JF2697: How to Live a Balanced Life – The Investor Lifestyle | Actively Passive Investing Show with Travis Watts

Maintaining a good work-life-balance can be difficult to accomplish. In this episode, Travis shares the lessons he’s learned trying to navigate a good balance between work and the other aspects of his life, such as health, relationships, and more.

Want more real estate advice? We think you’ll like this episode: JF2627: 5 Ways to Align Your Investments to Achieve Your Goals | Actively Passive Investing Show 67

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JF2690: How to Network at Conferences – The Best Tips For 2022 | Actively Passive Investing Show with Travis Watts

Attending conferences and events is one of the best ways to expand your network. But how do you make sure you make the most out of your experience? In this episode, Travis shares the critical elements to networking at conferences and how to create your own game plan for your next event.

Looking for your next real estate conference? Join us in Denver, Colorado at the Gaylord Rockies Convention Center from February 24th-26th for the Best Ever Conference! Register here: www.besteverconference.com

Want more real estate advice? We think you’ll like this episode: JF2668: 3 Ways to Grow Your Business at a Networking Event with Ben Lapidus

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JF2689: Scale from LP to GP with These 3 Tips with Joel Fine

Starting out as a Limited Partner, Joel Fine did everything he could to learn about multifamily syndication: he read books, listened to podcasts, and even asked to be part of a weekly GP meeting on one of his passive deals. In this episode, Joel discusses how he scaled from being a Limited Partner to a General Partner.

Joel Fine | Real Estate Background

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JF2668: 3 Ways to Grow Your Business at a Networking Event with Ben Lapidus

Ben Lapidus is the host and founder of the Best Ever Conference and has extensive experience in creating and overseeing networking events. In this episode, Ben shares how to maximize your experience at these events to help build new relationships, educate yourself, and ultimately grow your business.

Join us for this year’s Best Ever Conference in Aurora, Colorado from February 24th-26th: www.besteverconference.com

Ben Lapidus Real Estate Background

  • Chief Financial Officer for Spartan Investment Group LLC,
  • Portfolio: 51 operation, $100M AUM 
  • Founder and host of the national Best Ever Real Estate Investing Conference and managing partner of Indigo Ownerships LLC
  • Say hi to him at www.spartan-investors.com

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TRANSCRIPTION

Slocomb Reed: Best Ever listeners, welcome to The Best Real Estate Investing Advice Ever Show. I’m Slocomb Reed. This is the world’s longest-running daily real estate investing podcast. Today we have Ben Lapidus with us again. Ben, how are you doing?

Ben Lapidus: Doing well, Slocomb. Thanks for having me.

Slocomb Reed: You all just recently heard about the success that he is having with Spartan Investment Group LLC, and the self-storage that they’re developing, and the other deals they have going on. He is also the founder and host of the national Best Ever Real Estate Investing Conference. That’s what we’re going to talk about today. Ben, I’m going to translate my own experience and hope it goes with a lot of our Best Ever listeners. I’m attending the Best Ever Conference in person myself for the first time this year. I attended virtually last year and got a lot of great info. But you know, sitting at home with my headphones and my laptop, and my toddler running around, is a very different experience. Help me understand, Ben, this is my first Best Ever Conference attending in person. The first question, I’m registered, I’m checked in, I have my hotel room, I want to dive in… What’s the first thing that I should do?

Ben Lapidus: The first thing that you should do is you should identify your primary goal of attending. If your primary goal of attending is to identify a new passive investment to place, because that’s what your aim is – you’re not an active operator; you’re a pilot, an attorney, a lawyer, you’re looking for places to place your capital that you’re earning in your career into syndications, you’re looking for more groups like that, or to engage with the groups that you’ve already invested with, meet them once a year, the Best Ever Conference is a great place for that. There are dozens of high-quality operators that sponsor and attend the event that are friends of the Best Ever Conference. If you’re…

Slocomb Reed: What’s the best way for me to get myself in front of those operators?

Ben Lapidus: Just attend. If you’re at the conference, you will identify them by sitting down at the lunch table, there’s going to be somebody there that is an owner-operator. By going to the sponsor booths, you’ll walk up and down the aisles, and you’ll see dozens of those options.

We have a pitch event for passive investors to see a dozen or so of our owner-operator groups that have opportunities to invest into their deals. Groups like Spartan or Ashcroft. There are dozens of them that are in attendance, I want to say three or four dozen. Some of them highlight themselves on stage, some of them highlight themselves in the sponsorship area, some of them highlight themselves in the pitch event. There are dozens of operators. It is a conference for real estate syndicators to attend. So if you’re a passive investor, which about a third of our audience is, then you’re also going to be in a room with a large amount of nationwide syndication real estate firms.

Slocomb Reed: What if I am an aspiring syndicator, I own some rentals already, and I’m thinking about explosive growth in my own business?

Ben Lapidus: Again, back to what is your primary goal? Are you there to identify what is the asset class that you would like to invest your focus and time into? Are you there to find a business partner who can complement your skill sets? You’ve already got your team and you’ve already got your assets, so you’re there to figure out your winning acquisition strategy or your winning capitalization strategy that’s been limiting your ability to take down your first deal, or to scale a preexisting portfolio. So identifying what your primary goal is will help you figure out an agenda for yourself. What sessions do I want to attend, while allowing myself the freedom to network and enjoy the overall experience? There’s not a single-track way to attend the event, so identifying your goal in attendance is essential and primary.

Break: [00:04:42][00:06:21]

Slocomb Reed: Tell me, Ben, again, you’re talking directly to me and hopefully also a lot of our Best Ever listeners who have either been there several times or are planning to attend for the first time this year. These mini masterminds, I’ve read the blurb, but how is this going to work? What’s the deal with mini masterminds?

Ben Lapidus: We have a team of staff members who offer a white glove concierge experience, give you a call, get to know you one on one, and then identify a group of people that could be a good fit for you. We bring people together in a virtual space, one of our staff members attends and launches the first interaction of the mini mastermind. From there, it’s kind of for the individuals inside of that group to take it and run with it leading up to the conference. The intent is to have more interaction than just this one weekend so that you can maximize the impact of your time while you’re in attendance. If you have a group of six to eight people who have gotten to know you over the last couple of months, every couple of weeks interacting with them, you’re not only there in attendance for yourself, but you’ve got six to eight cheerleaders who are also looking out for you to identify that one nugget of wisdom, that one relationship, that one contact that can impact your life forever, that can impact your business. The idea is to create a group of people that can be a home base when you’re at the event because 1000 really successful people can be intimidating, but 1000 really successful people where you’ve got six to eight peers who you know, trust, and have already been vulnerable with, who you can kind of come back to as a sounding board for the experience, and who can also be your cheerleader and identifying opportunities for you as their networking. That’s a home base that we’re trying to create for all of our attendees.

Slocomb Reed: That is awesome. Ben, I don’t want to ask who your favorite speakers are going to be. But can you give me a couple of three speakers that you think may surprise people with their insight or with their subject matter?

Ben Lapidus: Some of the speakers that I’m personally interested in… Remember, I say this all the time, I basically built this event for me. I was an intermediate real estate investor, not advanced, not a beginner, and I didn’t want to be told one way to skin a cat at one of these “I’ll show you how to get rich conferences” which have value. I wanted diversity of thought on stage and I wanted to identify people who I thought were interesting that could teach him something. I assumed that, as an avatar of an audience member, if it was interesting to me, it would be interesting to others. The people that I’m most excited about are probably going to be the most interesting. But we have Spencer Levy who is a chief executive of CBRE, he’s been hailed as one of the best orators in the real estate space, he’s incredibly entertaining, and he’s got macroeconomic information that is going to be brand new for 2022. I’m very excited about that. We have cryptocurrency being represented on the stage for the first time and the impact of blockchain technology on commercial real estate. I’m excited to marry those two knowledge bases, those two investing worlds.

We have Vicki Schiff, who has been in commercial real estate since the 90s. She just recently sold a mortgage REIT that has originated over $3 billion. Just having somebody on stage that has played at that scale and can share some of her economic wisdom as well. I’m very excited about that. John Chang is coming back. He’s a great economist for Marcus and Millichap. We have an intellectual debate that is always awesome. We get two people to debate for a motion and two people to debate against a motion. It’s just a great way to explore a question that doesn’t have the right answer to it in trying to predict what the future looks like on a particular subject matter. There’s a number of sessions and speakers that I’m really excited about. That’s just a few.

Slocomb Reed: I hear an amazing speaker, one of the people you just mentioned likely. I have questions for them or want to connect with them afterward, will I have an opportunity for that?

Ben Lapidus: Absolutely. What we learned from the virtual event last year is that it was really efficient from a user experience to kind of keep the show moving, not do Q&A during the mainstage event, and to have a Q&A room after the fact. We’re going to take that model and we’re going to convert it into the physical space where during our breaks we’re going to have Q&A rooms with our speakers who have gone… Kind of like a radio station set where the hits keep coming, and then during the commercial break, you can go to the bathroom, you can hang out with the sponsors, or you can go into the Q&A room and interact with the speakers.

Slocomb Reed: Got you. I hear something that appeals directly to me and I want to follow up with that speaker on their subject matter. The main stage will get a new speaker soon, but I can go do Q&A with the speaker who engaged with me in another space.

Ben Lapidus: Yes, exactly right.

Slocomb Reed: Nice. Is there anything I haven’t asked about yet that you think everyone needs to know?

Ben Lapidus: Why come to the Best Ever Conference? What’s the point? What are we doing it for? I find that there’s a lot of content out there. There are dozens of conferences that you could attend, there are hundreds of books that you could read, lots of podcasts. Why this one? Why this experience? Why this content set? My answer is, it’s the only true national forum that marries the mid-market investor space, which is what the listeners of this podcast are, to institutional quality speakers and content. There’s a lot of conferences out there where you get your kind of top podcasters to be your speakers. These are folks who are, let’s say, early still in their real estate cycle. Even Joe, myself, and Brandon Turner from the Bigger Pockets Podcast, we’re all in our first economic cycles. We weren’t investing back in 2005 in commercial real estate. To learn from people who are talking about tens of billions of dollars who have seen multiple economic cycles, but to do it in a space where you have 96% of your people have done at least one commercial transaction in the last six months, which makes every audience member just as impressive as every speaker.

We have incredibly high audience quality interactions, incredibly high speaker quality interactions. It’s the only national forum that’s kind of taken that tact to allow our syndicator operators in our audience inside the Best Ever community to interact with institutional-level execution. We have found over 60 podcasts have been started from the Best Ever conference, over two dozen companies have been formed by interactions, by partnerships made at the Best Ever conference. Brandon Turner from Bigger Pockets kind of hails the Best Ever conferences, the inflection point when he started open door capital. That’s an example. Life Bridge Capital was formed out of the Best Ever Conference. Spartan Investment Group was formed out of the Best Ever Conference. Ashcraft was formed out of the Best Ever Conference. These partnerships were formed by connections that were made at the conference. That’s the reason to attend. It is the highest audience quality event in this big market syndicator commercial real estate space.

Break: [00:13:05][00:16:01]

Slocomb Reed: Ben, speaking of audience quality and quality networking, I was looking at the prospective itinerary for the conference and I saw Best Ever Party. That’s definitely not something I got to do virtually last year. Tell me about that. What is that?

Ben Lapidus: That is where we have one of our top sponsors just buys around drinks for the entire conference. We got a bus series coming in to bring people from the Gaylord to the largest bar in Denver. We’re just going to take it over and we’re going to be there for as long as people want to be there. Denver shuts down at 2 am and usually, there’s at least 100 people left by that hour in our physical space. The Best Ever Conference is not just a place to go and sit with your notebook and take notes, definitely do that but it is the best networking ground. People think they want to come to the speakers but the real value that they get out of it, the reason they come back, the reason 60 to 70% of people come back every year, is because of the audience quality. It is the best place to meet all the people that you’ve listened to on podcasts, that you’ve spoken to over the last year, and to make great new connections, partnerships, relationships. The party helps foster that.

