JF2604: The 4 Steps to Syndication with Bastian Kneuse
Born and raised in Germany, Bastian Kneuse played professional basketball and worked in finance before pursuing multifamily properties. He now works a full-time job, and still makes just as much time to work on his real estate career. Today, Bastian is talking about passively investing while also working on his own syndications, four steps to syndicating deals, and his innovative idea for adding value to his tenants as well as the community.
Bastian Kneuse Real Estate Background:
- W-2 job in finance for a bank, but spends just as much, if not more, time on real estate
- Currently passively invested in three multifamily deals in Houston, Phoenix, and Oklahoma equaling about 350 doors
- Based in San Francisco, CA
- Say hi to him at: https://www.linkedin.com/in/bkneuse/
- Best Ever Book: The Hands-Off Investor: An Insider’s Guide to Investing in Passive Real Estate Syndications
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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, Bastian Kneuse. Bastian is joining us from San Francisco, California. He has a full-time job in finance and spends an equal amount of time on real estate. He’s also a passive investor in three deals that are in Houston, Phoenix and Oklahoma.
Bastian, thank you for joining us, and how are you today?
Bastian Kneuse: Hi, Ash. Thanks for having me. I’m doing fantastic. How about yourself?
Ash Patel: I’m doing wonderful, thank you. Bastian, 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?
Bastian Kneuse: Absolutely. I would love to. So I was born and raised in Germany, I grew up outside of the Munich area. Both of my parents were entrepreneurs, as well as my grandparents. So I grew up in this whole entrepreneurial environment. Also, while I was going to school, I also played basketball in Germany, and kind of worked my ranks up until I actually ended up playing professionally in Germany for quite some time while I was getting my university degree there, my business degree, and then I decided that I wanted to pursue an additional degree in finance. So I passed or exited essentially my basketball career and came to the US, got a master’s degree in finance, started working in finance, had a stint at an investment bank, was working in New York for quite some time… And now I’m here in San Francisco working in finance as well. I’ve been a pretty heavy stocks and bonds guy for the majority of my life, until I kind of dabbled a little bit into real estate and learned more and more about it. And about 3-4 years ago, I took the plunge and actually bought real estate properties, built up a small portfolio of single families and duplexes, and that kind of kicked off my passion for real estate, and I explored different avenues. And right now, as you mentioned, I’m invested as an LP in several multifamily properties. I’m also actively pursuing multifamily properties, mostly in the mornings and evenings, outside of my W-2 job, and I also dabble into a little bit of short-term rental right now, so I have a property under contract… So I’m just trying out different avenues there.
Ash Patel: Bastian, you made the claim, “you spent an equal amount of time on real estate as your full-time job.” That’s a strong claim. Explain a normal day to me.
Bastian Kneuse: Yeah, my day starts at [4:00] in the morning. So before other people probably start with their day job, I’m already halfway through my other job, and then just fill in the evenings and weekend ends as well. So yeah, I definitely spend a lot of time in real estate.
Ash Patel: And what are you spending time on? Is it looking for deals, educating yourself?
Bastian Kneuse: It’s all the above. I’m looking for deals, educating myself, talking to brokers, identifying new markets, learning about different techniques, strategies in real estate… So yeah, the whole gamut.
Ash Patel: Why did you invest in passive investments when you were doing your own investments?
Bastian Kneuse: So I started off with single families and smaller multi families, and I very quickly realized that it’s a lot of work. And if you want to scale this any further, it’s going to be even equally amount of work, even more work. And I very quickly realized that that’s not sustainable; and I also have to mention that the properties that I own, they’re not anywhere nearby, I have them all in Alabama, and it’s all sort of remote investing that I do, which even takes up more time.
So I was trying to find different investment opportunities, and then I’ve never really had multifamily on my mind, because I was always under the impression that multifamily – a lot of money, only the wealthy can do that, so it’s not really anything attainable to me. Until I was thinking a little deeper, I did more research on multifamily and actually discovered that there may be an avenue for me as well. Me being a finance person, very numbers-driven, having some real estate background, I think those two mesh well with a commercial real estate area, and I just tried to do my research and eventually I found my entrance there. I first started investing passively in a deal, and to be honest, my first investment was a multifamily property in Houston… I really had no idea what I was doing. I looked through the OM, but none of those numbers or any of those actually made much sense to me. So I was like, “Okay, let’s just try it and see what happens.” And through that I learned a lot about multifamily. I established a good network and connections with actually the operator on that deal… And from there on, I kind of explored there. I had the opportunity to invest in another property as a limited partner, I did that as well, and I slowly built up my network, and came to the conclusion, “Okay, I want to do that myself”, and here I am, trying to do exactly that.
Ash Patel: You’re trying to syndicate deals on your own now?
Bastian Kneuse: Yes.
