JF1803: Selling $40 Million In Real Estate Before 25 Years Old with Chris Salerno
Chris got his real estate start as a real estate agent, he gained traction quickly and led his team to being the #1 team for residential sales in the Carolinas. Theo will ask about how he was able to do that, and then they’ll talk about his newest venture into multifamily real estate. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
“For people trying to get into multifamily syndication, give people details on what you’re doing” – Chris Salerno
Chris Salerno Real Estate Background:
- By 25 years he sold more than $40M in real estate volume and helped lead the #1 real estate team in the Carolinas
- Named to Charlotte’s 30 under 30
- Leads QC Capital as a well respected, high-return investment firm
- Based in Charlotte, NC
- Say hi to him at https://qccapitalgroup.com/
- Best Ever Book: Best Ever Apartment Syndication Book
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Theo Hicks: Hi, Best Ever listeners. Welcome to the best real estate investing advice ever show. I am your host today, Theo Hicks, and today we are speaking with Chris Salerno. Chris, how are you doing today?
Chris Salerno: Hello! I am doing phenomenal. How are you, Theo?
Theo Hicks: I am doing fantastic, I’m looking forward to our conversation. I actually know Chris, so it’s our first time actually meeting virtually face-to-face. I’m looking forward to learning a little bit more about you and your business.
Chris’ background – by 25 years old he had sold more than 40 million dollars in real estate volume, and helped lead the #1 real estate team in the Carolinas. He was named to Charlotte’s 30 under 30. He leads QC Capital, which is a well-respected, high-return investment firm. He’s based out of Charlotte, Carolina, and you can say hi to him at QCCapitalGroup.com.
Chris, do you mind telling us a little bit more about your background and what you’re focused on now?
Chris Salerno: Yeah, definitely. Thank you, Theo, for the introduction. Best Ever listeners, I’m excited to be on here… I started listening to the podcast about two years ago to gain my knowledge and education throughout the real estate industry.
I’ve been living in Charlotte, North Carolina for 13 years, and this is where my family is. Within those 13 years I focused heavily on real estate, and I got into the residential side of selling real estate here locally, and very quickly gained a success track record.
From that success track record in residential real estate I landed myself in the position of leading the number one team here in the Carolinas for residential real estate, and made them 46% profitable in one year, compared to their three years of just being stagnant.
With the education of learning that, I just fell in love with multifamily, especially value-added, B and C class assets… Because I feel when acquiring those type of assets – they’re basically a failing business, or they’re not extremely profitable as they could be… So I find it very exciting to go in there and make them extremely profitable for our investors. So that’s how I got into the multifamily industry, and I love it ever since.
Theo Hicks: That’s an interesting way to look at it, that you’re basically taking over failing businesses and turning them. [unintelligible [00:04:16].01] TV shows where they go into failing businesses and flipping them around. I can’t remember what it’s called, but I’ve got the picture of the guy’s face…
Chris Salerno: Yeah.
Theo Hicks: So before we dive into the multifamily, let’s talk about your time as an agent, leading a team. What were some challenges that you faced? Obviously, you were a young guy, you came into this industry… Obviously, you were very successful at it, but being a manager is tough.
Chris Salerno: Very much so.
Theo Hicks: Anyone who wants to grow a massive business at some point is gonna bring on team members. Maybe talk a little bit about some challenges, maybe talk a little bit about some tricks you learned, about hiring people, and anything surrounding being a manager and building a team.
Chris Salerno: Great question. My big thing was I enjoy studying businesses, and not just successful businesses, but failing businesses too, because you can learn a lot from studying a failing business.
Before I even got into that role, I just would study different types of businesses, like Sears for example. I studied Toys R Us. I just studied them and why they failed and why they didn’t succeed. So when I went into that role, I found a lot of holes… We call it the T-12, but I’m still used to calling it the P&L. I found a lot of holes in the P&L that needed to be filled to make sure we are tracking the leads better, to make sure that the money that is being spent on advertisement and marketing is being spent properly, and we’re not just dumping money anywhere.
So I really honed in on the P&L and the structure of that to get a good grasp of it, to make sure that we are cutting down our expenses and then making sure that the agents who are on the team, their sales role — every agent that joined the team I trained in selling; sell themselves, and how to sell a product.
So I’d made sure that they were selling themselves at a very high level, to make sure that the homes would sell. That was definitely a big difference, that I had a role into making sure each agent was trained properly and selling at a very high level, and then also overlooking to make sure expenses were lower.
