JF2246: Mindset Coach Madison Surdyke

Madison is a mindset and energy coach whose mission is to help people create more success, freedom, abundance, and impact in their life and others. She shares the importance of trusting yourself and how you can achieve your success to find freedom and reach your highest potential in your real estate career.

 

Madison Surdyke  Real Estate Background: (Joe requested her to be on)

  • Mindset and Energy Coach whos mission is to help people create more success, freedom, abundance, & impact
  • Been coaching for 3 years
  • She believes when you think higher-level thoughts, you feel higher-level energy which leads to taking higher-level action that can create higher-level results
  • Based in Dallas, TX
  • Say hi to her at: www.magneticallyyou.com  
  • Best Ever Book: Happy Pocket Full of Money

 

 

 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Ask yourself, what will that future version of me who already has the success  want to do or think at this moment.” – Madison Surdyke

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JF2243: Growing Your Business With Carl Allen

Carl is the founder of Dealmaker Wealth Society and is a corporate dealmaker who has worked in 330+ transactions worth $48 billion. Carl is an expert in buying, selling and even growing a business. In today’s episode, he will be sharing how he goes about each of these.

Carl Allen Real Estate Background:

  • Founder of Dealmaker Wealth Society
  • He is an entrepreneur, corporate dealmaker who has worked on 330+ transactions worth $48 billion
  • Has advised Bank Of America & Hewlett Packard on investments & acquisitions
  • His expertise is in buying, growing, and selling businesses
  • Say hi to him at: www.dealmakerwealthsociety.com 
  • Best Ever Book: That Will Never Work

Click here for more info on groundbreaker.co

 

Best Ever Tweet:

“There are only three ways to grow a business; organically, partnerships, or my favorite, by acquisitions” – Carl Allen

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JF2238: Solopreneur To A Business With Mike Simmons

Mike Simmons has been on a previous episode JF179, so be sure to check out this episode to get his full background. For a brief reminder, he is the Co-owner of Return On Investments, Partner in 7 figure flipping, and host of “Just Start Real Estate”. He has 12 years of real estate experience and today he will be sharing the details of how he went from Solopreneur to creating a business that can run without him.

 

Mike Simmons  Real Estate Background:

 

 

 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“If you have a goal to have a big company, your going to have to hire a team, & will need to develop your skillset to lead, manage, inspire, train, and motivate ” – Mike Simmons

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JF2237: Interview With A Real Estate Investor & Coach Erik Hatch

Erik Hatch is an entrepreneur, public speaker, do-gooder, social media expert, and leader extraordinaire. He owns 18 companies including Hatch Realty (the #49 real estate team in the US), Hatch Coaching, and Abovo which does over 644 transactions a year.

Erik Hatch Real Estate Background:

  • CEO & Owner of Hatch Realty and Hatch Coaching
  • Started investing in real estate in 2012 
  • Portfolio consist of 60 doors and also flips 20-30 homes annually
  • Based in Fargo, ND
  • Say hi to him at: https://www.hatchrealty.com/ 
  • Best Ever Book: The Pumpkin Plan

 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“There is a sweet spot in this, & anything outside of that sweet spot is no longer a skill game, it’s a guessing game” – Erik Hatch

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JF2236: Sophisticated Advertising Strategies With Kevin Urrutia

Kevin is the Founder of Voy Media and is an expert in growing brands using sophisticated paid advertising strategies. Kevin was very open in today’s episode with sharing multiple ways to help you grow your own business through some great online organic and paid strategies.

Kevin Urrutia (U-root-tea-a) Real Estate Background: #skillset

  • Founder of Voy Media
  • Expert in growing brands using sophisticated paid advertising strategies
  • Based in New York, NY
  • Say hi to him at: https://voymedia.com/
  • Best Ever Book: Dot Com Secrets

Click here for more info on groundbreaker.co

 

Best Ever Tweet:

“Utilizing organic content from users who are posting on Facebook, Instagram, or twitter usually end up working better for us” – Kevin Urrutia

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JF2232: Self-made Multimillionaire Willie Mandrell

Willie Mandrell is a self-made multimillionaire real estate investor, broker, coach, lecturer and author and has been investing in buy & hold rentals for 13 years. He shares how he started and his journey to where he is today. 

Willie Mandrell Real Estate Background:

  • Self-made multimillionaire real estate investor, broker, coach, lecturer & author
  • Has been investing in buy&hold rentals for 13 years
  • Portfolio consist of  40+ units valuing at $10 million
  • Based in Boston, MA
  • Say hi to him at: www.WillieMandrell.com 
  • Best Ever Book: Retire Young, Retire Rich

 

 

 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“What helps me is I wake up every morning with the same focus” – Willie Mandrell

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JF2231: Thought Leadership & Public Speaking With Alina Trigub

Alina is a returned guest from episode JF1750 and today we decided to bring her back to discuss and share her advice on thought leadership. She shares the steps she advices people on how to begin to build their credibility and presence so that eventually they can speak at public events and conferences. There are many benefits of public speaking and thought leadership, one for example is the “prestige” presence you will have when approaching deals and discussions of negotiations. You will also learn how to speak with more confidence to present your ideas across your potential buyer or seller.

Alina Trigub Real Estate Background:

  • Founder and Managing Partner of SAMO Financial, a boutique equity firm
  • Help clients over 1,200 doors, over 500 storage units and a $10M mobile home park fund 
  • Works with high earners to passively invest in real estate
  • Based in NYC, NY
  • Say hi to her at https://www.samofinancial.com/ 
  • Best Ever Book: Compound Effect by Darren Hardy 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Speaking on podcasts has helped me book speaking engagements on the big stage” – Alina Trigub


TRANSCRIPTION

Theo Hicks: Hello best listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today, we are speaking with Alina Trigub.

Alina, how are you doing today?

Alina Trigub: I’m doing great. Hi, Theo. Thanks for having me. I’m really excited to be back here.

Theo Hicks: Yeah, so as Alina said, she is a repeat guest. You can check out her first episode, which is Episode 1750. Thank you for joining us. I’m looking forward to diving deep into a particular skill set, because today is Sunday, so it’s skill set Sunday.

We’re going to focus on a skill set that Elena has, that’s has helped her grow her real estate portfolio. Before we get into that, let’s go over Alina’s background.

She’s the founder and Managing Partner of SAMO Financial, a boutique private equity firm specializing in commercial real estate. She has six years of real estate investing experience and her portfolio consists of mostly apartment syndication investments, equity partner in multifamily mobile home parks, self-storage and a couple of condos. She’s based in New York and you can say hi to her at https://www.samofinancial.com/.

Alina, before we get into the skill set we’re going to talk about today, can you give us a quick refresher on your background and what you’re focused on today?

Alina Trigub: Sure, I’ll try to make it quick, Theo, so that we don’t take too much time. Hi, everyone; my education started in accounting and taxes. I started my career as a tax accountant early on, but quickly realized that it was not the field I wanted to spend my time in, because I was not enjoying what I was doing.

While searching for something else, I decided to switch to a completely different field by moving into the information technology world, where I work to this day. My roles have evolved with career progression, but they mainly revolve around being the liaison between business and technology within the information technology world.

While working, while progressing in my career, my husband and I had growing careers and growing income along the way, but I have always been thinking about finding ways to lower taxes as a former tax accountant; that’s been on my mind for many years. That led me to real estate. Finally, about seven years ago, I took action, and decided to do my research. After doing the research, I was skipping certain points, but they all led me to syndications where I became an equity partner. After doing that for several years, I decided to start my own company, with the sole purpose of helping other people essentially do the same thing I’ve done for several years – build passive income by investing in syndications and having a diversified portfolio. In addition to having a Wall Street investment, I would have a real estate investments.

That’s in a nutshell is my story.

Theo Hicks: Perfect. I think that ending point where you mentioned that you are now focused on helping other people do what you do is a good transition into the skills that we’re going to talk today, which is thought leadership. And then we’re also going to get a little bit more specific and talk about public speaking.

I’ll let you start off and give us your thoughts on thought leadership. I know you’re on BiggerPockets a lot, posting. Whenever I post on BiggerPockets or I go on BiggerPockets, I always see your name at the top of the list for a lot of multifamily forums. Maybe kind of walk us through what your thoughts are on thought leadership, and then we can transition into talking about public speaking.

Alina Trigub: Absolutely, yeah. I do see you a lot on BiggerPockets as well. When someone wants to start a business and the business involves working with other partners or maybe passive investors, they have to start building their own thought leadership platform.

The first step of the thought leadership platform is having your own website. The website doesn’t have to be too complex. The main things that it should have is a clean homepage that states what you’re in the business for or what are you offering people, what are you delivering, what are your services and so forth.

Then you should also have an About page that lists you and your team. If you have any social media, then have a social media page, where maybe you’re listing the podcast interview like this one, or articles where you’re quoted or articles about you. In addition to that, any speaking engagements that you’ve had.

A basic Contact page is also needed, so that people know how to find you. And that’s basically the main ones. People add various other pages, but it’s really up to you as to how much content you want to put.  The simpler the website, the better it is for the end-user to understand what you’re offering and what they’re going to get from it.

In addition to the website, which gives you a web presence, you also need to leverage social media to show your expertise and to build up your credibility. That’s also an essential part of the thought leadership platform as well. You can select one social media platform, say Facebook or Twitter or Instagram, or you can go on multiple. The world is yours. It’s really up to you to decide how many social media platforms you can do. But whatever social media platform you concentrate on, make sure you’re active on it. And you’re not just posting content, you’re actually contributing and offering value to other people by posting the content that benefits other people, and engaging in a conversation.

In addition to that, one of the essential components of building a thought leadership platform, is having speaking engagements. Obviously, they’re not going to come to you automatically, because you need to build up your name, build up your brand first.

Once you build up your brand, you can start networking with people. If people see that you’re bringing value, and that others are benefiting from your value, then you’ll be invited to speak at the conferences and events.

One of the greatest events is the Best Ever Conference show that Joe always has every year, which is a phenomenal conference, which I highly, highly recommend for everyone. I really enjoyed attending it.

In terms of speaking at the conference – again, it’s more or less the world is in your hands. If you are a great presenter, if people are benefiting and the conference hosts are seeing that you’re providing value, then you’ll be invited again and again to many other conferences.

What it does is it does multiple things. Number one, it builds your credibility. Number two, it gives you speaking experience, and number three, it is a way of indirect networking… Because it’s one thing when you’re just in a crowd, meeting people one by one and collecting business cards, exchanging information and just meeting everyone. But it’s a completely different experience when you’re on the stage, when you’re presenting; and not just presenting through your presentation, when you’re able to connect with your audience.

Mind you, you may not be able to find that connection from the get-go. Again, it comes with experience. But some people are natural, and this or any other skill may come natural to them. It will definitely come with experience if it’s not something you’re natural in. But it’s something that as a public speaker, you need to concentrate on finding a way to connect with your audience. Because when you connect with the audience, essentially, you have a conversation and your audience is instantly attracted to you. Well, guess what – when the audience is attracted to you, they want to follow up with you, reach out, and that may translate to deals potentially later, or passive investors, or various business opportunities.

It’s really critical—when you know that you’re invited to speak at the conference, it’s really critical to find out what kind of audience would be expected. Obviously, it’s not going to be one size fits all and there will be different people. But in general, you can get a sense from the conference organizers as to what’s the percentage of people they expect to be representing whether it’s service providers, active investors, and so forth. Based on that, prepare a presentation that will resonate with the majority of audience, and you will be not only your presenting, but it will also be beneficial for this type of audience. It’s definitely very critical.

I can talk about my own experience if you’d like, which will also give our audience a few examples.

Theo Hicks: Sure. Let me ask a few follow up questions first before we go to examples.

Alina Trigub: Sure.

Theo Hicks: I really appreciate you kind of breaking down the first initial steps for the website, and then the social media presence.

For the speaking engagements, is it typically going from doing a podcast or writing blog posts to going to being invited to a Best Ever Conference-type speaking event? Or is it better to do baby steps first, like speak at a small meetup group first and kind of work your way up? Or do you recommend taking that leap, or does it depend?

Alina Trigub: I would say a lot depends on the personality. Some people are charismatic by nature and very outgoing and extroverted. For those folks, they will feel pretty comfortable on stage and will be able to jump onto a big stage from the beginning.

For the folks on the opposite end of the spectrum, if someone is introverted, not charismatic, and just in general, feels extremely uncomfortable speaking to, say, more than two people, then practice is essential. When I say practice, speaking to smaller groups, speaking in front of the meetup groups, getting interviews on podcasts is definitely an essential experience.

It’s sort of similar to buying a property. The natural progression is people start with a single families or small residential multis, and then they jump to commercial real estate, which they may first buy themselves and then buy through syndications with passive investors.

Same applies here. If someone is introverted and just in general not comfortable on stage, then I would strongly advise by getting that practice first, getting the experience of speaking in front of smaller groups, and potentially taking on some sort of training. For instance, I took a training… I found this New York City producer who was well known for teaching people how to speak and present on stage. Her training actually took place in one of the small theaters in New York City. That gave me a tremendous boost, because number one, I was getting feedback from someone who’s been doing it for over 20 years. Number two, because the practice was taking place in a real theater. I was on stage from day one, and that was instrumental in helping me build up my confidence as a speaker and gain the experience which I did not have prior to that, prior to speaking at the conference.

Does that answer your question?

Theo Hicks: Perfectly answers the question. My next question is about how to get invited to these speaking events. Maybe in answering this question, you can go through the examples of conferences or events you’ve spoken at, and then let us know how that came to be. Did you reach out to them? Did they reach out to you? Maybe explain how you were able to get the speaking engagements.

Alina Trigub: All of my speaking engagements, in my case in particular, came from other people reaching out to me and asking me to speak. Partially, it was due to numerous podcast interviews that I’ve done prior to that. Partially, it was due to extensive networking. I’ve been always a good networker—well, not always. But when I realized that I need to network, I started networking with people, not just for the purpose of networking, but essentially for the purpose of meeting potential partners, creating joint ventures, collaborating with people and finding ways to bring value to other people. That was my ultimate goal.

Through these connections, I was getting introductions to conference hosts, and people started inviting me to speak at conferences. While most of it has been in real estate, some of them have been in more of an educational space. And again, this was because someone knew that I’m really passionate about kids and non-traditional education, and they invited me to one event, and then I was invited to another and another. That’s how the trickle-down effect works. When someone sees that you’re bringing value and you’re passionate about the topic, they’ll start inviting you.

You could be a real estate investor, but you may be able to speak on education, or maybe setting up your mindset. No matter what your main expertise is, you may have other skills and other knowledge that you’ll be able to share with other people, that they can relate on… Because you’re going to be sharing it from your personal point of view and from your personal experience. And nothing works better than sharing a personal story, because it’s relatable and it’s something that people can leverage when building up their thought leadership platform, and [unintelligible [00:16:52].

Theo Hicks: Perfect. We’re kind of stepping back and figuring out, okay, so here’s what you do when you’re doing the talks, here’s how you were able to get to talk, which was through being on podcasts and networking… So I think it would be important to kind of go over some of your networking tips; that seemed to be at the root of how this began. We obviously already talked about how active you are on BiggerPockets. Maybe walk us through some of the top three to five ways that you are networking. Again, ideally giving a specific example of what extensive networking event resulted in you having some sort of speaking engagement.

Alina Trigub: Sure. I’m a big proponent of Dale Carnegie’s How to Win Friends and Influence People book, which I read probably 15 to 20-some odd years ago. This book can be applied not only to your professional but also to your personal career. Essentially, what the book’s main point is, people like to talk about themselves. When you meet someone for the first time, try to refrain yourself by jumping on and talking and saying, “I, I, I.” Try to be genuine when you’re listening to the person who you talk to, and ask them questions when they say something. Let’s say they start talking about career progression, or how they started and then closed multiple businesses, or have a big or small family. Ask follow up questions, show your genuine interest in their personal and professional life.

People get attracted to people that show interest in them. And by doing that, and by sincerely being interested in another person, you’re establishing and building relationships. Obviously, it will take more than one conversation. But the first conversation kind of establishes that bridge between you and the person on the other end of the phone or the other end of the table, that you’re speaking to.

When they see that you’re interested in them, they will want to follow up, regardless whether you have some business in common, and they will want to come back to you because that interest that you showed in their career, personal life will remain in their mind, and they will want to follow up with you and potentially stay in touch and do business, or be able to help you in one way or form. I think what’s very, very critical is to show you interest in the other person.

Also, when you’re networking and collecting cards, don’t just collect cards. I’ve seen people do different things. Some people take a business card and ask to take a picture of the person whose business card was handed to them to have a face next to that business card, so they remember who they talked to.

Another example,  or what I typically do is I write notes on each business card that I get. I put the notes that help me remember some stuff about this person. Maybe it’s someone who went to one of my alma mater colleges or maybe it’s someone who I worked with at the same company in the past. Or maybe they were talking about their business, and I thought this was a great business idea and I wanted to follow up with them. Whatever is going to help you remember the person down the road, put that as a note on their business card. That helps you to remember and that will be a good conversation starter when you talk to them next time.

In addition to business cards, as I said, the third point is always follow up. Don’t just collect business cards and put them on your desk, but also follow up, ideally follow up right after the event. And then the if you see that the conversation has been started and  that you have things in common, then follow up again in a few months, find out how the person is doing or how is their business… Or just, if you know, for example, that they’re looking for a multifamily in, let’s say a town where you live, then offer some things that you heard about your town; maybe there is new construction going on, or maybe there is a new company that’s coming into the town. Offer those small tips of information to them, and you’ll be amazed how grateful the people are when you’re bringing the information to them without them soliciting any of it. It’s always rewarding to see a smile on another person’s face when they get those tips without asking for that. Hope this helps.

Theo Hicks: 100%. Is there anything else that you want to mention before we conclude the interview?

Alina Trigub: In general, I think if someone wants to establish and build relationships, whether they’re personal or professional, I think reading Dale Carnegie’s How to Win Friends and Influence People is a great starting point. I highly recommend that.

Theo Hicks: Awesome, Alina. Well, thanks for joining us again on the skill set Sunday and walking us through the power of thought leadership, and more specifically, we talked a lot about speaking engagements and public speaking.

You walked us through the three components of a thought leadership platform. The first is the website, the second is the social media and then the third is the in-person speaking engagements.

We went over a lot of reasons why speaking engagements are important; it builds credibility. And then we also talked about some more specifics on what to do during these speaking engagements. So make sure that when you are speaking, you’re providing value, because you’ll get invited again, and again, and again.

You talked about the indirect networking benefits. Rather than meeting someone one on one, you’re in front of 10, 20, 100 or 1000 people. And as long as you’re able to share your personal experience, tell your story, connect with the audience, then you’re going to be able to get people to follow up with you and then complete deals and partnerships.

From there, you mentioned that some people are natural at public speaking so they can just jump straight to these big conferences. Other people who are more introverted, are going to need some more practice. So maybe start by speaking at smaller meetup groups, start by being invited on people’s podcasts. Then you kind of compared it to the progression of real estate going from single-family home to a small multifamily to a large multifamily. And you also mentioned actually go to a training; you mentioned a training you went to.

We talked about different ways to get public speaking engagements, and you mentioned doing these podcast interviews, as well as doing networking. And then you gave your three tips for networking, which one was from the How to Win Friends and Influence People… Essentially, people love to talk about themselves. When you meet someone, try to genuinely listen to them, genuinely ask them questions and follow up questions, because people are attracted to people who show an interest in them.

Your second one, which I never heard this before, but—well, I heard that don’t just collect business cards. I’ve heard the note-taking before. But taking a picture of them I think is also a really good idea. Because again, you take a picture, you look at the picture, and you are likely to remember more about the conversation than just staring at the business card, you might forget who that person was.

Your third advice was to always follow up with the business card people or people you’re talking to in person, do it right after the event and then if there is a connection, you can follow up with them again a few months later. Then when you’re following up, make sure you’re adding value.

Again, I really appreciate it. I learned a lot in this episode. I’m sure the best ever listeners did as well. Thank you for joining us.

Best ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

Alina Trigub: Thank you, Theo. Great to be here.

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JF2225: Goldbar Realestate With Abel Curiel

Abel Curiel is the VP of The Goldbar Realestate Team and has 10 years of real estate investing experience. As a kid, his dad never really made a lot of money but he watched his dad save every penny that he had to invest in properties. He created his team because he saw a need to help beginner investors in the intimidating market of New York. 

Abel Curiel Real Estate Background:

  • VP of The Goldbar Realestate Team
  • Has 10 years of real estate investing experience
  • Currently owns 1 property and has sold over 50 properties totaling $40 million+
  • His team’s investor division has sold 20 investment properties in Brooklyn, Queens, & Long Island
  • Based in Queens, NY
  • Say hi to him at: www.goldbarteam.com 
  • Best Ever Book: Never Split The Difference

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Focus on building your team” – Abel Curiel


TRANSCRIPTION

Theo Hicks: Hello, best listeners. Welcome to the best real estate investing advice ever show. I am Theo Hicks and today, we will be speaking with Abel Curiel. Abel, how are you doing today?

Abel Curiel: Doing excellent. Thank you so much for having me on, Theo.

Theo Hicks: Absolutely, thanks for joining us. A little bit about Abel, he is the VP of The Goldbar Realestate Team. He has 10 years of real estate investing experience. He currently owns one property and has sold over 50 properties totaling more than $40 million. His team’s investor division has sold 20 investment properties in Brooklyn, Queens and Long Island. He is based in Queens, New York. You can say hi to him at https://www.goldbarteam.com/.

Abel, do you mind telling us about your background and what you’re focused on today?

Abel Curiel: Sure. I was born and raised here in Queens, New York. I would say my introduction to real estate investing was just kind of watching my dad growing up. My dad never really made a lot of money. I don’t think he made more than 50 grand in a year throughout his life, but he pretty much saved every single dime that he had.

During his lifetime he was able to invest in two buy-and-hold properties, and they were pretty much in growing areas in Queens, New York. One of them was in Jackson Heights, which is not too far from Manhattan, about a 30-minute commute, and then the other one was in East Elmhurst, New York which is right by LaGuardia Airport. Just kind of watching his example is what led me into real estate.

I previously worked for the city of New York in a city hospital, and I was there for 8 years. One of my co-workers kept waiving this book in front of me, Rich Dad Poor Dad. I was done with college about 10 years before, and I’m not ready to go back and just start reading anything. I was kind of lazy in my day to day.  After a couple of months of him waiving the book in front of me, I decided to read it. I got into https://www.biggerpockets.com/ which is how I get in contact with you guys, and I really never looked back. A couple of years later, I was able to quit my job and go into real estate full-time.

Theo Hicks: Do you mind telling us a little bit about what your full-time real-estate job entails? It sounds like you work for a brokerage, you also invest yourself. Is that the case?

Abel Curiel: Yes, our brokerage is eXp Realty; it’s the largest cloud brokerage and one of the first of its kind. With everything going on in terms of COVID and shut downs, virtual is the way the industry is heading, so our company was formed 10 years ago and I just joined about 2 years ago.

Our day-to-day focus is sales related, but we have an investor division which has put us pretty much at the top of our market in terms of working with new and early investors. Most of our investor clients are house hackers and people who are using the BRRRR strategy to build equity into the properties and start building their portfolio from day one.

Theo Hicks: You guys are the people that the real estate realm, the BiggerPockets realm would call investor-friendly brokers?

Abel Curiel: 100%. Yes.

Theo Hicks: Okay.

Abel Curiel: When we formed our team, my partner and I, we actually met at a Bigger Pockets meet-up and what we realized is, there aren’t too many brokers in our market that specialize in working with first-time investors or early investors who are new to this market… And New York, as you know, it’s a very high price point area and it’s pretty intimidating, especially for early investors. That’s kind of where we built our specification around, just to make sure that we’re educating people who are interested in this market and people who want to get started, but feel like it’s impossible unless you have six figures or a million dollars in cash.

Theo Hicks: What types of things do you want to see out of a client? Obviously, you focus on first-time investors… So is it just someone who expresses any interest in investing you’ll work with, or do you want to see something out of them first before you invest your time into them?

Abel Curiel: Good question. Definitely, we do want to get in contact with anybody who has a general interest, but we all know that the interest alone is not going to help you reach your goal. Most of the people or all of the people that we work with are obviously qualified, in the sense that they’ve saved up enough for a decent down payment. They understand the process, and if they don’t, we just kind of help them along the way… But for the most part, we’re just looking for people who are motivated and not scared to jump in and get their feet wet.

A lot of what we see, especially on online forums, let’s just say Bigger Pockets for instance, a lot of people get analysis paralysis, right? There’s a lot of information out there and it’s very easy to gather a lot of information on a particular market and gather information on the process, and then get kind of nervous as far as taking the next step. We’re not pushy. This is my first time ever in sales and I just started four years ago. But what we pretty much centered ourselves around is just providing education and providing value.

We also have an investor club. The Queen’s Real Estate Investment Club was founded about three years ago. This is more for, I would say, people who are brand new and just trying to gather information. The people in our club that are ready to get out there and see what opportunities are out there – these are the people that we put through our vetting process, we introduce them to our vendors and just kind of get them prepared for the whole process.

Theo Hicks: In the intro, I said that your investor team has sold 20 investment properties. Does that mean you’ve worked with 20 clients?

Abel Curiel: For the most part, yeah. We’ve had one or two repeat clients and we bring on about anywhere from four to six new clients per month. We just try to keep the number a little bit smaller. Our team is only a team of nine right now. A lot of our team focuses on traditional home sales, condos, co-ops, and that sort of thing. But our investor division has just two agents, so we focus just on bringing on new clients that are looking to house hack and use the BRRR strategy for the most part.

Theo Hicks: Okay. So you’ve got your investor club… How many on average — you said you’re bringing on four to six per month; how many of those are coming from this investment club? Then of those that aren’t coming from the investment club, how are you finding these clients?

Abel Curiel: Good question. From the investment club, I would say about one or two a month convert to clients. Our club, right now, we have about 80 members, and like I mentioned, a lot of them are just kind of starting out. Many of them are investing out of state. From that group, we get about one or two that convert over and become clients here in our New York Metro market. The other clients that we bring on, it’s either through word-of-mouth, personal circle referrals, social media, but we have a pretty decent following on Bigger Pockets as well, so we got a lot of perspective clients from there.

Theo Hicks: Okay. So for the investment club, obviously they show up, you get them from in-person; the word of mouth, social media, Bigger Pockets, I’m assuming that comes from what you said earlier, which is providing education value. So besides the investment club, what are some of the other things that you’re doing on a weekly basis to provide value, provide education so that you’re able to attract clients on social media and Bigger Pockets?

Abel Curiel: Well, we’re pretty active. We write blog posts every week on Bigger Pockets. We also just got on Medium, which is another blog form that we contribute to. In addition to that, we post a lot of information as far as our closed deals on social media. We kind of give a little bit of a breakdown on transactions that we’ve had with clients in the past. We pretty much go over the beginning to end for house act deals.

For the most part, I think what’s really intimidating in our market is that the medium price point that we’re seeing in Queens, Brooklyn and Long Island is right around the 700k to 800k mark. For somebody who’s just jumping in, even if you’re going at a 3.5% or 5% down payment, you’re looking at about 25,000 to 35,000 down, which once you kind of bring it to that number, it’s less intimidating than looking at a property that’s three-quarters of a million dollars.

What we’ve done is we pretty much just break down what the deal is like from beginning to end, we’ve broken down the process, and more importantly, just introducing our team members from the beginning.

One of the things that we do is we don’t only teach courses for other realtors, but we also have investor seminars where our preferred vendors, attorneys, wholesalers, house flippers, inspectors and expediters… We pretty much get our entire team involved and they’re able to break down the entire process from beginning to end and just show everyone just how doable this is.

Theo Hicks: Sure. You’ve kind of already mentioned this a little bit in that last statement you made about team members, but for your clients, are you offering a full-service experience, I guess? If they come to you, clearly, you’re helping them meet team members, meet lenders… Then once they have a deal or a contract, with due diligence, and I’m sure if they need help with the backend contractors, things like that. But are you helping them actually find the deals, too? And if so, what are you doing to find these deals?

Abel Curiel: Great question. We have a full-service team in terms of contract to closing; we have a full-time transaction coordinator. She pretty much holds the clients hand until closing and explains every step of the process during that entire escrow period. We walk them through the appraisal, and anything that pops up, let’s say with the title report, we kind of walk them through the whole process, just because we know that this is not going to be their first deal and their last deal. These are people who are thinking about long-term and building wealth, so we’re always kind of educating them throughout the process beforehand, as far as helping them analyze a deal.

We have two main resources that we use. We have an in-house admin who runs comparable market analyses all day long, and pretty much is able to provide our clients with a good estimate on ARV, and also give them a good idea as to what we think a good offer price would be before we even go out and see the property.