Slocomb Reed: That’s awesome. I know, I spent a lot of time with my notebook in my seat last year watching the conference on my computer. I’m very much looking forward to the networking, the opportunity to meet you in person, Ben, and some of the other people that I’m interviewing with this podcast as well.

Ben Lapidus: Right on.

Slocomb Reed: Great. The conference is from February 24th through 26th. Where is the best place for people to get more information about it and to register, Ben?

Ben Lapidus: The best place is besteverconference.com We’re really excited. We have more than double the amount of people attending already than any other previous year by this time. We’re excited about another great event in February.

Slocomb Reed: Awesome. Best Ever listeners, we hope you have a Best Ever day. Ben and I hope we get to meet you at the Best Ever Conference in February.

Ben Lapidus: Thanks, Slocomb.

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JF2663: 3 Ways to Find Deals as an Introverted Investor with Camilla Jeffs

Camilla Jeffs was a burnt out, introverted landlord. When she learned about passive investing, it sounded like the perfect elixir to her fatigue. There was just one problem: commercial real estate is a team sport, and as an introvert, the idea of having to talk and network with groups of people was overwhelming. However, Camilla was able to create a strategy to work with and overcome a lot of the anxiety that surrounded the necessity of networking. In this episode, Camilla shares three great tips that introverted investors can use to overcome their anxiety and seek out amazing deals.

Camilla Jeffs Real Estate Background

  • Founder and CEO at Steady Stream Investments, which helps people achieve an elevated level of financial health through investing passively in cash-flowing real estate that impacts local communities, all without the hassles of being a landlord.
  • Portfolio: 107 multifamily units passive, 600+ multifamily units active, 64-bed assisted living new construction, totaling to $80M AUM.
  • Based in: North Dallas, TX
  • Say hi to her at: www.camillajeffs.com

 

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TRANSCRIPTION

Slocomb Reed: Best Ever listeners, welcome to the Best Real Estate Investing Advice Ever Show. I’m Slocomb Reed. This is the world’s longest-running daily real estate investing podcast. Today we have Camilla Jeffs with us. How are you doing Camilla?

Camilla Jeffs: Fantastic. Thanks for having me on.

Slocomb Reed: Great to have you here. Camilla officially went full-time as a real estate investor about 10 weeks ago. She has 18 years of commercial real estate investing experience as a multifamily syndicator, both active and passive. Her current portfolio includes 107 multifamily units in which she’s invested passively, 600 plus multifamily units where she’s an active investor, and a 64-bed assisted living new construction, totaling at 80 million in AUM. She’s based in North Dallas, Texas, and you can say hi to her at camillajeffs.com. Camilla, tell us about yourself. What got you into real estate?

Camilla Jeffs: Thanks. I want to clarify one point on the bio. You said I have 18 years of commercial real estate experience. That’s not true. 15 of that was actually residential. I spent 15 years in the residential space doing single-family rentals, some small multifamily as well… But what got me into real estate? Well, it really was necessity. My husband and I were living in a garage apartment, had very little money, we were both students in college, trying to make ends meet, working full-time, school full-time… And our landlady came to collect the rent one day, because that was back in the time where you put the rent in an envelope on your door and they would pick it up. I started a conversation with her and just said, “How are you doing in what you’re doing? I know you have multiple rentals. I know you’re a realtor as well. Tell me about this.” As we started talking, she suggested that maybe I should buy a house. I was like, “No, we’re poor. We don’t have any money. There’s no way we can afford a house. We can barely afford this garage apartment that we are renting.”

She said, “Actually, there’s a really cool strategy you could use where you could buy a house that has a basement apartment, and then you could rent it out, and your monthly payment might even be lower than what you’re paying in the garage apartment.” I thought about that for a minute. I thought “That’s really interesting.” That’s exactly what we did. We worked with her and we found a six-bedroom home. It was giant. Well, for us it was giant, because we’re in this little tiny, nasty apartment. And we bought this home as owner-occupants, so we were able to put just 3% down and got the best interest rates… And then it had a basement apartment, it had a kitchen in the basement, three bedrooms in the basement, and we rented those out, and we were able to live there for about $150 a month, is all that we paid for that house. And it had a pool in the backyard. How cool was that?

Slocomb Reed: That’s awesome.

Camilla Jeffs: And it was the only way that we really could get into it — well in our minds, at that time. That’s the only way we thought we could get into it. So today the term is house-hacking, and it’s a fantastic way to start in real estate for anybody. I recommend it for anybody to house-hack. And then that’s when we started thinking, “Okay, there’s something to this real estate thing”, and I started diving in, reading all the books I could find, and figuring it out. Then we just grew our portfolio, one house at a time. We were not the 10Xers, we were not the one out there massively pounding the pavement and getting it; we were just growing our portfolio.

So for 15 years, we grew a nice single-family residential portfolio, and then I hit burnout. I hit this point, because we were literally doing everything ourselves. I was mowing the lawn, we were fixing the toilets, answering the tenant calls, all the things. I was just to the point where like, “I’m tired.” And we had five kids by then, so there was a lot going on. Then I decided to pivot into large multifamily. The first thing we did was sell a bunch of our properties and invest passively. Then second, now I’ve built an active multifamily portfolio by focusing on teaching other people how to invest passively into real estate. That’s where I am today.

Slocomb Reed: Awesome. So you made the transition from single-family and small multifamily into larger deals, primarily to get yourself out of the day-to-day tasks that you were doing when you were self-managing?

Camilla Jeffs: Yeah, I was definitely looking for more time freedom.

Slocomb Reed: That’s awesome. What does your active investing look like now? Are you specifically in the Dallas Metro? What size properties are you looking for?

Camilla Jeffs: We just barely moved to Dallas about a year ago, so I’m still figuring out the Dallas market. I actually don’t have any assets in Dallas yet, but I plan to pick up a couple next year. But my portfolio consists of four assets in Arizona and two assets in Oklahoma. I like both of those markets, for two different reasons. Arizona, that’s where we used to live, so I know that market well and spent a lot of time in that market. It’s growing like crazy high appreciation, it’s booming; so that’s a great appreciation market to take advantage of that. And then Oklahoma is just a fantastic cash flowing market. It just cash flows from day one, really nice returns in terms of cash flow. Those are the two markets that I focus on currently.

Slocomb Reed: Is there a particular part of Oklahoma?

Camilla Jeffs: I have an asset in Oklahoma City and one near Tulsa. Both are great.

Slocomb Reed: You said you sold some of your portfolio, your smaller stuff, to get into passive investing. As a passive investor, what attracted you to particular syndicators or operators? Who is it that got your business, and why?

Camilla Jeffs: To be honest, it wasn’t very scientific for me in the beginning, because I didn’t know what I didn’t know. I’ve been a real estate investor for 15 years, so I thought I had a good experience, I thought I knew about real estate… But actually, investing in commercial real estate is completely different. There are different metrics, they use different numbers, they talk about it in a different way. With my real estate investing, for example, I never thought about equity multiple. And in commercial real estate we talk about equity multiples. Well, that’s because in my single-family portfolio, I didn’t have a set end date. I couldn’t project over five years, for example, which is what we do in commercial. So equity multiple was a very fascinating number for me to fixate on that.

So how did I find the people that I ultimately invested with? Again, living in Arizona, so I knew I wanted to invest in an Arizona asset, so I could drive by it and see it, because I wanted to be able to touch it. That’s what I had done with all my other properties; because I’m still in this DIY mindset. I’m trying to figure out “How can I even partner with other people? How can I trust these people to take care of my money?” It caused a lot of anxiety for me. I knew it was the right thing to do, I knew it was the right way to level up and to get out of being a landlord, but it was still hard to pass my money over and feel 100% confident. I don’t think you ever feel 100% confident in an investment. There are always risks, there’s always things, but you can do some steps.

One of the steps I did was I wanted to meet the people that I was investing with. So I got out of my comfort zone – and I think we’re going to talk about being an introvert a little bit later, in a bit… But I’m an introvert, and I never, never in my 15 years of investing, in the beginning, did I go to a real estate networking event. That was way too scary, I didn’t ever want to do that. So I didn’t really have any other friends who were investing. Well, to invest in commercial, it’s group investing; you can’t do it on your own. So I had to get out of my comfort zone, so I literally googled multifamily meetup in Arizona, and I started going to some of those. Some were very inexperienced people like me, who’d never done anything, that were trying to figure it out how to do something. And then some had more experience, folks that were there. So I just started networking and talking to some of the folks.

After I’d gotten to know a certain guy for a while, he came to me and he’s like, “Hey Camilla, I have a deal.” I was like, “Okay, show me what this deal looks like.” He walked me through the deal, he answered all my questions, and then I was like, “Okay, let me think about it. I’ll get back to you.” Over the next couple of weeks, he just followed up with me; he was just right there like, “Hey, what do you think? Do you have any other questions? How can I help?” He was very responsive to me and I really appreciated that about him, that he didn’t just, “Okay, if she’s interested, she’ll get back to me.” Because honestly, I probably never would have. I never would have gotten back to him, because I just needed someone to kind of push me along and help me to do that.

So really, after looking at what he had, talking to him about his track record, like “What have you done in the past?” And I’ll admit, it was light, it wasn’t even like someone who’d been doing it for 10 or 15 years. He’d been doing it for a couple of years. But I really liked the deal, I liked the concept of group investing, and I wanted to have that experience and have that as part of my portfolio. So I ended up investing $50,000 into that investment. And it’s going really well, it’s awesome. I get checks, I get notifications, and updates on it… And that’s the only thing I do. I don’t have to do anything. It’s amazing.

Slocomb Reed: Very different from taking your own maintenance calls, and cutting your own grass, and showing your own houses, for sure.

Camilla Jeffs: Yeah. 100%.

Slocomb Reed: That’s awesome.

Break: [00:10:32][00:12:12]

Slocomb Reed: Camilla, thinking about yourself around three years ago when you invested passively for the first time, thinking of yourself as an introvert do-it-yourselfer who wants to get more time freedom and get into larger deals, take better advantage of the wealth that you built for yourself through your own active investing – thinking back to yourself three years ago, what advice would you give to other people who find themselves in the same situation? They’ve been shoveling garbage out of their parking lots, and showing apartments, getting stood up, getting paint on clothes they never thought would have paint on them… What advice do you have for those people to get into passive investing?

Camilla Jeffs: Yeah, I ruined a lot of pants. [laughs] That paint, you just like accidentally bump a wall, you’re like “Dang it!” [unintelligible [00:13:07].00] those pants.

Slocomb Reed: Best Ever advice for people who have to do their own manual labor – wear scrubs, what nurses wear. It’s tough, it’s durable, it’s lightweight, it doesn’t matter how hot it is outside… I have so many dirty, bloody, painty scrubs from when I’ve had to do that stuff myself. Sorry Camilla, please continue.

Camilla Jeffs: I love it. I love it. [laughs] Okay, so what advice would I give to a fellow introverted burnt out landlord? Number one is there is a better way; there just is. It’s pretty crazy that the returns that I’m getting on this passive investment beat out some of the returns that I was getting on some of my single-family properties. I literally don’t have to do any of the work. That was mind-blowing to me. So number one, there’s a better way.

Number two – yes, it’s going to take a little bit of getting out of your comfort zone to get started. I think that’s the hardest part. The hardest part is getting out of that comfort zone a little bit to get started. And what I mean by a little bit is you don’t need to meet 50 syndicators; you need to meet a couple. You need to find a couple of people that you feel comfortable with, that you feel like they have the same vision and values as you, that you feel like are going to be very communicative, that you feel comfortable with their experience, their background, and what they bring to the table. Then you can start evaluating their opportunities.