Ash Patel: And what are the steps that it takes to do that?
Bastian Kneuse: A lot. So I’ve done a lot of education. I started that journey about end of last year. So I’m in there not quite a year. A lot of education, a lot of networking. Networking was important for the small properties that I looked at. But I learned how, even more important networking is for the commercial properties. So I try to really go to meetups, talking to people, learning from people, interviewing people, seeing what they’re doing, and seeing what doesn’t work for them… And at the same time, building my infrastructure, sharpening my skills on underwriting, which came somewhat natural, but still slightly different from what I’ve done previously. And just learning about different strategies and identifying markets, and now I’m at the position where I established a good network of brokers and property managers in the markets that I’m looking at, and really trying to take down these now and finding good deals.
Ash Patel: What types of deals are you looking for?
Bastian Kneuse: What I’m looking at are properties 50 units and up, probably in the 50-100 unit range. That’s where I play. And we’re looking at value-add opportunities. So we want to go in, we want to update the units, preferably not too much value-add, just more like cosmetics, if you will, and try to bring up the rents, try to optimize operations. Part of my experience in the W-2 world is setting up processes and proving processes. So doing the same thing at the properties as well, just to increase the NOI, and ultimately, come up to a higher valuation.
Ash Patel: And how are you going to find investors? Or how have you already found them?
Bastian Kneuse: So that’s the next thing on my list. So yes, I do have a strong network that I’m tapping right now. I have to say the whole capital raising is still not natural to me, I’ve never done that. But it’s just something that you have to learn and just have to commit yourself to go out and do it and try it, and that’s where I am right now. And also, I have good connections and some partners out here in San Francisco as well that obviously have a strong network as well. So that combination of those few things definitely enable me to take on deals.
Ash Patel: Bastian, do you mind if I play devil’s advocate with you?
Bastian Kneuse: Please.
Ash Patel: Okay, so you have limited experience in real estate with single families and vacation rentals. Why would I invest my money with you on a 100-unit complex?
Bastian Kneuse: That’s a good question. So I am partnered up with two individuals out here in San Francisco, and those are full-time real estate professionals; they have more than 20 years of experience, and they’re the one with the real estate experience. The part that I’m playing – I’m doing the analysis, I’m doing the numbers part, the market research, running the models. And I think that blends/meshes really well with the experience from my other partners, who have been in real estate for a long time, who have been commercial real estate brokers as well, and have done deals on their own. So they bring the experience part, essentially.
Ash Patel: And that’s great. So will they help you manage this asset?
Bastian Kneuse: Absolutely. Yes.
Ash Patel: Good. Okay. And what are you doing right now to attract investors?
Bastian Kneuse: I’m building up my social media presence right now. I’m very active on LinkedIn. I’m very active posting, prospecting potential investors, talking to them, educate them… I have a lot of people reach out to me wanting to learn more of what I do. I do recognize there’s a large interest out there, but people are just hesitant for one reason or another to take the plunge to invest in real estate, and my part is essentially, I’m trying to educate them, because I was in the same position not too long ago, and to explain to them my journey, and explain to them the different steps that I took, definitely help them understand more about real estate and the willingness to actually invest.
Ash Patel: Bastian, you’ve got a master’s degree in finance. But you’ve got a passion for real estate, correct?
Bastian Kneuse: Yeah.
Ash Patel: Throughout your education, were you not exposed to real estate in terms of real-world experience or courses, education?
Bastian Kneuse: From an education perspective, not really. I was more of very corporate finance geared. As I mentioned, I was in investment banking. So I did projections, modeling, all that, but might not necessarily real estate-related, but it translates very well over to real estate. So there was not a big learning curve for me in that regard.
Ash Patel: If you had been exposed to real estate, either through education or real-world experience before, would you have still gone down the finance route and working for a bank?
Bastian Kneuse: That’s a good question. Probably not, or maybe yes, but more real estate geared. The bank that I work for, they have so many different departments; soon I would have taken a look at anything real estate-related there.
Ash Patel: And I want to go back to playing more devil’s advocate. So there’s a lot of other experienced syndicators that have a track record. What can you offer that they don’t?
Bastian Kneuse: Right. So I think what we do – we take a little bit of a fresh look at some of the properties. What we are trying to do is we’re not only trying to improve some of the properties, we’re trying to put a little bit of a social element to that. We’re trying to help tenants – essentially, to provide the offerings to tenants to educate them financially, we want to be helpful to tenants to get to the next level as well. So for us, it’s not only the property, it’s not only bringing up the value, it’s also doing good for the community and providing value to the tenants, essentially.
Ash Patel: That’s incredible. Tell me more.
