JF2176: Developing Easier Ways To Invest With Jacob Blackett

Jacob is the founder of SyndicationPro and Holdfolio. He started investing in 2010 while in college and after some time decided to start companies that would help make investing easier, which is why he developed his two companies. Jacob talks about his second multifamily deal, a  50-unit that ended up making cash flow tight due to some unforeseen repairs.

Jacob Blackett Real Estate Background:

  • Founder of SyndicationPro and Holdfolio
  • Started investing in 2010
  • Holdfolio currently owns and manages 1,221 units across the midwest and southeast
  • Based in Columbus, Ohio
  • Say hi to him at: www.holdfolio.com 

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Best Ever Tweet:

“I love leveraging technology to make investing easier” – Jacob Blackett


TRANSCRIPTION

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

Jacob Blackett: I am doing well, Joe. Thank you.

Joe Fairless: Yes, my pleasure and glad to hear that. A little bit about Jacob – he’s the founder of SyndicationPro and HoldFolio. He started investing in 2010. HoldFolio currently owns and manages 1,221 units across the Midwest and the Southeast. Company’s based in Indianapolis, he’s based here in Columbus, Ohio. So with that being said, Jacob, do you want to get the Best Ever listeners a little bit more about your background and your current focus?

Jacob Blackett: Sure, Joe. So my background, as you mentioned, goes back to 2010, when I started doing some fix and flips back in college. I got the bug then and decided to go ahead and get right into fix and flips and wholesales in 2012, and just got a nice wholesale fix and flip model going and started holding properties, and then learned about multifamily and jumped into that realm. Currently, I own and operate HoldFolio. We purchase real estate, we do syndications, we create partnerships to profit from real estate, and then all of this also, we took the approach of sourcing money online starting back in 2013, 2014, after the Jobs Act was passed and loosened up; some of the first real estate crowdfunding sites came online, and so with that experience of managing all of this online, that’s where SyndicationPro, the second company that I own and manage, was born. So we license software to colleagues and friends and people all over the country and all over the world to help them manage their syndication business online.

Joe Fairless: Okay, elaborate more on that, will you? Is it a competitor to, say, IMS or Groundbreaker and companies like that, or is it something else?

Jacob Blackett: It does have an investor portal built in. So that’s a big piece to managing a syndication business, is making sure that you’re providing a service to your investors and you’re also streamlining your back office. So there’s a lot of automation and tools and streamline processes that are built in. So yeah, you’d consider IMS, Juniper Square as our competitors, certainly.

Joe Fairless: Okay. So you said there’s a component of that. Is there something else that SyndicationPro does that is not typical of a competitor?

Jacob Blackett: Yeah, we take a pretty holistic approach. So that starts on the front end when someone hears about Joe Fairless and thinks about potentially investing with you – how do we capture their details? How do we intrigue them to become a lead, a prospect to potentially invest in you? So that’s built into the software, being able to register and capture leads from your website and being able to facilitate those relationships. So how do we create automation so that when they register, they can set up a call with your team, and how do we bridge those gaps and track communication? So that’s the front end of it, and then of course, through that investment cycle, you start getting into asset management and just other parts of the business like underwriting. Those features are to come on the underwriting side, but just a bigger holistic approach.

Joe Fairless: Okay. Your goal is to have the all-encompassing software for doing syndications, versus a portal or an asset management software platform. It’s the whole kit and caboodle.

Jacob Blackett: Yeah, if we can integrate more tools and more functions of syndication business into one platform, I think that just drives bottom-line value for our users and for our business. So that’s our approach, our vision and what we’ve been delivering on.

Joe Fairless: Okay, and with SyndicationPro, when did you launch it?

Jacob Blackett: We launched a beta version of SyndicationPro in late 2018, and then we launched our current version in late 2019, in October of 2019.

Joe Fairless: What are the main differences between the two versions?

Jacob Blackett: So the first version was honestly, just more- -we built it out on WordPress, it was really just to get it into the hands of people and confirm. I was getting the request from colleagues in terms of how to replicate HoldFolio’s success. We’ve syndicated 18 individual deals over the last handful of years with just about 600 individual investments, and we don’t have a large investment management team. We do all of that through the software.