So how do you meet them? Well, you’ve gotta attend some networking events. The whole nature of commercial real estate investing and some of the rules that we have to follow for the SEC are you have to have a personal relationship, a lot of times, to even get in these deals. So what is a personal relationship? It could be as simple as a call that you’ve had, like a Zoom call, face-to-face, or you met up at a real estate conference, or things like that.

You can go to real estate conferences… Go to a real estate conference. I know that’s even scarier than a smaller meetup. So here are my strategies for doing that; here’s my Best Ever advice for introverts, at real estate networking. Number one, when you walk in the room, find someone who’s sitting alone. Chances are that person is also an introvert and is just as uncomfortable as you are. Go sit by that person and strike up a conversation. They will be so grateful that you did. And then you have your one-on-one conversation. No awkward, “Oh, there’s this clump of five people who are talking and laughing, and I’ll try to like waddle up and see if they’ll notice me, or insert myself…” No, that does not work for introverts. We don’t do that, we don’t work like that. So find someone there.

Number two advice is to set a goal for yourself, whether that’s three people or five people – set a small goal for yourself that says, “I cannot leave this conference until I have met five new people.” And then, once you’ve hit that goal, give yourself permission to leave. And if you’re still uncomfortable after meeting five new people, you have full-on permission to leave. You’ve hit your goal, you can pat yourself on the back, “I did it! I met five people. I got five business cards, people I could follow up with and talk to you later. Great. I’m done. I can go home.”

Because one of the challenges that introverts have is that, being in those large groups of people, it drains our energy. It’s not that we don’t like it, it just drains our energy, because we gain energy from being alone, in our thoughts, reading a book, walking in nature, things like that. That’s how we gain energy. Whereas extroverts, they gain energy from being with people, and they really feed on each other. It just drains introverts. But it’s not that we don’t want to be there and we don’t like talking to people; that’s a myth about introverts. But that’s my advice for introverts at networking conferences.

Slocomb Reed: That’s awesome. Find the other introverts; you know how to identify yourselves because they look and feel the way you look and feel, walking into a big room. And set a goal for how many people you know you’ll talk to. Then give yourself permission to be done when you need to be done and the tank is empty. That’s awesome. Camilla, taking the perspective of I know a lot of our listeners were active investors, and taking the perspective of myself if I’m honest, and you now as an active investor, what advice do you have for us when we are looking to attract passive investors to ourselves, particularly introverted passive investors?

Camilla Jeffs: To attract passive investors, you need to be heavily focused on education. I always say that Steady Stream Investments is an education company, because that’s what I do, I really focus on education. So if you think about a passive investor – and I thought really hard about my own experience and what my own experience was like, what I could have used to feel even more comfortable about investing… Because I felt like I was the one that was pulling for the information. But if you can set yourself up as someone who is pushing information to your investors, your investor database – that’s key, you’ve got to start building an investor database, and then nurturing that database in some shape or form.

My favorite thing to do is at first — but first start your database, you need to send out a sample deal… You need to come up with a sample deal, like “Here’s the types of deals I’m looking at.” If you’re in your mind, you’re like, “My next deal, I probably need to raise money from passive investors. I’ve never done it before. What do I do?” Put together a three-page thing on this deal. What is this going to look like? Where’s it going to be? Why do you like this market? What type of deal will it be? What kind of returns would the investor expect to receive? Everybody you know that you have their email, send this information to them and say, “You know, I’ve been an investor, and I’ve been doing this, and this, and I’m really excited about the next steps. My next step would be to start a group investment where I can allow other people to invest with me. So if I had a deal like this, would you be interested?” Everybody who says yes, you put them on a list. Now, this is the start of your investor database.

This is where most people get it wrong… Because they’ll do that, they’ll start, and they’ll get all these people who say they’re interested, and then they think, “Okay, great. Now when I have a deal, I’ll send it to all these interested people and they will invest.” Well, there’s a big difference between someone who is interested and someone who actually invests in a deal. Everybody’s interested in real estate, everybody knows that real estate’s a great investment. But to get them to actually invest, you have to really be strategic in educating them; so you can’t just leave them alone. So you’ve got to be sending out information constantly, and then think really hard about the information you’re sending out. Is it tailored to a passive investor, what a passive investor needs to know, or are you just touting your accomplishments and achievements and “Here are all the things that I’ve done, and here’s what I’m doing”, just to stay top of mind?

Again, a big difference between sending out information that says, “Here’s what I’ve been doing all the time. Here are all the podcasts I’ve been on. Here’s all this stuff” and then you flip that and say, “Hey, you investor, here’s what you need to know to be prepared for the next deal. Here’s how you vet a sponsor. Here’s how you vet a deal. Here’s what you need to understand about equity multiples. Here’s what you need to understand about the average annual return. Here’s what you need to know about IRR.” Hardly anybody understands IRR. That’s a hard calculation to figure out. So think about how you’re educating your investors… And I guarantee, if you flip the script and focus on the education of your investors, by the time you have a deal, they will be ready and they will invest in your deal.

Break: [00:20:59][00:23:56]

Slocomb Reed: A personal question, Camilla… This is coming from me and I hope it is relatable to some of our Best Ever listeners. Let me set the scene for you. I host Cincinnati’s Best Ever Real Estate Investor Mastermind at Joe Fairless’ investor meetup here in Cincy… And I am a large, gregarious man, 6’4″, 300 plus pounds. When I raise my voice to make an announcement, everyone just naturally gets quiet, turns around, listens, and then does whatever I tell them to do. The opposite of the introvert experience at meetups like that. I know there Best Ever listeners here who host local meetups and want to engage everyone who walks through the door. How can I help 2017 Camilla feel welcome at my meetup and how can I help you get connected with the people she showed up to connect with without draining the energy tank too quickly?

Camilla Jeffs: Well, number one — as an introvert, when I walk into a room, I immediately scan the room and try to figure out who is safe for me to talk to, and who’s going to be a safe person. I think as the host of the meetup, I think you need to work really hard on your own safety vibe. What vibe are you giving off? I think the way you approach – so you can’t approach gregariously, or I’m going to be like, “Whoa…! You’re too much. I can’t handle you.” But I think you can definitely approach me and welcome me; that’s really helpful, actually, for an introvert to be welcomed immediately, as soon as we walk in the space. So I think being the greeter at the door would be helpful for you.

Anybody who’s hosting a meetup – greet at the door. Don’t be standing in the front of the room behind your desk, or table, or whatever. I get, you need to set up, but you got to set up well before the time that people started coming, so that 10 minutes before, you can be at the door and greeting people as they come in. And you’ll know immediately who a new person is, because you’re the one running this meetup. It depends on how big your meetup is. I walk in, I’m a new person…

Slocomb Reed: Introverts tend to show up early.

Camilla Jeffs: That’s right, we do. Because we want to sit up front, so we don’t have to be distracted by all the people. So as I walk in the door, you greet me and you’re like, “Hey, welcome. I haven’t met you before. What’s your name?” Immediately, I’m put at ease, because I don’t have to be the one that starts the conversation. I think it’s hard for introverts to start a conversation. If you ask me a question, I’m happy to answer that question. Then ask the second question you alluded to, “What are you looking for? How can I help you?” Then as they answer that question, in your mind, you should be thinking of people that you can introduce them to. The third step is to take them over to Sally over here and be like, “I think you would really like to meet Sally”, introduce them to Sally, and then you leave them on their own, and then you can go back to greeting more people. That would be a perfect scenario for me as an introvert walking into a brand new meetup.

Slocomb Reed: Awesome. Let’s wind down with this… Camilla, give me an example of a passive investor who remains nameless, of course, who you have engaged with to educate them and help them not only learn passive commercial real estate investing, but also invest in your deals – how you engaged with them to give them the confidence to invest with you.

Camilla Jeffs: I do that through multiple avenues. I started out building my email list, and then I do send out newsletters. I also added on webinars, so I hold monthly webinars with my passive investors, and we cover a certain topic. Last month, we did the three biggest risks to investing passively, so they could fully understand their risks. Then I have a one-on-one conversation with every single investor that comes into my database to answer their questions and help them out.

So I have a pool of investors, sometimes they’re in the background and they’re just kind of watching the education and reading it, and it takes them a while. And it doesn’t bother me at all. It doesn’t bother me at all if someone comes into my thing and they don’t invest for two, three, or four years; that’s fine. If you need that time to feel fully educated or feel like you have enough money saved – whatever, totally fine.

I had one who was in my database for almost two years, and finally, they invested. When they decided to invest, once I launched a deal, they put in a commitment. I was so excited to see their name on there, because I’d been working with them for a while… And then we had several conversations about it, because they’re still a little bit nervous and still wanted to fully understand everything. When it’s the first time investing, it’s a lot to take in. When you’re faced with that PPM that’s 100 pages of legalese, in really big letters, and it says risky, risky, risky, risky all the way through… It’s a lot, and I think that’s something that I’ve been able to really develop, kind of my superpower, is really helping the first-time passive investor fully understand the process so that they feel comfortable… 90% comfortable. Again, as I said, you’re never going to be 100% comfortable. But once you’re at 90%, you can invest, and getting them into a deal. And then we celebrate. It’s very exciting for them when it’s your first time investing in a deal, then you start receiving the distributions, you receive the monthly updates, and that’s when you start feeling really good about the choice that you made.

Slocomb Reed: Awesome. That’s good stuff, Camilla. Thank you. And thank you for sharing your personal story and what it is that you’re doing to help investors now. If you are a burnt-out landlord, there is a better way. Re-listen to this episode. Camilla has shared her story to tell you about that better way. Get out of your comfort zone and do networking. Commercial real estate is it team game, it’s a group investment. When you are looking to attract passive investors for your active deals, focus on educating them and be proactive. Be the one who reaches out to the people who are looking to invest, to get their questions answered, their concerns addressed, and get them investing in your deals. Camilla, thank you again. Best Ever listeners, we hope you have a Best Ever day and we’ll see you tomorrow.

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JF2660: 3 Ways to Pitch to Partners With Little CRE Investing Experience with Brock Mogensen

Brock Mogensen went from completing one house hack to an 89-unit syndication. Self-taught and with limited commercial real estate investing experience, Brock was able to successfully pitch himself to partners. In this episode, Brock details how he crafted his winning pitch and the lessons he’s learned diving headfirst into CREI.

Brock Mogensen Real Estate Background

 

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TRANSCRIPTION

Ash Patel: Hello Best Ever listeners. Welcome to the Best Real Estate Investing Advice Ever Show. I’m Ash Patel and I’m with today’s guest, Brock Mogensen. Brock is joining us from Milwaukee, Wisconsin. He is a full-time real estate investor and has 10 million dollars of assets under management. Brock has also been syndicating deals for almost three years. Brock, thank you for joining us and how are you today?

Brock Mogensen: Doing well. Thanks for having me on.

Ash Patel: It’s our pleasure, man. Thanks for being here. Before we get started, can you give the Best Ever listeners a little bit more about your background and what you’re focused on now?

Brock Mogensen: Definitely. I got started in real estate a little over three years ago. I started with a house hack, so I bought a duplex, lived in one side, rented out the other, fell in love with everything about real estate, and decided this is what I want to do, I’m going to scale this and make it my full-time thing. From there, I got into syndication, spent some time learning the underwriting side. That was kind of my focus, it still is, and partnering with the right people. About a year after I bought the duplex, we syndicated in 89-unit deal, and have gone on to do five or six more since then. It’s been amazing. In that time, I was able to leave my W2 job and now I just focus 100% on investing in real estate.

Ash Patel: Man, that sounds easy. Hold on, let’s dive into all this. What were you doing before your house-hack? Or what was your full-time job?

Brock Mogensen: I was in a few different roles. I was in marketing, then I was in IT for a while; most of the time it’s like in an analyst-type role. I did have some skills that transferred over. I learned how to use a spreadsheet and kind of the analytical side of the business. Some of those skills transferred over, but nothing in real estate related in my W2.

