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MASTER INVESTORS — Chris Loeffler, Donnie Schrader & Jennifer Schrader / Caliber Companies

January February 2014 . Personal Real Estate Investor www.PersonalRealEstateInvestorMag.com28

MASTER INVESTORS

By susan Thomas springer

One evening last November, a few hundred guests celebrated Caliber Companies’ newly expanded 8,500 square feet of office space complete with Hugo Boss furniture, candles and swanky mu-

sic. Guests noshed on flat iron steak bruschetta with gor-gonzola and sipped “Caliber Cocktails,” champagne and a splash of Elderflower liqueur. That’s a long way to come for this Scottsdale, Ariz., business that started about five years ago out of the three partners’ houses, with only one client and no capital. These partners had found each other based on complementary skills and an investor who believed they could deliver bet-ter returns using real estate.

BEGINNINGS The whirlwind journey began with house flipping, then multifamily investing and on to commercial, retail and recently hospitality. Today Caliber is a full-service real estate investment company with 22 corporate employees, 150 hotel staff and at least 60 subcontractors. The partners have made plenty of bold moves, expanded into new areas and learned lessons along the way. One thing they have not been is bored. “None of us thought that we were going to be doing what we’re doing three years ago,” says Jennifer Schrader, one of Caliber’s three managing partners. “I think the sur-prise for me was where we can take this, and how fun and

SUCCEEDING BY MEETING INVESTORS’ NEEDS

Caliber’sexecutiveteam,fromleft:JenniferSchrader,DonnieSchrader,PatrickMcNamara(presidentofconstruction),ChrisLoeffler,PaulBressan(chieffinancialofficer)andBillHoward(vicepresidentofoperations).

www.PersonalRealEstateInvestorMag.com January February 2014 . Personal Real Estate Investor 29

challenging and exciting it is to have the team around us that we have.” “One of our biggest moments was when we closed our first large commercial transaction,” says Chris Loeffler, also a Caliber Managing Partner. “It was just such a fan-tastic time for us — we saw that if we can buy a $5 million deal, we can buy a $50 million deal.”

MAKING THE LEAP The third managing partner, Donnie Schrader, was flipping houses in Michigan in the early 2000s. Jennifer, an architecture student noticing signs of the oncoming re-cession, decided she’d rather be an entrepreneur than be saddled with student loans. So she quit school and joined Donnie house flipping where she was still able to use her design skills. Soon, the couple sold their “small portfolio of rental homes” and moved to Arizona in late 2007. Loeffler was working in the corporate world at an accounting firm where he was learning “how big companies are made, how they work, how they don’t work and everything in between.” Years earlier, he’d read “get rich in real estate” books and remained intrigued with the concept of “borrowing my way to success.” The three joined forces, and Caliber was born. “The focus at the start was 100 percent on buying homes at auctions, quickly remodeling them and putting them back on the market and selling them. We all had the foresight to see that wasn’t going to last forever,” says Jen-nifer. “We thought that we needed to do something else in order to have a sustainable company.”

FLIPPING IS “EATING YOUR SEED CORN” Although flipping hundreds of homes a year was prof-itable, the three partners knew they needed to change their business model in order to build a sustainable company. The essence of flipping is that you sell your best assets, as income, says Loeffler, and you are left with no residual in-come from the effort. You are eating your seed corn. So they moved into multifamily and then branched out into additional types of properties. Their philosophy evolved as well, from “opportunistic” to providing wealth development vehicles for other investors beyond the usual stocks, bonds and mutual funds. “We wanted to create an option for people to invest in these types of projects that was pretty far removed from your traditional choices,” says Loeffler. Today, Caliber has in-house teams to handle construc-tion and development, brokerage, acquisitions, property management, property asset management, capital raising, accounting and tax services.

