From High School to $1.5 Billion in Real Estate Deals with Spencer Gray – EP 263

The Fastest Way To Build A Six Or Even… Seven Figure Real Estate EMPIRE! 

If you want to automate and explode your real estate business, check out my coaching program!

If you’re looking to grow from residential to commercial (or residential to multifamily), don’t have an expensive education (or don’t use yours), and want to have amazing success, today’s conversation is for you.

My guest is Spencer Gray. He’s the president of Gray Capital, where he leads and develops investment strategy, performance, due diligence, and underwriting for their multifamily portfolio. He started in 2006 as a residential investor straight out of high school and has since been involved in over $1 billion worth of transactions and controls over $500M in real estate assets.

The best part about Spencer’s path, is that it’s one that you can start following right now. You can start doing deals, scaling capital, and creating amazing opportunities for yourself, just like he did–and just like I did.

 In this amazing conversation, Spencer and I discuss what makes the multifamily market of 2022 so different from 2019, why top-line revenue keeps growing, and how to find Midwestern markets that are cash flow positive and appreciating by 15-20%.

Key Takeaways with Spencer Gray

  • Why Spencer loves investing in the Midwest, what makes it more efficient than the Sunbelt, and why it’s an easier part of the country to start investing.
  • How Spencer is prepping for political, inflationary, and socioeconomic changes in the years to come.
  • Spencer’s investing strategy, how he stays disciplined, and what his model looks like.
  • Why the global central banks are all in a race to print money right now–and why the only guaranteed outcome is inflation.
  • Why going to school, getting a degree, and getting a job doesn’t need to be your Plan A.

Spencer Gray Tweetables

“We don’t want to do deals just to do deals, we’d rather just do incredible deals and build a track record of having incredible results and find great opportunities.” - Spencer Gray

“Don’t fall into your natural limiting beliefs of what you can do now.” - Spencer Gray


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Josh Cantwell: Hey, there, welcome back to Accelerated Real Estate Investor with Josh Cantwell. I’m your host, and today, I have a great, great conversation with you and for you with Spencer Gray. Spencer is the president of Gray Capital. He is the president. He leads and develops their investment strategy, performance, due diligence, and underwriting for all of their multifamily portfolio. They’ve been involved, and Spencer, in particular, has been involved in $1 billion of transactions.


And check this out, he started with his first rental property in 2006 as a residential investor. So, for those of you that are looking to grow and go from resi to commercial, resi to multifamily, this is a fantastic, fantastic interview and conversation, especially for you. Spencer actually started investing immediately out of high school. So, also, if you’re somebody that does not have an advanced degree, did not go to college, or somebody that even went to college and is not using their degree at all, this is a fantastic conversation about why going the entrepreneurial route immediately out of high school and forgoing an expensive college education, this is a true example of someone who has an amazing success without that advanced degree.


Spencer is a true entrepreneur. He’s founded several successful businesses and media distribution, real estate, and agriculture. He has extensive experience in real estate investing strategies and raising money. He’s been doing that since 2006. He’s also an avid rock climber, fly fisherman. He loves to free dive. If you’re not familiar with that, free diving is diving deep into the ocean with no tanks and no diving gear, pretty amazing stuff, young guy. Gray Capital has an amazing newsletter that you’re going to want to check out.


And in this conversation, I think a couple of the major points that we discuss is number one, why the 2019 multifamily market is completely 180-degree different than the 2022 market that we’re going to be experiencing next year. Number two, we’re also going to talk about why the residential and multifamily markets are going to continue to grow because the top-line revenue growth, the top-line growth continues to grow. Number three, we’re also going to talk about where and how to find Midwestern markets that have not only just cash flow, but also 15% and 20% appreciation similar to the Sunbelt, but that have cash flow opportunities because they’re in the Midwest. And also, we’re going to talk about elevated inflation and the ultimate role of the Federal Reserve and why they are not on your side. So, this is an amazing interview with Spencer Gray. You’re absolutely going to love it. Check it out. Here we go.




Josh Cantwell: So, hey, Spencer, listen, so excited to have you on Accelerated Real Estate Investor. Thanks for coming up some time.


Spencer Gray: Hey, absolutely, Josh. I’ve been looking forward to this. Yeah, I’m happy to be here.


