JF2622: From Physical Therapist to Full-Time Syndicator with Lee Yoder

After leaving his corporate job in 2016, Lee Yoder decided to go all in with real estate. What started as house flipping quickly turned into full-time apartment syndicating. Lee is sharing how he scaled from a duplex to over 100 units and the biggest challenges in doing so, how he gets most of his investors through referrals, and his best tips for finding the most valuable use of your time and outsourcing the rest. 

 

Lee Yoder 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, Lee Yoder. Lee is joining us from Cincinnati, Ohio. He is a full-time commercial real estate investor and has almost 200 units under his belt.

Lee, thank you for joining us, and how are you today?

Lee Yoder: Doing well, Ash. Excited to be on the show. Thanks for having me.

Ash Patel: It’s our pleasure. Lee, 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?

Lee Yoder: Sure. So I went to school for a really long time to become a physical therapist. Had a good job. Was actually doing home health physical therapy where I drove around to people’s houses, and it was a great schedule, great for the family, but I was just really bored. I wasn’t challenged in that, wasn’t fulfilled with that work. So the company I was with actually asked me to come in the office, be the clinical director. Pretty soon, I was doing no physical therapy. I was in the office 100% of the time, really kind of traditional client, corporate ladder, and really enjoying that work, but now, my home life was not good, because I was kind of getting carried away with the corporate ladder. Like, again, good job, but just not been what my wife and I and like God was calling us to for our family and our life.

So somebody turned me onto real estate. Actually, my partner today that was working with me that corporate job; and I thought, “Okay. Well, I want to get into this real estate.” Talked to another guy that was doing it full time, and he said, “Hey, Lee. Is there any way you could do your job from home?” And for me, the answer was no. I always like to bring that up, because more and more people today can do their job from home, right? So I couldn’t at the time, but I thought, “Man, but if I go back to home health physical therapy – I can’t do that from home, but it’s a very flexible, very relaxed job.” I thought, “If I want to do real estate as a side hustle, I should go back to home health.” So that’s what I did. I took a big pay cut, but I knew I was going to have the flexibility now, and the bandwidth to be able to start a real estate side hustle. So I did that.

I left at the end of 2016 that corporate job. It wasn’t until toward the end of 2017 that I got started. I started with just a single-family home. The next year I got a duplex. The next year I started getting into multifamily, got a 16-unit, 8-unit, and a 10-unit. It took about a year to turn those all around, took all those full circle, sold them, and then this year we’ve gotten into syndication, and that’s what we do now. We’ve got a 45-unit, a 47-unit, and we have a 96-unit under contract this year. So that’s kind of have been my progression.

Ash Patel: Alright, hold on. You went way too fast. You reduced your salary, you went from being a physical therapist to a home health aide, and then you got into real estate, and then I just heard a lot of units getting thrown my way. So what was your first deal?

Lee Yoder: Yeah, first deal — so I was a physical therapist the whole time. I was just doing like a corporate job. So I was like a Director of Operations type role.

Ash Patel: Got it.

Lee Yoder: So in the office, I’m doing no actual physical therapy. So we started with a flip, Ash. A lot of people start that way. My wife and I didn’t know anybody. Nobody in our family was an entrepreneur, let alone real estate entrepreneurs, and she’s very risk-averse. I’m not, but I wanted to honor her, and kind of meet in the middle, so we decided to start with a flip, because it’s just less risk, just because even if it all went south, we could have afforded the mortgage on that house. We could have afforded our mortgage along with that. So I said, “Worst case scenario, we’re paying off two houses. We’re paying off two assets.” So that’s worst-case scenario. We did okay on the flip. The funny thing about it, Ash, was the amount of my pay cut for that year with my new job that allowed me to get into real estate, that’s how much we made in that flip.

Ash Patel: Oh, that’s great.

Lee Yoder: It’s like a perfect lesson of I just changed jobs, right?