Ash Patel: What prompted you to start house hacking?

Brock Mogensen: As I grew up, my dad owned two duplexes. Both my parents worked very blue-collar jobs. Growing up, I kind of saw just the power of simply owning four units, the cash flow from four units, what that can change your lifestyle. So it was kind of just ingrained that I was going to buy a duplex out of college, save up some money, and buy a duplex. I never really had the thought in the beginning that it was going to turn into what it is now, but that initial thought of just simply buying one property was always on my mind.

Ash Patel: So you never meant to scale it, it was just to provide some additional income.

Brock Mogensen: Exactly. In the beginning, it was more, I kind of just thought maybe I’ll buy a couple of duplexes throughout my life. But after that first deal, I fell in love with real estate and everything it provides, and I realized I got to go all-in on this and make it big.

Ash Patel: And then a year later, an 89-unit syndication. Give us the details of how that came together.

Brock Mogensen: My thought process was when I initially started researching syndication, there’s a ton of different stuff that goes into syndicating a deal. I knew I didn’t have the net worth, I didn’t have all the money, I didn’t have the investor base, I didn’t have a lot of these big pieces of the puzzle. So I figured, let me learn one piece of the puzzle, then I’ll go out and find partners that might be looking for someone on that piece, that is strong in the other areas. Underwriting, naturally was kind of where I spent some time learning. Once I became proficient in there, six or seven months later, after just doing everything I can, practicing, looking up as much content as I could, I went out, and networked a ton, I connected with one partner that had the same kind of mindset as me, then he brought on one of his other buddies that had much more experience and had been doing it for a while, he just hadn’t syndicated anything… And us three kind of just went from there and did that first deal. They brought the capital, they brought all those connections, and I was more on the analysis side. Since then, our partnership has gone great, we’ve done a ton of deals together, and now I kind of take part in the whole process now. But initially, it was a lot. I figured let me just learn one piece, instead of trying to learn everything in the beginning.

Ash Patel: Alright, you’re doing it again, you’re making things sound easy. Let’s dive in a little deeper. You said “when I started looking into syndications”, what prompted you to look into syndications?

Brock Mogensen: Really, it was this concept of wanting to go bigger. I realized that the way I was going to scale was by going after bigger deals. And obviously, the first thought is I don’t have an expendable couple thousand dollars each year to go out and buy a big apartment building… So I came across this concept of syndication, leveraging other people’s money to go after bigger deals, and just taking a piece of the pie, instead of the whole thing. I came across this subject, it caught my attention, and I realized this is the way I’m going to scale. I’ve started thinking about how do I get into this personally, with my skill set and what I have to bring to the table? What is the way I can get into this?

Ash Patel: Brock, how did you educate yourself on syndications?

Brock Mogensen: It was really just a ton of podcasts and books. I listened to this podcast quite a bit, just going out and finding everything I could out on the internet. I did a few small courses, but never really got into one of the larger mastermind groups… But it was really just going out and putting all the pieces together and pulling information from everywhere I could. There’s so much essentially free information out there just through podcasts and books for people. If you really are dedicated, you can learn it.

Ash Patel: Was part of your to-do list “find partners”?

Brock Mogensen: Yes. Initially, I just wanted to spend some time just learning. Before I started going out and searching for partners, I figured let me at least have an idea and kind of know what I’m talking about before I started sitting down with these people. But as soon as I became pretty confident and understood the process — I was going out and networking a ton and just telling everyone what my goals were. After a while, I connected with the right person and everything went from there.

Ash Patel: Brock, what did you bring to the table? Because you’ve done a house hack, why am I going to partner with you on a syndication?

Brock Mogensen: It’s a great question. It was really me selling these two partners that had much more experience than me that I was going to put in the work. I did all the analysis on the front end, so I was able to talk through, show what I knew on the front end, and then lay out what I was going to bring to the table throughout the entire deal. I took on a lot of the investor reporting, and a lot of the admin duties in the beginning that they saw value in bringing on someone. So you’re totally right, as someone who’s coming into it with just a duplex and not much money in the bank, it’s kind of hard to sell someone that has several hundred units on becoming a partner with them. It’s really obvious you’ve got to learn the ropes first, and then you just got to learn how to sell yourself.

Ash Patel: I love that, man. You did it. You educated yourself and you made it happen. You got the partners, you talk the talk, you put the work in, and did the grunt work, I’m sure in the beginning. What a great recipe for success. So what was your first deal, the first syndication?

Brock Mogensen: The first one was 89 units, a class C apartment in Milwaukee. That was the first big one that we did. There were definitely some learning lessons in there, but it was a good first deal to start out with.

Ash Patel: Is this a deal that the three of you did together or was in the works when you came into this partnership?

Brock Mogensen: Kind of in between. It was a deal that we were looking at for a little while, it fell out of contract, so we all kind of had our eyes on it. But they ended up getting it under contract and I came aboard right after they got it under contract. So it was kind of a mixture. We all kind of understood the deal, but it was just like we were talking about — I had to sell myself on how I can get on the GP team.

Ash Patel: And you spearheaded the underwriting?

Brock Mogensen: Correct.

Ash Patel: How the hell did you learn how to do that?

Brock Mogensen: It was a lot of mostly just practicing. You’ve got to learn the basics of what’s NOI and how to categorize expenses, all that fun stuff. But once you have that base knowledge, you can go buy a spreadsheet online from one of the operators, or you can build your own. But then I’d literally go on LoopNet every day, I’d find a deal that was in the size range I was looking at, and I would just plug numbers in, try to analyze it, some questions would come up, I’d do some Google searches, and there’s a lot of — practicing is the best way, like anything I know; like sports or anything else. The more you practice, the better you’re going to get. So pull deals and just try analyzing and see what happens.

Ash Patel: Just pure hustle and grind.

Brock Mogensen: Absolutely.

Ash Patel: Were your partners pretty impressed with what you were doing?

Brock Mogensen: Yeah, I think on the front end I definitely spent a lot of time really diving deep into everything to show my value, to show my analytical side, and what I was going to bring to the table. Both my partners are more on the sales side, so I think they saw the value in bringing on someone that’s analytical. Those are really the best sort of partnerships that are created. But it worked out.

Break: [00:08:14][00:09:47]

Ash Patel: How much did you lean on them for questions? Or did you try not to bother them?

Brock Mogensen: I definitely had a lot of questions. I had all the book knowledge, the podcasts, all that stuff’s great and useful, but it’s a lot different than actually doing it. Actual experience can’t be replaced by anything, no matter how much knowledge you have. The best knowledge is learned by actually doing it. Yeah, there was a ton of stuff as we were going through the process, and after we bought the deal. Some basic stuff, that looking back on it, I didn’t even know, that I was kind of just learning as I went. I had that front-end knowledge. But having partners that already had done these deals and bought big apartment complexes, being able to ask them questions… And the more deals we’ve done, it’s always a learning process. You never stop learning. It’s just a matter of asking the right questions and making sure you understand stuff.

Ash Patel: Brock, do you remember the numbers on that? The purchase price?

Brock Mogensen: Yeah, we were at about three and a half million purchase price.

Ash Patel: Class C. So what was the renovation amount?

Brock Mogensen: We ended up renovating most of the units. That was one of the learning lessons we had on the first deal, was always put more money in your reserve account than you think you’re going to need. We ended up having to pull from cash flow to do some of it, we ended up doing more renovations than we thought, we didn’t quite budget correctly… So that was definitely one of the learning lessons on that property. Now whatever amount we think it’s going to cost for rehabs, reserves, and tenant improvement costs all that stuff, we throw in an extra 20% to 30% in there just as a safety net. Because when you’re holding these deals for five to 10 years – that is usually how long you’re going to hold these types of deals – something in your proforma is going to go wrong. There’s always going to be some water heater you didn’t account for, or something in the roof, there’s always going to be something. COVID comes and you get 10% of your tenants who don’t pay rent; there’s going to be hurdles along the way, so I’d rather have that safety net in there. If you don’t use it, you just give it back to investors at the end.

Ash Patel: So that 20% to 30% buffer comes from investors.

Brock Mogensen: Correct.

Ash Patel: So you’re paying the returns on that money that you’re holding. Can you return that early?

Brock Mogensen: It’s a good question. We haven’t done that yet. We do have some properties where we have a ton in there, and we haven’t used any of them. Potentially, I think we’ll look at that as we get further down the road and if it gets to a certain point where it makes sense to distribute back. But so far, we’d rather stay on the conservative approach and just avoid having to do any capital calls. That’s the worst-case scenario really in syndication is having to go back to investors and ask for more money. So our thought process is we’d rather just have it sitting there, and if the numbers work based on that amount of capital being contributed, then there’s no harm in just letting it sit there.

Ash Patel: Yeah. And in terms of dealing with investors, did you move into that role? Do you interact with investors? Do you try to get new investors on deals?

Brock Mogensen: Yes. I’ve definitely had more and more deals that I’ve taken part quite a bit in the capital raising, and then I do all the investor reporting, so I’m putting together reports every month to send to investors, and tracking the financials. So I take part quite a bit on the asset management side as well… As well as my partners; we’re all kind of contributing to all aspects of the deal.

Ash Patel: Do you attract investors yourself?

Brock Mogensen: Yes.

Ash Patel: How do you do that?

Brock Mogensen: I try to do more and more on marketing, social media, email lists, and networking events, doing everything I can. I’d say our biggest source of investors has been from networking events. We started a meetup here in our state; it’s grown to be pretty big, and we’ve attracted quite a bit of investors through that. We’ve put quite a bit of time into marketing those events, to just bring in as many people as we can into our funnel, let them know what we’re working on, and see if they’re interested.

Ash Patel: Brock, what’s a hard lesson you learned about interacting with investors?

Brock Mogensen: That’s a good question. I think really just being upfront with investors and letting them know where you’re at and not exaggerating things. We’re very upfront about some of the learning lessons we’ve had on deals; we don’t try to hide stuff. We’ll lay it all out there and say, “This is what we’ve learned. We made some mistakes here.” We’ll kind of show some performance on some of our other deals. I think being transparent with investors is the biggest thing instead of trying to hide the stuff that they’re probably going to find out anyways. Be transparent on the front end, and I think that goes a long way in building rapport.

Ash Patel: What’s a hard lesson you learned about having partners?

Brock Mogensen: I’d say dividing work sometimes and figuring out what everyone’s strong suit is. I think the best partnerships are all these people that have different strong suits and kind of come together to create this partnership. If you can divide certain tasks to say “You’re better at this task, I’m better at this one. Let’s just kind of take these paths and go.” Sometimes that can get challenging, because there can be certain tasks where maybe you both think you should work on, but it’s better to just have one person. I think that’s always going to be a struggle, is defining those roles. Eventually, when you get to a point when you can start hiring employees, you can delegate more of those tasks, I think that becomes easier. But on the front end, that can get difficult sometimes.

Ash Patel: Have you read the book Who, Not How?

Brock Mogensen: No. I’ve heard of it though.

Ash Patel: Alright. So if you have partners that have the who not how mentality where they try to offload things, have you run into that where they offload something and you don’t want to deal with it, you don’t like dealing with it? How do you deal with that?

Brock Mogensen: It’s a good question. I would say, in the beginning, that was probably something that happened, where there might have been some tasks… But again, I was kind of coming in, showing myself, saying I’m going to do all these tasks, and do everything. I think in the beginning, there were definitely some things where it’s like, “I don’t really want to do this”, but I know I have to do it, to prove my value. Now that we’ve done more and more deals together, it’s all even. We all put the same amount of work, and have been able to hire some virtual assistants now, so we’re able to delegate some of those tasks. As you’re growing, there’s still going to be stuff you don’t want to do. You can’t outsource everything. So there are those days where it’s like “I don’t really want to do this, but I know I have to do it.”

Ash Patel: So it’s not “Hey, Brock will do it.” That doesn’t linger from the early days. “I’ll just give it to Brock. Brock will handle it.”