We’re also running rental comps to give them a worst-case scenario and also a best-case scenario as far as what they’ll be able to cash-flow every single month once they close on the property, and we pretty much walk them throughout.

Now, the second resource that we have is one of our vendors. We have a lender who’s been in the industry for about 12 years, and his dad got him involved in the business, and his dad’s a full-time investor now. They’re pretty much our best resource when it comes to getting in contact with appraisers, and giving us a good idea of what the property is worth, before we even get into contract. All of this is pretty much full service that we handle for our clients. And for the most part, that’s how we’ve been able to locate the deals before we get any kind of commitment.

Now, on the other hand, we also have a seller division, which is completely separate from our investor division. The seller division is pretty much in charge of getting off-market deals. They’re prospecting anywhere from two to three hours a day, and we have six people doing that. We’re talking about anywhere from 12 to 18 hours a day, we’re hitting the phones and we’re finding properties before they hit the market. Some of these are short sale properties which go to our more loyal investor clients, and then some of them are something in between, right? Something that would fit that BRRRR strategy, distressed property where the seller is looking to sell but doesn’t really know how to get the process started, or sometimes they don’t even want to make it public, they don’t want to put their property on the market. This is where our investor division and seller division kind of work together, to get some of these deals done before they hit the market.

Theo Hicks: Okay, Abel, what is your best real estate investing advice ever?

Abel Curiel: The best advice I could give is focus on building your team and take the time out to make sure that you’re dealing with the top professionals in your market, so that once you’re ready to hit the ground running, you have all your ducks in a row, you have everything in line to be able to capitalize on an opportunity the second you come across it.

Theo Hicks: Okay, are you ready for the best ever lightning round?

Abel Curiel: I’m ready. Let’s do it.

Break: [00:15:40] to [00:16:31].

Theo Hicks: Okay, what is the best ever book you’ve recently read?

Abel Curiel: Best ever book I’ve recently read, I’m just finishing up, for the second time, Chris Voss – Never Split the Difference. It’s one of the best books I’ve read.

Theo Hicks: If your business were to collapse today, what would you do next?

Abel Curiel: Man, what comes to mind is a big passion that my dad had. He was the president of a softball league, where he got hundreds of people in our community… So what comes to mind for me is coaching baseball, and specifically, little league.

Theo Hicks: What’s the best deal you’ve done for an investor client?

Abel Curiel: The best deal we’ve ever done, it was a single-family deal with an accessory unit. Essentially, it was a two-family deal, and we got it for 12% below market value. New York is a pretty high price point, so 12% in this market, I believe it was around 135k off of the original asking price. In addition to that, we negotiated a $7,000 credit at the closing table, just because we had some nosy neighbors putting up complaints with the New York Department of Buildings. We got a pretty nice credit on that deal as well on top of the savings.

Theo Hicks: What is the best ever way you like to give back?

Abel Curiel: The best ever way is just giving information. Anybody who finds me online on Bigger Pockets, it’s pretty easy to just set up a time to talk, and whether they want to work with me as a client or not, I could care less. I’m always kind of giving out information, anything I know about my market or just sharing resources. I also like to donate a lot. So constantly just donating clothes and food and stuff like that.

Theo Hicks: Lastly, what’s the best ever place to reach you?

Abel Curiel: The best ever place, I would say https://www.biggerpockets.com/ is probably the best place. Other than that, Instagram. My handle is @abelcurielny. Either one of those places is totally fine.

Theo Hicks: Abel, thanks for joining us on the show today and giving us your best ever advice. A few of the takeaways that I got was number one, how prospective investors can be prepared to work with investor-friendly brokers. So making sure that you understand the process and actually have the money to buy a property before you begin reaching out to the investor-friendly brokers, so that you’re not wasting their time and ruining that relationship up front.

You also mentioned some tips and tactics that you’re implementing to attract clients; anyone who’s an investor needs to attract some sort of clients or some sort of customer… So your strategy is to have an investment club, like a meetup group, and then also writing blog posts on Bigger Pockets. You also just signed up for Medium, and also putting information about the deals you’ve done on social media. Specifically, you’ve talked about house hack deals. And also hosting investor seminars, where you’re introducing members of your team to prospective clients. I really enjoyed that.

You also talked about how you’re able to find deals in New York, and mentioned that you have a seller division who is constantly looking for off-market deals all day long, and they focus on short sale properties, distressed properties, and really everything across the spectrum for off-market deals, and that you work with them in order to provide your clients with good deals.

Lastly, your best ever advice, which was to focus on building your team and networking with the top professionals in your market so that when you are presented with an opportunity, you will have the groundwork laid, so that you can actually pull the trigger on that deal, as opposed to having to scramble and put together your team.

Abel, I really appreciate you coming on the show. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

Abel Curiel: Awesome. Thanks for having me, Theo. I hope you have a great day.

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JF2222: Active Investor & Podcast Host Steven Pesavento

Steven Pesavento is the Host of “The Investor Mindset Podcast” and an active investor himself who has flipped over 200 homes within his first 3 years in business. Steven started out in AirBnB before focusing on flipping homes, house hacking, rentals, and now is working on his first commercial deal. 

Steven Pesavento  Real Estate Background:

  • Host of “The Investor Mindset Podcast” and active investor
  • Full-time real estate investor for 6 years, the first 2 focusing in on AirBnB
  • Has flipped over 200 homes within his first three years in business
  • Based in Denver, CO
  • Say hi to him at: www.theinvestormindset.com 
  • Best Ever Book: Never Split the Different

 

Best Ever Tweet:

“I look for a partner who is good at something that I am weak in” – Steven Pesavento


TRANSCRIPTION

Theo Hicks: Hello, best ever listeners. Welcome to the best real estate investing advice ever show. I’m Theo Hicks and today I’m speaking with Steven Pesavento. Steven, how are you doing today?

Steven Pesavento: Theo, I am doing phenomenal. How are you doing today, my friend?

Theo Hicks: I’m doing phenomenal as well. I like the energy, looking forward to our conversation. Before we dive into that though, let’s go over Steven’s background. He is the host of The Investor Mindset Podcast, as well as an active full-time real estate investor for six years, with the first two focusing on AirBnB, as well as flipping over 200 homes within his first three years in business. He is based in Denver, Colorado, and you can say hi to him at his website, which is https://theinvestormindset.com/.

Steven, do you mind telling us a little bit more about your background and what you’re focused on today?

Steven Pesavento: Absolutely. I got into real estate just like so many others, kind of fell in through Rich Dad Poor Dad, but it took me about 10 years before I finally got into my first deal. I read that book when I was 17. But I actually started in AirBnB land, and I had no idea at the time that I was investing until years after I was already doing it. But I was essentially renting out my personal home and two other homes that I had leased from another owner, and then I had furnished those, and I was renting them on Airbnb. I started making money that way.

When I finally got into real estate full-time, and I really actually saw myself as a real estate investor, I started flipping houses, and in those first three years I had flipped over 200 houses. A portion of those were wholesale deals, but over 50% were full-blown flips, or new construction projects or land development.

And then I kind of shifted gears and I’ve focused on multifamily. I’m working on a 220 unit apartment building right now in Columbus, Ohio, so I’m excited to get that closed and over the finish line. Real estate has just been an amazing vehicle to create wealth, but it’s also been an amazing community, because I’m a real big believer in personal development and mindset and growth. Being surrounded by so many people who really believe that it’s possible to live a life different than what the norm is and that we can go out and create what we want, it’s been amazing to be surrounded by those kind of folks in this community.

Theo Hicks: Awesome. Thanks for sharing that. I want to ask one quick follow up question on your AirBnB, kind of how you started. You mentioned that you went out and rented out someone else’s house, and then re-rented that out to other people. What made you get into that, and then why did you stop doing that?

Steven Pesavento: What I was doing essentially was doing a master lease. I had the right to sign a lease with the landlord and I had the right to re-lease it to somebody else. Why I started doing that was I actually was dating somebody who lived out of state, and I was traveling to go visit quite often. I had heard about this thing, AirBnB, and it was right when it was just beginning back in 2014/2015. I rented my house one weekend, and actually, I made money after travel costs, after everything by going out of town that weekend. It was this “A-ha!” moment of, “Wow, Holy smokes, I can make money doing this.” It ended up being a vehicle. I used the money I made from AirBnB to fund a startup with a few friends that had just graduated from Stanford, on this on-demand storage startup.

That ended up not working out, but the experience of being able to rent out my home and know that no matter what, I knew that it was possible for me to make a pretty big chunk of money… I was making seven times rent during the busy season, about an average of four times rent on average over the year.

But what shifted or what changed for me was that in the state of Colorado, and specifically in the city of Boulder, they changed the laws, and a lot of cities across the country have made sweeping legislation that stops people from doing AirBnB for this specific type of strategy that I was doing. I just didn’t want to really play in that gray area. After about a year after the regulations changed, and things were becoming more clear, I made the decision to shift gears.

Theo Hicks: Sure, perfect. Okay. So then for your first three years, you focused on flipping after doing the AirBnBs; you did 200 flips. When did you transition into multifamily? Is this 220-unit your first deal?

Steven Pesavento: The 220-unit that I’m working on right now is my first commercial deal. I’ve bought plenty of residential multifamilies over the years and raised tens and tens of millions of dollars for that business. But this is the first deal that I’m working on where I am a managing partner and raising capital. I’m working with some extremely experienced operational partners that have experienced 25,000 plus units of management, they typically own 3,000 units at any given time.

One of the things for me that was really important, and it was the same way that I got started in the single-family space, was going out and finding operational partners that had a track record existing.

My first partner in flipping, he had built hundreds of houses, he had flipped hundreds of houses, and he had lost tens of millions of dollars back in 2008. Having that kind of experience ends up allowing us to move much faster forward and skip a lot of the challenges along the way, which is why we were able to flip so many houses so early on in my career, was because I was able to bring skills that he didn’t have; how do you go find the deals? How do you go raise the capital? How do you go and build the structure to make that a machine? And he knew how to manage the operational side of the business. I’ve essentially done the same in multifamily; I’ve been working at becoming educated for about a year, and about six months ago I made the hard switch to really ramp down my single family business almost completely out of the single family business at this point, and focused 100% of my effort on the commercial side.

Theo Hicks: Before we talk about the 220 deal, I wanted to focus on what you mentioned about finding partners with experience. You’ve already mentioned one characteristic you want to find in an experienced [unintelligible [00:08:52].14] experience, and number two would be complementary skill sets. Is there anything else that people should be looking for when it comes to finding a partner? And then also, what did you do to actually find these people? And then, I guess maybe on that same track, how specifically do you go to Google and look up experienced partners? How do we literally find them? But also, how did you make yourself, or what about you, was attractive to these people?

Steven Pesavento: Love the question. This is phenomenal. I actually just answered a lot of this in Episode 129 on The Investor Mindset, so I highly encourage you guys, head over there, check it out. If you like what I’m talking about here, you’ll probably like that episode where we dive deeper. But essentially, what I was looking for in a partner was somebody who had the track record and was good at what I wasn’t good at, who their unique ability was not the same as mine.

Where I looked was I went to networking events. I went out into the community and I was coming from a place of giving value, of always offering something without asking for something in return. One of my first mentors – I ended up making a deal to create a $10,000 website to allow me to follow her around. It’s a very, very good value delivery ratio there.

The same thing was true here. I built this relationship with this partner at some local events, and I think what really did it for him was that I had the background experience on marketing, about how to communicate and handle sales directly with homeowners, with investors, with people on that front, as well as the hustle, wanting to go out and grind and put this together, and the energy to go and do it.

When you meet somebody, and you get that feeling that you know they’re going to be successful, it’s just a matter of time – it creates this kind of energy. I feel it whenever I go to events with big players there as well, that are on their way up, it’s that feeling of knowing that you can either work with them, or potentially they’re going to be a competitor. Or it’s that feeling of, “Okay, I see this person coming to this event, and they’re continuously growing, they’re making progress.”

When you can bring that kind of energy to a conversation, when you can bring that energy to a relationship, to a partnership, people are attracted to wanting to work with you. That’s what I did to find these partners. Over time, you build those relationships and you start to understand, who do you trust, who trusts you, who do you connect with? You want to find someone that has the same core values as you. I think all of these things are super critical when it comes to partnership.

Theo Hicks: Thank you for sharing that. Something else you mentioned as well was that you raised tens of millions of dollars for your flips. I’m assuming that you’re responsible, or at least partially responsible for raising money for this 220-unit deal. If that’s the case, I’m just curious, how did you find that transition with your investors? They were used to investing passively in fix and flips, which is obviously a different structure than investing in large apartment deals. Were they on board? Did you have to do some convincing? Maybe walk us through that process.

Steven Pesavento: You know, it’s such a good question. For anybody who’s listening who wants to connect, just reach out to me, happy to share any advice on this front or if you’re interested in passive investing, put the same thing out there, you can just find me, Steven Pesavento, on LinkedIn or anywhere else.

But what I did was, I really don’t believe in convincing, right? I really believe in educating. I’m a big believer that you put good information out, you put good vibes out into the world and the right people and the right things are going to come back to you; you kind of create this space for greatness to happen in the middle.

What I did was I was working with these folks, delivering for them over and over again. When you flip 200 houses, you’re going to have some that are losses. When you’re able to say to your investor, “Hey, we wrote a check for $70,000 to sell this house, which means we’ve lost that $70,000; there’s good lessons learned. But guess what, here’s a check for you for 30k or 15k, or 20k”, or whatever it might be, and they’re seeing themselves get paid, it builds a huge level of trust. Because when you take care of your investors, they really believe in what you’re doing.

What I really did was when I had this “A-ha!” moment about commercial when I realized how powerful it could be for building my business, as well as building other people’s financial freedom, that I had to share it with them. I started calling my investors, started letting them know, “Hey, we’re going to be going in this direction, it’s going to be a long-term transition, but once we’re focused there, that’s where the sole focus is going to be.” And because I spent a good solid year building relationships, becoming educated, and really laying the foundation, when I essentially brought up that “Hey, we’ve got this deal,” they already were primed, they already knew about what we were doing, we knew why it was valuable to move this direction. For many of them, they were ready to jump at the opportunity because the structure that we have offers them all of the benefits that they were getting on the note side, but with a lot of the equity benefits that come along when you’re investing in a syndication.

It was really just creating the space and educating folks so that they could then opt-in and say “Hey, yeah, I am interested in joining you on this next deal.”

Theo Hicks: Okay, Steven, what is your best real estate investing advice ever?

Steven Pesavento: You know, Theo, as somebody that is a go-getter and go-giver, just going out there and trying to do as much as I possibly can, the best advice ever is to be patient, is to slow down and to realize that you can accomplish more than you think in five years and less than you think in one. Be willing to double down on the things that you know are important and stay focused, but to be patient that some of the best things take time, and it’s worth it to wait for them.

Theo Hicks: Are you ready for the best ever lightning round?

Steven Pesavento: I sure am.

Theo Hicks: Okay.

Break: [00:15:10] to [00:16:08].

Theo Hicks: Alright, Steven, so I saw behind you had Go-giver books. Obviously, it’s probably one of your best ever books. Besides that, what is the best ever book you’ve recently read?

Steven Pesavento: One of the books that I constantly keep going back to—well, actually, there’s two books I keep going back to. It’s the book Never Split the Difference and  The ONE Thing, and I read The ONE Thing every single year because it’s a baseline for me to be reminded about the focus that’s necessary to succeed, and Never Split the Difference because it’s a way about communicating more effectively. And yes, it’s about negotiation, and it just happens to be that I’ve been fortunate enough to be able to interview both of those authors and The Go-Giver, author, Bob Burg on the podcast.

If you guys haven’t read those, I highly recommend them. They’re books that will change your life for sure.

Theo Hicks: If your business were to collapse today, what would you do next?

Steven Pesavento: I would immediately take a deep breath. I would recognize that I have to accept what’s going on in my life right now, and that, “How are we going to move forward?” The way that I move forward is I would go and find a way to add the most amount of value in the quickest amount of time to somebody or an industry that can afford to pay a lot for it. Finding a way to add so much value that I could make a large windfall of return, and would be able to get right back up on my feet pretty quickly.

Theo Hicks: I guess this next question would probably apply to your fix and flips. But tell us about a time that you lost the most money on a deal. How much did you lose and what lesson did you learn?

Steven Pesavento: Well, there’s going to be some bumps and bruises along the way when you’re focused on appreciation in real estate, when you’re just focused on pushing that value of the price up, which is what you’re doing in flipping.

I bought this large house, it was outside of Raleigh, North Carolina in a town that should have been able to afford this price point; but it was a unique house, it was in a unique area and it required a very specific type of buyer. We bought it thinking we were going to make 100 to 150 grand on it, we thought it was a home run. It was just a list and we would end up rolling in the cash.

Well, after having it sit on the market for about a year, because of some failures in our own systems while doing that many deals at a time, when we actually sold that property, we wrote a check for about 70 grand. It was one of the best days, because there was a huge realization, not only in the power of having multiple streams of income and not just focusing on appreciation, focusing on cash flow and having a hybrid approach, but it was also that feeling of knowing that once you’re able to close something out, sign that away, I wrote that check and obviously that money was gone… But it was such a relief to know that that was off of our plate, and that we could move forward. That was definitely one of the big lessons learned.

Theo Hicks: What is the best ever way you like to give back?

Steven Pesavento: I love directly working with young people through Junior Achievement. I go into classrooms, teaching mindset and entrepreneurship in schools. I believe it’s a big thing, because I think the school system is broken in so many ways. For some folks, just having the opportunity to hear another way of living or to hear that somebody maybe wasn’t the best student or wasn’t always doing the right thing in my youth, but to be able to then take myself and put myself into a successful position, it creates a really cool level of inspiration for these young kids who maybe were thinking there’s no other option for them, but to take some crappy job… But to really be able to go and see, “Hey, it’s possible for me to maybe create my own thing, go find a mentor and go down that path.”

Theo Hicks: And then lastly, what’s the best ever place to reach you?

Steven Pesavento: You can definitely reach us on social media. You can find me Steven.Pesavento on all the platforms, but I really encourage you, if you found this conversation valuable, to definitely subscribe to the podcast, The Investor Mindset. But if you’re a passive investor and you’re looking for more resources, we’ve put together a phenomenal deep dive guide on passive investing, and you can find that at https://action.theinvestormindset.com/passive.

Theo Hicks: Okay, Steven, I really appreciate you coming on the show today and giving us your best ever advice. I guess the main takeaway that I got, and I’m sure our best ever listeners got, was your advice on partnering up with experienced people. You mentioned how you did that for your flipping business, and you’ve also done this for your commercial apartment business you’re beginning to launch.

And you said, obviously, the main benefit of that is being able to scale faster, as well as skip a lot of the mistakes you would make on your own. And then more specifically, you mentioned that you want to find someone who has a strong track record, and is good at what you aren’t good at, has different unique abilities. You mentioned that you were able to find these people at networking events, and that you were offering value to these experienced individuals without asking for anything in return. You gave the example of creating the $10,000 website in order to basically shadow someone. You mentioned that for your business partner for, I believe, of your multifamily business, they really liked that you had experience in marketing, handling the sales process, investors, as well as the hustle.

And then you talked about how best ever listeners can attract those types of experienced people. It has to do with energy and making sure that whenever you’re going to these events, you’re consistently improving. So each time to go there, you’ve done more than you did before, and that is able to attract people towards you.

And you also mentioned that you also want to find people who have the same core values as you. And you also mentioned some advice in transitioning investors from one asset class or one real estate niche to the other. In your case, it was investing in fix and flips to investing in apartments. And you said you don’t believe in convincing, you believe in education, so you focus on educating and making your investors aware of this transition, and how it will benefit them. And this transition for you was about a year, so by the time you actually had a deal, they were primed and ready to go. They knew that they were getting the same benefits and then some by investing in these apartments.

And then lastly, your best ever advice which is to be patient, to slow down, and then realize that you can accomplish more in five years and because more than you think you can in five years in 10 years, and you’ll probably accomplish less than you think you can in one year. So doubling down on what is important to you, but also realizing that the best things take time.

Again, really appreciate you coming on the show and sharing your advice. Best listeners, as always, thank you for listening, have a best ever day and we’ll talk to you tomorrow.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

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JF2218: Online Commercial Real Estate Loans With Tim Milazzo

Tim is the co-founder and CEO of StackSource, an online platform for commercial real estate loans. He previously worked for Facebook & Google helping B2B marketplaces in the ad tech space and got into a few limited partnership deals in 2015.

 

Tim Milazzo  Real Estate Background:

  • Co-founder & CEO of StackSource; online platform for commercial real estate loans
  • Worked for Facebook & Google helping B2B marketplaces in ad tech
  • Since 2015 has been involved as a limited partner on a few deals 
  • Based in Lyndhurst, NJ
  • Say hi to him at: https://www.stacksource.com/ 
  • Best Ever Book: When Breathe Becomes Air

 

Best Ever Tweet:

“Building a team that has complementary skills, and with people, you enjoy being around is key” – Tim Milazzo


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. I’m Theo Hicks and today, I’ll be speaking with Tim Milazzo. Tim, how you doing today?

Tim Milazzo: I’m doing great. How are you, Theo?

Theo Hicks: I’m doing great as well. Thanks for asking and thanks for joining us today. I’m looking forward to our conversation, but before we get into that, a little bit about Tim’s background. He’s the co-founder and CEO of StackSource, which is an online platform for commercial real estate loans. He previously worked for Facebook and Google, helping them with business to business (B2B) marketplaces, and ad tech since 2015. He has been involved as a limited partner on a few deals. He is based in Lyndhurst, New Jersey. You can say hi to him on his website, which is https://www.stacksource.com/.

Tim, do you mind telling us a little bit more about your background and what you’re focused on today?

Tim Milazzo: Thanks so much, Theo, for the introduction. Some people, they hear that I used to work for Google and Facebook in advertising technology and they say, “Well, how did you get into real estate and real estate Finance?”

The answer is actually that I grew up around real estate. My father was a real estate professional. He did big office leases in Manhattan for tenants and landlords, so I kind of grew up around real estate stories around the dinner table. By the time I got to college, I studied finance. I interned for big real estate and finance companies, but I always had a passion for technology and I wanted to work for a technology company.

When I got out of school, my first job offer actually was for a full-time job at Google. I always loved the tech side. I learned a lot within a few years at Google, working in their ad-tech division, which is the way these big tech giants make money, by the way, is from the advertising. I learned a lot about business and operations and sales.

I got a little bit of a startup itch; I went to a video ad tech startup that was a little bit of a smaller company versus Google that has 10s of thousands of employees and is a huge company. This one had about 100 employees. I had the opportunity to start a new team there… And that company, within a year of me joining, actually got bought out by Facebook, so I found my way to another tech giant.

I probably would still be working at big tech companies today, except I got reacquainted with real estate back a few years ago, by getting introduced to some real estate tech founders; and with the family background in real estate and having multiple family members in that industry, and seeing a technology enabled angle got me really interested in what was happening and maybe what was possible in commercial real estate technology. I saw the financing side as this black box of not understanding exactly how that process works, real estate investors needing to talk to people that didn’t have a very clear process as far as what financing might be available property by property – I saw this as a huge potential industry problem to solve, and that’s what got me down the road that eventually led to founding StackSource.

Theo Hicks: Thanks for sharing that. Let’s talk about StackSource; it is an online platform for commercial real estate loans. You have already mentioned why you started, because you identified a need in the market. Maybe go into what StackSource does and then I might ask a couple of follow-up questions on the actual process of creating the company.

Tim Milazzo: Sure. StackSource at a really simple level is bringing transparency into the commercial real estate financing process. There’s already a lot of transparency and there’s a lot more efficiency in residential mortgages, where you basically, based on your credit score and the down payment that you’re willing to make on maybe a single-family rental or your own primary home, you can very quickly get to the answers of what a 15-year mortgage rate is, or what a 30-year mortgage rate is, and what you’re going to be paying month to month in that, and therefore what that property investment looks like, or that home purchase looks like.

As soon as you hop over into commercial real estate, so multifamily five-plus units, if you have anything with a retail component or office or industrial, the financing process just becomes this black box. It’s about finding the right person to talk to you that’s actually tied in with the capital markets, has done a bunch of deals, and traditionally, there has been no way to figure out, what are the rates? What are the terms? Who are the lenders that are in the market for commercial financing? What does it mean to get a Fannie Mae loan versus a Freddie Mac versus a bank loan today? How much leverage can I get? What are the rates going to look like and the amortization and all of these covenants? There was such a lack of transparency in this market that I thought it could be easily addressed by technology.

StackSource, we’re actually an online platform for financing where we have commercial property owners that are considering an acquisition, or they’re looking at a potential development play or a major value add. If they want to get to the answers quickly about what financing might be possible, how to model that in with their deal, what are rates like today, and in a shifting market, like we have in 2020, to understand where rates are, which lenders are in the market. Traditionally, people have either gone to their local bank, and the bank they already work with, or they’ve had to use a commercial mortgage broker that may not have a transparent process. We are something in between.

We are direct in access, where we give you full transparency into what programs we can offer. We have Capital Advisors that are on staff at StackSource able to talk to people about their deal, and they are commercial real estate finance experts; you have a dashboard that shows you here are the options you’re matched to, here are lenders that are quoting your deal, how do you compare and analyze those… And we’ve built all of that into a web platform.

Theo Hicks: Alright. Can you give me an example of what someone would do? Let’s say they’re looking at an apartment deal, but they only wanna have value-add deals, and they want to get some sort of renovation financing. What information do I need to input and then what does actually outputted to me?

Tim Milazzo: Sure. One of the ways to start is, go to https://www.stacksource.com/ and you click ‘get a loan’, and you’re into our platform. Now, this is something custom that we’ve built. My co-founder in the company is a software engineer that was a friend of mine from Google, and he has built this web platform for us where you essentially put in information about the deal. We need to know the address, we need to know the asset type and basic information like the units and how many are occupied and what’s the current income and what are you projecting for income.

As you put in information, the platform asks you relevant questions. If you have a multifamily deal, it’s going to ask about the units and the occupancy and the income, and based on the financing that you’re looking for – so if you’re looking for short term renovation financing versus long term fixed rate, you’re going to be instantly matched with lenders that are in the market to provide that type of financing. Those lenders then essentially compete with each other for that loan by submitting quotes, where the borrower is trying to get the lowest rate, the most loan proceeds, the lightest covenants, and there are all these pros and cons of different loan programs, and what is output from the platform is actually a menu of options of different financing deals that you can pursue.

Theo Hicks: That’s amazing. From my perspective as someone who wants to use this, is it free? Is it subscription-based? If it’s free, then how do you, as StackSource, make money?

Tim Milazzo: Well, like a commercial financing broker, we only make money if a funding deal happens on our platform.

Theo Hicks: So you’re actually a broker?

Tim Milazzo: Yeah. We’re an intermediary where we work with a number of different lenders. If you’re talking to a lender directly, they are beholden to what their bank can prove, what their credit committee may be able to do. If you’re talking to a capital advisor or an intermediary, you’re talking to someone who may be able to offer options across a dozen different lending entities that have different credit boxes, and that can get you some competition.

Theo Hicks: Got it.

Tim Milazzo: Take that and bring it to the nth degree with StackSource, because we have hundreds of lending relationships across the country, from the obvious ones like Fannie Mae and Freddie Mac and HUD, out to the credit union that you’ve never heard of that’s actually out of state but just loves the type of deal that you’re working on, and is going to give you 25 bps cheaper rate right now based on their current credit box, right? We actually help a lot of borrowers find the lowest rate in the market from some lenders that they may not have ever discovered on their own.

Theo Hicks: So you guys are like a mortgage broker on steroids, in a sense?

Tim Milazzo: Absolutely, and we brand as Capital Advisors, but it’s absolutely that. We’re the next generation. Most of the biggest mortgage brokers, today, are companies that were built in the 70s and 80s. Maybe a few of your listeners will realize that a few changes have happened in the market since the 70s or 80s, and they kind of look around and say, “Well, we’ve got that whole internet thing.” What if we were to  rebuild the commercial mortgage brokerage process from the internet up, how different would it look?  The answer is, take a peek at our website. We are rebuilding the process from the internet up, in a way that’s maximum transparency. You see what StackSource fees are right in the loan, quote, lineup,; in the menu of options that we present to you, you see what StackSource’s fees are, as you can go down that road, you are seeing the options, you’re seeing the names of the lenders, and who they are. We’ve tried to rebuild that process to be more efficient for our borrowers, and ultimately, get them better financing.

Theo Hicks: Awesome. Man, I wish this interview was longer than 25 minutes, because I’m going to ask one more follow up question, and then we’ll go to the money question, which is, what’s your best advice ever.