Theo Hicks: When you did this deep-dive in the P&L, were you at this point already the manager, or is this something you did when you were just an agent, and then by doing this they’re were like “Geez, this guy is legit”, and then because of that you became a manager?
Chris Salerno: Yes, this was just me as an agent. I would go in there and all the other agents didn’t care about running a business or operating a business, but my long-term goal was owning a billion-dollar business and running it… So I would always walk into the boss’ office and ask him “Hey, can I see your P&L?” At first he was extremely hesitant, but then he just felt that I just wanted to gain the education that comes behind studying a P&L and understanding how money flows in a big business, that is an over 100 million dollar revenue business.
Theo Hicks: That’s what I thought. But that’s definitely a great way to get educated, but also to position yourself as a leader, and someone who’s serious about the business. A lot of people – your typical W-2 job; you kind of go in there, you do what you’re told, and that’s it… Whereas you went above and beyond, you looked at the business and you wanted to actually improve the overall business, for the business itself, but also for yourself, to learn and to grow as well. I think that’s awesome.
So because of that – you think that’s one of the reasons why you were eventually able to lead… Was it this same team, or was it a different team that you led?
Chris Salerno: No, that was the same team that I led. I was their top sales person leading that team and training each agent that joined the team. So that was the team that I led, and then going in, making that transition to multifamily – I then cut selling residential real estate off in full, so I do not sell residential real estate, and I’m full-time into multifamily syndication.
Theo Hicks: Was it your plan to start off by selling residential, and then transition into multifamily, the entire time?
Chris Salerno: It was my plan to make that slow transition, but a big thing that I preach to a lot is that when my back is against the wall, I end up doing things that I would normally not do, to gain business or to gain the knowledge. And I think that’s all of us as humans – when our back’s up against the wall, we would end up doing something that we’re normally not comfortable in doing. So when I figured that out, I spoke with my coach and I told my coach “Hey, in six months I’m done selling real estate.” Then I called him in a month and I said “I’m done selling real estate.”
I made that transition right away, and I took that risk. It is a big risk, jumping straight into it… But I will not fail, and that’s the only thing I have going – I will make sure I succeed in it.
Theo Hicks: What was — not necessarily the biggest challenge making that jump, but after you made that jump, what was the biggest challenge you faced to complete that first deal? What was the hardest part about completing that first deal?
Chris Salerno: Really gaining the knowledge. I think I’m always gaining knowledge, and I will always be gaining knowledge, and especially in this business. That’s one reason why I love it – it’s always different, it’s always transforming. It’s not the same thing over and over.
When I first made that transition into multifamily syndication, like I did when I first got into that company’s role by giving up my own time to gain the knowledge – I did that in the syndication world here; I met with Dan Hanford, who only lives an hour and a half away from me, and I told him “If you come to Charlotte, anything you do in Charlotte, let me know. I wanna shadow you, I wanna gain as much knowledge as possible.”
They acquired a property out in Greenville, South Carolina, and I drove out there 2-3 times a week when I first got into the multifamily syndication business – it’s about two hours from Charlotte, North Carolina – just to shadow Brandon Abbott, Danny Randazzo and Dan Hanford, to just soak up as much knowledge as possible to help myself close that first deal.
Theo Hicks: So that deal that Dan Hanford did – is that your first deal, or is this what you did before you did your first deal?
Chris Salerno: That’s what I did before I did my first deal. It actually closes tomorrow.
Theo Hicks: Oh, congratulations.
Chris Salerno: Thank you, I appreciate it.
Theo Hicks: You’re basically there. So how long were you doing this gaining knowledge period? How long were you shadowing other successful investors before you started the process of starting your own syndication business?
Chris Salerno: Great question. It was about two to two-and-a-half months. But I’ll never stop that. Any chance I get to just learn from someone where I want to be and where I want the company to be – I’ll always shadow them, I’ll always ask questions, just to gain the knowledge… Because to me, that better helps the investors that invest in our deals.
Theo Hicks: Let’s talk about this first deal… So you gained that knowledge from the other successful syndicators; what were the steps you took from “Okay, I’ve got the knowledge, I’m ready to go” to “Alright, I got this first deal under contract”? What is some of the upfront work that people who want to do what you are doing need to do before they actually sign on the dotted line and put their first deal under contract?
Chris Salerno: Great question. It’s very nerve-wracking, too. I started the same way Joe Fairless started; I actually started with no money down. I have a very strong client that I have with QC Capital, who trusts me very much, that actually lent me 220k to put down as hard money for this particular property.