So that initial beta version was really just get the core pieces into the puzzle, get it in the hands of users, confirm that it’s different, it’s providing a unique service, and then once we got that good feedback and validated, then we doubled down. So the current software is built on JavaScript. It’s a scalable, institutional quality software. So I took all those next-level steps.

Joe Fairless: Let’s talk about HoldFolio and SyndicationPro. If you had a good thing going with HoldFolio, why shift your focus to another venture?

Jacob Blackett: Well, I think you can agree with me on this – the beauty about real estate is you put in the front end work to identify those assets, especially buy and hold multifamily, and you can support an A+ team to operate the business. So HoldFolio is in a place now where it’s more of a mature business model. We continue to acquire properties. We’ve acquired two properties so far this year; bit of a pause in the last 60 days. I’m sure you’ve been in the same boat there along with everyone else, but HoldFolio continues to operate. It’s a beautiful business. We have scale, it provides great income, but knowing that– really what happened, Joe, is in early 2018, I went ahead and demoed a couple of investor portal options, because when I started HoldFolio, there was no options. In 2013, 2014, it just didn’t exist; investor portal didn’t exist, and so I had no choice but to build my own website and build that out myself. So I was demoing in early 2018 in order to consider getting on to one of these investor portals, and what I saw was, unfortunately, not a solution that would work for me just because of design, bulkiness, complicated and expensive. So that’s really where everything came together and why we launched SyndicationPro. So yes, following a desire, I’ve got a knack, and I just love leveraging technology, and so HoldFolio is in a great place, and now it’s really having fun with a new business. I’m sure that you relate to that, Joe, with the different verticals that you provide a lot of value in the world too.

Joe Fairless: It makes sense, and I’d love to learn more about your start with HoldFolio and how you got to this point. With HoldFolio, you’ve got 1,221 units in the Midwest and the Southeast. Now, are those properties that you have direct ownership in?

Jacob Blackett: Oh, yeah. 15 of our 18 partnerships, we’re the only sponsor on those deals. So we’re fully vertically integrated, we take a very hands-on approach. We are licensed contractors, property management, real estate brokerage, we manage most of our properties ourselves, and then three of our partnerships, we partnered with other sponsors on as well. Especially as we got outside the Midwest, we leveraged other people who had those vertical integrations to get exposure to different markets.

Joe Fairless: So what was the last property that you purchased?

Jacob Blackett: The most recent property was in South Carolina, actually Columbia.

Joe Fairless: Will you tell us about it.

Jacob Blackett: Yeah, it was a 226 unit, and we partnered with a group out of New York who has other properties in Columbia. So the property is considered a B+ type asset. It was built in the late 90s – ’98 was the year built on it – and it’s in an area of direct growth. A little bit more suburban, a little bit more affluent area where the comps are newer-built properties, so it was the start out there in that area,. So what it presented was the opportunity to go ahead and provide the next level of renovations in order to make those units more comparable to some of those newer builds in the area, and a nice little value add. So a really high occupancy, spending roughly $8,500 per unit on renovations, doing things like refacing cabinetry, hardware, granite countertops, putting nest thermostats and bringing up the common areas to today’s standard to, in the end of the day, reposition a B+ asset to probably what you’d consider as an A-.

Joe Fairless: What’s been the most challenging deal?

Jacob Blackett: That’s a good question. So I’ve done hundreds of single-family home deals, but I’ll focus on multifamily. So probably the most challenging multifamily deal we’ve done was our second multifamily we purchased. It was a 50-unit.

Joe Fairless: Who’s we?

Jacob Blackett: HopeFolio.

Joe Fairless: HopeFolio, okay. Got it.

Jacob Blackett: Yeah, yeah, always talking about it as a team. So yeah, we purchased that property from an owner who had owned it for about 30 years, and it needed some help. It had deferred maintenance, it was built in the early 70s, and it was pretty much your classic value add deal. Bought a C Class property looking to reposition it to C+, and our biggest mistake on that is that we went and scoped all the units and put together our budget to get through the improvements that we planned, but we didn’t consider that for the first 18 months of owning that property we were going to have considerably higher repairs and maintenance. So we went through with our improvements on the units just fine, but we didn’t have enough cash to really take care of the other things going on at that property, and so it just made cash flow tight for the first 12 to 18 months.

Joe Fairless: And how did you eventually navigate that?