Obviously, you’re a mortgage broker. Obviously, if I put all my information in and I’ve got all of these different potential loan options that are from all these different lenders; I’m just curious, how did you go about forming all these relationships? Was it something where you didn’t really need to—explain that to me, how are you able to form those relationships? And how are you able to pull all that information into one neat, customized plumb platform?

Tim Milazzo: Theo, the answer is that it took a lot of work. We’ve had to solve for the complexity of different deals in the ways that different lenders view them to see whether lenders should be matched on a deal by deal scenario. We track lenders and their loan programs against dozens of different criteria. It’s really not just, “Hey, if you put in multifamily, you’re getting all of our multifamily lenders.” There are dozens of different criteria as to why a lender and their credit committee may be interested in a deal or not.

We have taken all that information and we have put in an algorithm on our system that actually matches the right loan programs at the right time. Now, three years ago, if we were to chat, I would have been the guy that a lender would have said, “Oh, Tim and StackSource, they have some crazy ideas about trying to make the origination process more transparent and more efficient,” and they wouldn’t have believed me yet. We have to call over 100 lenders before the launch of our platform to talk to them about what our platform would be, why it’d be good for them as lenders, why borrowers are going to love it and why it’s going to become the next thing in the industry and very few of those initial lenders really understood the power of what we were going to bring to the table.

Fast forward to getting our first couple of dozen lenders on board and actually launching this thing and having a bare minimum viable product in 2017, that we started to get deal flow in the door. We’ve built slowly from that time. We now have hundreds of lending relationships across the country. Now the lenders are calling us rather than vice versa about being on our platform because we’ve got the deal flow and we have a process that borrowers want to use. It has grown. It took some real effort in the beginning and a marketplace business like ours, you have to balance both sides, as we built the platform and started getting deals done at a small level, and then a little bit larger and a little bit more, and eventually those scales tipped, and at this point today in 2020, with StackSource, where’s you’re actually finding every major type of commercial real estate loan available on our platform?

Theo Hicks: What’s the volume of loans you’ve done last year? What was the volume of loans you guys did on the platform?

Tim Milazzo: We have a higher pipeline of loan opportunities now than we ever have. As we talk here, we’ve now been operating for a couple of years, we’ve really grown in a couple of asset types in particular, multifamily is the number one asset type that we get loan requests for online. Number two would be retail, and we’ve actually closed a lot of retail deals. Retail is really hard in 2020. And we’re actually getting even more deal flow in retail, because it’s harder than ever to just go directly to your local bank, and hope that they can approve a retail loan. It really just doesn’t happen. You have to be going and underwriting in the right way and you have to go to the right lenders.

But at this point, we have a pipeline of hundreds of millions of dollars in commercial real estate loan opportunities. As a matter of fact, it’s more than a billion dollars in our pipeline, if you don’t weighted average that across the pipeline. We weighted average based on the stage that the deals had and whether it’s gotten the quotes yet and whether the borrower has accepted a term sheet. For that reason, it’s hundreds of millions of dollars rather than a billion dollars plus. We’re going to get hundreds of millions of dollars of deals done for our clients over the next several months, which I’ve never been able to say before until this point is growing client by client. We haven’t had the biggest marketing budget, like the big commercial banks and some of the traditional brokerages that have had decades to build up their cash piles. It’s been word of mouth, it’s been putting out our content on the internet, and this year, we’re really taking off in a way that has been awesome. And it’s been a lot of fun, as finally, these years of work can be paying off and the borrowers that are using the platform are loving it and coming back.

Theo Hicks: Thanks for sharing that. My next question is typically what’s your best real estate investing advice ever? You can definitely answer it that way because I know you do invest, but you can also answer it or look at it as, what’s your best business advice ever?

Tim Milazzo: I think they’re one in the same feel, Theo, and I’m going to give you this because building a business and building a real estate investment business, they require some of the same things. The one I’m going to say for the best advice ever is from people that have been mentors to me in the business side and definitely within the real estate industry. I think building a team that has different skills than you do and people that you really like being around and you have a level of alignment with is really key because whether you’re talking about making a real estate investment, and that’s an investment that you may be in for five, seven, 10 years or longer, or whether you’re talking about building a business and talking about bringing on partners, if you don’t enjoy being around those people, or if they don’t have complementary skills to you, neither of those situations are going to work out well. They need to have complementary skills, and you need to have some alignment, and you need to love being around them because you’re going to spend a lot of time with your partners on a deal. You’re going to spend even a lot more time with partners in business if you’re going to be working on multiple deals or working on building up an operating business.

I’d say, team is key; find people with those complementary skills, but make sure you have a level of alignment. You’ve got to have both sides.

Theo Hicks: Okay, Tim, are you ready for the best ever lightning round?

Tim Milazzo:  I’m ready.

Theo Hicks: Okay.

Break: [00:18:21] to [00:19:26].

Theo Hicks: Okay, Tim, what is the best ever book you’ve recently read?

Tim Milazzo: A great book that I recently read was not a business book per se, but it’s When Breath Becomes Air by Paul Kalanithi, and he was a doctor that then was diagnosed with cancer in early stages after saving other people’s lives that had cancer. It’s one that really hits close to the heart and makes you think about making the most of the time that you have because this life is short.

Theo Hicks: If your business were to collapse today, what would you do next?

Tim Milazzo: I love being involved in real estate and I am involved in some real estate deals and that would continue even if I wasn’t doing full-time in the real estate finance business. But if I was talking about what I’m doing day to day with the bulk of my hours, I’d probably be working in operations for a big tech company.

Theo Hicks: What is the best ever way you like to give back?

Tim Milazzo: One of the ways that we love to give back is we actually have a 1% pledge for the StackSource platform. 1% of all of our revenue right off the top, not our profits, but our revenue. So we can never make the excuse, “Oh, we weren’t profitable that quarter.” We give 1% off the top two charities that we partner with. When we do multifamily deals, in particular, we’re actually supporting Habitat for Humanity, a chapter of it in New Jersey, where we were founded with 1%, of all of our multifamily revenue. That comes right off the top automatic from the StackSource platform. That’s one way that we love to give back.

Theo Hicks: And then lastly, what’s the best ever place to reach you?

Tim Milazzo: Best Ever place to reach me would be tim@stacksource.com if you’d like emailing, or if you like going on LinkedIn or Facebook, I’m there as well. If you type in Tim Milazzo, I will usually be the first person that comes up. So tim@stacksource.com or find me on LinkedIn or Facebook.

Theo Hicks:  Awesome. Well, Tim, thanks for joining us and talking about your company, StackSource, a very [Inaudible [00:21:08] company. I personally, whenever I’m helping people underwrite deals, without understanding what the potential loan terms are, I always base it on the fly and say, we need to talk to the mortgage broker to figure all that out. Now, we have another option to give them, which is, go to StackSource, type in information with the in deal, and very quickly get an idea of what terms they can get for your loan, their amortization, interest rate, loan and value, things like that. [Crosstalk].

Tim Milazzo: —as well. My dad was a broker, I love brokers. We work with brokers every day. If you are a mortgage broker or a financing broker, and you’re one of these people that is helping people with their deals, and your current brokerage isn’t giving you the tools that StackSource gives to our Capital Advisors, I would love those people to reach out too, so use the same contact info.

Theo Hicks: I look forward to testing this out and seeing what this output we’re matching with different lenders looks like. But my other takeaway from the conversation, you talked about how you were able to form all these relationships with these lenders. Again, in business, everyone always says how’s the relationship business and you basically just grinded, right? You said you called over 100 lenders before you launched your platform. We talked about how you were pitching, telling them what the deal was, why it’s good for them as lenders, why it’s good for borrowers, why they’d be the next big thing. When you first start talking to them, they thought you were crazy, in a sense, and then you’re at the point now where you’ve got hundreds of lender relationships, hundreds of lenders on your platform, and they’re actually calling you. So you can really apply to anything. Take finding deals, for example. You call hundreds of brokers to work with them, eventually, you do enough deals, you add enough value and they’ll start calling you instead.

Then lastly, you gave your best ever advice which I really like which is building a business is the same as building a real estate investing business which requires a lot of the same things. You said that your best ever advice is to make sure that the people you bring in your team; number one, are different and have complementary skill sets; and then two, that you like being around them because you’re going to be spending a lot of time with these people and if you don’t like them or they don’t like you, it’s not going to work out. If you have the same skills, it is also not going to work out.

Tim, again, really appreciate you coming on the show. Best of listeners, as always, thank you for listening, have a best ever day and we’ll talk to you tomorrow.

Tim Milazzo: Thanks, Theo.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

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JF2208: Veteran To Founder With Seth Wilson

Seth is the Founder and Managing Director of Clarity Equity Group and is a four-time combat veteran of 14 years and currently serving in the Missouri Air National Guard as a pilot of a C-130 tactical airlift aircraft. Seth shares his background of over 12 years of real estate experience and his journey into this new venture. 

Seth Wilson  Real Estate Background:

  • Founder and Managing Director of Clarity Equity Group
  • A four-time combat veteran of 14 years and currently serves in the Missouri Air National Guard as a pilot of the C-130 tactical airlift aircraft
  • Has over 12 years of real estate experience from mobile homes to ground-up development on Class A luxury properties
  • Portfolio consists of $65MM in assets under management
  • Based in Kansas City, KS
  • Say hi to him at: https://clarityequitygroup.com/ 
  • Best Ever Book: Invest in Debt

Click here for more info on PropStream

Best Ever Tweet:

“Jumping off a cliff and then trying to build your parachute is a strategy I really don’t recommend, it’s better to have money put together first and then go and find a property” – Seth Wilson


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today, I’ll be speaking with Seth Wilson. Seth, how are you doing today?

Seth Wilson: I’m doing very well. Thank you.

Theo Hicks: Well, thanks for joining us. Looking forward to our conversation. Before we dive into that, a little bit about Seth’s background. He is the founder and Managing Director of Clarity Equity Group. He is a four-time combat veteran of 14 years and currently serves in the Missouri Air National Guard as a pilot of the C-130 tactical airlift aircraft. He has over 12 years of real estate experience, from mobile homes to ground-up development to Class A luxury properties. His portfolio consists of $65 million in assets under management. He is based in Kansas City, Missouri and you can say hi to him at clarityequitygroup.com. So Seth, do you mind telling us a little bit more about your background and what you’re focused on now?

Seth Wilson: Yeah. So I was really excited to get into real estate once upon a time ago because of the book Rich Dad, Poor Dad. I’m sure plenty of listeners have heard of that book or read it. The challenge was I was 19 years old, I was a college student, I didn’t have any money to actually buy the book. So I sat in the Barnes and Noble aisle and I read the book cover to cover over the course of about two days. So that started my journey on real estate. From there, I did my first deal. It was a VA loan on a house in Omaha, Nebraska, 100% leveraged. I timed the market perfectly. I bought it at the exact top of the market in 2007 right before the crash. So lessons learned there, and from there, I started getting into mobile homes on the rent to own model. And before I knew it, I was in apartment buildings and raising money from friends and family.

The challenge that I had then was that the friends and family rubber band only stretches so far as a lot of people know, and I had to go out and learn to raise money from other,  primarily high net-worth individuals and family offices. So that’s where I am today, and we’re focusing on building out the management company. Even during this global pandemic, we have a great team. They’ve increased the occupancy and decreased delinquency in our portfolio properties. So that’s sustaining. So right now, we focus primarily on raising debt and equity for investors that have run out of funds from their friends and family. It’s a tough step to take, and I’ve been there and done that. And that’s the main focus right now.

Theo Hicks: Thanks for sharing. So of that $65 million in assets under management, what portion of that is apartments? And then what portion of that is the mobile homes? Or are you out of the mobile homes and just doing apartments now?

Seth Wilson: Yes, I’m out in mobile homes. I’m just doing apartments now. So we third party manage one of those properties and we’re trading out of the portfolio that I own now. It’s actually under contract to sell. So that’s where I am now.

Theo Hicks: Okay. So you’re focused exclusively on multifamily. So that $65 million – how many different buildings is that and how many units is it total?

Seth Wilson: That’s three properties and about 500 units.

Theo Hicks: Okay. So three properties, 500 units. So walk us through your first deal and then walk us through the most recent deal. So for that first deal, do you mind telling us how you found it, what the numbers were, maybe walk us through the process of raising money from friends and family for the first time, and then what the business plan was for that deal?

Seth Wilson: Yeah. So I bought a 12-unit, and I used that with my life savings to acquire that. I bought another 12-unit, and that was family money; nothing spectacular there. And then I went to the 44-unit. So that’s probably where the journey really starts. I raised friends and family money from there, from old Air Force buddies, as well as some other friends that I had. Those are generally called Country Club type raises. That was not too terribly difficult to do. The challenge was that I came up short on the equity side, and that’s when I realized that I really need to get smart on being able to raise capital and things along those lines. I ended up only being able to close on that property because the owner took a carry back on it, which I then cashed out of about eight or nine months later.

From there, things got interesting because I knew I was stuck. Maybe some of the other Best Ever listeners know this, that you get to a point and the rubber band, as I said, it only stretches so far. You know you can go to the next level, you have it in you. You have the time, you have the energy, you have the experience and expertise; you just don’t know how to do it, and that’s where raising money from outside investors is very important.

So the next one was a 93-unit property. I absolutely had no ability to raise money at this point. I had built up a pitch deck, which is something that we build for people now, and I did some marketing. A gentleman saw some of the marketing materials that we had and he said, “Hey, I’m interested in getting involved in your next deal,” and I said, “Well, that’s great, because I actually have one under contract, and I have no idea how I’m going to be able to close on it, and this is why I’m very interested, and let’s figure something out.” So he came in, he brought the equity that was required to close on that property. And then since then, we’ve done a few more deals together.

Theo Hicks: So you got a deal under contract, didn’t know how you’re gonna raise money, and then this guy put forth all the funds?

Seth Wilson: Yeah. I did bring some money to that deal. That’s like jumping off a cliff and then trying to build a parachute on the way down. I really don’t recommend that strategy. It is better to have the money put together first and then go about finding the property, and I know that you guys preach that.

Theo Hicks: So you said– and this must have been a pretty amazing pitch deck that you had if the guy put forth all the funds for that deal. So do you mind walking us through the marketing material that he saw? Did he email you? Did you meet him in person? I’m just curious of how this whole situation unfolded.

Seth Wilson: Okay. If you really want to get to the deep parts of the story… The marketing piece was am article that was in the Kansas City Business Journal. It came out on Black Friday, 2016, I believe. I was actually in Las Vegas on an Air Force trip. It was a real hardship tour, but I made it through and we stayed up all night. We actually were flying all through the night during a very large exercise. I get to my hotel room about two in the morning. Some of the crew goes out and hits the strip. I went to bed. The next morning, I woke up, and there was an email waiting for me and it says, “Hey, we saw your article, and we would like to meet with you,” and that was it. There were some punctuation and grammar issues involved in it, so I wasn’t too– I was like, “Okay, who are these guys?” A lot of people were calling me trying to sell me insurance. These insurance salesmen.

Theo Hicks: I didn’t think about that.

Seth Wilson: Very persistent. But I had this rule where if they take the time to reach out to me, I will do the courtesy of calling them back. We went to lunch when I came back in town, and it wasn’t so much a meeting as it was an interrogation. The pitch deck that I had is very antiquated, and I don’t even use it anymore, but it just showed my experience, and what it was that I was going to do going forward. I didn’t think that the meeting went well at all initially, and about a week later, he called and said, “Yeah, I’m interested in doing this. Let’s get some terms together.” So that’s the real story there.

Theo Hicks: Nice.

Seth Wilson: To back up a little bit more, to get in that business journal, my wife knew that I was trying to get in the business journal and get a piece done on me, and she was actually at a media mixer. She worked in a local television at the time. She found the guy, she cornered him at this mixer and says, “My husband’s been trying to call you and you need to call him right away, and you’re gonna do a great story on him.” And he’s like, “Oh, man. Okay.” So the next day, the gentleman calls me says, “Hey, I met your wife last night.” I was like, “Yeah, I heard. Sorry about that.” But it was a great relationship and great opportunities.

Theo Hicks: That’s hilarious. Wow.

Seth Wilson: Very lucky to have that, yeah.

Theo Hicks: Grateful to her for that. So you’ve got a 93-unit. Can you walk us through how you did that one. So you said 93-unit, 44-unit… Were those the two, and the third one brought you to 500 total units? So it must have been a pretty big deal.

Seth Wilson: Well, the 44-unit I traded out of last fall.

Theo Hicks: Okay.

Seth Wilson: So I don’t own that any longer. The next one was a 144-unit property, and the same investor was interested, and he brought some friends into that deal. So those two, the 93-unit and the 144-unit, the ones that we’re trading out of, and those should close here in the next couple of months, which is great, because of the pandemic and everything else. But those properties are doing outstanding. And then there is a brand new development that we third party manage for, and that’s here in Kansas City as well. That was a ground-up Class A development, and it’s only about 50% occupied as of today, but it’s rapidly increasing from there.

Theo Hicks: You mentioned in your intro that you were also raising money from family office. Is that this guy, or is that something different?

Seth Wilson: No, he’s not out of family office. He has had a liquidity event from a sale of his business, and he manages his own capital. So family offices are generally a little bit of a different flavor than the high net worth individual.

Theo Hicks: Do you mind walking us through how you started working with these family offices?

Seth Wilson: Sure. So first off, I built a track record of success. I showed that I was an expert in what I was talking about. I could certainly hold my ground when I ask a lot of questions. And these are really a list of tips, really. First is I had the relevant experience. Air Force training does not convert to managing apartments or acquiring apartments or meeting with bankers. So you have to have relevant experience. I showed that I was an expert. I was able to stand my ground. I understood my numbers inside and out. I understood the market, I understood the demographics. I put together the look. So books are judged by their cover; I’m sorry to tell you this, but it’s true.

I had the marketing materials through the pitch deck, and when it came time to answer these questions or work with people, I was prepared, because that’s what experts do. And then I just trusted the process of reaching out and networking the best I could, and then took a lot of action from there, and I still continue to do that to this day, actually. So those are really some tips going down the line of how to work with these kinds of people. So your next question is going to be “Well, why did you decide to work with family offices and–“

Theo Hicks: Well before that, the first one totally makes sense. Make sure you have the relevant experience to show that you’re an expert, which involves being prepared, having the look. So you said having the look and then reaching out and networking, taking massive action. I’d like you to elaborate on those. So the look. Are you talking about suit and tie look? Or you’re talking about from a more branding marketing perspective?

Seth Wilson: The answer is yes. There’s lots of guys and I know that especially in coastal cities, the hoodie and jeans and flip flops is the look and certainly they can get away with that. I’ve never found and that’s been congruent with my personality. So when I do meet with a family office, one of the things I’ll do is I’ll call and speak to the receptionist or someone else lower on the totem pole and ask them what their dress code is there. And then I’ll just dress one notch higher than that; unless they’re already wearing suit and tie, then that’s what I’ll wear.

So for example, if it’s Colorado-based, all these guys wear all Patagonia. So you don’t want to be a suit and tie guy there, because you’re not gonna fit. It’s adapting to your audience and knowing who they are. So if you go to a New York office, you don’t even need to ask. You’re gonna wear a suit and tie, open collar, depending. So we have that kind of stuff. And these guys, the Mark Zuckerbergs of the world don’t have to do that, but unfortunately, I’m not him.

Theo Hicks: Okay, so we got that one down. So then next, reach out and networking. So you already mentioned that you call the receptionist to schedule a meeting. How do I get a meeting with the family office, assuming I have that relevant experience, I’m prepared, and I’ve got the look down? How do I actually get in there?

Seth Wilson: Well, you’re gonna want to talk to someone that’s on the committee. The patriarch or matriarch is always the best. However, you’re probably not going to have access to call them, if you’re trying to cold call, and they’re not receptive to that anyway. There’s a lot of groups out there where the Chief Investment Officer, acquisitions and dispositions, they’re out there, they’re searching for business and deal flow. So you connect with those people. And then they also generally sit on the Investment Committee, before they make a decision on to invest in a deal or not. The patriarch or matriarch, especially if they’re generation one, they don’t need an investment committee. They say, “Hey, this is what I’m going to do,” and that’s the way it goes. But anywhere else that they’re aggregating deal flow and you’re not speaking to the person that was the wealth creator, you’re going to have to go through generally a committee. So Chief Investment Officer or acquisition dispositions is really where you want to start.

Theo Hicks: Okay. And then the last one was taking massive action. So what exactly is an action you’re taking? Is it getting more experience or is it continually following up with them? What does that look like?

Seth Wilson: When you’re working with those types of investors, you’re put together, you look good, you have the experience, you trust the process, and taking massive action. So you’re on the phone, you’re contacting these people, you’re using the resources you already have out there, you’re taking care of them, and then asking for referrals, obviously, anything along those lines, and then you’re putting yourself out there. So I used to believe that having one good phone call week was good enough. Like, “Hey, I had a great phone call this week, and that’s great.” Or, “I had a great meeting, and that’s great.” But it’s not. You need to be having one or two great phone calls a day.

And then let’s talk about the meeting. So it’s a relationship business. It’s not transactional. If you’re going to be transactional with your investors, it’s probably not a very good fit going forward. You won’t have a relationship with them, you won’t be able to text them, you won’t be able to call them. “Hey, I saw this article. I know you’re into bodyboarding, and I thought this would be cool for you. What are your thoughts on that?” Those kinds of things.

Also going out and physically meeting with them. There’s times that– obviously not during these pandemic times, but there’s times where I go out and fly to, say, Chicago. I’m there for one meeting, and I turn around and fly home the next day. That’s it. So maybe people think that’s crazy that you’re spending the day to fly that far to just do one meeting, but that’s how these relationships get started, and that shows that you’re a dedicated person and an expert as well.

Theo Hicks: Yeah. Thanks for sharing those tips. Alright, Seth, what is your best real estate investing advice ever?

Seth Wilson: Think big, but act small. So think big on what they’re gonna do, but make sure that you’re paying attention to the details.

Theo Hicks: Okay. Are you ready for the Best Ever lightning round?

Seth Wilson: I think I’m prepared.

Theo Hicks: Ah, you’re prepared. Let’s do it.

Break [00:18:44]:04] to [00:20:17]:07]

Theo Hicks: Okay, Seth, what is the best ever book you’ve recently read?

Seth Wilson: I’ve recently been interested in investing in debt. So two books – Invest in Debt and The Banker’s Code.

Theo Hicks: If your business were to collapse today, what would you do next?

Seth Wilson: I wasn’t expecting that question. If my business was to collapse today, what would I do next? I’d probably take my lessons learned, lick my wounds and get back up and try again.

Theo Hicks: Is there any deals you lost money on? If so, how much and what lessons did you learn?

Seth Wilson: I have not lost any money on any deals and I haven’t even come close.

Theo Hicks: Well, then let’s talk about the deal you made the most money on. How much did you make and give us the details?

Seth Wilson: Well, we’re looking to close out on these two properties now. It’s gonna be a very healthy check coming my way. The details, value add deals, everything that I look to invest in, I want to see a 2x return at the partnership level, and 1.7x, 1.8x at the LP level, and that attracts the investors that I need, and we share in the upside. The investors do well first, and then I do well.

Theo Hicks: What is the best ever way you like to give back?

Seth Wilson: Giving back to the community. My wife and I are involved in numerous charitable organizations, as well as donating our time. Unfortunately, getting out and meeting people isn’t really happening right now, and we also have two small children under the age of three. So unfortunately, we don’t get to go out as much as we’d like to help out, but there’s numerous local charities that we donate to.

Theo Hicks: And then lastly, what’s the best ever place to reach you?

Seth Wilson: That’s the website. Please go to the website, with how much money we spent on it – clarityequitygroup.com. It’s spelled exactly how it sounds, and there’s all sorts of great resources on there as well.

Theo Hicks: Perfect. Well, Seth, thank you very much for joining us today and telling us about your journey. I think the biggest takeaway that most people are going to get from this– well, the first one was how you were able to raise money for your first deal. The story about getting into the Kansas City Business Journal is funny, but also, I think, enlightening and gives people idea of creative ways to get your name out there in order to attract investors.

And then the second thing was your five tips for raising money from family offices with them being one, making sure that you have the relevant experience; two, displaying your expertise; three, having the right look; four, reaching out and networking; and five, taking massive action. And for each of those, you went into more detail. And then I guess, thirdly, would be your best ever advice, which was to think big, but act small and make sure you’re paying attention to the details. So Seth, again, thanks for joining us. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

Seth Wilson: Alright. Thanks, Theo.

 

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JF2204: Investing While Overseas With Vincent Gethings

Vincent is the co-founder and COO of Tri-City Equity Group and is an active duty Air Force. Vincent shares the steps he took to begin his investing journey while still being active duty in the Air Force and not seeing the properties. He explains how he built a team through social media and through this team he has been able to grow his business to now a portfolio of 120 units.

 

Vincent A Gethings  Real Estate Background:

  • Co-founder and COO of Tri-City Equity Group and active duty in US Air Force
  • Has 6 years of real estate experience
  • Portfolio consists of 120 units (20 owned, 52 partnerships, 48 syndications)
  • Based in Oahu, HI
  • Say hi to him at: http://tricityequity.com/ 
  • Best Ever Book: Traction

 

 

 

Click here for more info on PropStream

Best Ever Tweet:

“Set goals based off your potential and not your abilities” – Vincent Gethings


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today, I’m speaking with Vincent Gethings. Vincent, how are you doing today?

Vincent Gethings: Good. Thanks for having me on, Theo.

Theo Hicks: Oh, yeah. Thanks for joining us. Looking forward to our conversation. Before we dive into that, a little bit about Vincent’s background. He’s the co-founder and COO of Tri-City Equity Group as well as active duty in the Air Force. He has six years of real estate experience and his portfolio consists of 120 units, broken down between 20 units owned, 52 from partnerships, and 48 from syndications. He is based in Honolulu, Hawaii, and you can say hi to him at his website, tricityequity.com. So Vincent, do you mind telling us a little bit more about your background and what you’re focused on today?

Vincent Gethings: Absolutely. So like you said, I’m active duty Air Force; I’ve been in about 14 years. So I do a lot of project management. I’ve done resource management before, so handling funds for big duty projects. Started getting into real estate investing, quickly wanted to scale up to multifamily. It didn’t take too long, about two years, to realize that small single-family, sub four-unit properties just were very hard to scale, especially because my entire strategy is out of state; being in the military, I’m always going to be out of state, essentially, from my market. So I wanted to scale up so I can afford the better systems, better quality project managers, property management systems… So I scaled up to multifamily. Now we’re looking at 50 to 100 unit property, B, C class. So we’re targeting El Paso right now. It’s our main market. We’re looking to take on a secondary market here, this Q3, Q4 this year.

Theo Hicks: Nice. So that will essentially double your units, right?

Vincent Gethings: Yes. So we’re eyeing up a couple properties right now. Nothing under the contract. We’re in June 2020, so market’s still uncertain. So we’re eyeing properties, but we haven’t pulled the trigger on anything yet. We’re still waiting to see if we can get some clarity on what the next year or two years is going to look like.

Theo Hicks: Perfect. So you’ve got 120 units. How many actual properties is that?

Vincent Gethings: Great question. So that’s seven properties.

Theo Hicks: And what’s the breakdown? So how many of those do you own? How many partnerships and how many are syndications?

Vincent Gethings: Well, I have 20 under my personal ownership. That was where I started, was I started with the zero down, VA house hack; that was my start. I made a bunch of capital off that. I was in Bay Area, California while it was crazy appreciating; took that capital, invested that. At the time, all I knew was small multifamily duplexes and fourplexes. So I went on a tear and bought six small multifamilies, had 20 units in about 18 months, and then that’s when I realized that I needed the partner to scale, and the next unit we closed was a 52 unit with a JV in Michigan. And then from there, we did our first syndication, which was actually closed two months ago in April now, during the height of Coronavirus. It was also our first syndication was that last 48 units.

Theo Hicks: Perfect. I want to walk through each of those. Let’s focus on the 20 units first. So six properties, all bought out of state. Obviously, the first one that you bought, you lived in it. So do you mind giving us some pointers, some tactics, some tips on how you were able to buy those properties, and then how you were able to manage those properties without being there in person?

Vincent Gethings: Absolutely. So the first properties I bought, I took that seed money from that live-in, VA, house hack, whatever the term we want to use. Took that seed money– it was about 150 grand I made off that first property from that VA loan, and then I started buying the out of state. So when I went into this, I went in with the mindset that I’m never going to work on these. I didn’t want to buy the properties down the street, become a landlord, and also the handyman and everything like that, because I know with being active duty military, I’m going to leave in three years, and I’m never going to come back to, say, Bay Area, California. So I didn’t want to have these properties sprinkled throughout the country at each base that I’ve lived in. I know that’s a very popular strategy for people in the military, and it works for them. That just wasn’t for me. So I picked the one location, said I’m going to build my team there, and I’m going to put my roots down there and scale up from that.

