that invests in commercial real estate, offering passive income opportunities to accredited investors who are interested in minimizing risk and maximizing cash flow.
In this episode, Christine discusses the importance of due diligence when it comes to vetting deals, investors, and syndicators. She also shares her tips for attracting investors outside of your circle and why it’s important to always remember your “why.”
Christine Hsu | Real Estate Background
- Co-founder and COO of Noblivest
- Portfolio:
- Five rental properties in Philadelphia and NY
- GP/fund manager of 1,400+ units in AL, AZ, FL, and TX
- Based in: Westchester, NY
- Say hi to her at:
- Best Ever Book: Getting to Neutral by Trevor Moawad
- Greatest Lesson: Figure out your why, and ground yourself in it. When things aren’t going right, it’s easy to lose motivation, but remembering why you're in this can get you through it.
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TRANSCRIPT
Ash Patel: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. I'm Ash Patel, and I'm with today's guest, Christine Hsu. Christine is joining us from Westchester, New York. She is the founder and CEO of Noblivest. They acquire multifamily real estate across the Southeast of the United States and Texas, connecting their investors with passive cash-flowing opportunities and equity multiplying real estate opportunities. Christine's portfolio consists of 500 properties in Philadelphia and New York, and 1,400 units as a GP fund manager in Florida, Alabama, Texas and Arizona. Christine, thank you for joining us, and how are you today?
Christine Hsu: Hey, Ash, thanks for having me. I'm doing very well. How are you doing?
Ash Patel: I'm very well. Thanks for asking. It's a pleasure to have you. I've gotta ask you, Christine - rental properties in New York and Philadelphia, probably two of the hardest markets to find deals.
Christine Hsu: That's right.
Ash Patel: How did you do that?
Christine Hsu: I would say the hardest markets not just to find deals, but also to manage them.
Ash Patel: And to make money, and to make returns.
Christine Hsu: Yes, that's absolutely right. So the backstory of that is I personally live in New York, and when I jumped into investing in real estate full-time, I just wanted to kind of keep the portfolio nearby, especially just starting out... So the New York properties are ones that either my husband and I have lived in and just never sold, and have converted to rental properties, or were house-hacking. So we were not actively looking to buy properties in New York, and I'm sure many investors know exactly why that is. Same thing with Philadelphia, it's not the most landlord place... And for Philadelphia, it was the closest market, where a lot of the deals from a numbers perspective still made sense, and was in a fairly close drivable distance from me. So it's kind of a practice ground. Right now I am actively looking to sell off some of those properties.
Ash Patel: Yeah. And listen, I'm not trying to knock -- I grew up in Jersey, so I'm not trying to knock Philly, Jersey and New York real estate... All I know is that I've mentored a lot of people, and they often look elsewhere, because there's so much money being thrown at real estate, and relatively few deals, compared to other parts of the country. There's just a high concentration of wealth in the Northeast, so people are willing to pay a lot of money for low returns out there. And then, of course, the political environment with not having landlord friendly laws is a challenge. So good for you for having those. And then being a fund manager/GP. What does that mean?
Christine Hsu: Yes, so I started off in the single family, then I transitioned over to multifamily syndications. So started off working as a co-general partner, helping to bring some capital and work on some asset management with key sponsors. That's kind of where I started off doing, and then kind of evolved over to being a fund manager. So a lot of times there's efficiencies with managing my own funds, and being able to invest in multiple deals and portfolios that way, and scale, essentially.
Ash Patel: So how do you become a co-GP and a capital raiser? How is that your first thing that you did?
Christine Hsu: It wasn't exactly the first thing I did. The first thing I did jumping from singles into the multis was become an LP. And I think that's what most people do, is invest passively as the investor first, and really learn that way. And that's what I did. And then that's when I decided the single family business really - it's a lot of work and effort for low returns, so I decided to kind of move into the multifamily space and scale up from there... And figured -- as I was doing all this real estate stuff, I left my W2 in 2020 and kind of transitioned full-time into real estate... I had a lot of people around me that were asking questions, and a lot of them were asking, "Well, how can I do this, too?" And most of them had jobs and careers that they couldn't just leave and do real estate full-time. So I was like thinking, "This is a great medium for me to also bring people into deals, and kind of give them a taste of the wonders of real estate and the returns that it brings." And not just returns, but also a lot of other benefits, like tax benefits and long-term rewards. So that's when I made that decision maybe this is a good transition over to being a co-GP, and to also learn alongside experienced sponsors and operators and join their team, and just observe by being part of their group.