Josh Cantwell: Fantastic. Guys, as you listen to this interview and this discussion, I think we’re going to really love this for a couple of reasons. Spencer and I are prepping for this, and we have a very, very similar path, both started in resi, both started co-GP’ing and co-syndicating deals with joint venture partners, scaled very fast, then got to the point where we were doing a lot of our own deals with our own team, co-sponsoring our own loans, raising our own capital. So, Spencer and I are just going to have a very frank discussion about some of the things that worked for him and me because I think, frankly, Spencer’s path and my path is a path that every single one of you in this audience is listening can follow, starting with resi and scaling up from there.


So, Spencer, welcome to the show. I love to hear some of the things that you’re up to today, literally like right now, what are you working on? What are you working on today? What are you working on next week to get you going that you’re passionate for?


Spencer Gray: Yeah. Well, I mean, obviously, always looking for good deals, making offers, doing a lot of losing really good deals right now, but something we’ve been focused on the past couple of months, but we’re really kind of nailing it down right now is we’re going to be launching a fund kind of Q1 of 2022. So, we’re kind of figuring out the details of that process right now. We’re sticking to kind of the strategies that we’ve been successful at the past six years, keep executing on good projects, and trying to find inefficiencies in the multifamily space, targeting stabilized multifamily assets primarily in the Midwest. But moving to the fund model is going to make us much more competitive, much more agile, and to really continue to scale our portfolio and really just make us much more lethal in terms of being able to execute on deals.


Josh Cantwell: Nice. I love it. Tell me about the structure of the deals, that open-ended, closed-ended. What types of deals is it going to target?


Spencer Gray: Yep, it’s a good question. And to be honest, we’re still working out some of the details, having conversations with some of our lead investors to kind of see what their preferences are because we’ve been big proponents of doing single asset syndications for a long time, building out your own diversified, just bespoke portfolio, and so, really kind of leaning on kind of some preferences of our kind of existing investors. And most likely, it’ll be a closed-end fund just because most investors want some kind of exit period, you want it to be necessarily indefinite. Although some investors do like the concept of really something that’s more perpetual, continuing to go on for an extended period of time, but lean towards the closed-end route. It’d be a $100 million fund or are going to go in relatively large for our first fund. And yeah, so again, targeting stabilized assets, kind of the light value add to core plus, which has been our sweet spot, and we’re excited to get going.


Josh Cantwell: Nice. Fantastic stuff. And you focus on the Midwest, you mentioned.


Spencer Gray: Correct.


Josh Cantwell: Why the Midwest? What are some of the things that you like particularly about the Midwest? Obviously, so many people are really focused on the Sunbelt and the South. I’m from Cleveland and I love the Midwest. We’ve got assets in the Sunbelt, we’ve got stuff in Atlanta, we’ve got stuff in Oklahoma, we’ve got a lot of stuff in the Ohio market where we’re from. I love the Midwest. I don’t want the people coming. But what were your thoughts? I’m focusing on the Midwest. What do you like about it?


Spencer Gray: Well, first, it was just the natural market because I’m from the Midwest, I’m born and raised in Indianapolis. And so, investing in a market that I already understood made a lot of sense before I even started digging into really other markets and really breaking down different regions, understanding kind of migration patterns. And so, we started investing in really what we knew. But now, knowing more and learning more about other markets and how popular the Sunbelt is, not only to new residents, people migrating from Northern states, but also foreign investors and capital and seeing significant capital flows to those Sunbelt states.


And what we started seeing as we started really trying to kind of get into some of those Sunbelt metros is that it’s incredibly competitive. And sometimes, the returns ended up being much less attractive compared to some of the projects we were finding in the Midwest and specifically, in Indianapolis. And so, what we started noticing is there’s just this inefficiency in the market of where so many properties in those Sunbelt metros are getting bid up, and for good reasons, they’ve got great stories, great growth metrics, and people are making a lot of money. What we found is the Midwest offers just a different return profile, being more balanced, being slightly more weighted to cash flow and income, as well as getting appreciation compared to a lot of Sunbelt metros where there’s so much growth, and you’re paying up for that growth.


And the growth is certainly there, but the translation that is you usually having a ramp-up of cash flow starting at lower cash on cash. And then typically, you’re going to still get a great equity multiple because you’re going to sell it at a low cap rate because that growth is continuing, but just a more balanced return profile. And a lot of these Midwestern metros, they’re still growing at similar growth rates, especially in some of the suburbs, as a lot of Sunbelt metros. I mean, there are suburbs and Indianapolis that are ranked growth, as you know, 20% year over year and 2% annual population growth.