The way I did it is, I started with property management first, started building my out of state team, so property management first. Then I got a colleague. For this instance, I used BiggerPockets. Did their search feature of finding very active people in that market, set up some phone calls with them and developed a relationship, and said, “Hey, can you be my boots on the ground? If I have a property that I’m interested in, would you drive by it, maybe go do the– meet my agent out there, do the walkthroughs?” They were happy to do it, both for their personal experience, and then I would throw some money their way for their time, much appreciated. And then I had my agent.

So the way I pictured this in my head was a Venn diagram;my initial team was a Venn diagram. So one circle is my property manager, one circle was my agent, and one circle was my colleague, and they all overlap a little bit, and then that center in the middle was the synergy. So having all three of these people on my team, knowing my criteria of what I’m looking for, visiting said property – it’s the four-unit that we own – and reporting back to me their different perspectives on that deal… For the property manager, he would say, “Hey, these are the issues. We’re going to see a property manager. Here’s the upside I see.” That colleague might say he’s looking at that property from an investor [perspective]. He’s like, “This is what I see, value-add” or things that you might want to look at as an investor, maybe some cap ex item. And the agent, they’re going to report back and she’s going to tell me what she thinks about the price compared to the market and the neighborhood and everything like that. And then I can not be there at all. I can be 3,000 miles away, all three of these people report back to me. In my head, I’m putting together this picture of all of their stories and perspectives overlapping. And then when I’m done, I have this full thesis of this property and I have a very clear picture and understanding of the condition the property, how it’s going to perform, so I can do my due diligence and pull the trigger on that property without ever being there. So the first five properties I bought, all the duplexes and fourplexes, I don’t think I’ve seen any of them before I actually bought them. So I was 100% out of state.

Theo Hicks: So I think the property management company and the real estate agent, obviously they get paid after you buy a property, and I’m sure you did your due diligence on them to make sure they were experienced, but I’m curious about that boots on the ground person. So what types of qualification did you want out of that individual? Because obviously, you can’t just have a complete novice do it. Maybe you did; I don’t know. But I’m just curious to see what you did to screen that person initially.

Vincent Gethings: The first level of screening was at the time, I knew BiggerPockets, I read Brandon Turner’s books. So that was my base of my education at the time. That’s why I was investing in small multifamily. So I went to BiggerPockets, searched the zip code, and then I just filtered by pro members. So at the time, I was like, “Well, if they’re a pro member, they’re obviously invested enough into this industry to purchase the premium subscription at BiggerPockets.” So that was my first level. And then I looked at how active are they. Are they posting? What kind of portfolio do they have? And then I filtered it down more. And then I called a couple people, and I was like, “Okay, I need somebody that understands multifamily.” So I wasn’t going to send a wholesaler to go inspect a four-unit property. They might be pretty good at coming up with a valuation, but they’re probably not gonna be very good at understanding the value adds or the systems that need to be in place to run this property long-term as a landlord or an asset manager. So I looked for somebody that was actively investing in multifamily, and that’s where I found my good friend now, Manny, in Michigan, who’s just been a huge asset to my team.

Theo Hicks: Alright, perfect. Let’s transition to the JV deal. So do you wanna walk us through that? So you’ve got your six multifamily deal. Well, I guess, five, including the house hack, and then you decide to move up to this 52-unit deal. So do you wanna walk us through after you made the decision, what do you do, why did you decide to JV as opposed to doing it yourself, how’d you find the deal, what was your responsibilities, what was their responsibilities, things like that?

Vincent Gethings: Absolutely. So this was fall 2018, I hit the ceiling, so to speak, this plateau in my growth; in the current systems I had set up, we were seeing cracks in the systems and being able to grow further. So I knew that there was something wrong, but I wasn’t smart enough to know what I didn’t know. So I went out and I sought mentorship, did one of those paid mentorship programs. After vetting quite a few of them, it was an absolute godsend to me, and my team. I quickly found what I was doing wrong or how I could grow, and that was fall of 2018. By January or February 2019 I was in contract on the 52-unit. So that’s how fast I was able to figure out what I was missing in my education and my knowledge, break through that barrier and scale up.

I found this 52-unit through broker relationships that I was developing. Got them online, got the LOI, and then through meetups is how I found my partner. So I went to meetups, started talking about people that were interested in investing out of state. I’m in a capital market in Honolulu, Hawaii. There’s a lot of equity here, but the cap rates and the barrier to entry here is just outrageous. So there’s a lot of people that are like, “Look, I have a lot of equity, say, in my house, and I want to do a HELOC, or I have a lot of money in my IRA that I want to do self-directed, but there’s nothing around to buy. We’re looking at $200,000 a unit here.” So they’re looking for somebody to do out of state, but they just didn’t have that connection in the lower 48 to go and start that process.

The niche for me here was go to meetups and start finding people that are interested in multifamily, interested in out of state, in mainland. They just need the person to make that connection, that bridge. I found three investors very quickly that were able to come up with 25% of the deal. So it was very easy. Everybody just 25%, about  $98,000 each is what we had to come up with, closed that 52-unit. We closed it, and I actually did a very creative strategy, because at this time — and as you know, brokers are very skittish on your credibility and your ability to close. And at this time, I thought I had 20 units, I thought I had some credibility. That was not the case at all, because the 20 units are all residential-sized property. So I had to prove myself.

The way we did it was the 52-units is more of a portfolio. It was an 8-unit, a 12-unit, a 32-unit, all in the same town. I said, “Look, we can buy the 8-unit cash. We had enough money right then to buy the 8-unit cash, and that’ll show you brokers and sellers that we are serious. I’m serious about scaling my company and I have what it takes to close this deal.” So I bought the 8-unit cash, and that gave me the time to put together the loan with the bank because also had the credibility issue with the bank of, “Okay, we see you can do small units, but what makes you think you can do a 52-unit reposition?” So I had to court them also, and they took longer for them to underwrite.

So I bought the 8-unit cash to show them I was serious. That gave time for the bank to underwrite the entire portfolio. And then what we did when the bank gave us that commitment, I ended up using the 8-unit as the downpayment. So I crossed collateralized the 8-unit as the down payment for the rest of the property, and then wrapped all 52 units back together into one loan.

So that’s how we were able to creatively close that with not really having the credibility on the team, because two of them aren’t real estate agents, the other team member’s a military member like myself. So we lack the credibility on our team and that’s how I solved that problem in being able to close that for both the brokers, the seller, and the lender, was that creative structure.

Theo Hicks: Nice. So after that, you moved down to the syndication. So I guess my question on that is, why didn’t you do the same thing as the JV? You had three investors come in including yourself… What made you decide to do syndication instead?

Vincent Gethings: One, we wanted to scale our company up further in syndication. Some ways, it’s a progression. Other ways, to me, I think it’s just another tool in your tool belt, that you should, as an investor, you should be aware of and experienced in. So some deals, you might be able to do JV. Some deals you might be able to do syndications. So whatever that right for that job to take down that asset, and one, for personally, I just wanted experience in syndication.

Another side of it is, we wouldn’t have had the equity upfront as easily as we did the first one. So a lot of our capital was deployed in that first 52-unit, and we’ve only owned it for a year. So we haven’t refinanced yet, we haven’t sold it yet, so a lot of our equity’s still tied up in that one. So that was obviously, the biggest factor of going to syndication. The other side of it is the desire to scale the company even further and get that experience. And the second syndication was a 48-unit, so it wasn’t like we went from 52-unit to 150, 200-unit deal.

Theo Hicks: Who were the investors? How’d you meet those people?

Vincent Gethings: We did the common thing of getting an Excel sheet and picking our power base and write down all of our family, our friends, our uncles, our aunts, our co-workers, our acquaintances that we know that all had expressed interest in investing in real estate, or maybe that we’re partners with on smaller deals, and we wrote it all down and we started courting these relationships even further. So obviously with the SEC law, you had to have that pre-existing relationship, so we didn’t go out and meetups or shouting from the rooftops, “Hey, we got a deal. We’re syndicating.” We stuck to that power base or that circle of influence of people that we already had pre-existing relationships with. And we only had to pull on 10 or 13 investors on this one. So very small; $50,000 was the average investment.

Theo Hicks: Okay, Vincent, what is your best real estate investing advice ever?

Vincent Gethings: Best real estate investing ever is set goals based off of your potential and not your abilities.

Theo Hicks: Do you want to elaborate on that a little bit?

Vincent Gethings: Absolutely. So a lot of people have these limiting beliefs, and what I see a lot of people, they set goals of what they think they can accomplish right now based off of their current experience, their current education levels, their current partnerships or whatever they have. So they set their goals extremely low. They use that SMART acronym, which I absolutely hate, because the R in smart is realistic. I absolutely hate that, because you sell yourself so short.

Giving you an example… My original goal, when I did this, I thought I was like, “I’m gonna do a SMART goal, because that’s what we’re supposed to do.” It was 20 units in 10 years. So two units a year was my cash flow goal. I did 20 units in 18 months once I actually started opening my mind up and growing myself, actively trying to grow my experience, my team members. And then now, my team is at 120 units, and I’ve only been doing this for five, six years. I think that the sky’s the limit, now that our eyes are getting more open, we’re adding more tools to our tool belt.

So I think the biggest thing is people sell themselves short because they want to set realistic goals for themselves. They do it based off of their ability and not their potential. So a big example of that is the 10X rule. I read that and I was like, “Well, 20. Well, scratch that off and write 200,” and that’s what was my goal, and I quickly went from 0 to 120 in a very short amount of time once I did that. So absolutely set big, hairy, audacious goals, and then take massive action toward them. Don’t be realistic, because it doesn’t give you any room to grow.

Theo Hicks: Alright. Are you ready for the Best Ever lightning round?

Vincent Gethings: Let’s do it.

Break [00:18:11]:04] to [00:19:35]:06]

Theo Hicks: Alright, Vincent, what is the best ever book you’ve recently read?

Vincent Gethings: Best ever book I recently read is Traction.

Theo Hicks: If your business were to collapse today, what would you do next?

Vincent Gethings: Be a commercial pilot.

Theo Hicks: Nice. Is that what you do in the Air Force right now, piloting?

Vincent Gethings: No, I wish. No, I wish. I am not a pilot. I’m not Air Force pilot, but I do have my pilot’s license, and I have a small plane out here in Hawaii that I use for island hopping. So If everything went to hell, I would go finish my commercial rating and go be a commercial pilot.

Theo Hicks: Have you lost any money on your deals yet? If so, how much did you lose and what did you learn?

Vincent Gethings: Not actualized losses yet. So back to my original four-unit – I bought a four-unit for $170,000, put about $50,000 into it for renovations, making it really nice, best place on the block. So I thought you were supposed to do that to get the rent premium. Went and got it appraised, and it was worth $170,000, and I was like, “I don’t understand why.” And the appraiser said, “Well, it’s a residential property. I don’t care how much you raise rents. We go off comp value, and you have the only four-unit in this neighborhood. So it’s worth $170,000 because we don’t have anything to go off of as far as what it’s actually worth.” So on paper, I lost, say, anywhere from 30 to 50 grand on paper. But I haven’t sold the place yet, so it’s not actualized. But that was a huge lesson and that was the last straw for me of like, “Okay, I’m done with residential. I’m scaling. I’m going to partner up, and I’m going to scale and do commercial where the valuations make sense.”

Theo Hicks: What is the best ever way you like to give back?

Vincent Gethings: Mentoring people, especially in the military. Financial education, financial literacy is huge for me. I see a lot of people that just come from home with a good financial intelligence, and they just make very poor decisions very early on in their careers. So I spend a lot of time giving them a lot of books, Rich Dad, Poor Dad or Dave Ramsey’s Total Money Makeover. So stuff like that and just coaching them how to make budgets, how to think about investing, the different shades of money, so to speak… How currency works is very big for me.

Theo Hicks: And then lastly, what is the best ever place to reach you?

Vincent Gethings: I’m on LinkedIn. So Vince Gethings on LinkedIn, and then connect@tricityequity.com.

Theo Hicks: Alright, Vincent, thanks for joining us today and very systematically — I can tell you’re a project manager, the way that you just knocked through everything, boom, boom, boom, step by step process for how you grew from your first zero percent down VA house hack to owning and controlling 120 units now, and hopefully, in the next few months, doubling that with your next syndication deal.

I think some of the biggest takeaways was I liked how you were able to find your boots on the ground in a state that you didn’t live in. So you mentioned how you went on BiggerPockets and you filtered by the pro member, and then you looked at those pro members to see how active they were, what portfolio they had, and then you spoke on the phone to make sure that they were actively investing and actually understood multifamily.

You also mentioned how you were able to do your 52-unit deal and build that credibility with the broker and the lender by instead of trying to buy all 52 units with 25% down or 20% down, you went in there and said, “Okay, I’ll buy this 8-unit all cash,” to show that you’re serious, and then you were able to actually not put any money in the deal and just use the 8-unit as a down payment and refinanced everything and cross-collateralized it into one loan.

And then you talked about how you were able to raise money for your first deal, which was that Excel spreadsheet exercise, which, Best Ever listeners, we talked about something similar on the show before, where you write down every single person that you know. Then you took it a step further and let everyone you know that you’d already talk to about investing in deals, and you were able to pull together 10 to 13 investors with an average of $50,000 each. And then lastly, your best ever advice which is instead of setting SMART goals, you set the SMAT goals. Or I guess, try to figure out SMAUT, so unrealistic goals.

Vincent Gethings: The Boston version, the SMAT goals.

Theo Hicks: The SMAT goals, yeah. So set goals based on your potential, not based off of what you can currently do, your current abilities or what you can currently do. So Vincent, really appreciate you coming on the show. Best Ever listeners, as always, thank you for listening. Have a best ever day, and we’ll talk to you tomorrow.

Vincent Gethings: Thanks, Theo, for having me on.

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JF2203: Happy Remote Teams With Rich Fettke

Rich is the Co-CEO of Real Wealth Network, where he focuses on developing the teams and systems. He has specialized in creating a great team that is fully remote. His wife Kathy was a previous guest in episode JF753. Today Rich will be sharing with us how he has been able to create a team of happy employees who work from home and are more effective.

 

Rich Fettke  Real Estate Background:

  • Co-CEO of Real Wealth Network
  • Focuses on developing the company’s team & systems
  • Based in Malibu, CA
  • Say hi to him at: www.realwealth.com 

 

 

Click here for more info on PropStream

Best Ever Tweet:

“Be sure to determine your core values and use them as hiring criteria” – Rich Fettke


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today we’ll be speaking with Rich Fettke. Rich, how are you doing today?

Rich Fettke: Great, Theo. Good to be here, man.

Theo Hicks: Oh, yeah. Thanks for joining us. So it’s Sunday, so we’ll be doing a Skillset Sunday. Before we get into that skill, let’s go over Rich’s background. So he is the co-CEO of Real Wealth Network, and his wife Kathy has been on the show multiple times; first episode would be 753, so make sure you check that out. And then if you just search her name on our website, you’ll find her other episodes. Rich focuses on developing the company’s teams and systems and right now, they have 25 employees who are all working remote. So we will be focusing on that for today’s skill. He is based in Malibu, California, and you can say hi to them at his website, which is realwealth.com. So Rich, before we dive into the skillset of the day, do you mind telling us a little bit more about your background and what you’re focused on today?

Rich Fettke: Sure. Going back, I was a business and personal coach for about 15 years before we started Real Wealth, helping people grow their businesses, mostly working with entrepreneurs. And then actually, I got diagnosed with melanoma, skin cancer, which is not the worst thing in the world, but when they did a CT scan, they found four masses on my liver and thought that it had spread to my liver; it was a false diagnosis. But in that, an oncologist told me I had six months to live. So Kathy was freaking at the time. She was a stay at home mom, raising our two daughters. One was three at the time. The other was seven. So she was just like, “What am I going to do here financially?” and she had this small little hobby type radio show called The Real Wealth Show, and she was interviewing people around different areas of life. So she started to interview people about how did you make money, and she found that most people made their money through real estate investing. So she came home and she said, “I think this is what we need to do. We need to get into real estate investing.” So we started on that path and she started to learn everything she could. She started to have more guests on to learn more about investing.

After that, I got the diagnosis that I was okay, that I was cancer-free after they removed the melanoma through surgeries. But that was the birth of us getting into real estate investing. And then that led to us– we were buying properties in Texas. Kathy had Kiyosaki on her show and he was saying, “Get out of California. Invest in Texas.” So we went and bought six properties in Dallas, and just started to learn what it’s like to be investors. We started to have friends who say, “How are you doing it? Can you tell me how?” and we decided to form a little group of investors just to help our friends, to help other investors, and we call it Real Wealth Network, and we thought we’d maybe have 100, 200 investors, and today, 17 years later, we have over 50,000 members at Real Wealth. So that’s the backstory.

Theo Hicks: Wow, that’s an amazing story. So at Real Wealth Network, are you guys buying deals, and then the people in your network are investing in these deals, or are you coaching them? What’s the business model?

Rich Fettke: The business model – it’s two areas. So we have SFR brokerage. So we help investors get into single-family properties, one to four-units all around the country. So we have different companies and teams that we refer to. We provide a ton of free education. We produced almost 900 free webinars over the years. So we provide free education and we help investors get into these properties. So we get a broker to broker referral fee for helping investors get into these properties. That’s one side of the business.

And then the other side is syndications, Real Wealth Developments. So we partner with developers and we raise funds. We’ve helped investors acquire over a billion dollars in assets now, and we’ve raised about– I think it’s up to about $112 million now for syndication deals, mostly in residential land development.

Theo Hicks: Perfect. So again, as I mentioned in the beginning, the skillset of the day is to talk about managing a team remotely. So I’m assuming that they’re working remotely because of the Coronavirus. So do you guys have an in-person location where everyone was there, and then now everyone’s working from home or were people already working from home?

Rich Fettke: Actually, we were way ahead of the curve, thank goodness. We started the business in 2003, and then in 2010 – I was up in the San Francisco Bay Area – we had an office in Walnut Creek, we had seven different offices in there, we had our whole team there, and then Kathy and I decided to move to Malibu, which is about six hours south of Walnut Creek. So we’re running the business from here in Malibu. We still had a few people in the office there, but we started to hire people from all around the country. And then 2011, we decided let’s go remote. So we closed that office, and we became a 100% remote company back in 2011, and we have been ever since. So once Coronavirus hit and it was all the stay at home orders, we were like, “We got this.” We’ve been using GoToMeeting and Basecamp and Zoom and Skype and all that for many years. So we got it dialed in.

Theo Hicks: That’s even better. So rather than asking you about all the challenges you went through during the Coronavirus, you’re the one that’s gonna be able to tell people how to manage a team remotely to those who did not do what you did, which was start remote, but had an office, had in-person meetings, and then were forced to go remote. So I’ll let you take the reins for a second and just start wherever you think it makes sense to start. Realize that we’re trying to give this skill to those who have a team and they’re not used to managing that team remotely, like you are. So what are some of the skills, what are some of the things that they need to do in order to make sure that they are still operating at the same level they were operating at when they were all together, face to face?

Rich Fettke: Yeah, good point. Yeah, I hope I can share some stuff that’s going to help. I think I can. Back then, when we were going remote, I read a book from the founders of Basecamp, called Remote. So it’s all about how to run a remote company, how to do that and all the benefits of that, and I was just blown away; that really nailed it for me. I was like, “Okay, we’re going 100% remote and this is how we’re going to do it.” So that’s a great resource, is the book Remote. It’s Jason– Jason Fried, I think his name is.

So that was really helpful, but what’s worked really well for us, one, it’s culture first. So we got really, really clear on what our core values are, and we didn’t just come up with that ourselves. We got our whole team on board, we talked it out, we argued about it, we discussed it, we brainstormed it, and we came up with our core values that are so important to us around– I won’t go over all of them, but accountability was a big one. Connection is another big one. We help connect people, we have a connected team, like family. Another one is obviously integrity, I think that’s an important one for any core values. And transparency is a huge one, it’s a core value of ours of being transparent; being open, speaking up when anyone is not feeling good about something or has a concern or a challenge.

So I would say a huge one is make sure that you are aligned as a company and as a team around those core values and hire to those core values. We just hired a new syndication manager. In the three different interviews we had with him, what came up every interview was I would focus on one core value and say, “So one of our core values is accountability. Tell me about a time when you were held accountable and why that was important and how you had to really pull through? And also, how would you hold someone accountable if they were supposed to do a certain job or accomplish a certain goal, and they didn’t? How would you handle that?” So it really let me see behind the scenes of how he is a leader and a manager. So hiring and firing to core values.

We’ve had people that we found were out of integrity and they broke that integrity, and so that’s a no brainer, and that’s an instant, “Sorry, you’re gone. You broke one of our core values of integrity.” But it could be other things. Breaking the core value of connection, and just being a jerk. You get three strikes. If you’re a jerk three times, then you’re gone. So that’s a big one.

Another one would be having a very clear organizational chart or accountability chart. Knowing who reports to who and how they do that and have everyone have that same chart so everyone knows what their roles are, what their responsibilities are and who to go to when you need something, and who’s the expert in each area. So I think that’s another big one, too.

And I would say on that org chart, don’t just create an org chart for your business today, also create an org chart for your business five years from today. So get all those boxes out. You can look up how to do an accountability chart or an organizational chart online. It’s pretty simple. But you have – who sits in which seat? What do they do? What are their roles? Sometimes maybe you’re a three or four-person company, you might build out your whole organizational chart in five years and have all these positions rather than faces. And then you can maybe, right now, your face goes in all those and you and your partners, your employees. But over time, my goal has been to take myself out of those boxes and put someone in who’s even more talented than I am, so I can oversee the whole thing.

Theo Hicks: Thanks for sharing that. So I want to go through each of those, one by one. So first of all, thanks for sharing that book. So people who are remote, make sure you buy that book, that’ll give you a massive head start. So you said culture first. So you mentioned what happens if someone is out of line with those values. I think you mentioned a three-strike rule. Is that literally what it is? If they break the rule three times, they’re gone?

Rich Fettke: Yeah. It works really well, and I’ve learned this over time. I’ve made a lot of mistakes as a business leader. I’ve learned from those mistakes, thank goodness, except when I don’t… But one of those lessons is to not blindside someone, to not complain about someone behind their back. Especially Kathy and I have been co-CEOs of the company, it’s an easy thing for me to be like, “This employee is really bugging me. They didn’t do this, they dropped the ball,” whatever, and  I’m telling her, or vice versa. So we got really clear on that transparency value is like, “We have to share this. We can’t just talk about this and be disgruntled and pissed off at this person. We have to bring it up.” So that’s where the three strike rule works really well, is you bring that person, have a one on one, and just say, “Hey, this is what’s going on. This is a problem and this is a strike. We have a three-strike rule here at Real Wealth, so please don’t let it happen again,” and make sure they’re clear about it, what’s the strike for and have them repeat it back.

And then if it happens again, say it’s a month or two later, it happens again, you bring them in again and say, “This is strike two. This is your second strike.” It might be for the same thing, it might be for something different, but it could be, “This is a strike. This is heavy enough for a strike. If you get another strike, sorry, but you’re gone. Three strike rule here.” So that way, no one’s ever blindsided. No one’s ever just, “I didn’t even know. I would have course-corrected or something.” They’re just like, “You know what? Yeah.” And when we get to third strike people are like, “Yeah, my heart’s not in it.” But most people, we’ve had it really well. Our average employees’ been with us for seven years. It’s amazing. So people stay for the long haul, and I think that’s because of the culture.

Theo Hicks: And then is this something that you’ve always had in place or is it something that you created after you started the business? And then assuming it was after you started the business, how do you communicate that with your employees? Do you sit them all down and say, “Hey, this is something we’re implementing”? Or do people only know this once they get their first strike that they know it exists?

Rich Fettke: That’s a great question. No, we’re really clear about it. So the other thing we do for culture is we do a quarterly state of the company address. Kathy and I do it together. At the end of the quarter, we’re just like, “Hey, everyone, here’s how we did. These were the big goals that we accomplished this last quarter. Here’s how we did financially. Here’s the profit-sharing”, everyone on our team shares in the profits of the company; so the better the company does that better our whole team does. So we share that in the state of the company.

So in that state of the company, that’s when we brought that out. We’re saying, “We’re implementing a new policy. It’s called the three-strike rule. This is the way it works,” and explain it that way. And then on top of that, I’m just thinking about these quarterly meetings – people love face to face human connection. That’s what we’ve learned as a remote company. So every year, we take our whole company on a three-day retreat. We hook everyone out, we treat them to a resort. The last time, we went down to San Diego at this paradise resort, and we do half day of looking at the year, the past, what worked, what didn’t, what have we learned, how did we grow, we acknowledge people for their role and what they did… We also look at what didn’t work, what did we learn, what were the mess-ups. And then the second day, we look at where are we going. We look at the vision, the ten-year vision, the three-year vision, the one-year vision, the goals for the year. And then we have a lot of fun. So we’ll do stand up paddle boarding, kayaking, we’ve gone on ski trips with the whole company.

So there’s something about that magic, getting the whole team together, all 25 people, that everyone falls in love with each other, and it’s really cool. Zoom is good and you can get the face to face, but face to face and really connecting is an awesome thing. So after this whole COVID stuff is over and we can get together and be face to face and hug, we’re really looking forward to that.

Theo Hicks: Thanks for sharing that. So on a similar note, when your company transitioned from office to remote, I’m wondering if there were people who couldn’t necessarily make that transition. They weren’t very good at working from home. Because the reason I’m asking that is — let’s say, I’ve got a company right now and we’re all working in office, and then Coronavirus hits, everyone’s working from home, and I’ve seen just a massive drop in productivity from people because they don’t work as well at home. I’m wondering how should we approach that? Do we fire them? Do we say, “Well, hopefully, we’ll eventually come back to an office and then everything will be fine”? How do you think people should approach that?

Rich Fettke: Awesome question. That’s a big one. I’m really proud of our team. What we focus on that I always have focused on is creating empowered leaders. So each person’s a leader. Rather than having to micromanage or look over their shoulder and say, “What did you do?” and everything, what we do is we have four directors at Real Wealth. So each one has their own division. There’s one in SFR brokerage, there’s one in syndication department, there’s one in Director of Marketing, Director of Finance and Legal… So each of those directors have their own team. So what they do with their team is they meet one on one with each of their team members, and they come up with their big, most important goals each quarter. First to get together as a team and they say, “What are we going to do this year? What are we going to accomplish this year as a team that fits into the company overall goals?” So the directors get together, we come up with the overall goals for the company. “This is our initiatives, this is what we’re going to do this year.” And then each of those directors takes their part of that to their team and say, “Our department, this is what we’re responsible to make happen this year.” And then they work with each of their people and say, “Okay, so what about you?”

We follow the EOS system, the Entrepreneurial Operating System from the book Traction. We’ve been following that for almost four years now; that’s a great one. So that’s one of my highly recommended books, is the book Traction, and the other books that Gino Whitman’s put out. So we use that same type of process. So each person has what they call rocks, putting the rocks in the jar, and it’s one to five of the most important things to focus on during the quarter. So each person has rocks.

So we don’t micromanage. We don’t look over someone’s shoulder and say, “You’ve got to do this, you’ve got to do this.” We just say, “Here’s your rock.” It’s very clear what they need to accomplish and how they need to accomplish it. And then every week, when we have our meetings, we’re looking at that and people are saying, “My first rock is this. I’m on track,” or “My first rock is this. I’m off track.” If it’s off track, then we drop it down, we make it an issue, we talk about it. What support do you need? What help? So that really helps. So people are responsible for the results, not just working their ass off. It’s getting the result is what matters for them. So everyone has a number.

Theo Hicks: Perfect. I interviewed someone before and we talked about a rock, and I told him he should just get a bunch of boulders, and then literally write whatever the goal is on there and then mail it up their employees’ offices. They get up to their office, there’s a big stone just sitting there that they see every day.

Rich Fettke: Yeah, that’s what it visually feels like. It is like that, these are the big three. I really like the big three. More than that, it starts to get a little bit diffused. So I like people to have one to three main rocks, because then they can really focus on, “Okay, this is what I’m responsible for this quarter. This, this and this”, and all the extra minutia, it’s like, “Don’t put a focus on it, don’t get sucked into email or any of that stuff. You focus on what needs to happen.”

Theo Hicks: Something else you mentioned right in the very beginning was you went through all of the different technologies that you use. So for people who are transitioning from office to remote, do you recommend that people Zoom and visual face to face type of meetings, or is the phone okay, is just email okay? What’s the best tech to use when you are communicating with people when you’re working remotely?