Ash Patel: When you found the GP to co-GP on, is that a GP that you were a passive investor in previously?
Christine Hsu: The person that brought me into that particular deal is who I ended up partnering with. She is now my business partner here at Noblivest. We actually didn't necessarily work with the same operators that I invested with my first deal, but he is a good friend and a close contact that I do stay in touch with. I would say most of our partners and GPs that we work with are from networking opportunities, and really just getting to know people out there and developing and nurturing a relationship with them.
Ash Patel: Christine, I want to understand how that relationship was formed and how it evolved. So this was an existing syndicator operator of multifamily.
Christine Hsu: Correct.
Ash Patel: And you ended up becoming a co-GP. How did the two of you connect initially?
Christine Hsu: Yeah, so I would give a shout out to the Best Ever Conference. That was probably the first big place that I met a lot of great operators and syndicators. And we make it a point not to just jump into any deal, especially if we don't personally know them... But just creating the context, getting to know people, starting the conversation, really get to know who they are and what they value was the start. And then just keeping in touch. I think that's the important thing, is a lot of times we all get busy and we lose touch... So it's having those check-in points every now and then, and being like, "Hey, how's everything going?" Sharing best practices and what deals we're working on. And I think just from there organically the conversations come. They may be like, "Oh, I'm working on this deal", or "This deal's in the pipeline. Would this be something you're interested in partnering with us on?" So that's how a lot of our relationships started.
Ash Patel: Okay, and then you presented the opportunity to your network, and that got you a seat at the co-GP table.
Christine Hsu: Correct.
Ash Patel: Got it. Okay. How much was the first raise that you were involved in?
Christine Hsu: We raised about $600,000 in our first raise.
Ash Patel: And did you raise the entire amount?
Christine Hsu: We did.
Ash Patel: You personally.
Christine Hsu: So it was me and my business partner at Noblivest. So Noblivest raised that amount, yes.
Ash Patel: Got it. And who was the operator on that deal? Not a name, but it wasn't you guys, right?
Christine Hsu: No, it wasn't us. It was someone that we had met, actually a little over a year before that opportunity came forth. So at that time, Best Ever Conference was virtual. This was during the pandemic. So we met, and yeah, we just kind of checked in with each other every now and then, and just became good friends. So they were working on acquiring a deal in a tertiary market in Alabama. So once they had that deal under contract, I wasn't even really looking for a deal, per se. And the conversation wasn't around a co-GP relationship. It was literally just "Hey, how are you doing?", that kind of thing. "What are you working on?" So that's kind of where the conversation came up, and she told me about the deal, and I was like, "Oh, this sounds really interesting. This might be something that our investors would be interested in." So we just kept talking, and then it ended up working out, and we joined the team.
Ash Patel: And at this time, were you cultivating your potential investors, prepping them for a deal?
Christine Hsu: Oh, absolutely.
Ash Patel: How do you do that?
Christine Hsu: So when we first started Noblivest, we started our list of a very humble amount of 30 investors, and they all comprised of close friends and family members who just were interested in our journeys. And the way that I did it - I utilized LinkedIn a lot. So just telling my story on LinkedIn, so that people can see it. I think also through conversations with people, whether it be like a family dinner, or some kind of meetup... It's pretty typical that any conversation would be like "How are you doing?" kind of things. "So what's new in life?" So then I would just talk about what I'm doing, and really educating them, too. So once they joined our lists, we talk about real estate, and just really learning about the benefits that real estate brings, and being open and available to answer any questions that they may have.
So it did take time... I would say from the start of Noblivest to when we had our first deal, it was about seven months. So it wasn't something that happened right away. And during that seven months, we were very actively nurturing our investors, and just constantly talking about what we were working on.