Ash Patel: You didn’t tell your wife that if you can’t find a renter, you can use it as a man cave?

Lee Yoder: No, we didn’t cross that bridge; I didn’t ask about that. It was in our town, so it wouldn’t have been a bad idea, a tiny little house. So we did well on it, but just learned pretty quickly. The whole time I’m listening to podcasts like this one, Ash, but people do different things. That’s the cool thing about you guys’ podcast, you have so many different people on it. There’s a lot of different avenues you can go; but the people that I was following and felt like I identified with were saying, “Flipping is not investing. It’s a job. If you want to really get into investing, go bigger. Go bigger, quicker.” So I still felt like I had to learn it myself and do the flip, but with that flip, I was like, “Yeah, this was just a different job.” I enjoyed it, and it got my foot into real estate, so I still think it’s an okay place to start, but I didn’t stay there very long. I just did one, and then I got into a duplex next.

Ash Patel: Did you do the duplex by yourself? Did you have partners?

Lee Yoder: On both of those, I really did it by myself. I brought in contractors, but I was the GC, and I really kind of did it by myself. And my in-laws did lend us the money for the flip. Our Home Equity Line of Credit didn’t come through quick enough. The bank got fired, and there was a mess there, because you could have done it on our own, and we did a duplex on, but… I started out kind of do it on my own, and then when I got into the multifamily and the duplex, we did a 16 unit, that’s when I started bringing in one or two partners and doing joint ventures.

Ash Patel: Alright. So the duplex, did you end up selling that?

Lee Yoder: Yeah, we sold it in under a year. So it really ended up like a flip.

Ash Patel: Okay, got it.

Lee Yoder: I did rent it for a little bit; it was kind of a full turn we got to both units, and it was a full flip, but I got a little bit of a taste as a landlord, because I managed that myself… And again, I just learned really quickly, Ash, that this isn’t what I want to do. I want to buy apartment buildings and have a third-party management.

Ash Patel: Lee, did I hear you say your next deal was a 60-unit?

Lee Yoder: No. Sorry, 16.

Ash Patel: Oh, 16. Okay.

Lee Yoder: Yep.

Ash Patel: I was going to say, you didn’t try to go for a quad or a 10-unit before the 60? But okay. Yeah. That makes sense. 16 unit. So you wanted to go big. You were educating yourself, you knew what you had to do… What were some of the challenges in going from a duplex to a 16 unit?

Lee Yoder: I will say, Ash, a couple of things. One is just wrapping your mind around it. Again, my wife and I, we felt crazy buying a duplex, having a second property, just because the people around us, friends and family, no one was doing that. So now going to a 16-unit just sounded astronomical; like, this is just something only incredibly wealthy people do. Just that kind of common thing. But that’s where the podcasts like this one, Ash, come into play, because you start hearing more and more people, and you’re like, “There are a lot of people doing this.”

So that was definitely one, it was just a mindset thing. But a property like that actually, Ash, it runs more like a business. So it’s not like — duplexes and single families, they’re kind of based on comps. So I knew, “Hey, I’m buying it for this,” and that’s a really good deal because likely, I can sell it for this.

With the 16 unit, now you’re evaluating it as a business, and underwriting for that is very different. So I really had to learn underwriting. So that was a big hurdle. Luckily, the Cincinnati REIA – every city has a REIA, and Cincinnati I believe has a very good one. And it has an apartment investing focus group once a month. So I started going to that. Also, I’m lucky to live in Cincinnati, where Joe Fairless back in those days — it’s back now, but I had a meetup, so I was going there and learning. You really have to learn how to underwrite.

So at the apartment focus group, the guy that led that had gone to one of the bootcamps and got some coaching that Joe and some other guys offer. Maybe you do too, Ash. And he’d learned that and he was really just passing that on to us. So through that group, I really got good at underwriting, and that was a big hurdle to get into that. And I would say, if you’re going to manage it, that’s a huge hurdle. I decided not to do that and use a third-party manager, and then it just comes down to finding a good one, which is kind of a hurdle too, but I was able to find one.