TRYING SOMETHING NEW Caliber’s current push is opening and operating pri-vate real estate funds. That’s accomplished through a dis-closure document called a private placement memoran-dum (PPM). They have two funds so far. It allows them to “put people’s money together in a pool and buy a single property or a group of properties.” “We’ll likely be opening a third fund soon,” says Loef-fler. “This is some of the perfect combination of our ability, which is buy phenomenal investment properties and man-age it right, and our clients are able to participate with us at the best possible level.” A second, newer area is also a popular one — Caliber’s Bridge Note Program. Investors provide the capital for Caliber to purchase, renovate, market and sell properties. Capital is secured by a first position deed of trust, with

investors receiv-ing a 12.125 per-cent fixed annu-al rate of return. “There’s this certain abil-ity for real es-

tate to maintain your capital, so there’s little risk there, but people don’t always want to own an apartment complex and do the heavy lifting of plunging toilets and deciding whether or not they should change the carpet or what they want to do with the paint, and so on,” says Loeffler. A third new area is hospitality. When the trio recently purchased a hotel, they realized it was a complex industry involving millions of dollars in renovation and including business within it — such as a restaurant and bar. They were familiar with most aspects, but needed additional ex-pertise on others. “The part where we needed a little bit of help was the management of the daily operations,” said Jennifer. “We made sure before we purchased it that we had a rock star management team to come in and be our partner and help us on it.” Along with experts to manage new investments comes the willingness to jump in. “If you want to understand the hotel industry, just go buy one, and you’ll know. The learning curve is much shorter,” says Loeffler, who adds that sometimes investors take too much time analyzing risks instead of acting. “I think my advice would be, thinking about it and building a team is important, but at some point in time, you’ve got to decide whether or not you’re going to be the kind of person who can just take the risk,” says Loeffler. “When trying to start a real estate business, the best education you can get is experience — and the only way you get experience is by actually doing it,” says Donnie.

“Don’t spent too much time reading every guru’s book on the market or going to every seminar you can find trying to learn how to do this. Just get involved in at least one

January February 2014 . Personal Real Estate Investor www.PersonalRealEstateInvestorMag.com30

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Name: Jennifer SchraderPosition: Managing PartnerEmail: Jennifer@CaliberCo.comHometown: Brighton, Mich.Education: Attended Lawrence Technological University in Michigan – pursued a degree in architecture/interior architecture First real estate deal: Purchased and remodeled a dilapidated home one block north of Detroit border.Sold it for more than 50 percent profit. Guiding principles: Respect and responsibility.What makes you get up every morning: Coffee!When you’re not working: Love to explore.Best advice ever received: Pay attention to every penny spent, however insignificant it may seem. It’s all the little things that add up and have the potential to make or break you.Technology you can’t live with-out: iPhone.On competition: Love it! Healthy competition breeds creativity. Most impactful book: I love read-ing – too hard to name just one.If I had to do it all over again: I would. Favorite quote: “Control your own destiny or someone else will.” — Jack Welch

Company: Caliber Companies LLCWebsite: www.caliberco.comOffice Phone: 480-295-7600Name: John Christopher Loeffler II “Chris”Position: Managing PartnerEmail: Chris@CaliberCo.comHometown: Scottsdale, Ariz.Education: B.S. (Business Administration & Accounting),Cal Poly / San Luis ObispoFirst real estate deal: My first home, a five-bedroom in a college town that I rented to roommates.Guiding principles: Integrity, honesty, transparency, responsibility and honor.What makes you get up every morn-ing: The opportunity to create something new.When you’re not working: I spend time with my fiancé, enjoy the outdoors and head to the gym.Best advice ever received: If it’s to be, it’s up to me.Technology you can’t live without: iPhone.What most people don’t know about you: I grew up in a military family and have lived in Asia and Europe.On competition: Quality competition creates more opportunity overall; consider the Starbucks effect to the local coffee shop.Most impactful book: “Jobs” (biogra-phy of Apple founder Steve Jobs).If I had to do it all over again: I’d start with an assistant!Favorite quote: “Whenever you find yourself on the side of the majority, it’s time to pause and reflect.” — Mark Twain

Name: Donnie SchraderPosition: Managing PartnerEmail: donnie@caliberco.comHometown: Brighton, MichEducation: Attended Schoolcraft College (Garden City, Mich.)First real estate deal: Simultaneously purchased two distressed single-family homes on the outskirts of Detroit, remodeled and flipped with 50 percent profit.Guiding principles: Perseverance, responsibility, adaptability, honesty. What makes you get up every morning: Being able to be my own boss and own my own company.When you’re not working: Exploring the outdoors with my wife and dogs, traveling, gym, car stuff.Best advice ever received: Don’t ever get too emotionally attached to a deal; there’s always another. And don’t get greedy.Technology you can’t live with-out: iPhone.What most people don’t know about you: I have four older sisters. On competition: I am very competi-tive, not just with my competition, but with myself. I’m always trying to get better! Former professional motor-cycle racer.Most impactful book: “Jobs”If I had to do it all over again: I would, just sooner!Favorite quote: “As long as you’re going to be thinking anyway, think big.” — Donald Trump