Ash Patel: How did you get paid on raising the $600,000?
Christine Hsu: There is typically an acquisition fee right at the point of closing. Typically, it's around 1% to 3%, I would say. And that's kind of our first way of the work that we put around, bringing our investors in. But then also there is a share of equity. So that portion doesn't really get paid out to us until the very end, when the property is sold, and goes through disposition. So that's typically how a co-GP or even a GP would get paid. A lot of the initial part of the returns will go to the investors first.
Ash Patel: Christine, the operator gets the acquisition fee, the 1% to 3%. What part of the co-GP are you? Is it the typical 30% for bringing the capital?
Christine Hsu: Yeah, that's pretty typical. Yeah.
Ash Patel: Got it. So that 1% to 3% acquisition fee, you get 30% of that. And then when the property is sold, you get 30% of the profits that go to the GP.
Christine Hsu: That's right.
Ash Patel: Do you also charge your investors fees?
Christine Hsu: No, we don't charge any investors fees on top of that. That's just what it typically is. And I think every deal is different and structured differently, but that's kind of how we structure things.
Ash Patel: Since you raised all of the capital on this deal, who communicates with the investors? I'm guessing the syndicator maybe gives you high-level details, and you package it up nicely and send it out to your investors. Is that right?
Christine Hsu: Yes, absolutely. We provide updates within our GP team. We stay up to date as to what all the updates are; we are sitting in on property management calls and we are involved in the active management as well. So we're providing updates to our investors. And it depends on the deal. Sometimes it's monthly or quarterly. And it depends on the scope of work for the business plan. If there's more going on, we will provide more updates... But if it's a little bit less value-add business plan, or it's pretty straightforward, we'll provide quarterly updates. So it really depends.
And also something new that we started doing this year, just to be front and center with being transparent with communication is we hold quarterly state of the portfolio calls for our investors, where we will review from a quarterly basis how the property is performing, we'll look at financials and numbers, as well as just different events that might be happening at the property and just an overall overview of how it's performing.
Ash Patel: Christine, how many deals have you raised capital for?
Christine Hsu: I have been a co-GP in two deals. They're both multifamily. And fund manager in now three funds.
Ash Patel: Do you have a preference, or do you ever demand that you raise all the capital?
Christine Hsu: I don't know that I'm at that point yet...
Ash Patel: Okay. And then you have a seat at the co-GP table... Do you have any decision-making capability? Because in essence, you're 30% of the GP. So do you get to share in the decision making? Or can you override the other co-GP?
Christine Hsu: I think it all ends up being a discussion. We haven't had a point where there's been disagreement as to how decisions are being made... So I can't say that I have that experience as of yet. But we work with operators who are oftentimes very open to suggestions. So I feel like I am heard as a team member. There's just constant dialogue and communication back and forth.
Ash Patel: So that would be important in selecting a GP that you're going to work with.
Christine Hsu: Oh, absolutely. Yes.
Ash Patel: Multifamily - interest rates popped up. There's a lot of bridge loans that are impacting deals. Have you had to deliver bad news to your investors yet?
Christine Hsu: We are very fortunate that we have not needed to do that. All of our deals as of now are cashflow-positive and performing very well. However, I have been an LP in some deals that are in a little bit of trouble... And I know that feeling of slight panic and insecurity in the investment. So we feel very fortunate that we haven't had to deliver the bad news yet, but we go through very rigorous vetting processes with our partners... And really just make sure that the deals that we're coming into and the deals that we're bringing our investors into are solid, performing deals.
Break: [00:15:21.11]
Ash Patel: There's a number of capital raisers out there. What makes you truly different?
Christine Hsu: Yeah, there are a lot out there. It's true. For us, I feel like everyone plays to a different audience. So for us, our avatar isn't really wholly different from probably someone else's avatar, which is working professionals looking to either retire early or just have more time with their families.
For us, I think it's all about relationship. Still, much of our network are people that we know personally. And we get a lot of our investors also from referrals. So we kind of like to keep our little community close, and that's what sets it apart. I feel like everyone knows people; we don't just kind of mass target everyone. We are a pretty close-knit group of investors.