Rich Fettke: I think it’s a blend. We do not do all Zoom meeting. It drives me crazy at times; our whole team crazy. It’s like sometimes you just want to focus on someone’s screen and look at the numbers or what we’re doing or the site or the membership portal, whatever it is. So having everyone’s face up there is not necessary. What we do – we just started initiating this – is we do a monthly call. So like I said, we do a meeting every single week, and the different teams have their own meetings. So there’ll be maybe five to eight people on a meeting. It’s a very structured meeting. It’s very clear. And in that, what we do once a month — so three weeks, we just share screens, we don’t look at each other, and once a month, we have an agreement that, “Hey, we’re going to share our screens.” So whoever wants to get dressed up, they can do that and do their hair or do their makeup or whatever they want to do, they can do that. But then we get to get that human connection, the face to face. But I honestly, not for our company, I don’t think it’s necessary to have every call be a face to face Zoom type meeting.

Theo Hicks: And then my other question on the tech side is– and again, this may just be a “This wasn’t an issue for us”, but when you did go to remote and you started to add in technologies, did you ever get to the point where you’re like, “I think we’re using too many different softwares. I think we need to bring it down a little bit and focus on the ones that are the most important.” So maybe walk us through that process, and again, for people who are now working remote, maybe they think about buying all these softwares and maybe doing overkill.

Rich Fettke: Yes, we did go through the overkill. I love tech, I’m an early adopter, I’m always looking at what’s next and what’s coming and what useful thing… So in the beginning, the most important thing that we did was Basecamp. So we use Basecamp as our project management software. It’s awesome. There’s teams in there, you can communicate through teams. So it keeps away from having to use Slack or Skype or all these different things – texting and everyone’s getting pinged and all these different things. So we run our whole company on Basecamp. And Kathy and I run our whole investment portfolio on Basecamp. We have each property in Basecamp as well, because each one can be set up as its own project. It can have photos, it can have all the documents, all the closing documents, HUD, whatever it might be, can go in there. So Basecamp’s great.

And then we also use software called Ninety. It’s just ninety.io is the address for it, and that is a software for running this EOS, the Entrepreneurial Operating System. So it’s the structured meetings, you can put to-do’s in there. You actually open it up when you run your meeting, you start the meeting off and what they’re called is an L10 meeting, a level 10 meeting; at the end of the meeting where everyone rates the meeting, and the goal is to have everyone say that was a 10. Usually, it comes in around 8.5, but 10 would be “That was an amazing meeting. It flowed quickly, we solved a lot of issues and everything.” So anyway, we use Ninety to run those meetings, which has a scorecard built into it. So it’s a dashboard. It shows how we’re doing, with leading indicators about where’s the company going, how many sessions of our investment counselors’ done with our members and investors, where are we on a raise till we transact for a syndication… So we look at that. Then it goes into to-do’s from the last week. So each person goes through and say, “I said I was committed to doing this; I did it. I was going to reach out to this person; done. And then I was gonna finish this report; not done.” And then if they’re not done, we can drop it down into this area of called IDS, which is – identify, discuss and solve. So we have 60 minutes there just to identify what issues are happening – issues can be good or bad – and discuss those issues and go back and forth. Take one issue everyone on the team could share, debate it, give ideas, and then we solve it. So what’s the solution here, and usually, that solution comes with a to-do that gets assigned to someone. Someone would be like, “Okay, we have a solution. I’ll take it on. That’ll be my to-do,” and then you wrap up the meeting.  So anyway, ninety.io works awesome for that, for anyone who’s running on the EOS system, which I know a lot of your listeners probably are for their companies.

And then let’s see, we were using something called 15Five, which is a really good software as well. When we went with Ninety to run our meetings and everything, we dropped 15Five; even though there’s too many platforms, but 15Five’s really good. It’s each person on the team fills out a report that takes them 15 minutes a week to fill out what they did, what their big wins are, what their challenges were, any numbers or anything, and it takes five minutes for their supervisor to review it. It was created by Yvon Chouinard, who started Patagonia. He wanted to use it to travel and rock climb and surf and all that, so he came up with this method for holding his employees accountable and know what’s going on in his company, where people would actually physically write it down in the day. It takes 15 minutes to write down what their week was like, and then it would take him only five minutes to review it. So they would send it over to him by fax or whatever back in the day. So he could be on a surfing trip or halfway around the world climbing and know what’s going on in his company. So very similar, 15Five is a great one if you’re not using Ninety. So those are great tools. And then we’ve been using GoToMeeting for years and years. So we usually use GoToMeeting which is just like Zoom, but we also use Zoom as well, for the same purpose.

Theo Hicks: Well, Rich, thanks for joining us today and going through the skill set of how to manage your 25 employees remotely. Fortunately for you, you were able to start doing this back in 2011, so you’ve had about ten years to master this process, and today you shared with us all the lessons that you learned.

You gave us two book ideas. You’ve got the book by the founders of Basecamp called Remote, as well as the book about the EOS system that your company uses called Traction, and you broke down the best ways to manage employees remotely into first, the culture, so you said that you want to make sure you’re clear on the core values of your team and that you need to hire around these values, as well as a fire around these values.

So you gave us your three-strike rule. If someone breaks a value once, you have a one on one, let them know what’s going on. And then they do it the third time, they ultimately get let go. Other ways that you focus on culture is quarterly state of the company addresses, as well as in-person retreats. You also talked about having a clear organizational chart and accountability chart for today, but also for five years in advance. Now of this can also help you realize what which roles you need to hire someone for.

From a tech perspective, you did mention that there is the possibility for tech overkill. The most important tech you use is Basecamp. You also use a software called ninety.io for EOS, as well as GoToMeeting. And you mentioned that you don’t do every single meeting via Zoom. You’ll just do your monthly meetings, face to face using video, whereas the weekly meetings are just simply screen share. So those are the main takeaways, but obviously, you went into a lot more detail on each of those as well as other piece of advice.

I really appreciate you coming on the show. Best Ever listeners, as always, thank you for listening. Have a best ever day, and we’ll talk to you tomorrow.

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JF2201: The Hands-Off Investor Author Brian Burke

Brian Burke is the President and CEO of Praxis Capital, a vertically integrated real estate private equity firm and in the past 30 years has acquired over half a billion dollars in real estate. He has been in a previous episode about 5 years ago, episode 305, and in today’s episode he will be sharing why he wrote the book “The Hands-Off Investor”  which is catered to the passive investor to teach them the ins and outs of investing

Brian Burke Real Estate Background:

  • President & CEO of Praxis Capital a vertical integrated real estate private equity firm
  • In the past 30 years has acquired over half a billion dollars in real estate; 3,000 multifamily units & 700 single family homes using proprietary software
  • Can be found in a previous episode JF305
  • Author of “The Hands-Off Investor”
  • Based in Santa Rosa, CA
  • Say hi to him at: www.PraxCap.com 
  • Best Ever Book: Ted Talks book

 

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Best Ever Tweet:

“Don’t take on too much debt” – Brian Burke


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today we’ll be speaking with Brian Burke. Brian, how are you doing today?

Brian Burke: I’m doing great. How about yourself?

Theo Hicks: I’m doing great as well. Thanks for asking and thanks for joining us again. So Brian was on the podcast all the way back in Episode 301. So that’s five years ago from when we’re recording today. So make sure you check out that episode, and today we’re gonna talk about what Brian’s been up to since then.

As a refresher, Brian is the President and CEO of Praxis Capital, a vertically-integrated real estate private equity firm. In the past 30 years, he has acquired over half a billion dollars in real estate, which covers 3,000 multifamily units and 700 single-family homes, using a proprietary software. He’s also the author of The Hands‑Off Investor. He is based in Santa Rosa, California, and you can say hi to him at his website praxcap.com. So Brian, do you mind telling us a little bit more about your background and what you’re focused on today?

Brian Burke: Absolutely. So I started out in this business 30 years ago flipping houses, and then grew into what you’d call a production house flipper where we were doing about 100 and something houses a year for a while there. We built a big rental portfolio of single-family homes at the bottom of the market, and then about 20 years ago, we shifted some of our focus over to the multifamily side. And then about 10 years ago, actually about 12 years ago now, really started going full speed in the multifamily side.

So our primary business focus right now is multifamily real estate. We acquire assets from Arizona all the way to Florida in the southern parts of the US and right now we own in Arizona, Texas, Georgia and Florida, and shopping in several other markets as well. Our portfolio now is approaching 3,000 units, and that’s really all we’re doing right now, is just focusing on operating our portfolio through the pandemic and looking for opportunities to grow the portfolio as we cross through to the other side.

Theo Hicks: Sure. So I definitely wanna focus on your multifamily business, but I know you recently released The Hands‑Off Investor book, and I actually have it in my bookshelf behind me. So that book’s focused towards passive investors, right?

Brian Burke: Yeah, it struck me that there was no book out there really written to show passive investors how to invest in syndication offerings. There’s books out there, and you guys did a great one on how to be a syndicator, how to raise money from other people, how to structure syndication offerings, but there was no book to show those “other people”, when you’re using other people’s money, there’s no book to show the other people what to look for in those offerings to make sure that they’re suitable for them, and I set out to change that and help fill that gap.

Theo Hicks: Perfect. So do you want to give– obviously, it’s a very long book, but maybe some tips on how to select the right sponsor, because obviously, there’s hundreds, if not thousands, of sponsors out there who are investing in apartments. So how do I as someone who does not know anything about real estate or at least not a lot about real estate, decide which sponsor to give my hard-earned money to?

Brian Burke: Well, the worst answer I can give is read the book first before you do anything. But it’s a true answer, because if you don’t know a lot about real estate, the book is going to teach you a lot about real estate. Because if you’re gonna be a building inspector, you need to know about construction techniques before you can inspect buildings. You might not have to be a contractor, but you have to know building techniques in order to know if contractors are doing the right thing. This is similar. If you’re investing passively in real estate, you don’t have to be buying real estate on your own, but you have to know enough about how to buy real estate, how to operate real estate, what things to look for to make sure that you’re making smart decisions when you’re looking at passive opportunities. So I always say that the sponsor that you’re investing with is the number one most important factor. If you find a good sponsor to invest with, chances are they’re going to be bringing you quality offerings to invest in, and you can spend a little bit less time worrying about the real estate itself, as long as you can get past the sponsor that you’re investing with. So my number one top tip for a passive investor is carefully select the sponsors that you invest with, because they can make or break you.

Theo Hicks: Okay. So let’s transition into the active side now. From my perspective, you see a lot of information when it comes to multifamily focused on raising money, focused on finding deals, maybe not so much underwriting deals, but since it’s a little bit longer to elaborate on, something you don’t see a lot on, at least from my perspective, is asset management. So can we focus on that in this conversation? Can you maybe walk us through some of your best practices for asset management and more specifically, maybe separate them between asset management tips for someone who has 50, 100 units, as opposed to someone who has thousands and thousands of units?

Brian Burke: It’s funny you ask that question because a lot of books out there, guru courses and that stuff, they always focus on the acquisition. It’s always about “Oh, you can find a deal, you can buy a deal, you can get the money for a deal”. That process only lasts a few months, maybe a few weeks, maybe a few months for you to find something, get through escrow and buy it. People neglect the part that actually takes several years, and of course, that’s the part of asset management and property management and operating all the way through to success. It’s a very, very important piece and a smaller operator who owns a few units, maybe you own a few hundred or maybe a few dozen or maybe just a few, it’s probably most efficient for you to use third party property management where they can come in, manage the asset for you. You can leverage their expertise, you can leverage their team, their resources, their scale, their local market knowledge and all those things to manage the property. And then managing the asset is really a job of managing the manager or managing the management company, in this case, making sure that they’re sticking to budgets, they’re hitting targets, they’re producing the income that you’re looking to produce, that they’re containing expenses.

So when you’ve acquired the property, you’ve probably (or at least you’ve hopefully) gone through and done a financial analysis forecast of what you think the income and expenses are going to look like. Your job as an asset manager, in this case, is to make sure that the management company is delivering to those objectives.

As you scale and get larger, there’s going to be a point where you might decide to manage your own assets, and that’s what we did. We made this decision about three or so years ago to form our own management company. We have an expert that’s in charge of the management company that runs it and gives us complete control over our assets, start to finish. So as you grow, now you’re going to be thinking about enterprise-grade property management and asset management systems, software, technology, all those things.

So for us, we have an enterprise-grade management system where I can look in there at any time all the way on the property management level to see rent rolls, income and expense reports. I can look and see move-ins and move-outs, and all those things, all the way up to the asset management level, where I can get key performance indicators for individual properties, the portfolio as a whole or a subset of the portfolio at a glance in a single dashboard. So having those kinds of tools is critical as your business grows, because now you’re actually running a large company here, not just managing a small property at that point.

Theo Hicks: When you made the decision to transfer from third party to in-house management, was it a certain dollar amount? Was it a certain number of units? Or was it something else that made you decide to make that transition?

Brian Burke: There were really three factors at play. One was, we felt that the scale that we were looking to achieve and we were beginning to achieve – we were at about 1,500 units when we made this decision – was such that we felt we could support a dedicated property management team. When you’ve only got a few units or a few hundred units, the management fees associated with that don’t support having an entire company dedicated to property management. As you get larger, you add up those management fees, you realize, “Okay, I could hire a full-time person with these management fees and we can start to do that.” So that was one of the aspects.

The other was that we were looking for institutional investors to invest alongside us in our assets, and our experience has been institutional investors prefer to invest with groups that manage their own assets. So in order to have the key to unlock that door, we needed to bring it in-house.

And third and finally, and probably most importantly, the team that I needed became available. In other words, I met through mutual contact someone who had started national multifamily management company footprint six times in his 40-year career, had done it for large institutional owners and had about 45,000 units of property management experience, and I had the ability to bring him on board with us to head up our management company. When all the stars align and the time is right, you pull the trigger, and that’s what we saw. All the stars were aligned; it was just time.

Theo Hicks: So logistically, how does that transition work? Is it very similar to the transition when you take over a property where it’s just an instantaneous thing? Or was there a longer transition where your new team worked with a third party team to make sure they knew what was going on first? Can you walk us through how that works?

Brian Burke: We did it a little bit differently. So it’s interesting, because the CEO of my management company, he had previously with another organization that he worked for, took about 25,000 units from third party management to in-house management in about a 90-day period of time. So he’s got experience doing that. We chose not to go that route. Instead, what we did is we just started folding in all of our new acquisitions into the internal management company and left the existing portfolio with third party, and then we just slowly started moving it over as the time was right. So really, all the new acquisitions went into the new management company. Most of the stuff that we had with third party was getting a little bit towards the end of its life where we were going to be selling anyway, and so we could let it ride with the management that was in place. And then as we sold those off, the management company — we had just management company attrition. We did this change about three years ago. We still have one property left that’s third-party managed, and maybe we’ll transition that one someday or maybe we’ll just wait until we sell.

Theo Hicks: Transitioning a little bit to what you’re talking about with the software and the technology and the management system. So for you, is that what you’re doing to track the progress at the property, just going into that software? Or I’m assuming you still have meetings with someone at the property management company that you own. So what’s the frequency of those conversations and what are some of the important things you talk about? Maybe what’s the recurring agenda for those conversations.

Brian Burke: Just like a third-party management company, we have the same high-level conversations on a regular basis. So we do a weekly to bi-weekly call with the senior management team where essentially, everybody on the capital and acquisition side is on that call, along with the property management operations team. So our org chart on the management company side, we have a CEO that’s in charge of the company, we have a Chief Operating Officer that’s in charge of the on the ground, street-level stuff, and then we have area vice presidents that are in charge of a certain region. So those individuals will be on the call with us, we’ll discuss each property and its performance, anything that has come up that we need to be aware of. We’ll look at all the KPIs to see “Okay, this property may be running a little lean on occupancy. What are we going to do about that?” and have conversations that are targeted based upon what we’re seeing in the data.

So we treat it just like a third-party management company. Really just the advantage to us is that because we own the management company wholly, we have complete control over all those personnel. We have the access to all the software so that we can see the entire portfolio through our business intelligence platform, and you have everything in a unified spot. This system is pretty robust. It drills all the way down to the property level. The property managers on-site use the same software that I’m looking at for day-to-day property management. So when they do a move in, it’s going in this system. The rent rolls are generated through this system, the invoices go through this system. So it’s an entire property management company in a box.

Theo Hicks: Perfect. Before we get into the money question, as the head of this massive multi-company organization, what does your week to week look like?

Brian Burke: Well, I would say that the majority of my time is spent on answering emails. It’s really just that exercise of — you’re getting pinged constantly from different directions for, “Hey, we need this, or there’s that, or here’s a deal coming up, or here’s an issue at a property we need to address.” But really, I spend a lot of time in the office. I like to tell people I’m just chained to my desk… Between investor communications and oversight of the assets, and I’m a pretty hands-on guy… So that means that I just had to spend a lot of time looking at absolutely everything, which means I don’t get very far away from a computer very often.

Theo Hicks: Alright. Well, Brian, what is your best real estate investing advice ever?

Brian Burke:Well, it’s 2020 as we’re recording this, we’re in the middle of a coronavirus pandemic. I think the best real estate investing advice I can ever give is most applicable to a time just like today, and this advice is actually designed for the climate that we’re currently in, and that is – don’t take on too much debt. Investors who buy with conservative leverage were the ones that survived the last recession. The ones that took on too much debt are the ones that failed in the last recession. So don’t take on too much debt, but couple that with always have plenty of cash. So if you’re a syndication sponsor and you’re raising money from individuals for your deals, make sure you’re raising plenty of cash to have excess reserves for those downturns, which they’re certain to be one year in the coming months. If you’re a passive investor looking to invest in an offering, make sure that the sponsor is raising plenty of cash, so that they don’t run short and put your investment at risk.

Theo Hicks: Can you be a little bit more specific? So how much extra money are you raising? Is it based off of the purchase price? Is it per unit? Is it a lump sum? Did you always do this for every property?

Brian Burke: Yeah, we tend to do ours as a percentage, and that varies, too. So I guess about a year ago, our percentage would be 1% of the purchase price of the property just for free cash. And then you’re also going to have additional cash that you’re going to have for funding impound accounts, funding utility deposits, funding first month’s mortgage payment; all of those are in addition to the 1% free cash.

Nowadays, I’ve been increasing that. We’re looking more at 1.5% free cash, plus we’re also abiding by the agency requirements for nine months principal and interest reserve that goes into a lender controlled account. So in that case, sometimes we’re raising as much as 3% or even 3.5% or 4% sometimes of the purchase price of the property just for cash reserves.

And then the other thing that we do is a lot of people like to use extra leverage to boost investor returns by funding capital expenses, like unit upgrades, new roofs, that sort of stuff, through a lender controlled reserve that’s through a bridge loan, where you’re borrowing the renovation dollars and you’re drawing them off as you renovate. We’re not doing that. We’re raising the renovation money ahead of time in cash. So in that case, we may have a few million dollars that are available for us to do renovations. But if things go really bad, that’s a lot of excess cash that we also have that allows us to survive an adverse event. So when it comes to having cash reserves, all I can say is the more, the merrier.

Theo Hicks: Alright, Brian. Are you ready for the Best Ever lightning round?

Brian Burke: Let’s hit it.

Break [00:19:34]:05] to [00:20:37]:02]

Theo Hicks: Okay, what is the best ever book you’ve recently read?

Brian Burke: I really liked this book called TED Talks, and it was written by the guy that is in charge of the TED Talk organization. It was a great book that talks about techniques for public speaking, and as an author, as a business executive and as someone who is in the financial services industry raising money from high net worth individuals and family offices, it’s really important that we’re able to effectively speak in public, and this is a great book to help find new ways to engage your audience.

Theo Hicks: If your business were to collapse today, what would you do next?

Brian Burke: I’d do it again. I’ve already been through this before. I’ve survived multiple market cycles; the Great Recession. 30 years’ time, I’ve had the chance to reinvent myself several times so far through different market cycles, and I’ve been very fortunate that in 30 years of doing this, I’ve never lost a nickel of investor principal. So I would first do everything I can to safeguard the investors that I have already, and then I would build the business right back up to where I have it now. They can take away the business, but they can’t take away the knowledge.

Theo Hicks: What is the best ever deal you’ve done?

Brian Burke: Well, I’ve got a lot of those. I’ll take a recent one. We’ve got one right now that I’m really proud of. It was two properties next door to each other that we bought for about a little under $40 million for the two of them, from two different sellers that were listed by two different brokers at almost the same time. We ended up buying both properties, and then what we did is we just cut down a small section of fence on a driveway that connected the two properties, and then we were able to make the two properties into one. One of the properties was using an apartment unit as a leasing office, so we ran all the leasing out of the other property that had a real leasing office, converted that unit back into a rental unit. But by combining the two properties, instead of having a little over 200 units each, we have one property that’s almost 540 units. By doing that, we achieve some incredible economies of scale, we saved a ton of expenses. We were also able to increase rents at a dramatic amount because the property was under rented. We were able to make some really good improvements. Within about a year to a year and a half’s time, just based off of the increased income, we resubmitted that to our lender to look at a refinance and found that we’d increase the value of that property by about $10 million in about a year and a half’s time. So a 25% increase in a really short time is a great accomplishment, and $10 million is a really meaningful number.

Theo Hicks: What is the best ever way you like to give back?

Brian Burke: Ours is through a charity organization that I started with Jay Heinrichs, a friend of mine. It was really his idea; I can’t take all the credit for it. It’s called A Hero’s Home. You can find it at aheroshome.org. We’re raising money for the purpose of providing a fully fixed up renovated home, free and clear, to a deserving US veteran, service member, first responder, something that’s near and dear to my heart. I just can’t wait to hand those keys over one day here soon. We’re about two-thirds of the way towards our goal.

Theo Hicks: That’s awesome. Lastly, what’s the best ever place to reach you?

Brian Burke: The best ever place is just as you said at the top of the show, through our website, praxcap.com. You can also find me on Instagram, either @investorbrianburke or at @praxcap, and also on biggerpockets.com quite frequently, answering questions on the forum. So you can frequently find me there as well.

Theo Hicks: Alright, Brian. I really enjoyed our conversation today; a lot of takeaways. We focused mostly on asset management. But before we get into that, we did briefly talk about passive investing. So the most important decision for a passive investor is selecting the right sponsor, and your advice was to read your book or to get educated on the process that you will know if the sponsor is doing the right thing.

From asset management, we talked about the difference between being a smaller operator and a larger operator, which is really who was actually managing the deal. So when you’re smaller, it’s better to go with third party, but eventually, you get to the point where it makes more financial sense to go with the larger operator, and we talked about the advantages of that, which essentially gives you complete control over the personnel that allows you to have access to the same software that the management company does.

You mentioned when you made your transition, and the three factors were one, that’s scale we just talked about. The second one was when you want to work with institutional investors, they prefer in-house management. And then the third one was that the team you wanted happened to become available. We talked about how you actually did the transition, and there’s really two ways to do it. You mentioned that the CEO of your property management company had experience doing full transitions over a nine-day period, whereas you guys instead decided to include new acquisitions into this new management company, and then the existing ones remain in the third party. And then whenever you sold those, they obviously left a third property management. You got one last thing you need to sell before you’re fully managed by your own property management company.

We talked about the communication with your management company, which is the same as it is with a third party – bi-weekly calls, everyone in your team is on those calls. We’ve talked about each individual property and their performance, anything that has come up with those properties that you know about, focusing on those high-level KPIs as well.

We talked about what your week looks like, which is just answering a lot of emails and staying at your desk. And then we talked about your best ever advice, which was twofold, which was  don’t take on too much debt, because those are the investors that did not survive during the last recession, and the ones who did not take on too much of that did survive. Then we talked about having plenty of cash in excess reserves. I really like when you said the reason why you are raising the capital for renovations is that it gives you the opportunity to have even more excess cash. If something were to happen, you can pause renovations and have all that money, as opposed to borrowing that from the lender and you have access to  none of that money. Then you gave more specifics on the numbers for raising extra money for free cash.

So I really enjoyed the conversation, Brian. Best Ever listeners, as always, thank you for listening. Have a best ever day and I’ll talk to you tomorrow.

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This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

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JF2197: Two Years In Real Estate With Jeff & Taylor Adams

Jeff & Taylor Adams are a husband and wife team attacking the real estate world. They share how they began investing with house hacking to out of state investing due to the cost of real estate in their area. Being only two years into their journey they have faced many different situations and they were very willing to share to help you pursue your personal real estate adventure.

Jeff and Taylor Adams  Real Estate Background:

  • Jeff is a software engineer and Taylor is a realtor and co-founder of @womensinvestmentnetwork
  • 2 years of investing experience
  • Portfolio consists of Duplex and a mix of long-term rentals/AirBnBs, a single-family home, and one 5-unit building
  • Based in Boston, MA
  • Say hi to them at: Instagram @TaylorColemanAdams
  • Best Ever Book: Four Hour Work Week

 

 

 

Click here for more info on PropStream

 

Best Ever Tweet:

“Listen to what you want to do and make sure you network with as many people as you can and try to add value to those relationships” – Jeff & Taylor Adams


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today I’ll be speaking with Jeff and Taylor Adams. Jeff and Taylor, how you guys doing today?

Jeff Adams: Great, how about you?

Taylor Adams: I’m doing great. Thanks for having us.

Theo Hicks: I’m doing great. Thanks for asking and thanks for joining us. Looking forward to our conversation. Before we get into that, let’s go over Jeff and Taylor’s background. So Jeff is a software engineer and Taylor is a realtor and the co-founder of Women’s Investment Network. They have two years of investing experience. Their portfolio consists of a duplex and a mix of long term rentals and Airbnbs, a single-family home, and a five-unit building. They’re based in Boston, Massachusetts, and you can say hi to them at their Instagram page, which is @taylorcolemanadams. So do you guys mind telling us a little bit more about your background and what you’re focused on today? And we’ll start with Jeff.

Jeff Adams: Our background is so intertwined. I mean, we’re a married couple, obviously. We met in college, we did the whole “We’re gonna get jobs…” I became a software engineer in robotics and Taylor went through a few things, you can talk about that… But really, the thing was, we needed to figure out how we were going to buy a house that we could actually live near our jobs and afford. The prices in Boston are crazy and our jobs were in the city of Boston. And the commute to get into Boston, if you’re even just 10 miles from the city, can take an hour and a half. So we started looking at single-family homes, but they’re just too pricey. So then we started looking more towards the duplexes. I mean, I’ll let Taylor do some of her background before we get into the real estate side.

Taylor Adams: Yeah, absolutely. So my background, I graduated from Northeastern University, and I started in finance, found out that was not for me, and I moved into higher education where I was before I left that work to become a real estate agent.

So I transitioned into real estate after Jeff and I started investing. So going off of what Jeff was just saying, we were looking for our single-family home to start out our lives together and decided to move forward with the duplex. At the time, we didn’t know anything about house hacking or BiggerPockets, and we eventually decided that we wanted to continue to buy properties because we got the bug. But we wanted to buy locally with our own money and realized that was going to take too long and it was going to be too expensive. So we started to explore out-of-state investing, and that’s what led us to dive into the properties that we purchased over the last two years.

So we dove in to test the waters in Tennessee with a single-family house. We found out we loved it and decided it was time to scale up to a five-unit. Given all of this happening, the market in the Boston area was super, super hot, and Airbnb was something of a lot of interest to us. So we decided to turn our upstairs unit into an Airbnb in our house hack. So we were full steam ahead at this point. We’re ready to scale up into large multifamilies. We had a 25-unit under contract. We ended up backing out of that because the numbers didn’t work out, and then COVID hit. So now we’ve been pivoting our strategy a little bit to try and take advantage of all the new opportunities that we’re seeing.

Theo Hicks: Perfect. Thanks for sharing that. So let’s start with the duplex. So you didn’t know about the house hack, but was it a house hack deal? Did you owner occupy it and then rent upstairs to cover your payments?

Jeff Adams: We did, exactly. We rented out the second unit.

Theo Hicks: Great. So do you mind telling us the numbers on that deal?

Jeff Adams: Yeah. So I’m more of the numbers person in the partnership… So it was on the market for $650,000 which around here was a pretty good price at the time. It might be crazy for some areas of the country. We did the inspection, we found some issues, we were able to negotiate down to $625,000. There was a renter in place that was paying $900 a month. So we asked that it be delivered vacant, because they were month-to-month renters. So then, we were able to get that rented out for $2,000 a month upstairs – that’s a three-bedroom – and then we lived in the other unit that’s a two-bedroom.

Taylor Adams: And we did 4% down using an FHA loan for that.

Jeff Adams: Yep.

Theo Hicks: You guys still live there now right?

Taylor Adams: We do.

Theo Hicks: Okay, perfect. So then after that, you said that you wanted to keep investing and you moved to out of state. So why did you select Tennessee?

Taylor Adams: We were evaluating a number of different markets, but we found out that the cash flow in the Sunbelt was really appealing. So we narrowed our search down, landed on Memphis for the cash flow, the low barrier to entry as far as pricing, and then started speaking to some of the more substantial property managers in the area to get a better sense of the market, and that just propelled us to move forward with Memphis.