Josh Cantwell: Yeah, I love it. I love it. I love the fact that you’re breaking down opportunities and sometimes, it’s so niched, right? It’s such a small submarket that has some of those same growth patterns as the Sunbelt. Many people are like, well, we’re just going to the Sunbelt because that’s where everyone’s going through, yes, but there are other states, there are other markets.


Spencer Gray: Exactly.


Josh Cantwell: That makes sense. That’s Houston and Arizona and Tampa, Florida and Charlotte and those kind of areas, which is great. Spencer, I’m curious, what is your take on the market right now? You’ve obviously dug into it a little bit with some of the growth in the Sunbelt, but just generally, there are so many different levers being pulled right now, politically, economically, inflationary. Just what are your thoughts and comments? What are you prepping for in the next couple of years?


Spencer Gray: Yeah, I think that there’s a perception of a great amount of uncertainty. And I mean, there still are some things that we don’t know, and no one will know until things play out over the next couple of years. But the whole question of, are we going to see inflation? It’s not a debate. We’re seeing significantly elevated levels of inflation. And the question is, so how much and for how long? How persistent is it going to be? And looking at not just commercial real estate, but just markets in general, we’re seeing all-time highs. And what’s fascinating is it’s not necessarily just being driven only by speculation, but it’s being driven by revenue growth in earnings, whether you’re looking at public securities, but in commercial real estate and in multifamily, I’m sure there’s a lot of cap rate compression. But the growth that we’re seeing is being driven by kind of a top-line income growth and rent growth.


And so, if we’re seeing incomes also grow, which they need to still continue to pick up, it starts to make a little bit of sense because when you have market rent growth growing by 15% to 20%, even 30% in some markets, there’s going to be a two- to a three-year period of where in-place rents get traded out, and you’re simply doing a mark to market strategy of just really bringing leases up to current markets which are already getting at. And so, it creates a really different investment dynamic than we’ve really been living in over the past really decade or so, where you were really looking at value-add strategies or needing to really force that appreciation to get that $200 of rent premium. That $200 rent premium is already built in just based on where the market has moved.


And so, you’ve seen that’s led to the significant compression in cap rates because sophisticated buyers have seen where revenues are going to go. And all of a sudden, current cap rates don’t matter as much because they’re willing to pay up more for future growth, and where that line is, that’s what’s hard to figure out, how much growth are we actually going to see? And for how long and who’s willing to speculate and accept lower returns today for participating and getting a good deal, maybe in the future?


Josh Cantwell: Yeah, and to the point where I’ve never seen so many operators using bridge loans. They have to bring less capital to a close. And so, guys really even bleeding cash in the first six months, in months, going negative in order to acquire the building, and again, performing out, projecting in some cases obviously, speculating on those grounds that are three and four years out. And where’s the top of the market, right? Nobody knows. And every operator, every buyer, every sponsor is going to have their different metric. I’m looking at a deal now that I just underwrote it again this morning and reviewed it with my team. And we see current in-place rents. This is in a really good part of Cleveland, but it’s been owned by the same family for 60 years. The rents are at least $200 or $300 below market value today, and it’s been one of the top markets in the area where we could see rent bumps beyond that. It’s hard to wrap my head around a possible $400 or $500 rent bump, but because they’re already 20% or 25% what we see below market value today, what other people are charging today, and if we do a significant CapEx plan, we’re going to be there in the top 75% or 85th percentile when it comes to our rents compared to the rest of the market. So, then you’re going to see another $200 or $250 on the other side of the average, on the other side of the mean. And I’m trying to tell my team like, are we really going to see a $400 rent bump in this market? And it’s like, the numbers don’t lie, man, they’re there. I’ve never really seen that before, though.


Spencer Gray: That’s what’s been difficult is catching up today in looking to the future, but things have moved so quickly, the grass moving so fast underneath our feet. And if you’re not really paying attention, you look at a headline number and saying, yeah, we’re going to move rents $400 or we’re going to, whatever, 20%, 30%. If you’re looking at the mindset of 2019, 2020, that’s absolutely ridiculous. That’s the most impressive numbers I’ve ever seen. And I know people are underwriting organic rent growth after the big lift of in the 4% to 5% range as opposed to your typical 3% organic rent growth. You would have never seen that type of activity happen a couple of years ago. And it’s because the growth is there, but it is also the environment that easily can lead to asset bubbles is when you see what asset classes do you want to be allocating to in an inflationary environment when people have excess cash out there, savings are at all-time highs, markets in general at all-time highs. Where do you go?


