JF1038: Standing on the Shoulders of Giants

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Do you want to make a jump to the big leagues but aren’t sure how to do it?  Chris was in that same position when he decided to connect with people in the industry and offer his services to them.  If you want to know how you can show your value to the bigger players in your area, listen up and take notes!

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Chris Tracy Real Estate Background:
-Acquisition specialist with The Synergetic Investment Group
-Active in the world of real estate for 5 years with investing and brokering
-A Realtor with Coldwell Banker and works part-time with people that have disabilities
-Based in Plainville, Connecticut
-Say hi to him at www.howtobuyalargemultifamily.com
-Best Ever Book: The One Thing

Click here for a summary of Chris’s Best Ever advice: Why You’re not Receiving a Response When Messaging Big-Time Investors

 

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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Chris Tracy. How are you doing, my friend?

Chris Tracy: I’m pumped, man! So honored to be here. I appreciate this – it’s an amazing opportunity. I’m just loving life! Thank you so much.

Joe Fairless: Yeah, well I’m looking forward to it. A little bit about Chris, and then we’ll get into why… He is an acquisitions specialist at the Synergetic Investment Group. He’s active in the world of real estate, he’s been so for five years, both investing and as a broker. He’s an agent with Coldwell Banker and he has been working part-time with people who have disabilities as well, just as a side note.

He’s based in Plainville, Connecticut. With that being said, Chris, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Chris Tracy: Yeah, man. Background – started off with residential, like you said, about five years ago. I started off just putting bandit signs on telephone poles, wholesaling deals… Then I went out and got a license, and I just found myself really on a hamster wheel, so I said,  “You know what? I really need to focus on something and start playing a game that’s a little bit bigger.” I just wanted to play with the bigger boys, people like yourself, Joe, just to kind of integrate [unintelligible [00:03:32].06] with some big guys. So I said, “You know what? I’m gonna see if I can enter this game of buying these big apartment buildings”, like the 75 units, 100 units, 250…

Still, I just said “How am I gonna do this?” and I just said “Well, I’m gonna focus right now and just see if I can connect with some people in the industry and just try to get in the game”, and that’s totally my focus now at the Synergetic Investment Group. I just linked up with them last year and they are totally my focus. We just closed on a deal a few weeks ago, a 36-unit, 144-bed student housing project; it’s down in Georgia. So yeah, we’re all about these big apartment deals, and I’m just loving it.

Joe Fairless: Well, this can be an interesting conversation, really cool for the Best Ever listeners who were in your shoes, who have some experience in real estate and wanna do larger stuff. Ultimately, that seems to be a topic that attracts a lot of ears too, so let’s talk about this.

You were doing brokerage stuff locally, and then you wanted to get in larger deals. You said before we started recording Jeff Greenberg, who’s also been a guest on this show, and I’ve met him a handful of times and I enjoyed my conversations with him everytime I talked to him… He is the president of this group – is that right?

Chris Tracy: Yes, he’s the ringleader, the sponsor, the shot caller… He’s the extremely seasoned veteran and he’s like the father figure of the whole group. He holds our hand, he educates us significantly and he’s the wherewithal of the group. We’re all standing on the shoulder of him as he’s the giant, and yeah, it’s his group. I just plugged into it as a result of going to a network event, and I think this can kind of segue into one of those other questions that I was reading – not to skip ahead, but just to kind of seamlessly transition into the advice that I could give to the Best Ever listeners…

Joe Fairless: No, don’t tell me, I don’t wanna hear that, because I haven’t asked that question yet. Hold that thought… I have to have lead-up music and everything for it, so…

Chris Tracy: Oh, that’s awesome.

Joe Fairless: I have many more questions before we get into your best ever advice.

Chris Tracy: Okay, love it. Did I answer that, Joe? I’m sorry.

Joe Fairless: Yeah, so you just closed on a 36-unit you’re involved… What specifically was your role and what specifically was your compensation?

Chris Tracy: My role is I’m just a soldier for the group. If Jeff is like the general, the president, I’m just kind of like a worker bee. Prior to meeting Jeff and I had not ever bought a building that was worth over a million dollars before, so I just kind of brought value to this table for him and just — we had a conversation about we’d see how we could fit together, and whatever his needs were, I said “Well, here’s how I can help you, this is what I enjoy doing. I’m a people person, as you can kind of see… I like to talk, I’m very outgoing and I like to network. I’m not shy about picking up the phone, calling brokers…” I am in the broker game myself, so I know how to talk to them, I know the objections, I know the scripts and all of that, so I never had a problem with getting deals into my pipeline, and ultimately my focus and what I wanna do is just bring deals to Jeff and the group.