Theo Hicks: How did you find these property management companies? What type of questions did you ask them? How many did you talk to? What was the timeframe between speaking with them to buying a deal, things like that?

Jeff Adams: There’s a few places you can look for the list of property managers to call down. Back then, we didn’t know as much. So we were looking at Google and looking at just Zillow, who was renting out the most units and stuff, which wasn’t a terrible strategy, but there’s also lists of qualified property managers that you can go through. So we actually compiled a list – I think we had 10 or 15 – and did more research on them offline, looking at reviews and stuff, and we could just cross off a whole bunch right away.

So I think I ended up talking on the phone with three of them. And it was the questions like– a part of it was how do you handle vacancies and turnovers and just the logistical questions, but a lot of it for us, too, was trying to get a sense of whether we could just trust this person. If they’re 1000 miles away from us and handling an asset that we put money into, and it’s going to be giving us money every month, is this a person that we feel that we can deal with? Some people on the phone, you can tell right away. Your gut just says, “This isn’t the right person for me.” Maybe for someone else, they’d be fine, but not for me. So we finally narrowed it down to the person who said the right things and we actually trusted, and then went and saw him in person and did a tour of Memphis for the whole day with him and then decided, “Yes, this is definitely the guy.”

Taylor Adams: Yeah, and the guy that we ended up going with, he is really well connected in the area. When we met him, you could tell that he really had a good relationship with lots of different contractors and people in the area and he could build those relationships and that was really important to us.

Theo Hicks: For sure. So at this point, you knew that you were gonna do Memphis and you were just trying to find the right team on the ground in Memphis.

Taylor Adams: Yep, exactly.

Theo Hicks: Okay. How did you find the deal?

Jeff Adams: So the property manager also has his real estate license. So he actually helped us find it. It was just on MLS, on Zillow, all that, and we just went through a whole bunch. We went down there and physically looked at ten properties. It didn’t end up being one of those. A few days later, after we got back, we found the one after maybe ten more that we investigated.

Theo Hicks: What was the number? So similar to before – what did it cost? Did you put your money into it? Was it turnkey? And then what’s it renting for now?

Jeff Adams: We got it for $65,000. I think that was $5,000 less than his price. We only had to put about $2,500 into it. There wasn’t too much to do; just the little stuff that comes out of inspections and just like you’ve got to fix that system and this thing. And then it was already rented out for $895 a month, and I just– they had a year left on their lease, so that’s lasted for a while. We actually had to evict them because they stopped paying last fall. But that was a pretty easy process in Tennessee. It’s very landlord-friendly down there. And then we got a new tenant in for the same price, $895 a month, and that one’s been going pretty smoothly.

Taylor Adams: And that one, we did 25% down on that property.

Theo Hicks: Yeah. So it was a pretty steep price reduction from the 650k in Boston down to 25k. So [unintelligible [00:10:24].11] difference. Perfect. Okay, so then the next deal after that, you said, was a five-unit, right?

Taylor Adams: It was, yep.

Theo Hicks: Was that also in Tennessee?

Taylor Adams: Also in Tennessee. Pretty close to our single family.

Jeff Adams: Yeah. So that one, five units, it was listed at $140,000. We did an inspection, got it down to $120,000, renting it out. It’s on average, I think, $400 a unit right now.

Taylor Adams: And I think we put 20% down on that property.

Theo Hicks: Was that an MLS or was that off-market?

Jeff Adams: That was on the MLS, yeah.

Taylor Adams: And that one’s been quite a bit of work. That one is definitely more of a BRRRR strategy. We’ve put quite a bit of money into it so far and will continue to, and we hope to double the value of the property, so that we can refi it at around $240,000.

Theo Hicks: Okay, so are you gonna increase the rents on that after you do the repairs?

Jeff Adams: Yeah. So we actually got two vacant units when we bought it. So we rented those out, and then there’s two units that are way below market. They’re at $350,000, and we can get them probably up to $450,000 or $500,000 if we redo those units.

Taylor Adams: Yep.

Theo Hicks: Okay, something else you had mentioned during your intro was that you had a larger multifamily under contract and then backed out and then Coronavirus it, and then you’re pivoting to take advantage of new opportunities. What are these new opportunities?

Taylor Adams: When everything happened, we had planned on continuing to move forward with syndication, but our investors were feeling a little bit unsure about what was going to happen during lockdown and whatnot. So what we decided to do was really focus on our house hack, which we hadn’t really been focusing on at all. So over the course of the lockdown, we refinanced the property, we’ve done a ton of renovations, and we’re actually in the process of transitioning our Airbnb upstairs to a long-term rental, because it just makes more sense for our area at the moment. And by doing these two things, the refi and turning upstairs into a long term rental, we actually are going to be able to get another house hack. So that’s something that we’ve been focusing on with the assets we already have.

And then really just trying to free up cash and focus on what are going to be the big opportunities that happen once we’re in a “post-COVID” world. So we’re thinking about, do we want to continue to look at large multifamilies or does it make sense to continue our approach around smaller multis? Is there opportunity in other asset classes? So we’re trying to keep our investors in mind and what they’re interested in and make sure that we are putting them in positions where they’re not at a ton of risk, given the uncertainty of the market right now.

Theo Hicks: Do you have any potential new asset classes you want to move into in the post Coronavirus world?

Taylor Adams: Yeah, this might sound crazy, but we’re really curious about retail space right now. We know that because a lot of smaller businesses, unfortunately, are going out of business, we anticipate that’s going to be a burden on these landlords who are holding these retail spaces. So we’re interested in keeping an eye on what happens with some of these and seeing if that’s an asset class that we can move into.

Theo Hicks: Yeah, that’s definitely an interesting approach. Alright, so starting with Taylor, what is your best real estate investing advice ever?

Taylor Adams: My best advice would be to listen to what you want to do. So people who have never invested will have lots of opinions and tell you to not invest in real estate. But this is your journey, so you should pursue it anyway if it’s something that you’re passionate about.

Theo Hicks: And then Jeff?

Jeff Adams: So going off of that one, some people are going to say things that you don’t know anything about what you’re doing and you shouldn’t listen to that, but there’s also gonna be a lot of people out there that have already done exactly what you’re looking to do. So networking is just so important, getting to know those people. And you don’t want to pester people every day like, “Well, what do you do about this?” But just being around them, you often pick things up that you just wouldn’t have otherwise. So being able to add value to them and network with those types of people is going to help you on your journey.

Theo Hicks: Before we go into the lightning round, I do have another question. What advice would you give to others out there who want to start a real estate business with their husband or wife in order to make sure that that goes smoothly? What are some things you guys do to make sure that the business functions smoothly together 24×7?

Taylor Adams: Yes, especially right now, we’re together a lot. Well, first of all, it’s a ton of fun. So I think that the biggest thing is communication and making sure that you’re on the same page. We very much treat this like a business. So we’re doing quarterly, monthly, weekly meetings to make sure that we are on the same page and we’re approaching this in a very specific fashion, and I think that helps to balance it out. But then also do not forget to take time to not talk about real estate and to talk about something else, or else you could be talking about real estate 24×7.

Theo Hicks: Anything to add there, Jeff? Or you’re just, “I agree”?

Jeff Adams: Yes.

Taylor Adams: Yes, I agree.

Jeff Adams: That’s another key, is agreeing.

Taylor Adams: Yes. [laughs]

Theo Hicks: Alright, are you guys ready for the lightning round?

Taylor Adams: Yeah, I think so.

Break [00:15:40]:03] to [00:16:43]:09]

Theo Hicks: Okay. And we’ll just do for all of these, we’ll do Jeff first and then Taylor second. So what is the best ever book you’ve recently read?

Jeff Adams: For me, it’s the 4-Hour Workweek by Tim Ferriss.

Taylor Adams: And then for me, I’m gonna say that it’s the Seven Levels of Communication by Rick Masters.

Jeff Adams: [unintelligible [00:16:57].21]

Taylor Adams: I’m sorry. Seven Levels of Communication by Michael Maher.

Theo Hicks: Perfect. Okay, if your business were to collapse today, what would you do next?

Jeff Adams: We’re just always starting new businesses. This isn’t the first thing that we’ve done. We’ve started software-based things… I think we would just find a new business to create.

Taylor Adams: Yeah, we’re a little bit of serial entrepreneurs. I think that the other thing that I would say is that we would figure out a way to make it work, because I think we’re really passionate about real estate. So we would want to figure out a way to pivot in a way that allows us to continue to do it even if it’s not exactly what our strategy looked like before.

Theo Hicks: What is the best ever way you like to get back?

Taylor Adams: So I’ll go ahead and say… So I actually started a community for women who are interested in investing in themselves, in their future. I definitely see that there’s not as many women in the investing world as I would like. So this is something I’ve created to help women gain the confidence and just inspire them to get involved.

Jeff Adams: Yeah, and we just like to help people get there. We help to mentor other people that just haven’t done anything yet. So that’s why I’m really excited for what Taylor’s doing with her women investors network.

Theo Hicks: And then lastly, what is the best ever place to reach you.

Taylor Adams: For me, that would be my Instagram @TaylorColemanAdams.

Jeff Adams: And for me, email is fine. So it’s jeff.adams.c@gmail.com.

Theo Hicks: Perfect. Well, Jeff and Taylor, thanks for joining us today and walking us through your two-year journey. I really enjoy these conversations. I really like getting into the weeds and details on specifically what you guys have done to get started because other people who haven’t started can take a look at what you did over the first two years and replicate that so they can get their first deal.

So we talked about your first deal is that duplex in Boston and then from that, you transitioned to doing out of state investing with that single family property in Tennessee. We talked about why you chose Tennessee because of the low barrier of entry and cash flow. We talked about the process for understanding the market out of state, not really knowing it, never being there, or at least not living there, and that was through property managers. You created a list of 10 to 15 managers, you did some online research like looking at reviews, and you narrowed down to three. And then when you spoke to them, you obviously asked them the logistical questions about how they operate properties, but you really wanted to know if it was somebody that you could trust.

And then ultimately, you landed on one person who you ended up actually going down and touring Memphis with this person who was really well connected in the area and you ended up going with them. They also help you find this first deal, which is that single-family home. You went through the numbers on that. After that, you scaled up to the five-unit, which you also found on the MLS. The plan on that one is to do more rehabs and increase the rents. And then your next thing was to do the Airbnb upstairs, which we didn’t really talk about, which is fine. And then now, you said you’re going to be focusing on your house hack. So you refinanced it, you’ve done a lot of renovations and rather than doing the Airbnb upstairs, you’re going to do a longer-term rental.

And then in the future, that plan is to do another house hack, as well as making sure you’re freeing up some cash to focus on other opportunities, which you said you’re looking into the retail space because all these smaller businesses are going out of business and the people who actually own these retail spaces are probably going to be motivated because they’ve got no one paying them.

We talked about your best ever advice. For Taylor, it was to listen to what you want to do as opposed to letting other people tell you what you want to do. And then for Jeff, it was making sure that you’re networking with people who are already doing what you want to do. And then we talked about some best ever tips for working with a spouse or significant other – communication, making sure you’re on the same page, making sure you’re still structured in doing your quarterly, monthly and weekly meetings. And then you mentioned that it’s also important to take time to talk about things that aren’t real estate related and then obviously, making sure that you guys are agreeing a lot on things. So Jeff and Taylor, again, appreciate you guys coming on the show. Best Ever listeners, as always, thank you for listening. Have a best ever and we’ll talk to you tomorrow.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

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JF2193: How To Go From Navy Pilot to Owner Of Two Businesses With Bill Allen

Bill is a former Navy Pilot and Founder of BlackJack Real Estate and CEO/Owner of 7 Figure Flipping. He initially started flipping one house a year and as he started to gain the confidence he then went full-time. He recently bought a new real estate company called 7 Figure Flipping. Today he shares how he has been able to grow from Full-time Navy Pilot to business owner.

 

Bill Allen Real Estate Background: October 15th air date

  • Navy pilot, Founder of BlackJack Real Estate and CEO/Owner of 7 Figure Flipping
  • He and his team at BlackJack RE currently flip and wholesale 200+ deals per year
  • Based in Nashville, TN
  • Say hi to him at: www.blackjackre.com 
  • Episode JF905 – May 2017
  • Best Ever Book: Extreme ownership

 

 

 

 

Click here for more info on PropStream

Best Ever Tweet:

“Listen to a podcast that is educational, and surround yourself around people who are strong where you are weak” – Bill Allen


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today, we’ll be speaking with Bill Allen. Bill, how are you doing today?

Bill Allen: I’m doing good, Theo. How are you?

Theo Hicks: I’m well. Thanks for asking and thanks for joining us again. So Bill was a guest all the way back in May of 2017, on Episode 905. So make sure you check that episode out. We’ll be talking about what Bill’s been up to since then. But before we get into that, a little bit about Bill – he’s a Navy pilot as well as the founder of Blackjack Real Estate, and CEO and owner of 7 Figure Flipping. He and his team at Blackjack currently flip and wholesale over 200 deals per year. He is based in Nashville, Tennessee, and his website is blackjackre.com. So Bill, do you mind telling us a little bit more about your background and what you’ve been up to since we last had you on the show?

Bill Allen: Yeah, you told me May 2017, so I can’t believe it’s been that long; over three years now. So I have a Navy background. I was an engineer and went through as a Navy pilot, and I thought that’s what I would be doing my whole career. I bought a couple of houses as rental properties. I moved around 15 times in 18 years that I have been a Navy so far, and just bought a house everywhere I went. I started to expand into doing a flip on the side; made a bunch of money. You make $45,000 in a couple of months, it starts to feel really good, and you figure out how you can do more of that. So I did one a year before I started scaling up a business, and then eventually I was able to leave the Navy full time and I’m a reservist now. So I fly part-time.

Over the past four or five years, we’ve been able to do over 100 deals a year. I have a team of about 15 or 16 people in that company, and it’s pretty nice. I’ve got to the point where — I talk about passive income a lot. I don’t really do a lot in that business anymore in Blackjack Real Estate, so my COO runs the company. He does the day to day ops. I spend two hours a week with him on a call and he does the magic, and the team’s awesome. It’s really incredible to get to that point. So that’s my background.

We primarily wholesale houses in the southeast. So Nashville, Chattanooga, Pensacola. We do some deals in Atlanta, Birmingham. If something pops up, we might do some marketing in some different areas. It’s pretty much all virtual now. COVID pushed us into a virtual world. So we’re closing everything over the phone. We’ve got a system set up where we don’t actually have to go see the house anymore. So it’s been a great journey. I don’t know — last three years, my COO’s got up and running, and I’ve been able to remove myself, and then I bought another business and I’m running that now. So that’s where I spend my world in that 7 Figure Flipping company you’re talking about now. It’s where I spend about sometimes 80 hours a week doing that.

Theo Hicks: Perfect. So the Blackjack is a machine that’s running on its own. Well, not on its own, but you’re not running it, and then your focus now is on 7 Figure Flipping.

Bill Allen: Yeah, I spend all my time in that mastermind company for single-family wholesaling, flipping. Blackjack’s great because I have a phenomenal team. We have a great leadership team. I don’t have to look over their shoulder. They hold each other accountable. We operate off with a system called EOS, so the Traction by Gino Wickman, that system… And everything runs. I can just pop in there, look at the scorecard, see how they’re doing. I show up every month and give them a meeting over some rah-rah, talk about how amazing things are doing. The Inc. 5000 list just came out yesterday and we were number 206 in growth from 2016 to 2019, which is amazing to see that. So I can celebrate those things with them and do something else. My passion moved somewhere else, and to be able to do that and build another company and put the right people in place has been fun.

Theo Hicks: So in my notes here, this is from your first episode, is that in 2016, you had flipped 13 houses and wholesaled 54 while you were working full time, and now you’re telling us that you’re spending a few hours on that business. You’re doing over 200 deals a year. So double, triple what you were doing at the time. What are the two or three things that you’ve done that have allowed you to not only increase the amount of deals you’re doing, but decrease the time investment on your end involved in doing those deals?

Bill Allen: Well, I think the first thing is listen to podcasts like this. Understand that it’s possible. When you hear somebody that you can relate to and realize that they’re just a normal person doing things like this, it’s possible for anybody to figure out how to do it… And then surround yourself with the right people. I brought in staff members and team members that were better in areas that I was bad at.

A lot of people say strengthen your weaknesses, and I really believe in that work on your strengths, know what your strengths are, and then surround yourself with the people who are strong where you’re weak, and that’s what I was able to do. I was able to put this team together that when I’m sitting at the conference table and I’m talking about marketing, I’m not the know it all at marketing. Somebody else knows a lot more than me. So when I started listening to other CEOs, other business owners to figure out how they got to the place that they got, it was mostly about the fact that every decision doesn’t have to go through them.

So putting the right people in the team, and — you guys have that here, right? You guys have a great relationship here with your team, with Joe and you, and it’s really cool to see that. So when you can bring the right people in on your team to do the things that you’re not very good at or don’t want to do, it frees you up to do the other thing. So first of all, a little bit of education and just really honestly, it’s all pretty much mindset. Believing that you can actually do it, that’s the first step. And if somebody else can do it, so can you. Lots of different people have been able to do this. It’s possible. It’s real. There’s a lot of people out there doing it. And then finding the right people. Those are the big things. We talked about systems and automation and process. It’s the people that are involved that are most important. Whether it’s the people in the deal, the people on the team and staff, that’s the important part in business as far as I go.

Theo Hicks: How did you find the team members? Did you just post a job listing? Did you get a recruiter? Are they people that you knew previously? Where did you find them? And then how do you know that they are the right fit? You mentioned that you want to find people who are good at what you aren’t good at or don’t like doing, but I guess tactically, how do you know that this person is actually good at these things?

Bill Allen: I think the first step is knowing yourself. So once you know yourself and what you’re good at — because people ask me all the time, who should I hire first? The answer to that question is it depends. I can tell you who I hired first, but who you hire first might be somebody totally different. It might be a project manager, it might be a bookkeeper, it might be a salesperson.. It’s really where are you weak and what do you not good at; that should be the first person that comes in. So knowing yourself, get to know yourself, your personality, what you’re good at, what you’re not good at and be honest with yourself. And then you interviewed me in 2017; 2016 is when I started hiring people, in early 2016, and it was like a Craigslist posting. We don’t do that style anymore. You can still do that…

The thing that I think you need to do is you need to cast your vision. You need to know where you’re going. Because that first person that comes in when you have no company and you have no track record, why should they leave another job or believe that coming to work for you is a stable way for them to do what they want to do? Casting the vision for them is the most important thing. Getting them on board and getting him to believe and buy into your vision. So what we do now is we hire off Indeed. That’s the only place we post, and we have ads running all the time. We look at the personality profile that we want somebody to have. So you can use a free resource like the DISC test. Kolbe is another one, Myers-Briggs is another one. We use a paid service called Culture Index. They cost anywhere from $6,000 to $10,000 a year depending on the size of company that you have. But I have two companies, we have about 50 people that work for the two companies combined. So it’s a great resource for us. I actually pay two licenses, one for each company. It’s that valuable to me.

So we set the personality profile that we’re looking for, and that’s who we are. What’s in your DNA? From the time that you’re 12 years old, you have these characteristics and traits that are in you. It might not show up, you might be able to work through it sometimes, but when you get stressed out, and things are going wrong and everything happens, you go back to that natural state that you’re in, and we’re constantly under stress as a real estate business. I think it’s safe to say that 70% or 80% of the time, there’s problems and things are blowing up. So I want the people that show up that can naturally go back to being salespeople or naturally going back to being admin people or naturally being good at bookkeeping at that point in time, and they’re not going to miss the details. So we look at that personality profile, and then we look at skillset. So a lot of people do it backwards. They look at skillset and they look at the resume, and then they hire somebody.

So I want to know who you are as a person, what your core values are, what you believe in, and if you can fit in with the team. I have a team member of mine, she’s amazing. She said one time, “They’ve got to pass the beach test. Would you go to the beach and sit on the beach and hang out with them for a little bit, especially as a small company?” I’ve hired some people before, they just don’t really fit the culture and it’s just the wrong fit. They can be great at that position, but they got to fit into the culture, the core values and all that stuff that we believe in, who we are.

So we post on Indeed, we create the personality profile that we’re looking for, and then we write the job ad on Indeed based on attracting that personality profile. So we use adjectives that when somebody reads it, they’re like, “That’s me, that’s me, that’s me.” Instead of talking about what the job is, we talk about who the person is that would be interested in this, and then we look at the resume.

So it’s like a funnel, just like your leads are. If you look at hiring just like you do going out and looking for leads for houses or for buyers or for raising money, whatever that is – same thing with hiring. And then we ask the same questions, we compare apples to apples. We write down the questions that we’re going to ask. We don’t change them, because a lot of times, you’ll go one way with the candidate on an interview and you’ll go another way on a different candidate on an interview, and you can’t compare apples to apples that way. So we ask them the same question. It’s very clear, it’s very obvious that we’re just being systematic about our approach. So that’s a short answer on hiring. There’s a lot involved in this stuff, but if your gut says no, don’t do it.. If your gut says this might not be the right person, but they have the resume… I’ve gone against my gut a couple times, big mistake.

Theo Hicks: That’s something I wanted to ask too, is how do you know when it’s time to fire someone, and then how does that approach work? Is it just one day it’s done? Is there a warning system? How much time do you give them to turn it around? I’m just curious of how that works.

Bill Allen: Yeah. That’s the answer again – it depends. For me, the problem is, I know that I’m an emotional decision maker, so I’ll hold on to people longer than I should. When my confidence runs out in somebody or it’s in question, it’s very hard to climb back up and get back on the good side of me and the company. Once I lose a little bit of trust and confidence in them because of their performance or what they’re saying or it doesn’t line up and my gut starts telling me this is the wrong fit, that’s the time that I should be letting somebody go, or having that first conversation. Usually what I do is I’ll have a basic conversation with them. I’ll give them some time to turn it around, and it’s never worked out for me. So from the HR side, I’ll say yes, we’ll give people a couple chances.

We use EOS. So we use something called the people analyzer as a tool inside of this EOS system that we use, and when they get below the bar on the core values or the Get it, Want it, and the Capacity, that’s when we go to them and say, “Hey, you’re below the bar. This happened, this happened, this happened.” So what I do is I give them three different times of things that they did in the past that highlights this core value being below the bar, and then I say, “You’ve got the opportunity to get back up, but this is what you need to do. You have two weeks or one week or three weeks or whatever we put a plan in place to get above the bar.” Because if it’s one instance, they say, “Oh yeah, but this happened,” or, “Oh, it was because of this.” But if it’s three times, they really can’t defend the fact that three times, they’re not showing up. And for us, it’s extreme ownership, stewardship, hard-working, integrity and personal professional development.

So if they’re not showing up with integrity, for me, you’re pretty much gone. There’s not going to be a warning for integrity. But if there’s some hard-working, maybe they had something going on with their family, they’re just not working as hard as they should be or showing up the way that they should, then that’s something that’s coachable. Personal professional development, if they’re not putting enough time into developing themselves professionally, then we can have a conversation and try to start to talk through some of that stuff.

Ownership, if they show up to that and go, “Yeah, but that was this person’s fault or this person’s fault or this person’s fault,” then they’re not even going to get through that meeting. We’re just gonna fire them right there. So it just depends on who the person is. But when your gut tells you that it’s time for somebody to go, it’s probably too late. Don’t be afraid to fire somebody in the first couple weeks, the first month, the first two months. You pour a lot of time and effort and energy into these folks, but there’s a lot of opportunity cost lost by holding on to the wrong person for too long.

We just had a quarterly meeting. One of our teammates was below the bar, and we had the opportunity to coach her, but she just wasn’t coachable and it was time to go, and we just parted ways on good terms. I’ll tell you, every single person that we let go so far, pretty much every single person, has written me back a year later. Every person I let go, I said, “Look, this is the best thing that I could possibly do for you. You don’t understand that this is not the right fit, you’re not in the right seat, this isn’t for you. You’re going to go find your dream job. Believe me that you’re going to be happier somewhere else. Here’s a couple of recommendations I have based on your personality profile, what I’ve seen; maybe go try this,” and I’ll get an email or a phone call six months, a year later, and somebody will say, “You know what? You were right. I found the incredible job. I love my job. I love what I do now. Thank you. Thank you for firing me. Thank you for letting me go. Thank you for caring about me that I’m actually not doing what fills me up.”

I think it’s pretty rare that employers actually look at their staff to see if they’re happy, if they fit the culture, if they’re enjoying what they do, and looking out for them. That’s the way I look at it is if they’re not happy, we’re not happy; they’re just working for a paycheck. Let me figure out where to put them and move them somewhere else, and if they can’t fit inside of our team, then what can I recommend for them?

Theo Hicks: That’s probably even more rare, is not only looking out for what’s best for them and for you, but also saying, “Hey, here’s what you probably can do based off of your personality profiles. So I wanted to ask a quick question about 7 Figure Flipping, the mastermind group. Is that traditionally an in-person event or is it online?

Bill Allen: Yeah, it’s traditionally in-person. So we have a big event every year in October called Flip Hacking Live, and last year, we had over 600 people there. We were planning on having it in Orlando this October. And then it’s traditionally quarterly meetings in person that we have, mastermind meetings, that we have transitioned to virtual meetings recently. So it’s been quite a challenge. We even just had one here in Nashville. I live in Nashville. We had it scheduled in Chicago. About a month before, we said, “Nashville is opening on July 1st. Let’s move it to Nashville because Chicago’s a no…” and it was in the middle of July. Two weeks before the event, we moved it into Nashville, got the contract in place, and then sure enough, July 3rd, they were just like, “Shut down Nashville, too.” We had to plan three events in a month. It was crazy.

Theo Hicks: Well, I wanna ask you, what are some of the things you’re doing for these virtual events to engage with people through their computer? What are some of the things you’re doing to engage with people?

Bill Allen: Well, you’re looking at some of it right now. So you can’t see, but I have four computer screens here. So when I’m presenting at these events, I’ve got a professional camera, lighting, set up my studio, I’ll move things around, and I can see every single face that’s at the event. I got the standing desk because of this. I got a lot of different new tech and things like that. I invested a ton of money into figuring out how we could deliver an experience to them. We learned a ton of things in Zoom. We do Zoom breakout sessions. We gamify some of the stuff. The biggest thing for me was to be able to see everybody, look at their reactions, and make sure that the content that I’m delivering is strong, and also coach up some of our other team and saying, “Hey, I need you professionally dressed. I need you with a nice background. I need you in a quiet place. Make sure that your internet is strong.”

We’ve put on probably six virtual events that we have learned how to do things. You can do a lot of cool stuff with zoom. You can do breakout sessions where you can send them to breakout sessions and then bring them back into a general session.

We’ve run two simultaneous events in the same weekend with six breakout sessions with different speakers and people running the room. So we’ve had to get lots of different licenses, do things like that. It’s been interesting. This October event that we have, we have the same event planner that does Tony Robbins’ event. He just did this Unleash the Power From Within; it had over 40,000 people. At his event, he had a 360-degree monitor. So what we’re doing for October is we’re building out a studio in Charlotte, where I’m gonna be there, I’m gonna fly the speakers out, and we’re gonna present a live event from stage to everybody and stream it to them.

We’re sending boxes ahead of time, we’re sending all the stuff that you would normally get at an event like that to their house ahead of time. We’re giving them point systems to gamify it, win some prizes and stuff, using private Facebook groups to get them interested and excited and network ahead of time. Networking sessions, breakouts, bringing keynote speakers in that we couldn’t afford before, all that stuff. Just taking it–  elevating it to a point where it’s not just a Zoom call or another webinar, because people are tired of that right now. I’ll tell you – a three-day Zoom call, they’re just not gonna be interested.

Theo Hicks: Okay Bill, what is your best real estate investing advice ever?

Bill Allen: Best real estate advice ever. I would say looking back, build the foundation and the mindset of what you want to do. I usually say take action, but I feel like that’s so played out. I really feel like when I look back, my success is because of what I tell myself in my mind all the time. So your mindset and the way that you show up with failure, with loss, with issues, with problems and the stories that you tell yourself in your head, that’s the most important thing. So if you can start with that and understand that you’re building the foundation on rock instead of sand with your mindset and where you’re going, you’ll be unstoppable.

Theo Hicks: Okay Bill, are you ready for the Best Ever lightning round?

Bill Allen: Ready.

Break [00:19:26]:04] to [00:20:28]:03]

Theo Hicks: Okay Bill, what is the best ever book you’ve recently read?

Bill Allen: Extreme Ownership by Jocko Willink and Leif Babin. Absolutely amazing book. It will change your life. Make sure your entire team, your family, your friends all read that book. It’s amazing.

Theo Hicks: If your business were to collapse today, and we’ll say Blackjack, what would you do next?