January February 2014 . Personal Real Estate Investor www.PersonalRealEstateInvestorMag.com32

MASTER INVESTORSaspect right away and just go. You will grow from there.”

OVERCOMING CHALLENGES During the inevitable setbacks to a swift climb up, the partners keep in mind their strong desire to pave their own way and their responsibility to each other and their growing team of employees. In down times, they boost each other. Also, they are driven by the entrepreneurial spirit — or as Donnie puts it, “I have my destiny in my own hands.” “There are weeks that it would be a lot easier to just go and get a 9-to-5 job, and not carry any of the stress home after work, but that’s not what I want,” says Jennifer. “I love the challenge of what we do. I love the company that we have. I love the opportunities that are available to us, and there’s also a sense of responsibility where we have a lot of staff now. It’s just not in my per-sonality to give up on something.” One barrier to growth for a compa-ny working in alternative investments is to expand despite lack of traditional financing. The partners had no oppor-tunities for a small business loan and no government assistance. Yet they did have to deal with regulatory chal-lenges. For example, at one point, they had 12 attorneys and 11 employees. Whether it’s regulatory issues, fi-nancing or industries with which they are unfamiliar, there’s always a new

area to learn about and invest in. “The fact is that there is never-end-ing opportunity,” says Donnie.

GIVING BACK Caliber gives back to the commu-nity in several ways. In its charitable work, the company gives back in the same spirit as its for-profit business — by creating some-thing bigger out of peoples’ collective effort. Instead of writing a check for $10,000 to a charity that helps battered women, homeless veterans and teens leaving foster care, they organized a team to make a bigger difference. They all descended upon the 300-room “fall-ing apart” hotel from which the char-ity operates to upgrade it and improve safety. “We brought in — between us, our staff and our contractors — prob-ably about 50 people, and in a single day, we paid for about $10,000 worth of supplies,” says Loeffler. “In a single day, we contributed maybe $50,000 or more worth of gifts in free contractor labor and free us just doing projects that they had waited all year to get done.” Donnie appreciates that their core business goes beyond earnings to

“being able to grow your community by redeveloping or remodeling old, delapidated homes or buildings and giving folks something nice to live in and take care of.”

Also, the trio is happy to speak and educate others in the business. “We understand our role, and we have a sense of responsibility for our role in this business in helping grow the industry, and we love to help peo-ple,” says Loeffler. The partners say they are always looking for new ways to grow their business. And they accomplish that through the core principles of respon-sibility, integrity and transparency, to which both they and their staff adhere. In short, “we do what we tell our inves-tors we are going to do.” As the first of Caliber’s Five Core Beliefs states, “It’s not about the prop-erty. It’s about the people and the team.”

INVESTORS NEED A TOP TEAM “Choose your partners wisely. Partnerships could be the very best thing you could have to build and grow your business, or they could be the very worst and completely tank everything,” says Donnie. “I’m blessed to have two of the best partners one could have, but we’ve had some others along our journey who taught us some pretty tough lessons.” Jennifer understands their new-ish company provides a livelihood to a growing number of employees and their families and wants to create a positive environment for them, com-plete with respect for all. “The really cool part about what we do is things like creating a fun, en-ergetic work environment,” says Jenni-fer. “Things are easier for us because of the team that we have.” The three partners have added expertise in all areas of real estate to diversify their services. For example, they have team members who can do anything from securing a bridge note to help remodeling a guest house. Effective real estate investment needs a broad set of skills. Caliber is a case of the smart, skilled and well funded attracting more smart and skilled people and attracting investors to more and bigger deals.

TheCaliberexecutiveteam,fronttoback:JenniferSchrader,DonnieSchrader,ChrisLoeffler,BillHoward,PaulBressanandPatrickMcNamara.