There are other members in the group, other people like myself, and we have a small little group, so I do basically whatever Jeff needs at any given time… When we are in the due diligence phase he said, [unintelligible [00:06:37].14] an insurance broker, we need an attorney…” Just any random little thing that is on Jeff’s plate and he needs it, I just try to assist with him the best I can, because obviously when you’re a giant, one of your biggest needs is time. So that’s how I try to make his life easy and try to make the group more successful – investing my time into the group and trying to just donate whatever is needed. I underwrite deals every once in a while, too.

Joe Fairless: Got it. What were you compensated?

Chris Tracy: My compensation is 3% equity position, but I’ll take it, since it’s my first experience into a deal. If it’s a really significant deal, I’ll gladly take that all day long, so as to give Jeff – rightfully so – the lion’s share of the proceeds of the property when we sell it, cash flow, all of that. So when you’re just trying to get in the game, if you have to allow — the more seasoned the mentor, if you will… Because he’s doing all the heavy lifting, he’s got the experience (we’re riding his coattails), he’s got the investor connections, all of that. I have nothing, because it’s just the elephant and mouse relationship. It’s like, “You know what? I’ll just take a small little equity position and I’ll be thrilled with that and very grateful at the end of the day”, and then we can just kind of graduate and renegotiate and move up the ladder from there as we get to know each other better.

Joe Fairless: For a 3% equity position you called and found an attorney, an insurance broker… What else specifically did you do for the 36-unit?

Chris Tracy: Let there be no misunderstanding, Joe, that I did invest a lot of my time into that… Much of what I did in the early stages, because I recognized the need for it and value of it, and I tried really hard to bring deals to the table for the group, so I was calling brokers just one after another, just looking for them on LoopNet, or whatever… A lot of times, you know how that goes – you underwrite a deal, the numbers don’t work and then you throw it in the garbage. So there was a lot of stuff behind the scenes, so much more than just calling an attorney or an insurance broker, but a lot of stuff that just never panned out, and it is what it is, and we just kind of move on to the next thing.

So yeah, there was a lot there, and just basically my time — I don’t know if I can put a concrete number on it, but it was a multitude of deals that I attempted to bring to the table, and like I said, some underwriting here or there… But just a lot of miscellaneous tasks.

Joe Fairless: Okay, got it. So you were attempting to find opportunities leading up to this deal, and the time that it took to do that – call brokers, follow up, run numbers etc. … Did you find this deal or did this deal come about another method?

Chris Tracy: It came about another method. I think it was just a connection that someone had in the group, and that’s how it goes – you’ve got a small little group of people, and you never know who knows who, and you build these relationships with brokers and different people in the industry, property management companies, attorneys, so on and so forth… And then yeah, someone brought the deal to the table and we closed on it.

Joe Fairless: Okay, cool. So that’s really helpful, because I know — at least I was curious, and I’m confident some other Best Ever listeners were curious about “Okay, he got in this deal… What exactly did he do and what did he make?” So you have clearly answered that… You called brokers, looked for deals; you didn’t find this deal, but you did help out on it with finding some team members, and then for compensation you were compensated 3% equity position – is that 3% equity within the entire deal, or 3% of the general partnership?

Chris Tracy: It’s 3% in the entire deal, because it would include cash flow, and then when we sell the property down the road, I would also realize 3% of those proceeds as well. That’s only because I don’t have really a lot of skin in the game; I didn’t invest any money, I didn’t find the deal, my name is not going on any mortgage, so I really didn’t do any heavy lifting, aside from much of what I said earlier about investing time, but I’ll take that all day long when you have minimal skin in the game.

Joe Fairless: And were there investors in this deal?

Chris Tracy: Yes, there are investors in the deal.

Joe Fairless: Do you know the structure of it?

Chris Tracy: You know, much of that is — that’s Jeff’s jurisdiction for the most part.

Joe Fairless: Yeah, no biggie. Okay, just curious. Congrats on getting an equity position in the deal; that’s great, for putting in some legwork, putting yourself out there, and now you’ve got a 3% equity position. And by the way, I think it’s gonna be a 3% equity position inside the general partnership, not the entire deal. Not to split hairs, but if you have investors and there’s probably a split, or GP has something, you probably have 3% ownership within the GP, not the whole thing. But regardless, it’s 3% – nice work on that.