Brock Mogensen: No. I would say it’s pretty even now. Obviously, there are certain tasks where it makes sense. Like the reporting stuff and some of the admin stuff where I’m the one that’s kind of manning that stuff. It just naturally makes sense for me to do it, even though it might be more of a mundane task. That’s my role and that’s what I’m doing. They’re bringing in more of the capital, so that’s obviously a huge value-add on that side.

Ash Patel: Brock, what’s the hardest lesson you’ve learned in real estate in general? I’m talking about a tough lesson, a hard lesson, one that beat you down.

Brock Mogensen: I would say, really going back to that first deal we did. We had a few learning lessons there. I think it really changed our business plan of wanting to not necessarily target any C-class properties anymore. We’ve had quite a bit of struggles there, where we didn’t budget correctly on the front end, ended up having to evict much more tenants than we thought, which led to more unit turn costs… Then once we get all that figured out, we’re finally in a good place and hitting our proforma, COVID decides to hit. We have 10 tenants walk in and say they’re not going to pay rent, we can’t do anything about it.

Then we had to kind of go back to the drawing board on that and figure out a way to get out of that. We had to work with some local community programs to get funding to cover some of that. So there was definitely a ton of learning lessons on that first deal. I think it’s just a matter of… There’s always going to be learning lessons on every deal, and just taking that, and making sure you don’t make the same mistake again.

Ash Patel: Yeah, that’s a tough position to be in. It feels like the walls are caving in on you.

Break: [00:16:27][00:19:20]

Ash Patel: What were some of the issues with, you said class C properties? Was it the tenants or was it the renovations?

Brock Mogensen: The tenants, I would say. Really, I think it’s just… There”s good deals, I think right now especially, even the C-class deals. The cap rate difference between a C deal and a B deal – really not that much different nowadays. I think, personally, I’d rather pay a little bit more, have a little bit less of a return on a B class deal on the front end, and cash flow, to know it’s just going to be smoother on the management side. Generally, the B class, it’s going to be easier to exit those sorts of properties.

Ash Patel: The $3.5 million property – is that close proximity to where you guys are?

Brock Mogensen: Deal size we’re looking at now…

Ash Patel: No. Location-wise. Sorry.

Brock Mogensen: We’re in the Greater Milwaukee area. My partner’s management company is right outside Milwaukee; an hour radius of Milwaukee is kind of our target zone.

Ash Patel: Got it. What advice do you have now in managing C-class tenants?

Brock Mogensen: Really keeping a pulse on everything in the property, looking at the numbers daily, and having some sort of KPI reports. We learned to really track collections, see and stay in touch with the on-site manager there to understand… We have a call with them each week to understand where are we at, “We’re only at 80% collected, and it’s the 15th of the month. Give us a list of those 10 tenants that haven’t paid yet. What’s the status? ” You really have to keep a pulse, especially in that space where they might not care as much about their credit, so if they don’t pay for a few months, they’re not too worried about it, as long as they get away with it. I think really, the collection is a big part of that, and managing expenses as well. Tracking KPIs every day on a weekly basis, at least, looking at the numbers, and talking to your property management company to make sure we’re doing everything we can to hit proforma – that’s the key, I think.

Ash Patel: Do you remember what the total renovation cost was on that property?

Brock Mogensen: We’ve put at least 200 grand into renovations. In the beginning, we were flipping units and kind of putting in the LVP flooring and everything. Now that we’ve realized there’s not as much of a rent bump there that’s worth it for those costs, we’ve kind of trimmed down some of those unit flip costs, which has helped. But yeah, there were a few other items. We’ve put in new lighting, we updated the camera systems, stuff like that, that we did budget for on the front end. But the unit turn costs are really something that usually are going to be more expensive. It’s going to be, especially now, with supply costs going up, labor costs going up, 5% or 6% a year. You have to account for that and assume it’s getting more expensive than you think.

Ash Patel: I’m glad to hear that you guys pivoted and changed how you renovate the units. If you’re not getting the returns that you anticipated, why continue super-improving properties?

Brock Mogensen: Exactly.

Ash Patel: Yeah, that’s a great lesson. How long is the hold on this property?

Brock Mogensen: We were targeting a seven-year hold on that property. We’re about two and a half years in, so we’ll get a few more years before we start looking at an exit.

Ash Patel: Why seven, versus five or less?

Brock Mogensen: A lot of it has to do with the loan structure. We use agency debt on that. There is a prepayment penalty all the way up until year seven. So even if someone were to come in today and say, “Hey, we will pay you a million dollars more than you bought it for.” If you look at their prepayment penalty, it’s really not going to make sense. That’s I think one of the downsides to working with agency debt, they almost always are going to have a higher prepayment penalty, unless you structure it a different way. But that’s where it really doesn’t make sense. Maybe when we get year five or year six, it might make a little bit more sense if you look at the prepayment penalty. But the 10-year note, at year seven, that prepayment goes away, so we do have a nice three-year window there to sell. But that’s the main thing, is looking at that and deciding when it makes sense. One of the benefits of working with local banks is, a lot of times there’s no prepayment penalty.

Ash Patel: Is that prepayment penalty staired, where it gets reduced each year?

Brock Mogensen: Not in our structure, no. It’s all just based on what’s owed.

Ash Patel: What’s the penalty?

Brock Mogensen: We have to pay out all the interest owed until ,up until year seven. If you look at the numbers and we’re in year three, four years of interest is a lot of money.

Ash Patel: Is that loan assumable?

Brock Mogensen: That is a good route and a good question. Yes, we do have the option to assume it. And we’ve kind of looked at exploring it for some people that have looked at it and made us some soft offers; we’ve kind of tossed that out there. I think most investors don’t like to assume a loan, especially with interest rates having gone down probably 100 basis points. We’re at like four and a quarter, I think, on that deal, right now… They need to get money in the 2% range now, so it’s a pretty big jump down there where a lot of investors are like “No, I want to get my own loans. I know I can get much better terms.” I think that just adds a little bit more hair on trying to sell someone a deal early.

Ash Patel: How much did you have to put down?

Brock Mogensen: That deal, I think our total capital raise was 830k. We did 80% LTV on that deal.

Ash Patel: Awesome. Brock, what is your best real estate investing advice ever?

Brock Mogensen: I think thinking big. A lot of who people get into real estate and just assume the only way to get deals done is to save money and buy a deal. But just think big and think creatively. There are a million different ways in real estate to structure a deal. You can get creative on a lot of these deals, and then get into some larger deals with less money out of pocket than you might think.

Ash Patel: Great advice. Brock, are you ready for the Best Ever lightning round?

Brock Mogensen: Let’s do it.

Ash Patel: Let’s do it. Brock, what’s the Best Ever book you’ve recently read?

Brock Mogensen:  Somewhat recently — I like some of the mindset books. I read 10X Rule. I got it here in my background, actually. I like that book for mindset and kind of thinking big.

Ash Patel: What was your big takeaway from that?

Brock Mogensen: Just that whatever your mindset is right now and whatever your goals are set at, you can think much larger, and just grow how you’re thinking. That really was a huge pivot point for me. Looking back at some of the goals I had three years ago when I was first starting, compared to the goals I’ve set now – they are just so much larger.

Ash Patel: Brock, what’s the Best Ever way you like to give back?

Brock Mogensen: I would say providing people with the education of learning real estate. I get a ton of calls a lot of times from people and I just explain how real estate works. I talk to my friends about it, show them the basics, [unintelligible [00:24:54].23] and invest in real estate. That’s, I’d say, at this point the way I’m giving back most, is through education. I have some bigger goals down the road, but that’s where I’m at right now.

Ash Patel: Brock happened the Best Ever listeners reach out to you?

Brock Mogensen: Yes. I’ve tried to post quite a bit on Instagram, real estate stuff. That’s just @brockmogensen. My email is brock [at] smartassetcapital.com. Our website is smartassetcapital.com, we have some free downloadable templates there, and some different eBooks.

Ash Patel: Brock, I got to thank you again for your time today. It’s hard to believe that it was only three years ago that you started a house-hack, and now you’re doing syndications. But you worked your way into this partnership, you hustled, you put the grind in. I love your story. Thank you for joining us today.

Brock Mogensen: Thanks for having me on, Ash.

Ash Patel: Awesome. Best Ever listeners, thank you for joining us and have a Best Ever day.

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JF2659: How to Expand Your Network to Find Better Partners with Daisy Serrano and Luc D’Abreau

Daisy Serrano and Luc D’Abreau are a millennial husband/wife multifamily investing team that scaled their business through extensive networking. The wider their network grew, the easier it was to find the right people with the right competencies to secure good sponsors and partners. In this episode, Daisy and Luc share what it’s like to enter CREI as millennials and how they hustled to expand their circle. 

Daisy Serrano & Luc D’Abreau Real Estate Background

 

Click here to know more about our sponsors:

Deal Maker Mentoring

 

PassiveInvesting.com

 

 

Follow Up Boss

 

TRANSCRIPTION

Ash Patel: Hello Best Ever listeners. Welcome to the Best Real Estate Investing Advice Ever Show. I’m Ash Patel and I’m with today’s guests, Daisy Serrano and Luc D’Abreau. They’re joining us from Austin, Texas. They are a husband-and-wife team whose portfolio consists of 445 units as LPs and 42 units as GPs. Daisy and Luc have been in real estate for four years now. Guys, thank you for joining us, and how are you today?

Daisy Serrano: Hey, Ash doing amazing. Thank you for having us. We’re excited to be on the show. We are definitely supporters and definitely excited to be on the other side now.

Ash Patel: It’s our pleasure to have you. Before we get started, can you give the Best Ever listeners a little bit more about your background and what you’re focused on now?

Luc D’Abreau: Yes. Like you alluded to, Ash, Daisy and I ended up starting our investment journey about four years ago where we started out as LPS in late 2017. And just with our goals and what we ended up having, we ended up deciding to not only do one deal but did another deal shortly thereafter. Then looking down the road at that time, we ended up thinking okay, we need to get active really, if we really want to accomplish what our financial goals are and what our life goals are. With that, we end up saying, “Okay, let’s get active.” We figured out what that would end up looking like. We ended up seeing that, a lot of times, if somebody is local to their target market, then that ends up helping out a bunch.

We had invested passively in San Antonio, so we were looking in Central Texas, hence the move to Austin about a year ago. We ended up being part of a GP group and got active with a deal earlier on this year. We just continued to look for properties here in Central Texas and be able to grow and continue on from there.

Ash Patel: What came first, setting the goals or investing as LPs?

Daisy Serrano: They kind of came hand in hand. We started investing first; we actually weren’t even married at the time, we weren’t even engaged, we were still dating, and started investing. Once we did really see the power of distributions and wealth creation, from that point — we already had certain goals in place in terms of our future and where we want it to be, but once we really got a taste of that distribution and saw the cash flow from the properties we had invested in, that really changed some of the long-term goals, and that focused right on wanting to be on the active side. I have to say one thing to add to what Luc shared, is that in that process of investing, being on the active side, we also saw a very big gap in the market, which was not seeing a lot of young people like us, millennials investing, so we really set out on a mission to help educate and create more access for millennials to know that this was something that was possible. Whether somebody invests with us or not, it’s really just about creating access and education for more millennials, more young people at any age group to be able to start investing as well.

Ash Patel: The mailbox money got you guys hooked. Alright, so how do two millennials come into real estate investing as LPs? How was the opportunity presented to you? How did you find out about it?

Luc D’Abreau: I guess it was mostly led by myself. I had been interested in real estate for a number of years and was looking for an opportunity to be able to get involved in some form or fashion. Right after I finished grad school. I started working when I was 23. I’ve read Rich Dad, Poor Dad like so many people do, and a lot of those thoughts, ideas, and those concepts, they really, really resonated with me. So I was looking, “Okay, how do I get involved? What do I do?” I explored a couple of different things, Ash, but ultimately ended up being connected to a GP through one of my old roommates who was also interested and involved in real estate.