Ash Patel: What's your bottleneck right now? Is it deals or investors?
Christine Hsu: It's a little bit of both. I just think this year has been a turning point, and probably not just for us, but for many, in terms of how the real estate world is working. It's definitely feeling different. There are less deals coming through the pipelines, and certainly even less deals are penciling... And also from an investor side, I think a lot of them are holding on to their capital quite a bit tighter than they were before.
For us though, we are not an AUM company; we don't need to always have deals, and we communicate that with our investors. And it's part of our education, we will continue to educate. But we want to make it a point that we want to make sure the deals are good deals before we move forward on them. So that may mean that we will have less deal flow. And I think it's just continuing to kind of communicate and be transparent about that.
Ash Patel: Yeah, it's an interesting time where there's not as many deals, the returns on the deals that are out there are lower, and investor sentiment is all over the board.
Christine Hsu: That's right.
Ash Patel: So you and your partner, are you full-time in doing this?
Christine Hsu: Yes, we are full-time.
Ash Patel: Okay. So is that going to be sustainable heading into uncertain economic times?
Christine Hsu: You know, that's a good question. At this moment, we'll just have to go with the flow of things. Because I think there's still a lot of uncertainty. We don't know where the market is going to go in the next maybe two or three years. It could take another run again, we don't know; or interest rates could continue to rise and we could just be slowing down even more in the next couple years. So it's kind of being flexible, and really observing the trends in the market and just staying on top of it. And I think that's kind of the mindset that we have right now. So I can't say that we know exactly what the future will bring, but we are kind of just doing our best to really monitor the situation that's happening right now.
Ash Patel: Christine, what are some tips on attracting investors to invest through you into other deals?
Christine Hsu: Yeah, so I touched on it a bit, and I think communication transparency is always key; being forefront and open about real estate, in even the current climate that we're in, and just being the expert on it, and really talking about it more. Because you can't sugarcoat what's happening. What's happening is happening.
How would I attract investors? We're not putting any pressure on people to invest with us. We're just saying "This is the situation." We tell our story as to how investing in real estate has benefited us, and we truly believe long term it will continue to be a benefit. The real estate market with any market kind of happens in cycles. And it's times like these when even in down cycles it's actually the best time to be investing. So it's really kind of engaging our investors to follow along with us on that journey.
Ash Patel: Let me add some pressure to that question. Imagine you've got two weeks to get ten investors to put $100,000 each in, in this big make or break moment for your company. How do you go about raising? And this is 10 new investors, not existing. How do you get 10 new investors in two weeks?
Christine Hsu: Good question. I think it's picking up the phone, giving them a call, and not saying "Hey, I've got this deal you've gotta invest in right now", kind of thing. But just saying "I've got this opportunity, it's a really great one, we fully vetted it..." And even spending more time with them. I think being able to explain, go through the numbers, and just showing them, unveiling the curtain to let them know kind of what is in front of them, and that it's a great opportunity is probably going to lead to conversions. So that's probably what we would do, and we'll just keep calling. I think now's the time to work a little bit harder in this environment.
Ash Patel: Yeah. I'm gonna throw another curveball at you... Let's say you exhaust your Rolodex; everybody you know. And you're three people short. What would you do to fill that gap?
Christine Hsu: Yeah... So this is why I love multifamily syndication communities, because we're all friends at the end of the day. And in this business, you have to have friends, because they will save you. So if that was the case, I would bring in my Rolodex of other capital raisers and co-GPs, and be like, "Hey, let's work together, and let's get this done." And we have done that before. We've worked with partners in raising capital, and we were able to get to the finish line. And I feel like that's just the environment that we're in, and it's great. I love that everyone is so eager to bring value to each other, because at the end of the day I feel like most of us do end up working together, and it is a small world.
Ash Patel: Yes. What is the one single best question you can ask a syndicator to vet them?
Christine Hsu: This is my favorite thing to do...