Bill Allen: I’d keep doing what I’m doing. I’ll tell you what I would do if Blackjack fell apart. I would probably look at what the marketplace looks like and figure out how to pivot the people that I have inside that business to something else. If it was because of the fact that we’re wholesaling real estate and that started to tighten up or close down, I have phenomenal people that we could have a rockstar donut shop right here in Spring Hill, Tennessee if we needed to. So look at the marketplace and look for opportunity and figure out how to pivot.

Theo Hicks: What is the best ever way you like to give back?

Bill Allen: I’m actually the Tennessee Director for Operation Underground Railroad. So I absolutely love giving my time and money and raising awareness for that. That’s an organization that frees trafficked kids from sex trafficking, sex slavery. In the US, about 500,000 sex slaves here in the US that are kids and almost 2 million total, so over 1.5 million abroad. So it’s a pandemic, it’s an issue. We’re fueling the problem as Americans and that’s it. Operation Underground Railroad, ourrescue.org. You can check it out. It’s absolutely amazing. It’s changed my life, opened my eyes to something I had no idea was a problem.

Theo Hicks: And then lastly, what is the best ever place to reach you?

Bill Allen: Well, that event, Flip Hacking LIVE, absolutely amazing. I recommend anybody to check it out. But 7figureflipping.com, you can reach me there.

Theo Hicks: Alright Bill, thanks for coming on the show again. I really appreciate you catching us up on what you’ve been up to, and congratulations on such massive growth since we launched talk. Again, went from 13 houses flips, 54 wholesales, full-time to working a few hours and having a self-generating machine of 200+ deals a year.

So we talked mostly about team. So we talked about the two main reasons why you’re able to scale – one was education and mindset; the other one was, surround yourself with the right people, complementary skill sets. You mentioned that you’ll post a job on Indeed, and rather than looking at the resume first, you’ll focus on the type of person, the values that you want, the personality you want for that job.

And then as you create the job listing based off of that, they’ll take the personality test, then you’ll look at the resume and then when you interview them, you’ll ask them all the exact same questions so you can compare apples to apples, and then ultimately, it comes down to your gut. If your gut tells you no, well, it’s probably not gonna be a good fit. We talked about the process of firing someone and your three examples of if they weren’t aligned with specific values. But again, if your gut tells you it’s not working out… You said that you’ve never had a time where you’ve lost confidence in someone, and then they’ve been able to turn it around. But I really liked what you said that when you do fire someone, you don’t just say, “Good luck.” You actually will try to give them advice on what might be a good career field based off of their personality test. You gave us a lot of advice on how to effectively do virtual events, whether it’s a meetup group as you’re doing every single month or a one-time yearly conference, and that would be your 7 Figure Flipping.

You talked about investing in a studio and making sure your team also has a nice camera, lighting, background. You said you use Zoom a lot for the breakout sessions. You get point systems, games, private Facebook groups to get people excited. And then something else you said that I thought was interesting was you can get bigger name speakers to talk. So you don’t have to fly them out, pay for their hotel. They don’t have to do an in-person event and spend a full day or full weekend. Now they can spend an hour at their computer doing it. So that was also interesting. And then your best ever advice was to build a foundation and a mindset first before you go out there to start taking action. So Bill, thanks again for joining us. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

Bill Allen: Thanks, Theo.

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JF2189: Important Factors When Deciding to Sell Early With Jason Yarusi #SkillsetSunday

Jason is a 3-time great guest who has delivered valuable information to all of our listeners and he is now back with some new information to share. His previous episodes are  JF1157, JF1538, and JF1788. In this episode he will go over his recent 94-unit project and why he ended up selling even though it was doing so well.

Jason Yarusi Real Estate Background: 

  • Founded Yarusi Holdings, a multifamily investment firm with over 800 units under management
  • The host of “The Multifamily Foundation”
  • Has a family construction business focusing on raising and moving structures
  • From Westfield, New Jersey
  • Say hi to him at:https://www.yarusiholdings.com

 

 

Click here for more info on PropStream

Best Ever Tweet:

“How you lay out your plan to your investors is vital and can either create confidence or uncertainty” – Jason Yarusi


TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless. This is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever; we don’t get into any of that fluffy stuff. With us today again, Jason Yarusi. How are you doing, Jason?

Jason Yarusi: Doing great. Hey Joe, thanks for having me back.

Joe Fairless: Well, my pleasure. And I said again, that’s because Jason’s been on the show a couple of episodes – Episode 1538 and Episode 1788, and on a previous episode, Jason talked to us about a 94-unit that him and his team purchased with investors, and it returned a lot of equity. Jason, when you talk about — you can fill in the gaps on how much equity was returned… And you did a refinance on that deal, with the intention of holding on to it for a period of time. But – newsflash, he did not hold on to it for a period of time, or a longer period of time, I should say. Instead, he decided to sell it.

So the purpose of today’s episode is to talk about how do we think about the decision of should we hold on to this longer? What are the pros, what are the cons, versus selling it and exiting out of the deal if the deal is performing? So what are the things to consider? So a little bit about Jason – he founded Yarusi Holdings, which is a multifamily investment firm with over 800 units under management; he’s the host of The Multifamily Foundation, he is based in Westfield, New Jersey, and the website is yarusiholdings.com, which is in the show notes. So Jason, do you want to just give a refresher on the 94-unit, so we’ve got a little bit of context? Best Ever listeners, you can go back, there’ll be links in this show notes for the previous episodes, so you can listen to those episodes if you want to refresher… But can you give us a refresher, and then let’s go right into the thought process?

Jason Yarusi: Absolutely. So we bought this property back in May of 2017. It was our first large acquisition going from a three-unit to this 94-unit. So it was the first property that we brought through syndication with our team. It was a great find. We found it through – we’ll call it a distressed owner; but the owner had passed, his kids were now running the deal, and they really didn’t want to be in this industry; they don’t live in the state. So it was a prime product to really go in there and just improve the efficiencies of the property.

The buildings themselves were in good shape, but we were able to add a lot of value really just through capturing the loss to lease, getting rent bumps up to really a $100 to $125 per unit based on just the properties right across, and we did a number of savings programs on the property that we talked on prior episodes.

After month 13, we had knocked out really a majority of the business plan. It was really month five or six that we had knocked out a big portion of all the cap ex than we had planned on that, taking really conservatively between month 14 and 18… But really just got in there, knocked it out, and by month 13, we were able to refinance the property and pull out about 75% of the capital back to investors.

So our plan and our thought process was great. The property was optimized, we were just turning the units, just capturing really on turning it to classic units going forward. It wasn’t an area that really called for premium units. So that’s what we continued to do, and really just improving on making this a better place for people to live. And we were accomplishing on that and we were building it through.

What came up though, is that there was a large property around us, and that large property has about 284 units, and that really dictated the way the area was going. So one thing is that that submarket couldn’t warrant RUBS, but because that owner had decided against it, he was controlling the narrative. He didn’t want to do it. It wasn’t in his game plan. So other owners who had tried, who had smaller properties around it, were really getting hit back because tenants were saying, “Well, I could just go over to competing property that wasn’t having this with the billing system for the property.”

That property, he started going in there and doing premium upgrades and capturing some of the rent; then pretty quickly, he put the property up for sale, and it took a minute, but he sold it at a pretty astonishing price point; just really the market had grown so much and the path of progress was coming right down the pipe that we caught really just the wind of it moving along with us. So he sold this property at a very high price point, and that price point alone really would serve well for our property.

The biggest difference is he had a lot of two and three-bedrooms, where our property was predominantly one bedroom. So it was about 83 one-bedrooms, 11 two-bedrooms. But looking at the market and looking at where we were, we just had to give it a hard thought here. This was the best comp that was gonna be there for us; and when we took it over, that owner was a lifer owner, he had no intention to sell. So we really said okay, then we can track off that owner. But when he sold, he sold at such an attractive rate that we had to take a really hard look at our property, size down what we thought we could do and where we can go from that.

We had never had it in the business plan to do premium units. We didn’t capitalize for that and we were continuing to roll the property, doing classic units; we had turned about 65 of the units. So with that and with the way the market had grown, where cap rates were compressed and there was still very attractive debt, we decided that we were going to really just soft touch it to the market.

We didn’t list it, we didn’t put out there, but I had a number of connections where I reached out to about ten people and just said, “We’re considering listing this property. We want to give you the first opportunity to have a look.” What we found was because you could get really attractive debt and you had 94 untouched units that can now be turned to premium units, and it was not a lot of heavy lifting on the property, that we had six offers come over. So we knew we were moving in the right direction.

Looking at that, where we would sell at that point, we exceeded our investor expectations over a seven-year hold. So weighing on this cost and looking at the uncertainty that where we are, it makes us look great today, but where our thought process was that in year seven, we wouldn’t have this good comp, and ultimately how attractive things are today that we probably wouldn’t have the best market conditions, so now would be the ideal time to test the market, which we did, and we had a very attractive number.

Joe Fairless: Did you work with a broker?

Jason Yarusi: It ended up that I did work with a broker, but it was never listed. It was actually the same team who represented the seller when we brought it. I’d worked with them on other transactions and I reached out to them and talked to them about the potential of listing this, and he brought a buyer to the table.

Joe Fairless: Sometimes I get a question from our investors whenever we have an opportunity, and they ask, “Well, if the property’s doing so well, why are they selling it? Why don’t they just upgrade the units like you’re going to upgrade the units?” You have explained in your business model, you just didn’t have in the business plan to do those premium units. So you would either have to allocate some money from a refinance or supplemental loan, or you’d have to do a capital call, or you’d have to do a personal loan to the property in order to do that business plan. So you had a performing property, but you just had a different business plan than the buyer, right?

Jason Yarusi: That’s correct, and what I felt is that with this business plan being to simply go classic, that it did lead to a very attractive narrative for us to have a talk track for other buyers. So we could, but then it gets into us going through cash flow or going through reserves or just changing really the landscape of the property. But I also didn’t feel that this area, although two and a half years really could make a big difference in an area, I didn’t feel that the growth of this area could warrant 94 premium units and have all this go on and another 284 units going on where they were hitting all these rent bumps, and that the hard capture here is you have to think, “Okay, so if we do premium units, this is not 100% change of the model. How many tenants are coming in this area that can afford these rent bumps?”, and that would be a pretty big change to our existing tenant base, and we didn’t want to have to go through that hiccup where we’re going to have some delta between the vacancy levels just to get those rent bumps. We felt this was an ideal time that another bullish buyer would come on board, they’d be able to implement this business plan, and we’d be able to get the cash out to our investors at a very attractive rate.

Joe Fairless: Were there any discussions about doing one or two rent premiums renovations to prove that that business plan would work at your property?

Jason Yarusi: Actually, no. It moved so quick and I made a quick decision that I didn’t want to go through the process there just for any reasons, because I set my mind that this was the right time, and for whatever reason, I just moved quick on it with the prospect of it happening.

Joe Fairless: From a return standpoint with your investors, how do you think about that? …Because there might be one or two of your investors or a small percentage of them who say, “Well Jason, we’re doing so well. We just killed it on this refinance. Why don’t we just hold on to this puppy for the long run? What’s the rush?”

Jason Yarusi: Funny enough, I actually did not have any feedback in that response from any of the investors. I think because the way I laid it out, I said, “Listen, I feel that this is our best comp and this isn’t going to be available again for us in four years. I also feel that the market conditions are the most favorable we’ve seen them, and just to think that we’re gonna have another four-year runway here would not be a conservative thought process for me. So I’m making this decision that we’re going to move forward to sell the property.” Another point is that, it’s not like when we sold the property we were at a big lag on where the potential returns would be. We actually were right at where our multiplier was going to be on a seven-year hold, and we just crushed the IRR from where we were. So there wasn’t much pushback from any level on the investor side.

Joe Fairless: Anything else that you think we should talk about that we haven’t talked about as it relates to the thought process you had when thinking about this decision to sell early?

Jason Yarusi: Yes, I would definitely talk to legal. I would definitely talk to your accountants. You want to know where it falls from responsibilities here. Also, we had done a cost seg study with the thought process that we were going to hold this for the long run. So you want to see what the effect’s going to be and how that’s going to trickle down, not only to you but your investors overall.

You also want to have a survey with your investors too, because the narrative has to be that if we’re going to give them back a chunk of money, they’re gonna have taxes they’re gonna pay, but ultimately they may not have another opportunity to put it into. Maybe they’re fine with that, maybe they’d like to have money back into their pocket, but ultimately, you want to make sure it’s not putting a large part of your majority base in some difficult position. But the group was very excited about it. They were very opportunistic about what’s going forward next and where we stand today. It put us in a good light that we’ll be ready for future opportunities quickly as they come about.

Joe Fairless: How can the Best Ever listeners learn more about what you’re doing?

Jason Yarusi: Go over to yarusiholdings.com, like you said. If you want to see me run 100 miles, 37 miles, somewhere in between pretty frequently, go over to @jasonyarusi at Instagram. I run a lot, and we usually track it in some fashion, and we actually encompass The Multifamily Foundation podcast into our parent podcast; we almost called our channel now The Jason and Pili Project, because we were finding we were doing so much fitness, self-development, mental fortitude along with the real estate that we really just wanted to bring that to the masses.

Joe Fairless: Jason, I love following you. I’m not on Instagram, or I personally am not. I think my team on my behalf is on Instagram, but I personally am not, but I see you on Facebook and we were talking before just how much of an inspiration you are for others and myself. I love seeing what you’re doing from a fitness standpoint and just from a mindset standpoint. So thanks for sharing with us the thought process, congrats on this deal and talking to us about the different components of what we should consider prior to moving forward or not moving forward with the sale early. So thanks for being on the show. I hope you have a Best Ever day and talk to you again soon.

Jason Yarusi: Thank you.

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JF2187: Branding With Tonya Eberhart & Michael Carr

Tonya and Michael are partners from Brandface, a personal branding firm that helps real estate professionals differentiate themselves. They discuss the importance of creating a personal brand, especially in the real estate industry. You will pick up some tactics on what you should be looking at when it comes to creating and managing your personal brand.

 

Tonya Eberhart & Michael Carr  Real Estate Background: 

  • Tonya is the Founder of BrandFace a personal branding firm that helps real estate professionals differentiate themselves
  • Brandface has clients in 41 states
  • Michael is the COO and America’s top-selling real estate auctioneer.
  • Michael has over 60 investment properties
  • Tonya is from Columbus, OH and Micheal is from Jefferson GA
  • Say hi to them at: www.BrandFaceRealEstate.com

 

 

Click here for more info on PropStream

Best Ever Tweet:

“People don’t do business with a logo, they do business with a person” – Tonya Eberhart & Michael Carr


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners and welcome to the best real estate investing advice ever show. My name is Theo Hicks and today we’ll be speaking with two people. We’ve got Tonya Eberhart and we’ve got Michael Carr. How are you guys doing today?

Tonya Eberhart: Good Theo, thank you for having us.

Michael Carr: Every day is Saturday, Theo.

Theo Hicks: That’s what I like to hear, and thank you for joining us. Looking forward to our conversation. Before we get into that though, a little bit about Tonya and Michael’s background. So Tonya is the Founder of BrandFace, a personal branding firm that helps real estate professionals differentiate themselves. Tonya and Michael are partners in BrandFace. BrandFace has clients in 41 states. Michael is also the COO of BrandFace and America’s top-selling real estate auctioneer. So maybe he can give us an example of talking super fast. Michael has over 60 investment properties. Tonya is from Columbus, Ohio. Michael is from Jefferson, Georgia, and their website is brandfacerealestate.com. So maybe starting with Tonya, and then transitioning to Michael, could you tell us a bit more about your background and what you’re focused on today?

Tonya Eberhart: Yep. I won’t be as fast-talking as Michael, but I can get it done. So years ago, I sold vacuum cleaners to pay my way through college. I did it for about three years, and then I sold a vacuum cleaner to a radio station engineer who suggested that I take a sales job at the radio station. And fast forward 18 years later, I was still in media sales. While I was in media sales, especially the very early days of my radio career, I noticed that when certain business owners walked into a room at an event or convention, they were almost like rockstars, and the things that differentiated them were that they were the face of their business, and they were almost always number one in their industry in the market as well.

So I understood very quickly between selling myself as a poor, young college student selling vacuum cleaners, and then helping to sell my own clients in developing their personal brands, how much it impacted their business. So that’s where BrandFace came from years later, and I’ll let this gentleman talk about how we met each other. He was actually the first real estate client for BrandFace, and hey, we became partners and I’ll let him take it from there.

Michael Carr: Well, my background is as an auctioneer. I started off my career as an automobile auctioneer. My dad had a car lot and I didn’t really want to be in that industry, but I loved it, and the guy that trained me to be an auctioneer, he said, “Hey, go get your real estate license because you might be able to call a farm sale one day, pick up an extra paycheck.” The industry was called a circuit auctioneer. So I worked a certain circuit in the Southeast, and next thing you know, I ended up with a Georgia real estate license and then a South Carolina real estate license.

Fast-forward to the year 2000, I really just used my real estate license to buy my own investments. I started buying residential properties in 1994 and I continue to buy them today. I just use my license as a way to get some kickback and commission. If anybody was invested in the late 90s, you could get 125% of what it was worth and make a commission on top of it to boot. It was fantastic years. We had to pay for it, of course, after the dotcom bust and all of that.

Fast-forward to 2006, I partnered with a company out of Irvine, California, and we got the Bear Stearns residential portfolio when they went under and we auctioned it off. We thought it would be about three years’ worth of work and ended up being about seven, and to date, I’ve been involved in over 78,000 residential transactions as a broker and an auctioneer. And then in 2013, we were working ourselves out of a job as all great auctioneers do, and I knew that REOs were coming to a flatline, and I just wanted something to do. So I came back to Jefferson, left the office in Irvine, the office in Seattle, Washington, came back to the office in the suburbs of Atlanta, opened up a arm’s length transaction brokerage, and needed help on marketing, met Tonya, and the rest, as they say, is history. She asked me after I executed the BrandFace principles to get known in the area as an investor, as a real estate broker, as a builder and developer. Then she asked me to co-write the book with her for BrandFace for Real Estate Professionals, and it’s number one in eight Amazon categories, including International Business. So it’s been a wild ride.

Theo Hicks: Perfect. Well, thanks for sharing that. So the name is BrandFace. You already mentioned, Tonya, in your background, how back in your radio days, you’d walk into certain events and business owners would just walk in and certain ones of them were just rockstars, and you mentioned because number one, they’re the face of their business; number two, they’re the number one in their industry. So BrandFace, they’re the face.

So I’ve talked to people about branding before a lot in the podcasts, and there seem to be two camps. The one is, be the face of your brand and the other one is to not be the face of your brand. Think of any major corporation. So why is it that being the face of your brand in real estate is better than being behind the scenes, making it more like a logo or having multiple people be the face? What’s the main benefit towards the face, making it personal, you’re the man or the woman?

Tonya Eberhart: Okay. It’s about a personal connection. In fact, you just hit on something, Theo. On the back of all our books, our mantra says, “People don’t do business with a logo. They do business with a person.” If you think about it, in every instance where you do business, there’s a person involved. So in real estate, on a local level, we already knew coming into BrandFace — we worked with many different business owners and entrepreneurs. Real estate has been our biggest sector so far. Number one, because of the success of this gentleman with me today, and number two, because it is an industry that already leans toward that way. A lot of real estate agents already have their photo on their yard sign or their business card, and they were one of the first industries to really go all-in with that, because they realized that no matter how many people are in a brokerage, the brokerage name is great, the brokerage might have their own brand. However, it’s the individual sitting across the table from you that is going to make you decide who to do business with.

Theo Hicks: Oh yeah, perfect answer. So follow up question, for some context. So do you focus mostly with real estate agents or is it agents, investors, anyone?

Tonya Eberhart: All of the above.

Michael Carr: All of the above. We work in every genre of business, from lawyers to honestly, to medical profession. It doesn’t matter. Anything that is customer-facing, we put a face forward.

Theo Hicks: What would you say, out of all your clients, the top maybe two or three? Just if you can focus on those ones?

Tonya Eberhart: I would say real estate agents, real estate investors, and then the others is splintered, because entrepreneurs come in all shapes and sizes. We have one surprisingly, that’s doing super well, is a skin care consultant, and she is doing incredibly well because she realized they were–

Michael Carr: On a global scale.

Tonya Eberhart: On a global scale. She realized there were many, many thousands of people like her and she wanted to set herself apart, for two reasons. Number one, for the customers who would purchase the end product, they would be the end-user of the product, and then for recruitment purposes too, because a great brand not only helps you to sell your products and services and connect with people on a human level, but it also helps you recruit the right people in for the culture you want to build.

Theo Hicks: Perfect. So most people listening to this show are going to be investors, so let’s talk about that. So let’s say I’m a real estate investor, and I either have no branding at all or I’ve been focusing more on having a really nice company logo and all of my content on my website is focused towards my company, and the only place where my face is on there is maybe in the bottom corner from my bio. So what’s the first thing that I need to do in order to start working towards building up my personal brand?

Michael Carr: The most important thing is to define what it is; that’s really big. When we build a brand, we look at about 77 different criteria, but they all boil down to defining the brand. So we take personal experience from people and their life experiences and what has brought them to where they are. We try to find a natural point of differentiation. We all have them as humans. We’re all uniquely an individual and uniquely special in that way, and then we also have other people who are naturally attracted to us and attracted to not just our facial features, but the story behind why we do what we do. So you have to define what that position is, and then you have to flag it and own it. That’s the most important.

Tonya Eberhart: Yep.

Theo Hicks: Okay, so you would say, come up with some stories in your past, and then figure out a way to make that be your main brand. So maybe give us a few examples.

Michael Carr: Well, let me tell you an example of a guy actually in the Atlanta marketplace that uses this principle extremely well. There is an investor in Atlanta, and you see his billboards all over the place, and he does it extremely smart. He’s got one point of differentiation – Get a guaranteed offer on your home. He buys remnant billboards all over the city, he puts his face on there, his name, his website. There’s not even a phone number to it, and everybody on earth knows that when you see Mark, he’s going to give you a guaranteed offer on your home. That’s a point of differentiation, and that is defining that point of differentiation, and then holding that position until the business comes to you, so much as you going after the business. Does that make sense?

Theo Hicks: So is the differentiating point the billboards, or is it the guaranteed offer?

Michael Carr: No, it’s the guaranteed offer on the home.

Theo Hicks: Guaranteed offer, okay.

Michael Carr: Yeah, get a guaranteed offer on your home, and that’s his point of differentiation.

Tonya Eberhart: They can range, Theo, from many different things. They can be personality-driven, they can be attributes, or things that just set you apart in how you conduct business. They can be a promise of doing business. It can be a differentiator that says, “I service this area or this type of customer.” It can really be anything you want it to be. The most important thing is, first of all, you’ve got to look in that definition phase who you’re trying to attract. Who are those ideal customers?

But here’s what happens a lot of when it comes to branding. People think of marketing first and branding later, and they’re two very different things. Marketing is utilizing platforms and vehicles to get a message out to the world. Get a message out to your customers and try to draw them in. Your brand is the message and image that you put out there on those marketing vehicles. So if you think about it this way, how on earth would you even begin to know what to put on any of your marketing, what to even post on social media, for goodness sake, unless first of all, you knew who it was you’re trying to attract. So in that define phase, we look at ideal customers and point of differentiation; those two things. Does that help with a little clarity?

Theo Hicks: 100%.

Michael Carr: For me, mine’s “America’s top-selling real estate auctioneer” because nobody’s auctioned off more residential properties than me, period. Because of that, even though it’s an arm’s length transaction brokerage that Tonya helped me try to launch, I still was a very active investor, especially in those times when there was still a lot of remnants laying around that we could pick up.

I moved directly from buying housing to buying building blocks because there’s this lag time of years there where nobody believed land was ever going to be worth anything anymore until they ran out of it, but they were still very excited about paying too much for houses at foreclosure auction. So what we did was we took my point of differentiation from my experience level, and then she taglined “America’s top-selling real estate auctioneer”, and then the secondary was the confidence at that time – 65,000 transactions. We leveraged the fact that no matter where you stood in line, if you wanted me to sell your house, I can sell your house for you. If you want me to buy your house, I could buy your house, and then we’d just show them the door one, door two, door three, and then let you choose which door worked best for your family type of situation. So we took my experience, and then we’ve defined it that way, and then pointed it at the ideal customers that we were trying to attract.

Theo Hicks: I really appreciate you explaining that right there. You said the top auctioneer, that crystallized in my mind. Ours is “the world’s longest-running daily real estate investing podcast”.

Tonya Eberhart: Yep.

Michael Carr: There you go.

Theo Hicks: It’s the same thing, same concept as yours.

Michael Carr: Yep, exactly.

Tonya Eberhart: It puts you in a position of differentiating yourself.

Michael Carr: Yep. Or even to the best ever, how y’all put “best ever” behind everything; that is a point of differentiation that makes you guys stand out and continue to stand out.

Theo Hicks: Perfect. So I’ve defined my personal brand and know what differentiates me, I’ve got my tagline, and I’ve got my ideal customer defined. Now, what do I do?

Tonya Eberhart: What’s next? Okay, the next phase– and by the way, we call this our freedom formula. It’s three Ds – define, develop and display. I will tell you why it’s the freedom formula here in just a moment. But in the develop phase, what you’re going to do now is you’re going to develop a strong personal brand wrapped all around that point of differentiation starting with your brand colors, your personal brand logo, imagery that resonates with what you stand for and what’s going to attract your ideal customers, photos of you that are very well done and portray the image you want to portray, and most importantly, in that development phase, it’s the brand messaging that sets you apart from your elevator pitch to your biography to what we call signature sound bites, which are bullet points, if you will, highlights of your brand at a glance. The most important thing about a brand is living it and breathing it, and it all starts with how do you communicate what it is that sets you apart, and that’s done in your brand messaging. So once you’ve got the messaging and all that imagery ready to go, the development phase is complete.

Theo Hicks: Perfect, and then after that you said, define, develop and then display. So I’m sure display is get it out there.

Michael Carr: Get it out there. Use the billboards, the park benches, the social media, and it all needs to be consistent, and you need to know your ideal customer. I didn’t do it for a long time as a real estate agent. As an auctioneer, I did it naturally. When people came into an arena and I was auctioning off a group of houses or whatnot, I sized everybody up pretty fast. I could tell who my main investors were, I could tell who end user homebuyers were, I could tell– you size them up, but we don’t do that enough in business. You have a lot of listeners that are investors that are like, “Hey, I just want to attract more business and find more business, but what does that have to do with it?” Well, if you know what the lifestyle of those people are for that ideal house that you want to buy, if you know everything about that particular owner; it might be a multifamily, small one to four multifamilies or even all the way up to something bigger 200, 300, 800-unit apartment buildings, whatever that might be. If you understand that, then your messaging in the display, that messaging is clear and towards those people.

Then when you display it, you actually get a return on your investment, and you’re not just throwing out money just to get known because Zillow has enough money to be able to get known whether they knew what they were doing or don’t know what they’re doing. But for those of us like the Theos and the Mike Antonios, well you have to watch an ROI on how much money we spend out there in the display stage. It’s very important that you’ve pointed that in the right direction.

Tonya Eberhart: Yeah, otherwise you end up with what we call spray and pray marketing. You just spray it against the wall.

Michael Carr: Yeah, I’ve done a bunch of that.

Tonya Eberhart: You put something somewhere it sticks.

Theo Hicks: What’s the best way to find out after you have your target audience very finely tuned and defined to find out what marketing avenues to use like billboard or you said, park bench, social media? How do I know, after I know who my audience is, how to get in front of them the best?

Tonya Eberhart: Okay. Well, that one happens to be honestly, one of the easiest things. So there are many, many ways to get to an audience. First of all, you’ve got to figure out where your audience is spending their time. So for some of our agents, like in Phoenix, for example, we’ve got an agent who focuses on empty nesters who are moving into lifestyle-driven communities, their home is all low maintenance, they have a golf course; it’s all about the lifestyle and retirement age. So he actually started his own small newspaper in that area. Now newspaper, you’d ask nine people out of ten, they say–

Michael Carr: What’s a newspaper?

Tonya Eberhart: Yeah, what’s a newspaper? But that still works for him because his audience still reads the newspaper every day, and it’s someone else who maybe after say, first-time home buyers or growing families, they may find that reaching them is a totally different thing. Maybe they’re encompassed in a certain number of neighborhoods and new canvas and farm those neighborhoods with postcards and door hangers and things like that. So you’ve got to first drill down and say, “Where are they spending their time? How are they consuming media? What is important to them? What’s their lifestyle like, as Michael said?”, and once you dial that in, then you choose within your own budget range, what you feel you can afford to do. If all you can afford to do is do some door hangers and some postcards in one or two neighborhoods, then max it out. But if you can afford to do more, go to maybe a little local radio station whose listeners are people who share a certain lifestyle or a certain belief system, and certain things that make them alive. So it’s different for everybody. There really isn’t just one set answer to that. It’s different for everybody because it’s very dependent on the area and who the ideal customers are.