Yeah, this was actually the GP group’s first deal in fact, so it was my first deal, it was their first deal, it was our first deal. That’s kind of how we ended up getting involved. It was just one degree of separation, an introduction, and then a ton of due diligence to figure out “Okay, am I going to throw five figures into this deal, or what’s going to go on here?”

Ash Patel: What was that due diligence? Because I remember my first passive deal, and – man, I just thought it’s too good to be true. You put money in and you just get returns every month. What a great idea. My mindset back then was “Alright, I’ll put the money in. If I lose it, lesson learned. But if I actually make what Joe Fairless says – what a win!” So what was your guys’ mindset and what was the due diligence that you performed?

Daisy Serrano: There was quite a bit. We had definitely listened to podcasts such as this one, read books, and really started going to meetups to meet people that were in the industry that were doing it. Once that opportunity came about for us to invest, to move forward, and take that leap of faith, it was really about knowing the team that we were working with. We ended up meeting with one of the sponsors that were based in California where we were at the time. We also flew out to the market, so we flew from California to Texas, and went to San Antonio to secret shop the property, secret shop some of the comps as well. People thought we were a little crazy, because we were investing this money before investing into the actual property. But for us, it was worth coming out, really touring, getting an understanding of those metrics that you see on paper or online, and getting an idea of if that’s really what’s happening on the ground.

Those were all really the different things that we did. It was over a month, starting with basic education, books, podcast, and then leading up to really meeting the sponsors, knowing who they were in person, that was really important for us. Then, of course, going out into the market, secret shopping it, and understanding what it was exactly that we were investing into.

Luc D’Abreau: To your point, Ash, also about not losing money – that was something I was very concerned about. I’m fairly risk-averse, so I figured, okay, at the very least, I don’t want to lose any money, so I ended up backing into ultimately – I didn’t know it at the time, but breakeven occupancy, ended up taking the underwriting that the sponsors had, and ended up just creating my own spreadsheet to tinker with, kiind of pull the levers, and be able to get a much more tangible understanding of what levers to push and pull. Because up to that point, I didn’t have any finance classes or done any accounting. So that was just a way for me to dig in, have more surety for myself, and then be able to provide more to Daisy as well.

Ash Patel: I love that. Good for you guys, you’re putting in all that legwork. Was this an experienced investor? This was their first deal…

Luc D’Abreau: Yeah, it was their first deal, but it’s funny, because they’re actually part of the Joe Fairless tribe. It was with Wild Horn Capital. There was a lot of experience behind the main lead GPs on it.

Break: [00:06:49][00:08:22]

Ash Patel: What were the returns on that deal?

Luc D’Abreau: That was a percent pref and then two times equity multiple over five years. The IRR was in the mid to high teens. Actually, the first deal is exiting now. It should be exiting officially and closing on the 29th of December. So coming full cycle in just about four years instead of five.

Ash Patel: Awesome. Was that Western Station by any chance?

Luc D’Abreau: It wasn’t. It was Joseph [unintelligible [08:46].

Ash Patel: Okay, because I’ve got a deal with Joe that’s closing December 29th as well.

Luc D’Abreau: Oh, there you go.

Ash Patel: Awesome. Alright, so you guys now have your mailbox money coming in and this real estate thing is working, it’s cool. What’s the next step?

Daisy Serrano: For us, it’s really been a transition. I failed to mention, I was in international education prior to coming into the space and did that for about 10 years. So for me, it was a really big change coming into the commercial real estate space and learning everything that’s involved with being a sponsor and being an operator. What’s next for us in our journey is really…

Ash Patel: Sorry, can I cut you off? I meant what’s next after you did this first investment? So we’re still back in the day. So you’ve got your first one under your belt, you wrote the check, you’re getting the returns… It’s got to feel good, getting those monthly or quarterly distributions. So what’s your guys’ next step?

Daisy Serrano: After that first investment, it was really about creating the kind of life that we wanted to have and backing into how to make that happen. I think Luc alluded to this earlier, but I had been in international education for about 10 years prior to starting my investing journey in real estate. Within that space, unfortunately, there wasn’t the opportunity to help retire my parents and accomplish a lot of these big goals that I wanted to do…. So together we realized that the planning that you asked about earlier, once we started investing in getting those distributions, that cash flow, then it was how can we scale, how can we help provide more opportunities for other people to also take advantage of all of these different things that are available within real estate? And really, it came down to getting involved more to joining organizations locally and nationally, to corresponding and just meeting more sponsors that were doing what we wanted to do, and jumping onto the active side.

So that was really the next step for us, Ash, was looking at, okay, we’ve taken that leap of faith, and now there’s this creation of wealth that’s starting to happen. Now, how can we take that to the next level and help create that opportunity for more people? That’s really where Make It Rain came about for us. It was being able to be operators ourselves, to move into our target market, to leave California, to leave everything that we knew, and our whole lives behind, be able to be in Texas to be boots on the ground, and make progress in this dream that we had.

Ash Patel: Awesome. So how do you do that? How do you go from being an LP to being alongside the GPs or co-sponsor, co-sponsoring a deal?

Luc D’Abreau: I think looking back at what we did, we decided that that is something that we wanted to do. From there, it was a matter, like Daisy had mentioned, of attending more networking events so that way we could meet more sponsors, be able to understand what their either day to day, week to week, month, a month actually looks like, and kind of what that would look like once we’re in those shoes. From there, being able to meet more people we ended up helping of course, because then you just have a wider network, so that way you know whose competency is raising capital, whose competency is being able to asset-manage, and whose competency is boots on the ground, all those different things. Then I guess the next part in our journey, like Daisy mentioned, was deciding, “Okay, if we’re going to do this then we need to relocate.” That was just what worked for us and that’s kind of what our plan was.

Daisy Serrano: We joined a mastermind as well, which was really important just in terms of surrounding ourselves with people that had done it, that had the experience, the track record, and being able to learn from them. I think that’s a really big thing. What’s really important, was to seek mentorship and have people around us that could support us in that journey.

Ash Patel: Alright, a lot of syndicators out there right now have the typical 8% pref, high teens, mid-teens IRR. How do you differentiate all of these different sponsors or operators?

Luc D’Abreau: I think it boils down to who do you trust. Underwriting is underwriting like it’s numbers and sometimes it can be garbage in, garbage out. I think if somebody doesn’t have a level of understanding of what rent growth should be, or really what should taxes align to, or a myriad of other things in your underwriting that you’re getting from your sponsor, then it should be “Okay, do I actually trust this person to have a relationship with them? If I call them, are they going to pick up my phone call? Are they are willing to answer questions?” I think that’s ultimately a lot of it, of how to differentiate. Because at the end of the day, if it goes sour, then are you as a sponsor willing to look somebody in the eye and be able to have a conversation about what occurred, and be able to take responsibility, be able to move forward in a positive manner? That’s kind of what my thoughts are. I’d be interested to hear Daisy’s.

Daisy Serrano: Yeah, it’s similar for me. It’s really being able to have a personal relationship, understanding what somebody’s goals are, being able to help them get there, and making sure that it’s the right opportunity with the right investor. Because not every opportunity is going to be the right fit for every investor, depending on what they’re looking for.

But I would say on the other end also, for us, the big differentiator was moving here, was people seeing the seriousness of how we were operating and conducting our business. We were willing to move, to relocate to be boots on the ground, to get out there and tour, meet brokers, and really have that face-to-face presence. We have a local meetup here in Austin and just have found ways to add value to people on a regular basis… Not just with an investment opportunity, but connecting them with somebody that they’re looking to meet, or just looking at different ways to add value, depending on the investor.

Ash Patel: And Daisy, what is that value you bring to the sponsors?

Daisy Serrano: For us, it’s really now being boots on the ground. It’s being able to – now that I’m full time within the multifamily space, to get out into our property within a couple of days’ notice to really understand some of those submarket metrics, and really be very active here and in the local Austin MSA. So whether that’s with meetups, being able to help connect people, getting out, touring, meeting brokers, and all of that; being very active boots on the ground.

Ash Patel: Do you raise capital for these deals?

Daisy Serrano: We do.

Ash Patel: Is that primarily how you add value? Or are there other things you do as well?

Luc D’Abreau: We’ll end up raising capital, of course. Then the other piece is – with us being local, it’s “finding the deal” because we do have those broker relationships. So those are those main two pieces. There was just a deal yesterday, it came out Thursday or Friday. We’re like “Let’s take a look at it.” Yesterday was Sunday; underwriting it today or tomorrow, then if everything looks good, we’ll be able to tour pretty quickly in short order. It’s 10 minutes from where we live so we know the area very well, we know what the comps are, we can back check with the broker scene. A lot of that ends up helping as well, in addition to being able to raise capital and equity on deals.

Ash Patel: Luc, who would end up buying the deal. Would you give it to a different sponsor and just raise capital for the deal? Or would you guys buy it yourself?

Luc D’Abreau: It would end up being the latter. We would work to be the leads, then be able to bring in the appropriate people in the strategic fit that ends up making sense in order to be able to get the deal across the table, and have it be the right fit for a three, five, seven-year partnership that you have on that one specific deal.

Ash Patel: Got it. Okay, so you’re involved in all aspects of the lifecycle of a project.

Luc D’Abreau: 100%.

Ash Patel: You mentioned seven years – is that how long some of your deals anticipated are going?

Luc D’Abreau: We end up saying seven years because of just the environment that we’re in. Ideally, I guess, average, we would say is that five-year mark. If it happens in three or four, then that’s great. Not knowing what the future is like, if it gets pushed out to six or seven, then that’s something that we end up talking to investors about and say, “Hey, this is what we’re seeing.” That way, they’re not knocking on our door at [12:59] on year four like, “Hey, what’s going on here, guys? I thought this was a five-year deal?” Because things end up changing; no underwriting is perfect, and financials end up changing, so that’s why I ended up saying seven years in that instance.

Ash Patel: You guys look very young. Do you find that’s a hindrance with having brokers or investors take you guys seriously?

Daisy Serrano: I think it was more so at the beginning. I think now that we have a pretty solid team, and once we talk to investors or brokers, we’re able to show the team that’s behind us. Luc mentioned that the first GP group that we invested in, something that was really important for us is who was their entire team, who had the experience and the track record. For us, it’s really been about leveraging the people behind us as well, our team on the lending side, on the GP side, our property management of course, and making sure that we have that experience and track record. If we have a question about X, Y, and Z, we knew exactly who to go to. That’s definitely helped a lot. I think we can’t really control how people see us from the outside in, but we can definitely control the business plan and the team that we bring to the table.

Ash Patel: Daisy, somebody that wants to follow in your footsteps, what advice would you give them?

Daisy Serrano: The first piece of advice I always give is to, one, educate yourself. Start by understanding the foundations, the multifamily 101 basics. Number two is to start going to meetups and meeting people that are doing what you want to do… Because after a certain time of education, reading books, and listening to podcasts, I think it’s so important to surround yourself with like-minded people and build your tribe. Build that group of people around you who is going to support you, but also who is doing what you want to do, because that will push you to go a lot further than you ever thought you might be able to on your own.

Break: [00:17:54][00:20:47]

Ash Patel: Awesome. I’m going to push you guys here for a second… What’s one thing that would make this husband-and-wife team work better together?

Daisy Serrano: Work better together? That’s a good question. I think time. Luc has a full time job. He’s still having his gig on that end. For me, I’ve been able to now transition full-time into the multifamily space. But I think like as with everything, there’s the marketing piece, there’s the acquisitions piece, there’s the operations piece, there’s so many different aspects of the business. I think for us, it’s time. Being able to have more time to dedicate to growing, scaling, meeting more people, partners and investors alike.

Ash Patel: What advice would you give husband and wife teams to minimize issues?