Ash Patel: Similar to what I just asked you - I put a lot of pressure on you... So if you had a syndicator in front of you, what's the one thing that would really get them off kilter and get them to think about an answer?
Christine Hsu: Yes. First, I would ask them what their worst deal is currently, or in the past, and what did they do to manage the situation, how did they get out of it. And along with that, this is what I always do to vet my sponsors and operators, is I ask them for their T6 or T12, versus their proformas. And I look at their numbers. Because a lot of operators have gotten very lucky in the last few years. Any idea kind of came out with money in the market that we were in, right? So there have been cases where they were nowhere near their proformas and their projections, and they sold it at a huge profit. But we target working with operators that are very strong in asset management, because that is what makes or breaks the deal. So we ask for that. We ask for the numbers and the documents, and we kind of look through it, and that's how we vet the operators that we work with.
Ash Patel: Yeah, that's good advice, because similar to Wall Street, when they report earnings, it's in a previous quarter. They have a three-month window, a margin of error until that news has to hit... So that's great, where you're diving into their current status, and not just "Look, last quarter was great. Here's what we did. We met all of our numbers in '22. We're halfway into '23." So I love that; great advice. What is your best real estate investing advice ever?
Christine Hsu: Best real estate investing advice ever? I would say it's never forget your why. So keep that and truly ground yourself in your why and why you're in this business. Because when things aren't going right, it's easy to kind of lose motivation and momentum of your why. When you're massively successful, it's easy to lose yourself and forget your why. So that's probably my one biggest advice.
And also, second advice with that is to constantly fuel your mindset... Because your mindset is the ignition that keeps you going. And it's easy in times of - especially now in the market that we're in, to lose a bit of that spark. So whether it's having a great community behind you, that's always encouraging you and giving you a lot of inspiration, or it's podcasts like this, or reading books... It's just constantly feeling that mindset to continue moving forward.
Ash Patel: Christine, are you ready for the Best Ever Lightning Round?
Christine Hsu: Yes, let's go.
Ash Patel: What's the Best Ever book you've recently read?
Christine Hsu: I've recently read this book, it's called "Getting to neutral", by Trevor Moawad. And I think this is very relevant to what we're going through today in our markets. I really liked this book. So Trevor Moawad is also a mindset coach, and he coaches a lot of performers and athletes in terms of how to approach difficult situations. So Neutral Thinking, is really what he teaches; not positive thinking, because sometimes it's not realistic to just be positive... It's neutral thinking. And it takes away the emotions that a lot of times distract us from really making conscious decisions when you're in a high-pressure situation. So I really liked that, and I think it has applied to my life, and really has helped me with my mindset.
Ash Patel: Christine, what's the best ever way you like to give back?
Christine Hsu: There are two things that I really enjoy doing with my family and my two young kids... Every year we volunteer at an organization called Harlem Grown. It's a community garden in Harlem, New York, that serves the community of lower-income individuals and families who may not be able to afford fresh, wholesome, organic fruits and vegetables. And so anyone from the community can come in and get a bag of fresh fruits and vegetables. And so I like to take my family there every year to kind of work the gardens, and just teach my kids the enjoyment of nature, of wholesome foods, and just giving back as well.
Ash Patel: And Christine, how can the Best Ever listeners reach out to you?
Christine Hsu: I'm pretty active on LinkedIn. You can find me there. And also, if you would like to join our investor club at Noblivest, check out our website at noblivest.com. We put out monthly webinars on different various topics, as well as additional educational content. If you're new to investing passively in real estate, it's a great place to start. And we also do issue great passive investing opportunities, and ones that we have very much put a lot of time into vetting. So if you would like to kind of join us and follow us on our journey, you can find us there.
Ash Patel: Christine, thank you for your time today, sharing some of the nuances and the ins and outs of being a capital raiser and sharing some great advice with us as well. So thank you again.
Christine Hsu: Thank you so much for having me, Ash.
Ash Patel: Best Ever listeners, thank you for joining us. If you enjoyed this episode, please leave us a five star review. Share this podcast with someone you think can benefit from it. Also, follow, subscribe, and have a Best Ever day.
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