Commodities might make sense, but they’re not going to pay you any cash flow in the meantime. But when you think of multifamily apartments, not only is it proven your hedge against inflation because we can track inflation on a daily basis, because if you have a portfolio, you’re signing new leases and new market rates on a daily basis. There are very few investments out there in asset classes that even in commercial real estate that provide that kind of inflation-hedging ability. And so, we’re going to see even more inflows into the space from other markets, new real estate investors, as well as investors who’ve been investing in retail and office who are very uncertain about those asset classes. And I think also, we’re going to probably see inflows from Asia and outside of the United States into U.S. real estate because there have been some outflows in recent years. And people are going to be searching for a safe haven, seeing the United States as a generally more stable economy compared to the rest of the world. And specifically, multifamily assets had this really unique asset class.


So, I think it’ll be an interesting couple of years. And when I see people paying these insane prices that I can’t justify today based on just our metrics, I still say, and we just lost out being a big– heard about this morning, lost it on a big deal. And I’m like, well, we can’t go there because it’s crossed our line in the sand. We’ve got to be disciplined. But at the same time, like they’ve got a good deal. It’s going to be worth $10 to $15 million more in five years from now, I know it is. And so, we can’t come up with a million dollars or $2 million, but I still think in the long run, it’s going to work out for them. It’s just we’ve got our line in the sand in our criteria, so.


Josh Cantwell: Yeah, I know, that was so well said. Thank you for that because high-level summary, when you have office retail gotten pummeled, nobody knows that there’s coming back. Those dollars are going to go where? Multifamily, right?


Spencer Gray: Yeah.


Josh Cantwell: Multifamily is the darling asset of COVID. It performed well, even with the eviction moratoriums, rental, slush funds being set aside. It performed really well. There’s going to be some, not a lot, but some upheaval in the resi space because those prices are going to top out and because there’s going to be some additional foreclosure activity next year. When there is foreclosure activity, those people are going to move into apartments. And look, if there is any kind of chaos that it’s the market, people living in A-Class buildings are going to move to B-Class. So, B-Class workforce is going to continue to do well. So, for all those reasons, sure, you could see things continue to appreciate.


But again, I love the fact that you said we have a line in the sand. We’re still not going to cross it. You got to be disciplined. Same here. It’s a deal we just lost out on that we went all the way up from. We started about $16, $17 million, if I remember, we ended up in the $20 million range in our final invest, and it traded at $21.5. And I’m still like, they still got a good deal, good for them. It’s great. But I could see, I could see that value continuing to go up. So, fantastic stuff. So, Spencer, what is exactly your strategy? Help us understand your structure for a deal’s pref return, what type you’d like to buy? You mentioned staying disciplined, so disciplined to what exactly? What is your model?


Spencer Gray: Yeah. So, I’ll talk about our model that we’ve done in the past. And when we move to the fund, it’s going to be slightly different but kind of very similar philosophy and ideas. So, we try to keep things pretty simple in terms of our deal structure. So, we only offer one class of membership units into our projects, we offer a preferred return that’s been 8% in our past three deals and will probably continue to be 8%. And then we offer us 70/30, LP and GP split after that. It’s pretty, very vanilla, very straightforward, very familiar to many investors.


In terms of kind of our strategy in our risk profile, we’re right in that white value-add to core plus space, but really looking for assets that we believe are undervalued or there’s just some inefficiency in the market where we can find kind of a wedge opportunity to find some really great value, some good basis where assets that for one reason or the other, maybe some buyers have just looked over or discounted or looking in markets that are just overlooked at times. And so, a couple of examples, I mean, during COVID last year, we acquired an asset, a newer asset built in 2018, but it recently come out of a lease-up and it was a little bit more difficult to put financing in place. They were bloated with concessions and marketing and admin budgets that were unnecessary. But it was in Granger, Indiana, which is a submarket of South Bend, and not as many investors were. One is the middle of COVID, so no one was flying out to South Bend, Indiana at that time, so no one was even touring the asset. There was one from football. Yeah, exactly, well, that was the thing. People are like, well, I’ve never heard of Granger, Indiana, but it’s like, well, if you’ve heard of South Bend, it’s a 10-minute drive to Notre Dame’s campus. It’s actually a decent mech going on in the market, but just people were discounting it and were not looking at it. And it provided an opportunity for us to get it in, buying it under whisper price, which it never happens.


