The Deal From Hell and Why I Would Do It All Over Again

Bad timing. Wrong loan product. A market that turned upside down mid-execution. And somehow, this became Brian Sutton's favorite deal. In Episode 9 of Lessons the Hard Way, Brian sits down with co-host Sam Chillingworth to break down a Birmingham, Alabama multifamily deal that had everything going against it: bought in 2021 at near-peak pricing, repositioned from student housing to conventional during Covid-era supply chain chaos, sitting on a bridge loan while the Fed raised rates to the moon, and still sold at a profit. Small profit, but a profit. What made it Brian's favorite was not the return. It was the people who stayed. In this episode:The Birmingham deal: bought in 2021, repositioned student housing near UAB to conventionalWhy student housing just far enough from campus fails and what to do about itBridge loans in a rising rate environment: the mistake and the lessonHow the Fed rate hikes changed the deal mid-repositioning and why nobody saw it comingFighting through Covid supply chain delays, material shortages, and eviction moratoriumsWhat happens when you reset investor expectations mid-deal and do it with integrityEverybody got their money back and made a little: what a win looks like in a tough marketPride vs. favorite: why the deal you are most proud of is not always the most profitableThe three types of people in a crisis: those who stick, those who leave, those who make it worseWhy neighborhood quality was the single factor that separated the deals they lost from the deals they savedStrong neighborhoods attract more buyers at exit: the thesis that proved itself under pressureThe magic carpet ride ahead: why Brian is more bullish now than everNon-negotiables: who to cut out and who to run toward when times get hard Subscribe for weekly episodes. New deal autopsies and hard lessons every week. 🔗 Two Waters Capital: 2waterscapital.com real estate deal autopsy | Birmingham Alabama multifamily | student housing repositioning | bridge loan real estate | how to recover a bad real estate deal | multifamily investing podcast | accredited investor education | real estate partner relationships | deal gone wrong recovery | Lessons the Hard Way podcast 0:00 Cold open0:35 Show intro0:57 Welcome back1:18 What full cycle means: from acquisition to disposition2:09 The 5 to 7 year hold3:03 Leave the meat on the bone3:41 The setup: not my favorite going through it, actually a painful experience4:04 Birmingham, Alabama: bought in 2021, near-peak pricing, post-Covid skyrocket5:13 Why Birmingham5:38 Student housing near two universities6:32 The thesis: reposition to conventional and attract grad students and families7:15 Bridge loan in 20217:33 The Fed raises rates: what nobody could have predicted happening mid-deal7:50 The conversion process: Covid delays, materials, staffing, eviction moratorium8:34 Fought through it: rehab, painting, upgrades, repositioning, and sold within the bridge window9:02 The right investor partners: who you need when the market stops cooperating9:30 No investment has zero risk: even money under your mattress has a rat problem9:54 Investors stayed supportive: hey, we understand the market is not going your way10:21 Why this is his favorite: struggle and strife can reshape and reform you10:53 The workout analogy: you only grow muscle when you strain it a little11:45 Pressure that does not break you: what this deal did to Two Waters as a team12:14 Resetting investor expectations mid-deal: the honest conversation that saved the relationship12:58 Everybody got their money back and made a little: what success looks like under pressure13:19 New OREO deal incoming: the bank came back, same market, new opportunity13:43 Relationships with banks:14:26 Buy better properties in better areas15:14 Neighborhood quality as the key variable15:37 Better neighborhoods attract more buyers: why it mattered at exit16:02 Not my favorite deal, but the one I am most proud of: the distinction16:24 Pride is forged through going through tough things: the real takeaway17:08 Find partners you can trust: it is always about the people17:28 The magic carpet ride ahead18:19 Forged by fire18:38 Good times vs. tough times: the high fives are easy, the trenches reveal the truth19:07 Three types of people in a crisis: those who stick, those who leave, those who create more trouble19:48 Notice all three: the people who stayed are the ones to keep20:12 Move away from the people who made things worse21:08 What are your non-negotiables21:27 Being a yes person: the lesson this downturn taught Brian about saying no22:05 The right partners make you want to keep going22:48 Closing #lessonsthehardway#twowaterscapital#realestatepodcast#realestateinvesting#multifamilyinvesting#dealautopsy#valueaddrealestate#accreditedinvestor#realestaterecovery#realestatelessons Powered by ATL Podcast Proshttps://atlpodcastpros.com