Theo Hicks: Well, there’s one thing interesting that I noticed from everything you said is it sounds like it’s better to get more maybe, I guess, I’d say local with it and smaller scale with it as opposed to saying, “Well, I’m just gonna market on Facebook or Twitter or LinkedIn or Google or whatever.” You didn’t bring up any of those. I thought that was interesting. Very interesting.

Michael Carr: Well, here’s the thing, Theo, and I find this to be the case so much. I teach this to any agents that are coming in and even investors that would come in. There’s a couple of points here. First off, if you’re buying single-family housing in developing areas, say, a major metropolitan area or whatnot, you might be dealing with elderly people or with out of town family members that are dealing with that asset. So you do have to have your social media to back up. That’s why it’s very important during the define and development phase that you complete all of that because it can’t say a different message. I told you about the guy in Atlanta that runs the billboards. Well, there’s another guy that I follow in Greenville, South Carolina, and he’s a heck of an agent, and this guy does the same thing as I’m talking about, same thing I do, same thing Mark does – will buy a house or will sell it for you; what’s best for you, you tell us. But every billboard that this guy puts up is a different message and every one of them are forgotten.

So I’m going back around to what you said. It’s important that we have Facebook and we have our Instagram accounts and we have our website, definitely. That’s your central processing unit, that’s where everything’s got to culminate because you want to push everything back to that because that’s a main source of information, but don’t spend the money on your advertising there if that’s not where that person is going to be. They might go and check you out there, but they might not find you there. I’ve got a friend on the West Coast and he’s got buyers from Huntington Beach, California, all the way up past the bay. He’s got 12 guys; he runs Pennysaver ads – I buy estates, and about one out of every 12 estates that he buys, which is all the knickknacks that people can’t get moved down in a weekend and overly ambitiously thought that they could, he ends up buying about one out of every 10 or 12 houses because he gets there, they’re sick of it, they’ve been working for three days trying to get grandma stuff out.

Grandma’s in a nursing home and they live in Colorado and the plane leaves in four hours, and here comes Big Bill; Big Bill’s buyers. They’re like, “Well, I’ll tell you what. You got nothing but junk left. I’ll hold it all for you. Oh, and what do you want for the house?” He does the bulk of his advertising in Pennysavers – I buy estates. At other websites, he uses his estatesales.com and he just runs I ads – I buy estates, and he gets house after house after house from that. But once you do that though, obviously they may say, “Well hold on. Who’s Big Bill?”, and you want your social media to back up your story, and this is where it goes all the way back, the importance of the authenticity of the defined state because people are pretty savvy, and they’re going to pick up pretty fast if you’re shyster, is just trying to harm them or if you’re a fair investor that deserves to make a return on their investment.

Theo Hicks: Exactly. Okay, starting with Tonya then going to Michael, what is your best personal branding advice ever?

Tonya Eberhart: I would say it is about authenticity. So don’t try to be something you’re not; embrace who you are. We had an agent in New Orleans tell us last week how much she loved her brand and it had changed her life because she realized it wasn’t about helping her compete. It was really more about making sure she didn’t have to.

Michael Carr: Yeah, also an investor.

Tonya Eberhart: Also an investor.

Michael Carr: She has about 18 properties down there. So been an investor for years.

Theo Hicks: Perfect, and then Michael, what about you?

Michael Carr: Well, on the heels of that, if you’ve got the authenticity down, be bold. Prosperity favors the bold, and we say be bold. Some people would look at my career and say, “Hey, you’ve been pretty bold,” but I look at others and think, “Man, I wish I’d been bolder.” So I’d definitely say for me, it would be bolder.

Theo Hicks: Perfect, and then before we go into the lightning round, what was the three Ds. Is there a name for it? What did you call it?

Tonya Eberhart: The freedom formula – define, develop and display because it gives you the freedom to stand on your own merits. Take your brand with you wherever you go, because your brand is you.

Theo Hicks: Perfect. Alright, are you guys ready for the Best Ever lightning round?

Tonya Eberhart: We’re ready.

Break [00:24:37]:02] to [00:25:49]:08]

Theo Hicks: Okay, first question that I got. I like you both to answer these. Best ever book you’ve recently read.

Tonya Eberhart: Oh. Awaken the Giant Within. Reread it for about the fourth time.

Michael Carr: Every Man’s Tell mood.

Theo Hicks: If BrandFace were to collapse today, what would you do next?

Tonya Eberhart: I would do real estate investing. I’ve had a taste of it before. I would do it again because I absolutely love it.

Michael Carr: I’d find some way of helping people realize what they don’t realize about themselves.

Theo Hicks: What is it the best ever way you like to give back?

Tonya Eberhart: Right on the heels of what Michael just said, helping people unveil their inner star.

Michael Carr: I got to just stick with that theme, Theo. I gotta say it. We had a friend tell us a long time ago, “We love what you do because it’s hard to read the label from the inside of the jar,” and I think that I have to stick with that. The best part of our job is helping people realize the power that actually happens inside them.

Theo Hicks: And then lastly, what’s the best ever place to reach you?

Tonya Eberhart: brandfacerealestate.com. Everything we do is encompassed there and shoots out from there.

Theo Hicks: Perfect. Well guys, I really enjoyed this conversation. Branding is always a fun topic to talk about and from a personal business perspective, I could use this information from today. I know all the Best Ever listeners definitely get to learn something that you could apply to your business directly. The big thing we talked about was the freedom formula, those three Ds – define, develop and display. So essentially just define what a brand is, and then figure out who the ideal customer is, and then once you know what the brand is, you develop it around that unique differentiating factor that you have – your logo, pictures of you, your messaging, social media accounts, websites, and then focus on living and breathing that brand, and then obviously, determining how you’re going to direct that toward your target audience, and then display which is actually getting it out there and making sure that you are using the method that your target audience actually uses.

So figure out exactly how they’re consuming their media, what’s important to them, what their lifestyle is, then find a medium in which you can target them that you can actually afford. You also mentioned that Facebook and Instagram, the website are important. That’s more of a hub that people actually will go to once they actually find you and then how they find you. I thought that was a very interesting point to make distinguishing between the Facebook, Instagram and the other examples of billboards, park benches, local radio stations, things like that. Your best ever advice, Tonya’s was authenticity and Michael’s was to be bold. When you talked about the guy with all the billboards, I was like, “That’s pretty intense. It’d be weird driving around and seeing my own face on a billboard.” That’s definitely bold.

Tonya Eberhart: Michael has some billboards too, so I’ve never–

Michael Carr: I just don’t ever go that way.

Tonya Eberhart: That’s true. I’ll never forget the first time when we first started working together, I put him on shopping carts in the grocery store, and I said, “Michael, they just came out. The signs just came out. Can you please go in the grocery store and take a picture of one of those.” “Uh-uh, I’m not doing that.”

Michael Carr: I know.

Tonya Eberhart: He ended up doing it, but I think he did it in secret behind the produce.

Michael Carr: I did.

Theo Hicks: You should have done a video of you on the cart with the kids when they’re out of there flying across it. You should have done it and put it on Instagram or something. I enjoyed this conversation, Tonya and Michael. Best Ever listeners, as always, thank you for listening. Have a best ever day and we will talk to you soon.

Michael Carr: Thank you, Theo.

Tonya Eberhart: Thank you, Theo.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

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JF2186: How Do You Know When It’s Enough | Actively Passive Investing Show With Theo Hicks & Travis Watts

Today Theo and Travis will be sharing their thoughts on the topic of “knowing when enough is enough”. There are some who are on the side of “always continuing to grow” and others who are in the group of “at some point, I want to retire”. 

We also have a Syndication School series about the “How To’s” of apartment syndications and be sure to download your FREE document by visiting SyndicationSchool.com. Thank you for listening and I will talk to you tomorrow.

 

Click here for more info on PropStream


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks. We’re back for another episode of the Actively Passive Investing Show. With me today, as always, is Travis Watts. So Travis, how’s it going today?

Travis Watts: Hey, doing well. We finally got an official background for those tuning in on video; there it is.

Theo Hicks: That’s amazing. Maybe I’ll see if I can figure out how to edit my background, but I don’t have a green screen like you, so…

Travis Watts: That’s true.

Theo Hicks: It might look a little weird. I might morph in and out the video. But yeah, so today we’re gonna be talking about another one of Travis’s blog posts. It’s a deep topic today, so I’m really excited to dive into this with Travis and the blog post is entitled, How to Know When To Retire – How Much Is Enough?

Now before I let Travis describe it, I don’t see many people asking this question. I haven’t seen many blog posts covering this topic, and I think Travis did a really good job explaining what we need to do in order to number one, just be aware of this concept in general, and then number two, what we should do to figure out when, if ever, we have reached the point of maybe we don’t need to work as much, or continue that grind. So I’ll let Travis take it away and then we’ll have our back and forth. So go ahead, Travis.

Travis Watts: Sure, awesome. I think you hit the nail on the head there. This is an awareness blog, and it’s really not talked about a lot especially out in the real estate space, not that I’ve seen anyway. So what I wanted to do is paint a picture maybe from a different perspective that not a lot of folks have thought about before. So in this blog, I use this story of a CEO of a tech startup company, we’ll call it Silicon Valley startup. So it starts with the tail end of this guy’s career, saying he just took his company public, he’s got stocks that are going to vest over the next five years; once they do, it will be estimated this guy will have about a $5 million payout.

So that sounds like the ultimate American dream. The ultimate solution that we’re all after. But as we dig a little bit deeper, we get a little more into this story, and we figure out that number one, as I mentioned, this is the tail end of the story. So the way this journey started was this guy worked at a Fortune 500 company for the first decade of his working career, had a high salary, had some stock options there as well… So in those first ten years, walked away with approximately $2 million in total investments, had paid off home, things like this, and then launched his own company afterwards, went into business for himself. So he had actually previously sold a company; that was his second venture in the second decade of his life, and then here, we’re taking a look at the third.

So the question really is, is as much as that looks like an amazing success story to a lot of folks potentially, how much is enough? Was it possibly enough when he had a couple million dollars and a paid-off home? Could he have potentially retired in his 40s, maybe in his 50s? So now he’s 60 looking at– okay, 65 is the target, got a couple of kids in their 30s that he wishes he could have spent a lot more time with in his life. I know you and I, Theo, have talked about the previous blog I wrote about the top regrets of the dying, and Bronnie Ware’s story. Bronnie Ware, for those that may not know, was a nurse working in a terminally ill patient care unit, did a poll or survey on people’s top regrets before they passed, and the top two were, “I never pursued my dreams and aspirations and I never spent enough time with my friends and family.” So that’s a lot to think about.

To your point earlier, this is a deep topic if you take it that direction, but if nothing else, I just wanted to inspire the thought that a lot of people get caught up in these success cycles. It’s just one business to the next to the next to the next. I made $1 million now, I need to make $2 million; I made $2 million, I need $4 million, and I made $4 million, I need $8 million, but where do you stop? Do you one day just pass away like Steve Jobs, $10 billion in the bank, but a lost family by the wayside and possibly some regrets there? So that’s really what the topic’s about.

Theo Hicks: Yeah, I remember when I initially read the blog post about the top two regrets of the dying. So one of them is essentially career-focused and the other one is more family-focused. When I first looked at it, I was like, “Oh well, are these two mutually exclusive or can they both be used together?” Because in this story with George, we’ve got George, who I’m sure it was his dream to do a start-up, but at the same time, he in the story neglected the other regret. So I think what he’s saying here is that it’s not necessary that you’re gonna have both of these regrets when you die, it’s just you might have one or the other. It’s finding that balance. It’s finding that “Okay, well, I’m going to do this career thing.”

I’ve got a couple of things written down, because obviously, a lot of people expect if you’re the person who is able to grow that much success, it’s gonna be very difficult for you to attend to anything, so there’s obviously some options you can do in order to continue pursuing a career without having to work 120 hours per week. But when I  heard that at first, I thought, “Well, is it possible to have neither one of these regrets?” and then I think the reason why this blog post is important, especially for people who are just starting out who have no money at all and they’re like, “What are you talking about? It would be awesome to have $5 million in the bank” start realizing you need to be aware of this upfront, so that you can create your business plan on maybe not having these two regrets. So an example would be, I was talking to someone– I can’t remember what his name was; it was maybe two weeks ago on the podcast, and he literally had an exit plan right when he started; he knew exactly how much money he wanted to get in real estate before he fully stepped away. I think for his game, he was just gonna sell everything, right?

Travis Watts: Yeah.

Theo Hicks: So obviously, that’s one option, [unintelligible [00:08:38].11] okay, so let’s say I know what enough is, then what? What do I do after that?

Travis Watts: This is how I see it – identify first what is important to you, what are the most meaningful things in your life, what is the purpose of your life. If you had that ultimate life, reasonably speaking, what does that look like? What brings you the most fulfillment? This is something that — you’ve gotta write this stuff down. This can’t be just done in your head one time; just setting goals for a lifetime, 10, 20 year plus goals.

Number two is then you have to reverse engineer now. So how much is that going to take to afford that type of lifestyle. And I think what a lot of people find, myself included, is when you really nail this stuff down, you might find it’s a lot less expensive than you might think, when you really get down to it. I think the problem is in general, in society, is that we don’t stop to think about these things. We just think “I’m working now, I’m going to work forever, I’m going to work till my 60s”, whatever, and we don’t give it much thought, and we just go on the treadmill. And then one day, you’re waking up in your 60s thinking maybe either a) I have a few regrets about some of these things or b) like in George’s case in the blog, maybe I could have actually pulled the plug back in my 40s or my 50s, spent more time with my kids, maybe traveled a little more, had less neck and back pain, and those things; a lot less stress, if nothing else.

I think the purpose is not to say “Quit working” or retire in the traditional fashion, especially if we’re talking about someone in their 40s. I think it’s about finding what you’re truly passionate about. And maybe for George, this truly was his passion, but that’s why I point out in there that he’s got kids in his 30s he wishes he would have spent more time with, so obviously, there’s a level of possibly some regret in there. So just trying to find the balance and optimize your lifestyle. That’s really what this blog is all about.

Theo Hicks: Yeah, I totally agree. I think a good question would be again, where this is from – this is not from me, but ask yourself the question, essentially, what’s the job I’d be willing to do for free, is basically what it is. What I’d be willing to do, that I enjoy so much – work-wise, obviously; not like you sit there and watch movies all day or something, but maybe that’s what it is. [laughs] But what kind of job would I do? How many hours per week If I could do it for free, and then that would be what you do once you retire.

This also reminds me of what we talked about last week, is obviously how you get to this point. So there’s a million different ways to get to this point, and one of them would be making sure you’re focusing on not overspending in those main areas – the vehicle, the house and the food last week, and then doing some positive things as well. But I did have a few things besides that what I’d do for free, that you could possibly do once you’ve hit your goal. Obviously, the most important one is gonna be passively investing.

Some people’s goals in real estate is to actively invest, build up a large enough nest egg that they can passively invest with someone else, and then live off of that interest. So that would be probably the strategy that resolves it most times for you, because you’re just checking– Travis would know more about this than me, but you’re just checking the monthly reports and looking at deals, and it’s not gonna take more than a few hours a week.

There’s someone named Holly Williams, she’s been on the podcasts a lot. I interviewed her last week, and she is someone who is a professional passive investor. All she does is passively invest, that’s her job, and she’s been on the podcast a bunch of times. So if you want to figure out what that life is like, you can listen to her podcast. So that was one, and Travis, any thoughts on that?

Travis Watts: No, that’s exactly– yeah, that’s my big message to the world, too. Obviously, I’m a huge advocate for passive income and passive investing; that’s my story. The point is, you and I, Theo, are very fortunate. We’re very grateful, obviously, to have jobs and careers that we genuinely enjoy. We like to be creative and expressive, we both write blogs, we both do the podcasting stuff in various outlets, and that’s amazing, but you also have to remember most people can’t do that. Most people aren’t doing that. Most people are caught in the golden handcuffs, either a 9 to 5 situation or they’ve climbed this corporate ladder so high that they make a really nice salary and there’s really nothing else that they could do, so they’re trapped.

So until you start putting some of your income towards investments, whether it be passive investments or not, it’s hard to branch away and have this balance that we’re talking about, no matter what your approach is. But I think we all get there at one point or another. I think maybe we talked about that before. What’s the average American retirement like? 67 retirement age, or I don’t know; something like this. So you’ve got social security, you’ve got possibly a pension or your 401K. This is passive income at that point. You’re not having to exchange your hours and your labor in exchange for money. So we’re gonna get there somehow, at some point, hopefully. It’s just a matter of if you focus on this stuff earlier in life, you can get there potentially a whole lot faster than perhaps your 60s or your 70s.

Theo Hicks: Oh yeah, exactly, and there’s all those examples if you can invest $1 every day or whatever, for 20 years, you’re a gazillionaire, or something like that. So I 100% agree.

The other one, I’ve gotten this from– I do eight interviews every single week with people, and every single person obviously works — most of them, probably nine out of ten people were not born into a real estate family, and just were raised in it from birth. For example, I talked to someone last week, – he is a physical therapist, that was his full-time job, and he was doing some form of physical therapy that was very flexible. I think he go to people’s houses or something, and so it was very flexible, and then he got a promotion and he was a corporate physical therapist, and so he was traveling everywhere, he was working 60, 70, 80 hours a week, and during this job is when he had gotten in real estate, and he’s making six figures… And he asked himself, “Okay, well, I can continue to grind this 80 hour a week job, not be home with my wife, and make a lot of money, or I can go back to my old job, have more flexibility, so that in between the clients or at the beginning or at the end of the day I can work on my real estate business, so that I can get to the point where I can have my own physical therapy company” or whatever he wanted to do. But the point is, you don’t have to just once you catch the real estate bug, quit your job, and just be like “Well, I’m done”, without having an option. So one option would be to get a more flexible job, so that you can focus on pursuing your dreams and aspirations so that you can quickly get to this point where you’ve reached enough and then can transition into something else.

It’s funny, because I’ll talk to one person and then someone else who proves what the guy said to be true, and this guy had a job and he got into real estate, he completely neglected his job for real estate and got fired a few months later, and then it ended up working out for him. But if he would have gotten a more flexible job, he could have kept that job and then scale even faster, because he’s used that income to grow his active or passive investing business.

Travis Watts: Yep, exactly. Also, I was introduced to this video maybe a year ago. I came across it on YouTube, and unfortunately, this is on the fly right now, I can’t remember what the guy’s name is, but if you type in, I think, “retire at 36” or something like that, “retired at 36”, there’s this guy who had a passion for boats and sailing; that was really his life purpose. It was his hobby, it was his everything. Well, he was a consultant, if I remember right. An IT type consultant, made really good money, worked full time, grinded it out, up until 36. Ended up just buying this sailboat and just living out on the boat and in the Caribbean. He “retired” at 36 because– and he’s the one that introduced me to this concept of enough. He said that’s the hardest thing to do is pinpoint that number, “This number would be enough for me” and then take action when you hit it… Because that’s the scariest part, is taking the leap and saying, “God, I hope this is enough. I hope I’m right.” But it was for him, and this guy’s, who knows, in his 50s now or something, but it’s an amazing story just to hear about this guy’s adventures in life, and with his wife, and all the memories and moments that they’ve had, because he could identify that. His alternative was just more and more and more and more money, but then that would have kept longer and longer and longer away from sailing, and what if he had passed away or came with a debilitating disease or something? You never know, right? Life is short. So yeah, something to think about.

Theo Hicks: Yeah, that story just brought up another thought in my mind, which is why this topic is even more important the younger you are, because enough is gonna get bigger and bigger and bigger the older you get and the bigger your lifestyle gets. We also talked about this last week, about the three main areas of life, and the bigger your house is, the more expensive your car is, the more you’re used to these things, when you’re sitting there saying, “What’s enough? Well, I want to have a BMW and I want to have a million-dollar mansion and I want this,” which is obviously fine, but that enough number is gonna be way higher than if you just graduate from college and you’re in an apartment like, “I really just want a three-bedroom house and it’d be nice to have a car and to be able to go out to a restaurant once a week”, and then that could be your number and that’s what you can start working towards. Obviously, it might not be exactly that. It might grow a little bit, but you’d be in a lot better situation if you started thinking about these things earlier. It’s easier the earlier you do it, for that exact reason.

Travis Watts: Yeah, that’s a great point, and I know that we did talk about that previously. But again, for those that may not have heard the episode, as far as the things like talking about a BMW or a ten-bedroom house, or this, that and the other, you’ve really got to ask yourself, “Why are you doing that?” Is it because you genuinely, wholeheartedly love BMWs and you’re passionate and you’re a car fanatic, that’s your hobby and interest and everything in life to you, and it brings so much joy? Or is it because you’re keeping up with the Joneses? Or is it because you think, “Well, society expects this of me. I’m a dentist or a doctor or a realtor. I’ve gotta drive this really fancy car. What will people think of me if I don’t?” So you’ve got to really understand this takes a lot of soul searching and looking deep, but at the end of the day, it’s probably the latter in most cases for most people… And nothing wrong with those vehicles. I’ve owned nice vehicles, like we talked about before. I chose to buy them pre-owned and I don’t think I’ve ever spent more than 13 grand on a vehicle, but I have owned luxury vehicles. So there’s ways to go about it, but it’s to recognize that you’re doing it for yourself, and not trying to impress other people. So good point, though.

Theo Hicks: And then the last thing I had on here was — probably the most common transition that I see from people I’ve spoken with, what they’ll do is they’ll have this business, own this big business, maybe they’re fix and flippers or whatever, and they’ve gotten to the point where “I’ve got enough” or “I’m ready to have more time freedom”. So what they’ll do is rather than just sell portions of it and transition over to something else, they will completely automate the company, hire a COO… I was talking to one guy, he said he spends a few hours a month on his business that he used to work 100 hours a week on. And then he can take that money that he’s making and obviously grow that business, but also passively invest in other things. But then from there, he can just do really whatever it is he wants to do, and for this particular person, he started a mastermind group. So he’s still passionate about real estate, he just didn’t really want to do the day to day stuff anymore, and so he started a mastermind group and he was teaching other people how to do what he’s doing. So automating your business is another way to slowly get yourself out of it once you’ve hit that enough number.

And then I just wanted to mention one more thing, because we were talking earlier about pensions and how once you retire, it’s not like you’re just going to do nothing. My dad, for example, he retired, and he is a bus driver because he loves talking to people, and so every morning he will — not now, but before COVID, every morning at 6 am, he’d go to the bus shop where the buses are, and all the retired bus drivers are, and they just talk about whatever for two hours, and he really enjoys doing that. So it could be something as simple as “I like talking to people, so I’m gonna do a part-time job where I’m doing something as simple as driving a bus or being a cashier where I get to hang out with people all the time.” I thought that was really interesting.

Travis Watts: Absolutely. I know we’re getting towards the end, but I do want to share this one thought that you just made me think of it. I know we’re both Tim Ferriss fans. I forget which book, 4-Hour Workweek or one of them, but he’s sharing this story of the New Yorker business guy that goes down to Mexico on a fishing trip, and this guy takes him out on the boat for a few hours, comes back, and he says, “Alright, thanks. That was great. It was amazing. Do you have more customers today?” He said, “No, I only do the one trip a day and get some fish for my family and do this.” He says, “Well, why don’t you do more? Why don’t you do five trips a day? You’ve got plenty of time to do it,” and he’s talking about, “Well, I like to come home, take a nap, visit with my wife, play with my kids in the evenings, have some tequila or whatever, and then play music with my friends, and that’s my life.”

And he goes, the New Yorker, “Well, can you imagine though, what if you did more of these trips, made more money, you could buy two boats, then you could hire employees to run those boats, and then you could have a whole fleet of ships, and then when that gets successful, you bounce out of the business, then you could headquarter in the States, and then you could run this big operation, and then you could franchise it…” And then the guy keeps asking, “And then what? And then what? And then what would I do? And then what would be after that?”, and he goes, “And then, you can retire and come down here and have a quality life and spend time with your family and your friends and play money.” It’s like, the guy already had all that. He already had the quality of life. That’s one more example of having enough. This guy already had that. So something to think about, just an awareness article in general.

Theo Hicks: Oh yeah, that’s a perfect example of someone who’s just starting out and just getting a few rental properties or passively investing in a few deals, and then just using that income, and then essentially you don’t need to, as you mentioned, franchise. That’s a perfect story to definitely end with. So is there anything else you want to mention before we sign off?

Travis Watts: I guess, for anyone listening, just think about this question – are your goals and your aspirations more set around a quality of life, or having quantity, meaning money and numbers? I was guilty of this early on when I would set goals, it was always money goals. One of my first goals – I want to be a millionaire; I want to have $10,000 a month passive income. But when you dig a lot deeper, it’s what do you really want out of life? Who cares about the money aspect? What if that wasn’t the factor, how do you want to live your life? So that’s really what the question is and that’s how I end the blog, on that note.

Theo Hicks: Perfect. Let’s end the episode on that note as well. So thanks, Travis, again for joining me for the Actively Passive Investing Show. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

Travis Watts: See ya.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

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JF2184: 21 And Syndicating With Kyle Marcotte

Kyle is a 21-year-old syndicator, finished 119-unit syndication at 20 years old. Dropped out of UC Davis to pursue full-time apartment syndication. He explains how difficult it was at first when he was pursuing syndication as a young man and how he was able to overcome some of the hurdles most would fear. 

Kyle Marcotte  Real Estate Background:

  • 21-year-old syndicator
  • Syndicated 119-units at 20 years old
  • Left UC Davis to pursue apartment syndications
  • Located in Austin, Texas
  • Say hi to him at :https://kylemarcotte.com

Click here for more info on PropStream

Best Ever Tweet:

“There was a tremendous amount of pushback when I was looking to leave school and go full-time syndicator” – Kyle Marcotte


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. I’m your host today, Theo Hicks, and today we’ll be speaking with Kyle Marcotte. Kyle, how are you doing today?

Kyle Marcotte: Good. Thank you for having me on.

Theo Hicks: Absolutely. Thank you for joining us. A little bit more about Kyle – he is a 21-year-old syndicator, he syndicated his first 119 units between two different deals at 20 years old, and he actually left UC Davis to pursue apartment syndications, currently located in Austin, Texas. You can say hi to him at kylemarcotte.com. So Kyle, could you tell us a little more about your background and what you’re focused on today?

Kyle Marcotte: So a little bit about my background. I was a pre-med student at UC Davis and playing division one soccer out there, and was just giving a lot of my time to other people and pursuing things that I wasn’t fully passionate about, and I just started to realize that in order to put the time in that’s necessary to be really successful at something, you have to really enjoy doing it as well. So I just knew that I was doing the wrong thing and I didn’t know really where I was going to find this passion or this thing that I could start pursuing, but ended up finding real estate through Rich Dad Poor Dad. I know, very cliche, but that is what happened. I was in my apartment in college, my sophomore year early on, and I just read the book and it put words to the feelings that I was having, which was I didn’t want to trade my time for money all the time especially as a doctor; you go to school for God knows how long and you’re in quite a bit of debt and you trade quite a bit of your time… And it’s a noble profession and I love the service aspect of it, but I just couldn’t see that being something that was going to light me up inside. So I found real estate and quickly jumped into it and then found multifamily through Jake & Gino and realized that that was going to be the best way to scale out of my business so that I could run a 107-unit deal one hour of the week is really all it takes, because you have a full-time property management because of the scale, and that just made a lot of sense. And by my mid sophomore year, I did a 107-unit deal in Louisville and then I ended up actually dropping out of school and pursuing this full time.

Theo Hicks: Alright, thanks for sharing that. So before we get into specifics of some of the deals, I just had to ask a follow-up question. Most people that are doing this are older, and for them, it’s about leaving a job. For you, it was about leaving college. Most people, they’re leaving, and then you talked about this in Rich Dad Poor Dad, what you’re “supposed to do”, that you get a lot of pushback from people. So what was the hardest part about deciding to quit, in this case, college, not necessarily a W-2 job, in order to pursue apartment syndications?

Kyle Marcotte: So there was a tremendous amount of pushback, as you said. My parents, for one, were not the biggest fans. I don’t think that parents are super excited to hear that their kids dropping out of school their sophomore year, especially when it’s an out of state school… And I’ve been pursuing soccer my whole life too, so telling my soccer coach that “Hey, thanks for recruiting me all the way from Austin to the Sacramento area and spending money on me, but I’m no longer going to finish out the year with the team, and everything like that.” So that was probably the hardest conversation for sure, just because soccer had been a part of my life since I was very little. It was the one thing that I had poured my heart and soul into, and to have to move on from that was definitely difficult, but there’s a great quote that says, “Be willing to sacrifice who you are for who you want to be at any time,” and you have to be able to see that change