So once I found that I had someone who trusted me and trusted my business and my real estate education here in the Charlotte area, once I had that, then I had that footstep to go ahead and put that down for a non-refundable deposit on this particular property.
Once I finished with the PSA and all the negotiations in regards to that – and I definitely feel from my residential background side it’s definitely helped me with the negotiation and understanding the contracts to a point here… That right there has definitely helped in making that transition to getting my first deal under contract.
Theo Hicks: Alright. How did you meet this person? Was it one of your clients you met through residential selling?
Chris Salerno: Great question. He’s one of my clients for residential selling. A very high net worth individual here in Charlotte, North Carolina, with a big public company, and it took me eight months — I was all about cold calling when I sold residential real estate, and scripting. I taught people around the United States and I coached people around the United States in selling real estate, so it took me eight months to get him on the phone. But I finally got him on the phone, and when I did get him on the phone, he bought four houses from me.
Then when I was making that transition into multifamily, he called me up and he said “Chris, I wanna buy some more single-family or condo rentals.” I said “Well, let’s sit down and talk a little bit.” He always does a business deal over brewery here in Charlotte, so we went to a brewery… And I spoke to him, I said “This is what I’m doing now in multifamily. Your returns are higher, you have higher tax benefits, and you don’t have to manage the property, you don’t have to worry about the tenants.”
Once I showed him the returns on some of these deals, he invested in myself, and I raised capital for another deal… Once he saw that, then he said “Okay, this is where I want to park my money, for the tax benefits and for the returns.” So that’s when he trusted me to move forward with this particular deal. It was a very risky point, but we are closing tomorrow, so everything turns out good for it.
Theo Hicks: Is he investing in the deal as a passive investor, too?
Chris Salerno: Yeah, so he’s investing as a passive investor as well, and he’s also investing in other deals throughout the Carolinas, passively-investing.
Theo Hicks: What about your other investors? You mentioned that when you were presenting this particular business to this client, you mentioned that “Here are the returns I’ve gotten on some of the other deals I raised capital for…” So obviously, you have experience raising capital. What are some tips you have on how you were able to raise all that money without having necessarily done a deal before?
Chris Salerno: Yeah, it’s very difficult. I think the biggest thing is really network. If you see me on social media – I’m very active on social media in all the real estate groups that are on social media that I’m in. I’m extremely active on social media, and I try to stay in front of everybody, especially my network that I have. I’m always reaching out to them.
And I think a big thing for people who are trying to get into the multifamily syndication is not necessarily sell yourself or sell the deal, just give them the education on what you’re doing. Once they figure that out… And because this was my first deal, some did not want to invest, and they just said “We wanna see how you do your first one”, which is totally understandable… And I’m still staying in contact with them and keeping them updated through this process, just like if they would passive invest, so they feel comfortable with me.
So I’d say the big thing is just making sure you’re staying in contact, staying in front of them, and just giving them the education of the returns on multifamily real estate, not necessarily selling them on a deal.
Theo Hicks: What percentage of the total capital you’ve raised so far has come from your residential real estate network?
Chris Salerno: The percentage of the total capital came from (I would say) right now around 15% to 20%, and it’s growing. I had a couple of phone calls yesterday with some high net worth individuals here in Charlotte who actually found me on social media and we’re having lunch next week, in regards to me just being out there in front of people. But from my network I’d say about 15%-20% for this particular deal.
Theo Hicks: And the rest – where is that coming from?
Chris Salerno: The rest is coming from me networking. And with my KP and my sponsors as well, who are on the deal. I feel that with your first syndication — or I would say all the syndications, it’s always good to have multiple people on the KP and on the sponsor, because you’re having multiple people see the issue. If an issue arises or if anything comes up, you have multiple people seeing it, so it’s very helpful to have multiple people in that position.
Theo Hicks: Alright, Chris, besides all of the fantastic advice you’ve provided thus far, what is your best real estate investing advice ever?
Chris Salerno: Best real estate investing advice ever… I would say find someone that is at your goal or where you want to be in the future, and find a way to get with them and just soak up as much knowledge as possible. I’m willing to fly on a plane to meet with my coach, and just sit in the same room with him and soak up as much knowledge as possible.
So I would say find someone who’s where you wanna be and has already hit your goal or has the same goals as you with business, and just soak up as much knowledge as possible.