Bastian Kneuse: Yeah. So the idea is that there will be programs that we implement, partnering up with larger educational providers, and essentially providing the tenants the opportunity, if they want, to learn more about how credit scores work, how budgeting works… Just more financial literature, and providing them the opportunity to do that. It not only helps them in their further financial journey, it also, to a large degree, helps the operators as well to have tenants that are stable, that have the ability to pay the rent and just be valuable tenants.
Ash Patel: Would you go as far as maybe partnering with some lenders or banks and bring them in, and in turn, they may get new accounts opened, or job placement agencies, all of the above?
Bastian Kneuse: I think that the opportunities are endless there. We are still in the beginning phase on kind of laying that strategy out, but I think there are many different angles that we can take, and it’s going to be a win-win for not only us, but also for the tenants.
Ash Patel: Yeah, I love that, and I think you earn the respect of your tenants by doing that, and in turn, they’ll take better care of your property. Is anybody else doing something like that, that you know of?
Bastian Kneuse: I’ve not heard that to that degree. Every once in a while, I hear attempts that operators are doing that, but I’ve never really seen anybody goes through with that. So to my knowledge, it’s not widely known at that point.
Ash Patel: Yeah, that is incredible. And once you get that up and running, please, come back, and we want to hear about the success.
Bastian Kneuse: Absolutely. Will do.
Ash Patel: Bastian, I want to circle back. One more question. You said you’re moving into the Phoenix-Tucson market. Why?
Bastian Kneuse: Several reasons. One is, it’s fairly easy for us to get to from San Francisco, it’s just an hour or two flight, so we can get there very quickly. And secondly, I just like the market. Phoenix is obviously — we all know Phoenix is exploding. And Tucson, we feel that the impact of Phoenix there as well. So Tuscon is definitely getting more expensive, but I just like the market.
Ash Patel: Awesome. Bastian, what is your best real estate investing advice ever?
Bastian Kneuse: It’s very simple. We just started penetrating the Arizona market, Tucson and in Phoenix as well. And we’re based out here in San Francisco, so we are not local. So we’re trying to build a network with brokers; obviously, it’s very difficult. Calling them up, getting some FaceTime is very, very challenging, and I hear a lot of people complain about that as well. So, “The brokers aren’t calling me back,” or “They’re not answering the phone.” And in all fairness, these brokers get hundreds of calls every day from potential real estate operators and investors all over the country, probably even international.
So what we did – we went to Tucson, we had set up face-to-face meetings with these brokers, and the response rate was almost 100%. And it definitely earned us a lot of credibility, because brokers told us, they get a lot of calls all day from a lot of people, but only very few actually take the effort and go into the market and meet them face to face, take them out to coffee or lunch or dinner or whatever it is. And I think it’s such a small thing, but it makes a tremendous impact. And to be honest, you see the results; the deal flow exponentially increased, and we get good deals, we get off-market deals… So it was definitely worth the trip.
Ash Patel: That is fantastic advice. And you’re right, there’s a lot of people complaining out there, saying, “Man, I call all these brokers, I get on their list, but I never hear from them.” And you’re right, they’ve got their preferred clients that they would rather give the deals to first, versus a random person that called them a month ago.
Bastian Kneuse: Yeah.
Ash Patel: So thank you. That’s incredible advice, and I’m glad it’s working well for you.
Bastian, are you ready for the Best Ever lightning round?
Bastian Kneuse: Yes, let’s do it.
Ash Patel: Let’s do it. Bastian, what’s the best ever book you recently read?
Bastian Kneuse: One book I really like is called The Hands-Off Investor by Brian Burke. It’s more written for passive investors, but to be honest, I think it has a tremendous value for active investor network as well. So it’s one I read regularly, and I really enjoy.
Ash Patel: Bastian, what’s the best ever way you like to give back?
Bastian Kneuse: I network a lot, and a lot of new investors reach out to me, asking me about my journey, asking me about how I’ve done it, asking me if I have the ability to review deals for them… So I’m more than happy to jump on these calls, because one day I was in their shoes as well. So I just try to give back that way, to offer my time to them and my advice to them.
Ash Patel: And Bastian, how could the Best Ever listeners reach out to you?
Bastian Kneuse: The easiest way to connect with me is probably on LinkedIn. I’m pretty active there. And I think, to my knowledge, I’m the only one with that name. So Bastian Kneuse, you can look me up there. You can also reach me by phone, 646-450-0725. And I also have an Instagram account, but my Instagram game is pretty weak at this point. I’m still trying to beef that up, but it’s @BastianREInvstor.
Ash Patel: Well, Bastian, thank you for taking time out of your day and sharing your story; Germany, professional basketball, masters in finance, finding real estate, investing passively, and now starting your own syndication with a social factor to it. It’s incredible. I want to hear about your success. So please join us when you become successful on your first syndication.
Bastian Kneuse: Absolutely. I would be happy to.
Ash Patel: Best Ever listeners, thank you for joining us and have a best ever day.
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