Ash Patel: Alright, a couple questions. What are things that people leave off on underwriting, typically?

Lee Yoder: I’ll tell you just from experience, something I left off is deferred maintenance. On the 16 unit, we knew it was very poorly managed. So we were coming in with a big CapEx budget. We can hardly ever get this today, but we did get a big amount of money back at closing, to help with the roof and stuff like that. So I had a good grasp, Ash, on the CapEx. There were three vacant units already. I figured a couple more were going to become vacant, so I had a good budget to take on those.

What I did not expect, and what I’ve learned a couple times, it’s taken me a couple [Inaudible [08:10] to learn, is that the people that stay, and are happy to stay and are happy to take on the increased rent, and you think, their unit must be decent, because they’re living in it. It’s not the case. You go in, and we spent thousands on some of these units, because while the previous owner was okay with them not having running water to their vanity sink in the bathroom, we’re not okay with that. So we’re going to fix that. And if they don’t have hot water, we’re going to fix that; and things are falling down. It was big. Deferred maintenance in the units, we spent a lot of money on that, and I ended up — actually on the very first one, I put some extra money on my own into it to kind of take care of some of those things. And it all worked out, but we spent more money on that for sure.

Break: [08:48] to [10:22]

Ash Patel: Did I hear you say, you got a property manager? You’re a hands-on guy. What are you doing with the property manager for 16 units?

Lee Yoder: You know, Ash, again, listening to podcasts, I feel like a good bit of advice, for me anyway, and everybody’s different, it’s figure out what you’re good at, but then also figure out what you enjoy. I mean, if I’m going to create this business for myself — I’m still doing physical therapy full-time doing this, but I want to do real estate full-time, but I want to do the parts of real estate that I want to do. And taking calls from residents… Again, we did it for a little bit on that duplex, Ash, and it had great residents. They were easy. It was a good area. I didn’t enjoy that burden of knowing that they’re going to be calling me… And I’m not super savvy as a plumber or as an electrician. So I just knew early on, that’s not what I want to spend my time doing. I want to spend my time finding deals, finding money, putting that together. I always kind of knew I wanted to end up going the syndication route.

So if you’re saying yes to property management, you’re saying no to having time for some other things, or at least a lot of time. So I just found early on that I did not want to be doing this, I want to be doing that, and I just didn’t have interest in managing it. And I’ll tell you what, Ash – on that 16 unit, I found out very quickly that, for me, that was one of the best decisions I’ve made.

Ash Patel: Good for you for recognizing that earlier. What was the purchase price on that?

Lee Yoder: $350,000.

Ash Patel: And did you borrow funds or do a joint venture on that one?

Lee Yoder: Yeah, we did 80% LTV financing from a local bank, and then I had one partner. Actually, I brought in kind of that mentor that was leading the apartment focus group, gave him a little piece of the deal, because he really helped me with the paperwork, and I was doing everything; I kept going to him. “Hey, how do you fill out this LOI? What about this contract?” “Yep. Let me take a look at it.” Just right there, knowing and just giving me that little bit of support, and giving me that confidence – I gave him a piece of the deal. I had 50% of it. He gets in, and then I brought in another partner that mostly just brought the money, about $100,000, for the downpayment and a CapEx. So three of us JV-ed on that one.

Ash Patel: Okay. So you didn’t have any of your own money in this deal, did you?

Lee Yoder: No.

Ash Patel: Ah, that’s a win.

Lee Yoder: Yes, that was.

Ash Patel: Do you still own this property?

Lee Yoder: No, we went full cycle on this one.

Ash Patel: What was the return to your investor?

Lee Yoder: A little over 173k, I think something like that.

Ash Patel: In what period of time?

Lee Yoder: Just about 13 months.