Now, a year later, we paid $62 million for the asset. And today, if we look at our trailing three-month NOI, and if we put kind of a market cap rate, even just being conservative, putting not up to 4.5% of which we would have probably traded for today, but even a 5% cap rate, the values closer to $75 million over essentially, less than a year period, just because we bought when no one else was looking, they were mispricing the asset itself. We saw a pretty clear trajectory to really not take a lot of renovation risk. It was all operations. It was burning off concessions, running the property more efficiently. And I mean, we’re going to be cash flowing over double digits this year at a Class A luxury asset that when you would look at it on its face value, you would just make an assumption and that’s going to be a low return asset because of the quality. But just finding those unique moments in time and just things that are discounted, just because people aren’t willing sometimes just to take the time to dig into it, I mean, a lot of people just didn’t want to fly out and tour through the property, they weren’t willing to take a three-hour drive from Indianapolis or Chicago and we’re able to pick up a great asset.


So, just finding situations like that, and we wish that they were more of them, that it’s led to us doing less volume because we’re trying to find great deals. And we have this conversation all the time. We don’t want to do deals just to do deals, we’d rather just do only incredible deals and build a track record of having just incredible results and find great opportunities. And if we miss out on a deal that’s on the margins, sure, we could have overpaid for it, but then all of a sudden, we’re just doing deals to do deals. And so, that’s what gets us excited is find those inefficiencies in the market. That was just unique opportunities where we feel like we’re not taking as much risk as other strategies, like we’re not doing very large renovations, although we’ve done those in the past and we’ve done fold at rehabs. But when we can find a deal where we can go in create good cash flow from day one, really tweak the knobs, improve things, do targeted CapEx. We feel like it’s a really great risk-return profile.


Josh Cantwell: Yeah, I love it. That’s fantastic. Thank you so much for that explanation. And yeah, I mean, there are different places to take risks, right? There’s operation risk, there’s CapEx risk, trying to get a deal to stabilization, refi risk. You’ve got to pick and choose your battles because those risks are limited. Today, we’re really focused on acquiring buildings as many as we can that are stabilized, 90%, 95%, or more occupancy, but need that kind of light to medium value add where we can still get permanent financing, non-recourse off the rip, and we can raise a little bit more capital with private investors so that if there is any kind of chaos in the market, I believe there’s a tremendous amount of upside. I’m very bullish like you are, but sometimes, you just don’t know what you don’t know.


We’re talking more and more conversations with our staff about, look, Lehman Brothers took the whole market down. And you start to hear about some of these huge banks in China that in the 62 million vacant units they have, is that feasible? Is it possible that some of the banks and the developers in China could have some significant, significant disruption in the entire global economy? I don’t know the answer.


Spencer Gray: Wait, Josh, you’re saying that we completely reset the fold in the entire world economic system and there may be some hiccups in the next couple of years.


Josh Cantwell: Yeah, I mean…


Spencer Gray: You think so, right?


Josh Cantwell: That happened 10 years ago, right? It happened.


Spencer Gray: And why can’t it happen again? And there’s always something that’s present that we’re not aware of. There are always those black swans that are out there, and so much has changed so quickly with so many people, institutions, either not catching up, and we live in a different world in 2021, 2022. It’s completely different than it was two years ago, and I think most of us are still operating off of probably the old playbook. And I think very few really understand what the new playbook is. I don’t think that really the Federal Reserve understands it. I mean, it sounds like they appeared to be pretty behind the ball in terms of catching up with inflation and trying to cover for saying, how long can transient inflation be transient if it’s prolonged? It’s kind of the opposite definition of a transient. And so, the leading economists that are supposed to be controlling the economy, they don’t really know, they don’t have the crystal ball. So, it’s left us as individuals to kind of figure it out and find those opportunities, but.


Josh Cantwell: Or let me add this, I wasn’t going to go down this bunny trail. Let’s go, Spencer.


Spencer Gray: Yeah, let’s do it.