Luc D’Abreau: I would say open lines of communication, just like with any relationship. I know that for myself, whenever there’s a misunderstanding, either with Daisy or with somebody else that I end up having, it’s because there was some miscommunication that occurred. So I think having open, honest, candid lines of communication is extremely important. If a husband-and-wife team is looking to do this, I think to understand that there’s a solid foundation there already within the marriage, first and foremost, because it’s going to be very difficult to end up working together if that isn’t already there.

And just being open to change. I definitely learned what Daisy’s work style was, she learned what mine was, we learned what each other’s competencies were, and what that ended up looking like. I think just being open to the journey and how things end up looking as you continue to make progress.

Daisy Serrano: On the more practical side, having an operating system as well and knowing who’s doing what. There are certain things that Luc focuses on, and there’s certain things that I focus on. For our operating system, we use EOS, based on the book Traction. I think it’s pretty common in the industry. He has certain metrics that he’s responsible for, I do as well. We have a weekly meeting where we look at where we are in X, Y, and Z. Where am I? How can I support you? How can you support me? We separate the professional and the personal on that end, to where when we have that Make It Rain operator hat on, then it’s business. Of course, there’s overlap, there’s no clear delineation. But the more that you can stay in your lane and support each other within that lane, I think that makes things a lot easier going forward.

Ash Patel: What’s a hard lesson that you learned about dealing with investors?

Daisy Serrano: I can share on that. I think that not every investor is the right investor for you. We learned that on the last deal that we had. We had somebody that we were working with that was very difficult to work with. As a sponsor, of course, you want to provide the opportunity to as many people as you can. But it’s also about it being the right fit in terms of values, in terms of long-term goals, so we decided not to work with someone for that reason. We didn’t have similar values, the long-term expectation wasn’t clear on the investors… So working with the right people on all aspects, on the property management, your partners, your investors, everybody that you’re working with, I think was a hard one, because you’re then raising less money, raising less capital; but I think in the long-term, they’ll be happier with the right operator and we’ll be happier with the right investor.

Ash Patel: Daisy, what was it specifically about that investor that made you not see eye to eye?

Daisy Serrano: It was really the method of communication, to be quite honest. I have certain expectations in terms of how I was raised, and being spoken to respectfully. I think it’s just foundational for me in terms of an expectation. If that basic understanding is not there, and it’s not being respected, then it’s not going to be the right working relationship going forward.

Ash Patel: I agree. 100%. Good for you. What is your best real estate investing advice ever?

Luc D’Abreau: I would say figure out what you want to do. It’s not necessarily only applicable to real estate, but I think if you figure out what you want to do, then that informs everything else. It always goes back to what’s the goal; is this something that you truly want for yourself, for your family, and for everyone else in your life? Starting there, what does that goal look like? Then go into the why, what’s motivating you, and trying to understand that. That informs everything else, and I think that pushes you through when it becomes difficult, when there are hardships, and those long hours and early more mornings, late nights and weekends, and all of that.

Ash Patel: Alright. Are you guys ready for the Best Ever lightning round?

Daisy Serrano: We are.

Ash Patel: Alright. What’s the Best Ever book you’ve recently read?

Daisy Serrano: For me, it’s The Energy of Money. It’s really more of the spirituality of money; for any of your listeners that aren’t familiar with it, it really walks you through your own money journey growing up, why you make certain money decisions, and how to take control and be able to intentionally channel that money energy into different aspects of your life.

Luc D’Abreau: I would say Outwitting the Devil by Napoleon Hill. It was a book that came out a handful of years ago. It was actually written when he was younger, but it didn’t get released until, I think maybe three, four, or five years ago, something along those lines. It’s a great book built upon Think and Grow Rich. I think foundational for anybody who’s looking to accomplish really anything in their life.

Ash Patel: What’s the Best Ever way you guys like to give back?

Daisy Serrano: Mentoring and volunteering. That’s really been something foundational for me. I’ve always had very active mentors, and so with that, being able to give back to the community and to other people that are in a different place than I am. I’m volunteering right now. I’m part of two organizations. Seedling, which works with children of incarcerated people, and Girls Empowerment Network, working to empower girls that are younger to help them be who they can be growing up once they reach adulthood.

Ash Patel: How can the Best Ever listeners reach out to you?

Luc D’Abreau: The best place is to actually go to our website; it’s makeitraincapital.com. You’ll find all the info about us on there. You can schedule a call with us, you can email us, you can check out our social media, our podcasts that we have as well. Everything is there, all in one central place and you can connect with us. When I say schedule a call, literally feel free to schedule a call. We will make calls with anybody who’s looking to do anything within real estate. Even if you’re not looking to invest with us, as Daisy said, we’ll connect you with somebody else who is a better fit potentially for whatever your goals are. We’re more than happy to do that, so makeitraincapital.com.

Ash Patel: I love it. Daisy, Luc, thank you guys for joining us today and giving us your journey. Four years ago, you invested as LPs and now you guys are doing deals on your own. Thank you for your time.

Luc D’Abreau: Thank you, Ash.

Daisy Serrano: Thank you so much for having us on and just for providing this platform for so many of us.

Ash Patel: Best Ever listeners, thank you for joining us. Have a Best Ever day.

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JF2646: Want to Host Your Own Networking Event? Check Out These Clever Tips to Elevate Your Meet-ups with Hayden Harrington

Hayden Harrington was tired of the meet-ups he kept attending. They were usually hosted in crowded, hard-to-hear areas where it was difficult to effectively network with people. That’s when he decided to create his own, unique events. In this episode, Hayden shares how he broke from tradition and created a successful in-person and online networking group.

Hayden Harrington Real Estate Background

  • Real estate entrepreneur focused on large-scale multifamily syndications
  • Currently has $30MM AUM and actively growing the portfolio
  • Managing partner at Momentum Multifamily, a commercial real estate group focused on buying institutional quality assets for their investors
  • Based in Richardson, TX
  • Say hi to him at: www.momentummultifamily.com
  • Best Ever Book: The E-Myth Real Estate Agent by Michael E. Gerber

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TRANSCRIPTION

Joe Fairless: Best Ever listeners how are you doing? Welcome to the Best Real Estate Investing AdviceEver 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 fluffy stuff. With us today, Hayden Harrington. How are you doing Hayden?

Hayden Harrington: I’m doing well. Thanks for having me on, Joe.

Joe Fairless: I’m glad to hear that and it’s my pleasure. A little bit about Hayden. He’s a real estate entrepreneur focused on multifamily syndications. His company has $30 million of assets under management. He’s a managing partner, speaking of his company, at Momentum Multifamily, based in Richardson, Texas. With that being said, do you want to give the Best Ever listeners a little bit more about your background and your current focus?

Hayden Harrington: Sure. Thanks again for having me on. Like you mentioned, based here in Richardson, which is a suburb of North Dallas. I’ve been here for about eight years now. I’m originally from the Woodlands, Texas, down on the North side of Houston. That’s really where I got my start in real estate, doing actually fix and flips and rentals with my dad, growing up through my teenage years. That’s really where I was exposed to it and first got a taste for it. But ultimately, through doing some rehabs and flips with him, it kind of opened my eyes to wanting to go bigger. Obviously multifamily was that next natural step. It took me a while to kind of figure out how the game is played and how it works, but I finally landed that first deal earlier in January 2021. We currently got our second one under contract and are set to close actually next month. So we’re excited.

Joe Fairless: Congratulations on all the above. You said it took you a while to learn how the game is played. How long did it take and what did you learn?

Hayden Harrington: Good question. It really took probably four or five years. I started really setting my sights on the commercial side of things around 2016 or 2017. At first, I wanted to do everything myself, because that’s really all I was exposed to. On the single-family stuff, it was just me and my dad doing all the work ourselves. That’s really all I had ever seen, is just “We’ve got to do it ourselves and make things happen.” So for a long time I had that dream of I want to get into commercial, I’m going to find that one investor, he’s going to write me a million-dollar check, I’m going to go out and buy a commercial property, and I’m going to be off and running. That dream got me nowhere.

It was a lot of trial and error for a while, just understanding the reality of the commercial real estate space and educating myself on the different niches, like where I wanted to start… Because there are so many different places that you can start, whether that be development or buying existing multifamily, buying office, triple net commercial, and so forth. So I spent some time really just exploring and talking to people on each of those areas, and ultimately set my sights on multifamily.

From there, again, you have more challenges that you’re presented with and how to get a seat at the table of a syndication or become a general partner. There’s definitely a learning curve involved with that. For a long time, I knew proximity was power, I knew I just wanted to be around people doing deals… So I’d meet somebody that’s experienced and I’d offer “Hey, I’ll work for free.” I just want to be around the people that are making deals happen, because I knew that was the fastest way to learn. A number of doors actually closed on me, and nobody would accept that offer from me for a while, and I was kind of scratching my head like “Man, I’m smart and capable. What am I doing wrong here?” It wasn’t until I really put myself in their shoes and looked at it from their perspective of what I was actually offering when I had my lightbulb moment.

When I did that, I realized that what I was asking for was not offering them value. It was offering their time and resources and energy to educate me so it really wasn’t a great deal for them. Until I looked at it from that perspective, I really wasn’t making a whole lot of progress and I was just dealing with a lot of frustration.

So I began to look at it from a different angle and a different approach. I said “Okay, in my mind, what are the things that are going to speak to a syndicator or somebody that’s experienced?” The two things that popped up were deals and capital. In my mind, those were the two things that were actual tangible value to get a seat at that table. I knew finding a deal would be extremely difficult, especially when you’re just starting out. It’s hard to even know what a deal is, honestly. And if you’re looking at everything on LoopNet or Crexi, there’s a reason why most of those deals are there. So the good deals really are only sent to those that are experienced. A broker is not going to waste their time on somebody they’ve never heard of. I knew that, and so I really set my sights on the capital side, that’s ultimately how I was able to bring some skills to the table and get a deal done.

Joe Fairless: When you were originally looking for a deal by yourself, what type of deal were you looking for?

Hayden Harrington: Honestly, I was just scouring LoopNet and Crexi, those online sites, just trying to make sense of it. Like I said in the beginning, it was kind of looking at different types of assets but I wasn’t getting anywhere else. I was trying to make some relationships with brokers and so forth, I tried to make my own underwriting model, and a lot of it wasn’t great. So after not making a whole lot of progress, I just kind of discarded that idea. I said “Hey, I need to actually go and fine-tune this strategy, get around people that are actually doing deals so that I can be pointed in the right direction.”

Joe Fairless: Got it. Whatever the property type ended up being by yourself, how were you planning on funding it?

Hayden Harrington: Like I said, hopes and dreams of having some investor believing me enough to write me a big check. But obviously, that didn’t get me anywhere, so that was not a great approach.

Joe Fairless: Fair enough. Alright. You got the first deal in January 2021. What was it?

Hayden Harrington: It was a 228-unit property in North-East Houston. A property built in 2012. It was formerly called [unintelligible [00:06:08].18] Liberty Hills and we rebranded it as the Henry at Liberty Hills. It’s kind of our brand that we wanted to stamp down there in Houston on all the properties we buy down there. We bought it for just shy of about 30 million, 828 a door. We actually got it at a five cap, so looking back, we feel pretty good about that, especially where things are at now. But really kind of interesting, just to wind it back, my partner, Dustin and I, we’ve been teamed up for about three years now.

Joe Fairless: How did you meet Dustin?

Hayden Harrington: Just in my own educational process, and trying to understand how the game was played, I started networking. Like I said, I knew proximity is power, and I want to get around people. That was kind of my approach, to add value. I ended up meeting, Dustin and I threw out an idea. I said, “Hey, what if we start a networking group here and kind of make it a little different to help us stand out?” In that way, I can not only put him in a good light, but also, we can work together to build an investor list, or in other words, a pool of equity that we could potentially pull from when that deal eventually came. So we started working together in early 2019 and did the meetup for a little over a year until COVID shut us down… But we were getting 100 plus people out every month. That’s really how I was able to kind of get my name on the map, and we built a pretty sizable database from it.