Theo Hicks: Alright, Chris, are you ready for the Best Ever Lightning Round?
Chris Salerno: I am.
Theo Hicks: Alright. First, a quick word from our sponsor.
Theo Hicks: Alright, Chris, what’s the best ever book you’ve recently read?
Chris Salerno: I would say Joe Fairless’ book. I’m actually currently reading that right now, and that is just phenomenal. I’m gaining the education from it.
Theo Hicks: That’s the Best Ever Apartment Syndication Book. You can find that on Amazon, or BestEverBook.com.
If your business collapsed today, what would you do next?
Chris Salerno: I’m a big believer in never giving up, and focusing on your one thing. I would rebuild the business. I would rebuild it.
Theo Hicks: Besides your first deal or your last deal – and this could be syndication-related, or any properties you sold through your residential selling career – what is the best ever deal you’ve done?
Chris Salerno: Best ever deal I’ve done was actually a single-family rental. I bought it off market for 55k; I found a tenant to pay $1,100. I had to put 20% down; I got a conventional loan, and in six months I refinanced that deal. I got my 20% back, plus an additional 5% back, and it’s still renting for $1,100 and it’s cash-flowing around $550.
Theo Hicks: What about the worst deal you’ve done?
Chris Salerno: Worst deal I’ve done – I would have to say going from a flip, dealing with contractors and finding good work, and trusting contractors to say they’re gonna get the job done. So I’ve learned not to trust contractors saying that they’re gonna get the job done, and oversee their work.
Theo Hicks: And then lastly, what’s the best ever place to reach you?
Chris Salerno: Best ever place to reach me is at QCCapitalGroup.com, or Christ@QCCapitalGroup.com.
Theo Hicks: Alright, Chris, I really appreciate you coming on the show today. It was nice finally officially meeting you virtually. Lots of solid advice. Just to quickly summarize some of the main takeaways – I really like your perspective about looking at these B, C multifamily assets as failing businesses, that you go ahead and essentially turn around and make profitable, or more profitable again. I really like that.
You also talked about your experience as a residential agent, and how you’d go in there, go to your boss and say “Let me see the P&L and the T-12”, and you’d take a look at that and you’d essentially figure out ways to increase the bottom line. And because of this, you were the leader of that team.
We talked about your transition to multifamily and how this was kind of your plan all along. You started off as an agent and eventually transitioned into multifamily, and how your plan was to quit after six months and you were able to do that after one month, which is always great to hear… And you mentioned what you did is you essentially found the people who were doing what you wanted to do and just met with them and shadowed them. It wasn’t just a virtual meeting or a back-and-forth; you literally went out there to a specific deal they were doing, multiple times a week, multiple hours’ worth of driving, and just watched and observed and asked questions to the syndicator. You mentioned Dan Hanford, Danny Randazzo, Brandon Abbott… You did this for about two and two-and-a-half months. Obviously, you’re continuing to do this, but once you did that, you made the transition into your own deal, which you’re closing on tomorrow; once this goes live, you’ll be well into that business plan.
You mentioned that, like all new things, it’s pretty nerve-wracking, and you were actually able to start with no money out of your own pocket. We talked about the client you had met through your residential agent career, and how because of your credibility and trust with that person, they actually lent you the non-refundable down payment for that property, which I’m sure was very helpful in securing that deal.
Chris Salerno: Very much so.
Theo Hicks: And then we talked about raising capital for your first deal, and it basically comes down to networking. Sometimes I really liked that you said is you’re not selling yourself, you’re not selling the deal, you’re just educating them on what you’ve got going on.
Something else that I think — I’d never heard this before, because most of the time when people raise money for deals, they send the deal out to their main database, and then whoever says they wanna invest, they make a new email and they’re only giving those people updates… Whereas you will also include people who said “Well, we wanna invest, but we wanna see how you do on your first deal.” So keeping them updated on what’s going on that deal I’m sure probably elicits that fear of missing out response.
Chris Salerno: Yeah, that too. It does tap into that. So then once we close, they’re like “Oh, I wish I got into it.”
Theo Hicks: Exactly. And then your best ever advice, which obviously you live, is find someone who is either at your goal, or is doing what you wanna do, and then find a way to meet with them and soak up as much knowledge as possible, even if that involves getting on a plane and meeting them in person.
Again, Chris, I really appreciate it. Great advice. Thanks for joining us today. Best Ever listeners, thanks for listening. Have a best ever day, and we’ll talk to you soon.
Chris Salerno: Thank you.