Josh Cantwell: Or the global Federal Reserve, the global central banks, and the governments are in a race to print money. They’re all printing money. It’s not just the U.S. Federal Reserve, it’s China, it’s all the central banks, the European Union, all the central banks are all printing money at unprecedented rates. We have liabilities that none of these countries can afford. It’s not just the United States, it’s every single economy. They’re all printing money, they all have liabilities that they can’t afford. The only way out of it is inflation.


Spencer Gray: Yep.


Josh Cantwell: So, is it possible, that’s a loaded question, right? Is it possible that they want inflation if Federal Reserve wants and it is encouraging inflation on purpose because the lower the value of the dollar, the less these liabilities are because the dollar is worth less? My opinion is that the Federal Reserve is doing it on purpose. These supply chain issues are real, and they’re on purpose. I think Joe Biden is a puppet who is playing into it on purpose. I think the Federal Reserve knows exactly what they’re doing, keeping interest low. And I also feel like the Federal Reserve is a private bank. We all know it’s owned by separate people, it’s not part of the federal government. And what it’s allowing is by keeping interest rates low, it’s allowing people that are already at the top of the pyramid, the top 1%, 5%, 10%, to borrow more money at cheaper rates to consolidate the wealth at the top.


Now, the good thing for you and I, Spencer, is that we’re in that group. We can borrow money at really cheap rates, we can buy assets at really cheap rates, and we can participate in that. The trouble is, and I think, is that the global middle class and lower class can’t participate, and things are going to get more white and more disparaging between the upper class and the lower class. That is not good. And ultimately, I have a feeling that the Federal Reserve is actively allowing this to happen to dilute all the liabilities that are on the books, and inflation is the only strategy they have. But the people are going to get left behind, man, and I’m just afraid to see what that looks like.


Spencer Gray: Yeah, I tend to agree with you 100%. And I don’t think that’s even a question of whether that is the plan of the Federal Reserve to devalue the dollar and destroy the debt for inflation, I think that is the stated plan. They’ve been saying for years we need higher rates of inflation instead of using a 2% target now, going for an average of 2% so we can run at 4% or 5% for years because then we’re going to take a long period to get a 2% average. And I tell my friends all the time because you’re absolutely correct, it’s using the tools, like the top 1% are using to accumulate a significant amount of debt backed by real assets that are producing cash flow. We’re using that strategy in the playbook that family offices and ultra-high net worth individuals have been using for centuries and beyond, and also looking at the playbook of the Federal Reserve, understanding what they’re doing, and really trying to take advantage of it and exploit it.


And I tell my friends all the time, even if they aren’t investing, it’s no longer a question. I feel obligated to say, look, if you’re not investing in some kind of asset, obviously, I love real estate, but even in the stock market and equities, some type of asset that’s going to at least track inflation and be able to grow over time, if you’re relying on your income and your wage, it is on a linear growth trajectory, and these asset prices are going to be on an exponential growth trajectory. The difference between the folks who are going to be left out is going to be tragic, and unfortunately, we’ve seen time and time again throughout history, that leads to such great conflict. And so, if we could build a better civil society from the bottom up rather than the top-down to educate people and say, you really have to start allocating yourself and you have to start thinking about the future on what’s happening, I feel obligated to tell people that I know. Again, they may not be able to invest in our projects because we only allow accredited investors but say, look, you have to start getting yourself allocated to some type of assets.


Josh Cantwell: I mean, look, the dollar is down almost 5% with inflation, but crypto, cannabis, stocks, bonds, real estate, it’s all up. Money doesn’t have to sit in cash, right? So, it’s got to get invested in order to keep up and outpace inflation. And I think that’s great advice. And Spencer, let’s just fast forward to that. You had a lot of success now, 9,000 units, lots of syndications. You’ve raised lots of money standing up a fund. Looking back, what would you do differently, if anything? What advice would you give to our audience or to your younger self? You look pretty darn young, by the way.


Spencer Gray: I appreciate it.


Josh Cantwell: You started young. You are young. That’s one piece of advice I would give our audience is start young, you don’t have to wait. I mean, he started investing when he was just out of high school. And we’ll circle back on some of that introduction later. But what kind of advice would you give to yourself or our audience? Whether it’s navigating today’s market or just some early challenges that you faced along the way, what would you do differently?