So your focus prior to this – you said you hadn’t bought anyhing over a million bucks – well, join the crowd… I hadn’t bought anything over a million dollars either prior to doing the larger stuff. That also leads me to believe that you did buy some stuff prior to this 36-unit, on your own, that was smaller than a million. Is that the case? And if so, what?

Chris Tracy: No, man… This is my first deal. I’ve never bought anything. I partnered up with someone a long time ago and just wholesaled a three-family, but the amount of work that I put into that, just to get [unintelligible [00:11:38].08] I said to myself, “I need to play a bigger game.” So I [unintelligible [00:11:42].18] I helped my buddy sell his condo… Just like table scraps, but as far as — I don’t flip houses or do anything like that; I don’t buy things regularly… I just immediately wanted to enter this game of buying these large apartment buildings; it’s kind of like 0 to 100, if you will… I wanted to go right into the big leagues asap.

Joe Fairless: Good for you. That’s pretty cool that you went straight there and you started adding value, and now you have an equity position in a larger deal and you’re continuing to do so.

Alright, Chris, here we go. Here’s the money question – what is your best real estate investing advice ever?

Chris Tracy: Oh, man… Best ever advice – I would say just try to see whatever it is you’re trying to do… So the purpose of this conversation – buying these large apartment buildings is just stand on the shoulders of giants, whether that be guys like yourself, people like Jeff… Just whoever it is and whatever it is you’re trying to do, connect with them and add value. Because I see a lot of these people on Bigger Pockets – and not to know what anyone else is doing, but it breaks my heart when I see these guys, and you probably see it a lot too, Joe… You always see that comment in the forum where people would say “Hey, I need a mentor. I’d love to meet up and have coffee.” [laughter] Yeah, exactly… Well, I’ve got news for you – the guy that owns a huge portfolio… I mean, Joe, would you have time in your day to go out and have coffee with all kinds of random people that want you to mentor them? As a syndicator you don’t have time to do that.

So rather than do that — I know that maybe you’re trying to pick people’s brains and stuff like that, and we’ve heard that before… Like, yeah, go have coffee; that might work with brokers and stuff like that, because they like to network and they’re trying to get your business, but if you wanna learn from someone — like, if you’re trying to learn how to play basketball and you want LeBron James to teach you how to play basketball, it’s like learn what LeBron James needs or what the needs are of the person and bring value to them, and say “Hey, do you need anyone to help you underwrite deals? Do you need anyone to help you make phone calls? I’ll bring you deals. What do you need?” Not just “Hey, can we do lunch?” because you, Joe, can probably just go to Panera Bread and get your own lunch; you don’t really need someone to buy you coffee. But what are your needs?

That would be more attractive and appetizing, and you’d have the better success of getting involved (kind of like the way I did) with a group, if you can just focus on bringing value, not like “Hey, can we do coffee and can I pick your brain?”

Joe Fairless: And then even something to build on that – I love your advice and your thought process – would be instead of asking “What are your needs?” to do some research, anticipate what the needs are and proactively add value without even asking them what their needs are; then if it’s not exactly what they’re looking for, who the hell cares, because no one has done that for them most likely in the last year, and it’s gonna stand out. They’ll be like, “Hey, I appreciate the effort.” You’re definitely gonna get a response from them. “I appreciate the effort. Not exactly what I’m looking for, but I am looking for X, Y, Z” and then you can go do that and you’ve stood out from the crowd and you’ve added value and you’ve already built a relationship with them.

Chris Tracy: Yeah.

Joe Fairless: And you mentioned the LeBron James thing, and it made me think that I never thought of it this way – if you did wanna learn basketball, you would get some value by taking LeBron James out for lunch and having him tell you about how to play basketball, but you would get ten times more value if you actually played with LeBron James on a pickup game or while he practiced, and you were just kind of throwing him the ball and watching him, and every now and then you’d make a layup and he might say something to you. That’s such a better way of learning, and we can take that same analogy and apply it towards what you’re doing right now.

Chris Tracy: Yeah… I’m a Celtics guy; I’m mad, I don’t even know why I gave him credit… [laughter] They got their butts kicked last night. You’re from Cleveland originally, aren’t you, Joe? Or you lived there…?