Joe Fairless: That’s awesome. Let’s talk more about that. But just so I’m clear on where you met Dustin – you said networking, but what specific networking event did you meet Dustin at?

Hayden Harrington: There was a networking app, it’s called Shapr. We connected there and then I just threw it out. I was like, “Hey, can I take you out to lunch?” The app is kind of similar to LinkedIn, and I saw that he had experience in multifamily. I said, “Hey, I want to take you out to lunch if you have some time.” I just want to ask some questions. I think it was on our second lunch that we did that, because we kind of hit it off and got along right away. That’s when I threw the idea out there. I was like, “Hey, what if we start this networking event together?”

And honestly, that was a challenge for me because growing up, I was very introverted and very shy for a long time. I knew throwing that idea out there. I was like, “Oh, man. If I’m co-hosting a networking event, I’m going to have to speak in for all these people.” Honestly, I went back and forth in my mind whether or not to bring it up. I’m grateful I did, looking back, because so much has come of it. I think that’s a product of what happens when you take those chances, you take those risks, and you kind of believe in yourself. Because if not, a limiting belief that I held within my mind keeps me from achieving my goals. That’s when I was like, “You know what? Screw it. I don’t care how it goes. I’m going to throw this out there and put forth as much effort as I can and see what happens.”

Break: [00:08:45][00:10:18]

Joe Fairless: With that meetup, clearly, it was successful with 100 plus people shortly after you started it. You said you wanted to do something different. Tell us, what did you do?

Hayden Harrington: A couple things. Like I said, I was going around to different events too, just trying to understand how the game is played. I realized that the people that were putting the events on were the ones that were doing deals. That was a big realization for me. But the problem I saw was all these events were done at restaurants, bars, and crowded hard to hear places. They didn’t have a sophisticated way of checking people in, it was kind of a table that you do it yourself. I started to see all these things as opportunity. I was like, “I don’t have the best handwriting. I’m sure a lot of people out there don’t either. One simple thing, when you’re putting in your database, you put one wrong letter in an email address, that’s a lost lead.” So doing stuff like a digital check in where we had a computer or an iPad that would be on the backside of a website that I built for us that would automatically add people to a CRM. Just trying to minimize the room for error, maximize efficiencies, and then also doing automated follow-up emails from the time that they submit that form. Two hours later, when the event is over, and they’re getting home, they’re already getting hit with a follow up thank you email.

Then a big thing was putting them in an environment that will help them network, getting them out of the restaurant, that was my number one criteria. I said, “We’re not doing it at a restaurant, we got to get it out of that.” Because the problem with that is you sit down at a table and you’re locked in that seat. You’re talking to the guy to your right or your left and that’s where you spend the next hour and a half. That’s a major issue when you’re trying to build your network. We said we’re done with restaurants. We started in a title company’s office up here in Dallas actually, Madison title. They were gracious enough to open up their office after hours, they actually catered food for us. It was great. Then to further that too, again, like I said, I was kind of naturally introverted. I wasn’t the best at networking. So I basically just solved the problem for myself, which was, we called it a graceful exit. Trying to get out of conversations can sometimes be very difficult when you’re networking because you don’t want to come across as rude.

We’ve essentially just addressed that problem that everybody’s thinking. Every 10 minutes, we force people to mix it up, we actually would bring a cowbell and that was their signal. Okay, times up, exchange business cards, go meet somebody else. People loved it. The first meetup, I think we had 20 to 25 people, then it was 45, then it was 70, then it was 100 plus. It grew very, very quickly. Essentially, we just wanted to help people network more efficiently. That was really the only problem that we were solving.

Joe Fairless:  That digital check in, is the attendee the one putting their info into the iPad?

Hayden Harrington: Yup, absolutely.

Joe Fairless: Describe the flow of the event will you, from the moment you go in to when you leave. As an attendee, what am I experiencing as far as content and different setups that you have structured?

Hayden Harrington: We eventually moved it to the Westin in Las Colinas here in the mid-city. It was a big conference room in a nice brand-new hotel. We’d have them come in and check in outside the room that we’re holding it in. Then we had somebody writing down their name tags. Everybody’s name tag was all in the same font, it’s clear and legible.

That’s another problem too that we solved, because sometimes it can be just hard to read people’s names and their handwriting. So we had somebody with good handwriting writing down their name tags, they’d be checking in, then they’d go and network for a little bit. We kind of introduce ourselves up on stage and some sponsors that we had. We then let people network for the next hour, rotating every 10 to 15 minutes. We gave them free food so there’s always food and drinks. Then the second hour of the event, we do a speaker. So we’d have the speaker come in, and we had Michael Becker come one time, James Kandasamy, John Montero. We had a bunch of pretty well known, especially around Dallas, people that would come and speak on different topics. You get kind of the best of both worlds. We’re not sitting down for two hours and just giving you a presentation, but we’re allowing you to connect with some people, and then also giving you some education to take home as well.

Joe Fairless: What’s the cost, if any, to attend?

Hayden Harrington: It was always free. We gave people free food and it was free to attend. That’s one thing. We didn’t want to put a price tag on it because honestly, we wanted as many people as we could possibly get out. So we left it free for people and I think they really appreciate that.

Joe Fairless: How would you promote it?

Hayden Harrington: Mainly just through social media, honestly, and Meetup. That was kind of our big avenues to promote it. Not anything special really. Once they’d be signed up, we’d obviously send reminders and stuff like that. I think that’s a big one just because people get busy. We were only doing it once a month so sometimes you put it on your calendar, or you register for something, and you kind of forget about it. So we made sure to send people reminders and make sure that they knew when and where it was.

Joe Fairless: How often would the reminders be?

Hayden Harrington: Normally we do a week before, then morning of, and then kind of like an hour before reminder. We do typically three, maybe four reminders kind of leading up to the events.

Break: [00:15:36][00:18:29]

Joe Fairless: You had a lot of people and then COVID hit. So now what are you doing with that Meetup?

Hayden Harrington: We transitioned to do a lot more online stuff. I think that was a big pivotal moment too because a lot of people, as soon as COVID hit, especially in our space, they just kind of stopped doing stuff. A lot of people had local meetups and they never really made the transition online. We started doing webinars and online networking events. We actually were able to build our list significantly faster than we were before and also expand our reach. We pivoted very quickly and just started doing monthly educational webinars, we do bi-weekly networking events with people all over the country. I think the first few months, we were getting at least double or triple the amount of people added to our list just because we could expand our reach. Especially up front, everybody was excited to hop on different network events. There was some definite Zoom fatigue over the subsequent months. But really, at first, we were getting at least twice if not three times as many more contacts added to our list every single month.

Joe Fairless: Now are you still doing those Zoom networking events?

Hayden Harrington: Absolutely. We just finished up a three-part series. We did kind of lifecycle of a deal. We did one video in the series per month. The first one we did, Dustin and I were on underwriting, then Gary Lipski came on the following month and did asset management webinar to our audience, and then Rob Beardsley of One Star Capital just recently did a case study on a full cycle transaction. Then we still do the every other week virtual networking on Zoom as well.

Joe Fairless: Are you doing this full time?

Hayden Harrington: Yup.

Joe Fairless: What’s been the biggest challenge? Actually, before you answer that, you were learning for four to five years how to approach getting a deal. How are you supporting yourself?

Hayden Harrington: Out of college actually, I started a nutrition company, did that and grew that for a few years. Then when I exited that, that’s really when I went all in on multifamily. I definitely had to make some sacrifices too because I knew in my mind, it’s the coffees, it’s the lunches, it’s those meetings that are spontaneous where all the value is found. If I was tied up too much, I’d miss out those opportunities, and I didn’t want that. So I had to do things like sell my car and just go all in on this bet on multifamily. I think that definitely paid dividends. But it’s very challenging to get off the ground because the barrier to entry is very high, especially for somebody that’s young. I definitely had to make some sacrifices along the way.

Joe Fairless: When you sold your car. How did you get around DFW?

Hayden Harrington: I drove my grandfather’s old Jeep around for a couple years. Thankfully I had that. But that kind of afforded me the ability to go and make that sacrifice. Not everybody has something like that. Thankfully I did and was able to go forward with that.

Joe Fairless: What did do you do with the money when you sold the car? Where did that go?

Hayden Harrington: Straight into savings. I have little savings, plus proceeds from that, did a couple of little jobs, and stuff. But that was all into savings, just try to keep myself afloat and keep the dream alive.

Joe Fairless: Wow, good for you on that nutrition company. What did you sell it for?

Hayden Harrington: I’m not able to disclose that but it was a good venture. We ended up growing it into about 90 different stores across eight different states.

Joe Fairless: A seven figure sale to you.

Hayden Harrington: Not quite, but we didn’t know…

Joe Fairless: Pretty healthy.

Hayden Harrington: Yeah, it was still a good business. I credit that business a lot because it actually taught me a lot. Especially the marketing and branding side because at first, frankly, we were broke. So I had to figure out how to build a website, how to design a product, all that stuff I had to kind of take on myself. A lot of those skills translated to real estate because a business is a business, ultimately your investors are customers and the same principles apply to selling a product as selling an investment.

Joe Fairless: If you speak to someone who says “Yeah, I want to get into multifamily,” but they were where you were years ago. What’s something you would tell them to do less of that you did and what’s something you would tell them to do more of that you did?

Hayden Harrington: I’d say don’t try to do it all yourself. Because for a long time, that’s what I tried to do and it got me nowhere. Be willing to specialize, be willing to focus on where you can add value, and not try to do it all. Multifamily is absolutely a team sport. Focusing on a role that you can be really good at and bring a lot of value to the table, I think that would definitely serve you well in the long run. Just to add to that, just be patient. These are long relationships, not only with the partners that you’re in, but also the properties, the deal itself. It’s not like you’re flipping these in a month, we underwrite to five year holds, so these are long term transactions, they take time to put together. I mean just the closing process could take two or three months, and that’s from getting your offer accepted. That doesn’t even factor in how competitive the space is. Just be patient, be willing to put in an enormous amount of effort and work, and good things will happen

Joe Fairless: Based on your experience, taking a step back, what’s your best real estate investing advice ever?

Hayden Harrington: I think my best piece of advice really goes back to just believing in why you’re doing this. What’s your why to begin with? I think that’s the most important question to ask yourself is what’s your purpose behind that? Because you’re going to face a lot of closed doors, you’re going to face a lot of hurdles, a lot of objections, and your why’s are what’s going to keep you going. Having that the center of your focus, and having a lot of clarity around what that why is, I think is the best advice I can give.

Joe Fairless: We’re going to do a lightning round. Are you ready for the Best Ever lightning round?

Hayden Harrington: Yeah, let’s do it.

Joe Fairless: Best Ever book you’ve recently read.

Hayden Harrington: That’s a good question. I really liked the E-Myth. I read that one recently. It kind of ties into what we’re talking about here as well.

Joe Fairless: Best Ever way you like to give back to the community.

Hayden Harrington: The best way to give back is we’ve actually done some charity events and that’s something we’re really excited about within Momentum Multifamily. It’s continuously giving back to not only our investors and getting them involved, but also the community as well.

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

Hayden Harrington: Check out our website momentummultifamily.com. Feel free to reach out at hayden@momentummultifamily.com as well.

Joe Fairless: Hayden, bravo on what you’ve done. Thank you for sharing your story. I know it will be inspirational and helpful to a lot of Best Ever listeners who are starting out especially in commercial real estate. Thanks for talking about at the Meetup, how you positioned it differently, proved upon the experiences that you had attending other Meetups, and are enjoying the results of those improvements with a lot of people attending. So nice work on that. Thanks for being on show. Hope you have a Best Ever day and talk to you again soon.

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Joe Fairless