Spencer Gray: I think that the biggest thing is don’t fall into your natural limiting beliefs of what can I do now? What do I understand at this moment as opposed to what can I do in the future and what’s possible? And like when I talk to newer real estate investors, and they talk about, I’ve got this much money for a down payment, what should I do? I think it’s important, let’s take a step back and let’s look at what is the real long-term goals here? What are the best investment strategies? And don’t exist in the box of these are the resources that I have today, and we’re building the plan and then figure out what the piece of the puzzle is and start putting the puzzle together and start painting that picture because there are opportunities out there that are going to be incredible, that are going to be outside of your ability. And if you don’t have the foresight to say, alright, this is just a problem that in search of, that we need to find a solution for, and it’s 100% possible, whether it’s building the right team, putting the right people together, you start doing bigger deals, you start growing faster. I mean, it includes being pretty uncomfortable sometimes because you’re doing something you haven’t done before, but I would go bigger, faster, and just don’t focus on what you could do today.


Josh Cantwell: Yeah, that’s such good advice. That’s self-limiting. Belief is so big. And I think the one thing to keep in mind is, look, almost every major deal, whether it could be a small restaurant, half a million-dollar restaurant or a million-dollar restaurant, apartment building, an e-commerce business, or a large social media platform, none of those deals were done with just the operator’s cash.


Spencer Gray: Exactly.


Josh Cantwell: They were all done through some sort of joint venture, some sort of syndication, some sort of investor pool, some sort of group of people that came together, it could be four people, it could be 400 people, whatever. And none of those circumstances did one person with just themselves and just their money gets wealthy. It was always done through some sort of group, a pool of investors, syndication, some sort of joint venture, some sort of network that made it happen. And so, the pie got so much bigger that everybody was willing to take a smaller slice of a much larger pie versus, hey, I’ve just got my little slice of pie, how much of this can I eat or how much of this can I invest? That’s a different mindset. I think that’s fantastic advice, Spencer. Thank you for that.


Spencer Gray: Absolutely. Yeah, I don’t believe that other people will believe in them necessarily, and who’s going to give me money for a project and believe in me? But if you believe in yourself, the money is out there. It’s just you, but you have to take a step and you have to ask for it. If you don’t try to ask for it, you never know what it can actually do. So, get out there and try.


Josh Cantwell: Spencer, let’s finish up with the final five. Are you ready for this?


Spencer Gray: Let’s do it.


Josh Cantwell: Let me, super fast. Alright, let’s start with this. What’s your absolute favorite way to find new deals?


Spencer Gray: Favorite way to find new deals. We get a call from– I love from the owner directly, but even if some are brokers saying we’ve got the perfect deal for you guys, the seller needs to move incredibly quick. You guys are the buyer for it because we know that you’ve executed in the past, sent over an LOI, we’ll get the PSA wrapped up in a week or two and are ready to go. That’s my favorite way to find new deals because it’s a non-broker relationship, ready to go, no bidding process, and just a nice little matchmaking process.


Josh Cantwell: Nice. I love it. How about your capital stack? You said the accredited investors only, you’re going towards a fund structure, but you’ve done basically a one-off type of syndications, one deal at a time. What’s been your favorite way to fill up that stack?


Spencer Gray: Favorite way to fill up the stack is really through a combination of a handful of large anchor investors, a few large family offices, typically investing kind of $1 to $2.5 million. And then we’ve got a lot of investors who are investing 50 to 250, and because I love working with the bigger groups, they can write the big checks. Obviously, it moves the needle, but also, we built this business and coming to work with multiple investors and help individuals, build portfolios, and grow their wealth. So, working with people who are passionate about investing in real estate, we’re never going to not do that. Even though we have investors who can write a $10 million check to get a whole deal done, we always carve out a couple of million dollars for our own, just a group of individual investors. And so, by having that kind of diverse pool, we have a little bit more flexibility, different deals for different groups. And so, we kind of take out a little diversified approach to building up the capital stack.


Josh Cantwell: I love it. Spencer, you’ve had a lot of success at a very young age. Who do you think’s had the biggest impact on that? Who’s been the mentor that kind of stuck out that really moved the needle for you?


Spencer Gray: Yeah. I’ve got a lot of good mentors today, a lot of people that are in the industry, people who are still multiple steps ahead of me, but I’ve been able to benchmark. But if I have to think of the one person that really has influenced me, it’s got to be my father. I saw him build a business as well growing up, started from absolutely nothing. He’s really taught me how to kind of think larger, I’m not thinking inside the box, and led me down a path of entrepreneurship as kind of the preferred option as opposed to go to school, get a degree, get a job. I was taught that was kind of Plan B rather than doing your own thing, going off on your own. So, very just fortunate to having that upbringing and kind of starting at a young age with that mindset.


