The Fort - An Entrepreneurship Podcast

RE #206: Scott Everett - Founder of S2 Capital - 0 to 38,000 MF Units by 32 y/o

Apr 5, 2022

Scott Everett, Founder of S2 Capital, shares his journey in value add MF and growing to 38,000 units. He discusses underwriting deals, operational setup, and why he's raising a fund. They explore physical due diligence, investment management software, labor market challenges, and balancing rent growth. The speakers also discuss raising a fund, the impact of social media, and building a family business.

01:42:30

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Episode guests

Scott Everett

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Episode notes

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Quick takeaways

S2 Capital prioritizes quick renovations and value to tenants by engaging their design, branding, and construction teams immediately after closing a deal.

S2 carefully balances renovations with maintaining occupancy by starting with renovating around 50% of vacant units and turning unrenovated units while increasing rents.

S2 maintains a consistent approach to interior finishes and branding, allowing them to keep costs down while creating a cohesive identity for their properties.

S2 demonstrates market timing expertise by taking advantage of opportunities presented during the COVID-19 pandemic and low interest rate environment to generate strong returns.

Deep dives

Fast and Efficient Turnaround: How S2 achieves quick renovations

S2 has developed a fast and efficient system for renovating units in their properties. As soon as a deal is closed, they engage their design team, branding team, and construction team to begin the renovation process. They aim to have all paint schemes, design branding logos, and renovations done on-site by the time they close. This allows them to hit the ground running and start the renovation process immediately. With a goal of renovating 100% of units in two years, they prioritize turning units quickly and providing value to tenants by increasing rents while upgrades are made.

Introduction

2min

From Development to Distressed Apartments

16min

Building Relationships to Identify Good Buyers and Great Offers

14min

Physical Due Diligence When Buying Apartment Units

14min

Investment management software and unique construction approach

6min

Labor Market, Immigration, and Supply Chain Challenges

11min

Exploring the Difference Between Fannie and Freddy, Loan Metrics, and Execution Process

3min

Balancing Rent Growth and Occupancy Rates

9min

Raising a Fund and Building Capital

18min

10.

The Impact of Social Media and Building a Family Business

9min

Scott Everett founded S2 Capital in 2012 to acquire multifamily Real Estate. In the past 10 years as CEO of S2 Capital he has built a Real Estate investment company that has acquired over $6B of multifamily assets totaling 40,000 units and 3 operating companies that generate annual revenues in excess of $350M with over 600 employees.

On this episode, Scott discusses how he got started in value add MF and grew to 38,000 units, how he underwrites deals, and what matters when underwriting a deal. They chat about how S2 is set up operationally and how his different teams all work together. Scott also shares why he's raising a fund after 10+ years of syndicating deal by deal. Enjoy!

Learn more about Chris Powers and Fort Capital: www.FortCapitalLP.com

Follow Fort Capital on LinkedIn: www.linkedin.com/company/fort-capital/

Follow Chris on Twitter: www.Twitter.com/FortWorthChris

Follow Chris on LinkedIn: www.linkedin.com/in/chrispowersjr/

Subscribe to The Fort on YouTube: https://www.youtube.com/channel/UCuJ32shRt8Od3MxMY-keTSQ

Follow The Fort on Instagram: www.Instagram.com/TheFortPodcast

(02:07) - Scott’s RE career

(08:42) - Did something happen in your childhood that gave you your sense of confidence?

(10:48) - Scott’s first deal for 184 units

(15:33) - What are illegitimate reasons a property isn’t performing?

(18:11) - How do you think about approaching a deal?

(20:55) - How much has the RE landscape changed over the past decade?

(23:26) - Being laser focused on one asset

(26:38) - How do you think about due diligence?

(29:20) - Scott walks us through the entire deal process

(35:27) - Why do you renovate units so often?

(36:39) - What’s the first 90-180 days after closing look like?

(40:41) - How long does a full unit rehab take?

(41:22) - When do you talk to folks about renewals?

(43:18) - Do you want to get every unit updated within 2 years?

(48:09) - What separates you from competition in the construction part of the process?

(52:08) - What are you experiencing in the current labor market?

(55:33) - How do you think about staying on top with materials supply?

(57:20) - Are rents so competitive that class B tenants are moving up to Class A apartments?

(58:50) - What do you want your asset managers focused on?

(1:02:15) - What’s your ReFi strategy?

(1:02:48) - What’s the difference between Fanny & Freddy loans?

(1:03:44) - How fluid is the process of getting to your projected NOI number?

(1:05:20) - Where do most people miss the boat in terms of Capex?

(1:07:10) - How are you refreshing your portfolio today?

(1:11:14) - Is there any technology that has your attention right now?

Fetch

(1:14:25) - Why are you raising a fund?

(1:30:44) - Is there anything out there that scares you?

(1:33:59) - What’s your words of wisdom on building a great family business?

(1:37:53) - What is the S2 foundation?

The Fort is produced by Johnny Podcasts

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The Fort - An Entrepreneurship Podcast

RE #206: Scott Everett - Founder of S2 Capital - 0 to 38,000 MF Units by 32 y/o

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Fast and Efficient Turnaround: How S2 achieves quick renovations

Balancing Renovations and Occupancy: S2's strategy for managing tenant turnover

Maintaining Consistency: S2's approach to interior finishes and branding

Capitalizing on Market Opportunities: S2's strategic timing in the market

Building a Construction Team and Developing Relationships

Challenges in Labor Availability

Scaling and Adapting Construction Strategies

Raising a Fund for Capital Management

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The Fort - An Entrepreneurship Podcast

RE #206: Scott Everett - Founder of S2 Capital - 0 to 38,000 MF Units by 32 y/o

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Fast and Efficient Turnaround: How S2 achieves quick renovations

Balancing Renovations and Occupancy: S2's strategy for managing tenant turnover

Maintaining Consistency: S2's approach to interior finishes and branding

Capitalizing on Market Opportunities: S2's strategic timing in the market

Building a Construction Team and Developing Relationships

Challenges in Labor Availability

Scaling and Adapting Construction Strategies

Raising a Fund for Capital Management

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