Jacob Blackett:  It’s tough. It’s your second multifamily deal, you’re still learning in certain senses… So we just stayed on top of things, we looked at every single expense, every single month and categorized it… We reached into our network and anytime you can get some feedback from experienced colleagues, and  that helped them… It was really just the function of the previous owner putting bandaids on things for 30 years, just not dealing with the plumbing stacks leaking, just patching it, not replacing the plumbing stack and the toilets. If everything’s good, you could replace a toilet for a couple of hundred dollars, but if the sub-flooring is completely caved in and plumbing is so old that you can’t turn on and off the valves and they just break, all of that just starts adding up a lot. So we wrote it out, it hindered our cash flow, but in the end, we were able to sell the property and return principal plus profits to everyone. So for a bad deal, it wasn’t so bad, but it was certainly stressful as we were doing it.

Joe Fairless:  What deal have you made the most amount of money on?

Jacob Blackett: Oh, man. Probably my shiniest deals probably came in doing fix and flips in some gentrifying areas in Indianapolis where in 2013 through 2015 we were buying homes for 10 to 20 grand, we were completely renovating them for $80,000 to $100,000. These are older homes, older vintage… And we’re selling them in the neighborhood of $200,000 to $280,000 dollars. So it was a good couple of year period.

Joe Fairless: What years?

Jacob Blackett: It was in 2013 through 2015.

Joe Fairless: What area of Indy?

Jacob Blackett: In Fountain Square.

Joe Fairless: Okay.

Jacob Blackett: There’s dozens of homes in that area that we had the pleasure of getting in, and you strip it down to just the sticks. You can see from the backyard to the front yard, and you just come in all-new, that new layout, and so that was fun and some crazy numbers.

Joe Fairless: Do you remember the deal when the gravy train stopped on that area, and you’re like, “Oh wait, I just put in 100, and it’s not getting the price that it’s been getting for last two years”?

Jacob Blackett: It was interesting, because I didn’t stay in it long enough to get to that point, and that neighborhood is still cruising along, although people are paying 80 to 120 grand.

Joe Fairless: Instead of 10 to 20.

Jacob Blackett: Yeah, yeah, yeah. So we wrote it out summer over summer, year over year, and we started selling these things for 160 grand, and when we exited, we were getting close to the 300 grand mark on those exits, and of course, we slowly started paying more and more. But quite honestly, it is right about when we started getting traction with syndications in late 2015, that we said, “You know what? The fix and flips are fun, but they’re risky, they’re super transactional. Every property you buy, you sell, you’ve got to go find another one.” So we were looking to build a portfolio, long-term, buy and hold. So we just washed our hands of the fix and flips and focused on rentals.

Joe Fairless: Based on your experience, what is your best real estate investing advice ever?

Jacob Blackett: I would say for anyone who is getting started or entering into a new investment or something new, leverage existing people. So I made that mistake early on with my first couple of fix and flips. I was trying to do everything myself, when I could have simply tried to find a deal for an existing person or JV with someone who’s already doing flips. So just find someone who’s doing what you’re doing, who’s doing it successfully, especially if you’re just trying to get started, and see where you can fit into that puzzle, even if it just means providing some capital and having someone who’s agreement is to let you be more involved.

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

Jacob Blackett: Sure, Joe.

Break [00:17:32]:09] to [00:18:35]:03]

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

Jacob Blackett: Quite honestly, I have my first baby at home, so I haven’t been–

Joe Fairless: Congratulations.

Jacob Blackett: Thank you very much. But I will say one book that I come back to continuously is The Four Agreements. It’s an amazing book to just stay on track and have a really good mindset and outlook on life.

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

Jacob Blackett: Big Brothers, Big Sisters.

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

Jacob Blackett: They can visit syndicationpro.com. Our contact information is on there.

Joe Fairless: Jacob, thanks so much for being on the show. I enjoyed our conversation about HoldFolio, how you were getting some grand slams in Indianapolis on the single-family homes, also the challenging projects that you’ve worked on, and then SyndicationPro too, and why you created it and your focus now, in addition to HoldFolio. I enjoyed our conversation. Thanks so much for being on the show. I hope you have the best ever day, and we’ll talk to you again soon.

Jacob Blackett: Thanks a lot, Joe. Thanks, everyone.

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