Josh Cantwell: Yeah, I love it. We have so many things in common. My father, same thing. I got to witness him in the house, be an entrepreneur, and make one step, one move, one decision, one after the other. What an amazing business. There’s no better way to learn than to see it yourself. Last question, Spencer, is listen, you have a great business, you have a tremendous amount of success, often when you sit in a CEO or a founder’s role, it’s hard to find free time to think and just sit and ponder and strategize. What’s your favorite way to do that? What’s your favorite way to carve out time to really think several steps ahead, to find blind spots? How do you do that in your own business to make sure that you don’t get caught, you don’t get some unknown, some black swan, something like that comes up and kind of disrupts your business?


Spencer Gray: Yeah, I love the outdoors. I do a lot of fly fishing as well as bow hunting. So, it’s deer season right now for bow here in Indiana. And so, going up and getting into a tree stand and sitting for three to six hours and absolute silence, just observing kind of nature around me has been incredible opportunity to really sit there, think, decompress. It’s really forced you, you can’t make any noise, you have to just observe. And so, that’s been incredibly helpful. Not bow season, I do a lot of fly fishing as well and similar experience. I don’t really play golf, but I do a lot of fly fishing. So, that’s my kind of release to kind of get out there, get in nature, but also just decompress, strategize.


Josh Cantwell: Isn’t it funny that when you’re doing that, that’s like when your best ideas pop in your head, right?


Spencer Gray: 100%.


Josh Cantwell: Bow stand versus sitting at your desk with your four computers in front of you and looking at all your metrics, it happens out when you’re away. So, I encourage my audience to get away from the business, to not be just so dialed in, to just hustle, hustle, hustle, to take time away, to think and strategize, and actually go do something that’s like mildly occupying, but not something you have to think too hard about, and that’s ultimately where the best ideas kind of flowed in. I love it.


Spencer Gray: Yeah, absolutely.


Josh Cantwell: Spencer, tell us where our group can find you. I’m sure our investors will and our audience will want to get a hold of you. Gray Capital, LLC, I know has a fantastic newsletter. Tell us a little bit more about where people can reach out.


Spencer Gray: Yeah, is the website, I mean, welcome to sign up for our newsletter, and you go there, there’s a button to do that. We’re also on all social media platforms. If you just Google Gray Capital, we’ll pop up. Yeah, and we’d love people to join the newsletter. We think it’s one of the better multifamily newsletters really in the industry, comes out every week, every Thursday, and we have a whole team that’s basically aggregating every new research report or data set that comes out from, whether it’s the brokers, the property management, the real pages, the already matrix is, really anything that’s kind of like a hard research in multifamily real estate and the economy. We’re aggregating that, sending it out every week. And it’s no fluff. It’s just like, here’s what’s going on in the markets, keep you updated from a macro sense but also micro. And we have great reception. People seem to really enjoy it. And so, yeah, sign up,


Josh Cantwell: Fantastic stuff. Listen, Spencer, thanks so much for popping on today. Appreciate you carving out some time.


Spencer Gray: Hey, thank you, Josh. Really appreciate it. This is great.




Josh Cantwell: Well, hey, I really, really had a great time interviewing Spencer right there. Thank you so much for listening. Listen, don’t forget to subscribe to Accelerated Real Estate Investor. Open up your phone, open up your laptop, your browser, and click the Subscribe button now so you never miss another episode. Also, don’t forget to leave us a rating and a review. If we did a great job, tell us. If you hated the interview, tell us. Either way, I’d be so grateful to hear your feedback. And also, don’t forget to join our free Facebook group. It’s called Accelerated Real Estate Investor. You can find it on Facebook. You can join for free and get fantastic free content.


Finally, don’t forget to visit, especially if you’re a passive investor seeking your next investment opportunity. Just like Spencer and I talked about today, your money cannot sit in cash in today’s environment. If you’re sitting in cash, you’re getting destroyed by inflation at roughly 5% right now per year. The dollar is being devalued, and so you have to get that money invested in order to keep up and surpass inflation to protect your family. So, don’t forget to visit Thank you so much for being here today, and we’ll see you next time. Take care.

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