Joe Fairless: No, I’m from Texas originally.

Chris Tracy: Oh, gotcha. Do you live in Cleveland now?

Joe Fairless: Cincinnati.

Chris Tracy: Yeah, that’s it… Cincinnati.

Joe Fairless: One of those Ohio cities with a C…

Chris Tracy: [unintelligible [00:15:37].28] best I could do there… [laughter] But even the challenge there is getting LeBron James to even show up to the game, or to have coffee or lunch. But yeah, totally…

Joe Fairless: Are you ready for the Best Ever Lightning Round?

Chris Tracy: I think I am.

Joe Fairless: I think you are, too. First though, let’s hear from the Best Ever partners.

Break: [[00:15:57].29] to [[00:16:50].10]

Joe Fairless: Alright, what’s the best ever book you’ve read?

Chris Tracy: One Thing, by Gary Keller.

Joe Fairless: Jay Papasan also [unintelligible [00:16:55].02] some hand in writing that book. If you search at BestEverShow.com “Jay Papasan” you’ll get the episode where I interviewed Jay. Best ever deal you’ve done or transaction you’ve been involved in?

Chris Tracy: The deal that I’ve mentioned earlier, this 36-unit, 144-bed student housing that I did with the Synergetic Investment Group.

Joe Fairless: What’s a mistake you’ve made on a transaction or just in business in general?

Chris Tracy: Going back to the other analogy, the basketball one, if you wanna play basketball in the NBA, the biggest mistake I ever made was playing basketball with high school kids. So for the analogy of real estate, just kind of — and we’ve all done this, where you’re just kind of collaborating with people, you need them in an event and it’s just that you’re in the same boat working with people, like-minded individuals… Nothing wrong with that, I love like-minded individuals, but if you’re trying to elevate your game and you’re trying to play in a bigger game, go up and play with people that are smarter than you, that have more experience etc. Start playing at higher levels.

That’s the biggest mistake I ever made – I was operating and playing with people that were on my level and I never started to play with people that were on a higher level than me. So try to go higher, don’t play with people that are on the same level as you, because you’ll just stay the same. Go higher and more advanced realistically, as soon as you can.

Joe Fairless: What’s the best ever way you like to give back?

Chris Tracy: Two ways I would say, Joe… Number one, I love giving back in my community. I still work part-time for a nonprofit – as we’ve mentioned in the intro – for people that have disabilities; they’re adults in wheelchairs, they’re non-verbal, they have mental retardation… I like to work with them part-time in a group home, and that makes me feel good.

Number two, with respect to what we were talking about today, I like to give a lot of free content, put it out on my blog, and I always like to try to help answer people’s questions on the Bigger Pockets forum, and just how I can get people to get deals done and share what I have learned in my experiences that way… I love giving back there.

Joe Fairless: How did you originally get involved with the group home volunteering and what do you personally get out of it that helps you and your business, if anything?

Chris Tracy: Well, the group home — I’m actually an employee for the group home. I used to be there full-time there, and then I said I wanted to focus more on my apartment buying business and real estate a little bit more… But I still love working with the clients. What I get from working for them is just kind of like a sense of reward. When I care for them and do things for them, make them laugh or whatever, it makes me feel good just to kind of give back to the people and take care of them, because they’re very low-functioning individuals… They need a lot of help and support, and if I can go in there and kind of like make their day in little ways, it kind of warms my heart to do that. Good times, you know…

Joe Fairless: How can the Best Ever listeners get in touch with you? You mentioned the blog…

Chris Tracy: Yeah, I have a blog… It’s www.howtobuyalargemultifamily.com and there’s a bunch of articles that I have on there – how to talk to brokers, things like that.

Joe Fairless: Chris, that is in the show notes page, so Best Ever listeners, you can feel free to visit that if you are so inclined. Chris, thank you for being on the show, talking about how you are leveling up your game by leveraging your resourcefulness, your drive and other people’s expertise to help elevate you to that level, and talking about a specific example with the 36-unit, the value that you added and the compensation that you received, and your entire thought process along the way.

Chris, thank you for being on the show. I’m sure this was very helpful for some Best Ever listeners who are wanting to go from the singles to the larger stuff, or maybe even skipping the singles and going straight to larger stuff. I hope you have a best ever day, and we’ll talk to you soon.

Chris Tracy: Yeah, thanks a lot. I appreciate it, man.

 

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