Ash Patel: Wow. Alright. So now you’ve got high expectations for your next property.

Lee Yoder: Yes, that was not good.

Ash Patel: Alright, what’s the next one?

Lee Yoder: Somebody will talk about the law of the first deal. I’m the perfect example of that; the day we were closing on that 16-unit, as far as multifamily, a buddy of mine who I’ve been telling all about multifamily and a close friend of mine from church, he finds an 8-unit listed on the residential MLS, and he’s like, “What do you think of this one?” And, again, because I had so much practice underwriting by this time, and had been training myself in that, I knew right away that was an awesome deal. So I said, “Get a hold of your buddy, who’s the realtor on this one. Tell him we’ll pay full price.” So we got an 8-unit under contract the day we were closing on a 16 unit. And then just about a month, month and a half later, we got a 10-unit under contract. So kind of a rapid succession; we got 34 units between three buildings in the fall of 2019.

Ash Patel: And your property manager is performing well?

Lee Yoder: Yes, they were. They managed two of the three of those. One was a little bit too far away for them, because I was out in Wilmington, too far outside of Dayton, for them to manage; and all of their properties are in and around Dayton. But they didn’t do very well. I would say they were like a solid B, which a lot of people say, “Hey, I’ll take that with property management, because it is hard to find”. They just didn’t lease units very quickly, so I did end up moving away from them on the properties that we took on this year as we’ve syndicated… But yeah, they were solid, as we mentioned; with the 16 we did very well. I made a very good return, and they were a big part of that. So I’m happy with them, but they just didn’t lease units quick enough.

Ash Patel: Lee, what’s the tough lesson you learned about friends and investors and taking other people’s money?

Lee Yoder: I’ve been fortunate so far. I will say, early on you just want to set the right expectations. I guess too, Ash, as I mentioned, I just was not conservative enough with the deferred maintenance, and I did end up putting some of my own money in. On another one, all of us investors, we were all closing in on it, so we all put a little bit more in. When we’ve gotten into syndication, honestly, I didn’t know that was going to happen. So we’ve overraised, because you just don’t want to go back to people and ask for more, even though all those turned out phenomenally. It just doesn’t instill confidence when it’s, “Hey, we should have brought more to the deal.” And you don’t want to raise more than you have to, but you want to err on that side of things for sure. But I haven’t had to learn too many lessons with investing for people close to me.

As far as property management, it’s really hard to pick a good one, Ash. I think referrals is number one, and I would just say [unintelligible [00:14:56].03] property management is good, you’ve got to talk to some people that have used them for over a year, because a property manager can be pretty good for a while and then really start to fall off. So it’s hard to pick a good one. I’d say, you’ve got to use referrals to find a good property manager.

Ash Patel: Lee, at this point, are you still a physical therapist?

Lee Yoder: No. Almost a year ago, I quit. So those three smaller ones that we bought at the end of 2019, we sold two of them toward the end of 2020, and I quit December 2nd of 2020. So doing that allowed me to quit.

Ash Patel: Good. And what was your first syndication?

Lee Yoder: The first one was a 45-unit here in the Dayton area that we got. It’s actually a 29-unit building, and two 8-unit buildings pretty close to each other. So that was the first syndication we did, and we closed on that in February of this year.

Ash Patel: And why did you go the syndication route versus just doing a joint venture with people that you know?

Lee Yoder: I guess the easiest answer is just because we wanted to do bigger deals, and I just don’t know enough people that can bring $250,000-plus to a deal. So on that first one, we raised $550,000. So if I’d known a couple guys that could put up $200,000 to $300,000, then I probably would have done a joint venture, but I just didn’t. So we needed more investors, and when you’re going to bring on more investors in there, they’re going to truly be passive, they’re not going to be part of the deal, and then you have to go the syndication route.

Ash Patel: How did you find these investors?

Lee Yoder: It started out family and friends, Ash, and then it’s kind of grown organically. So family and friends have referred other family and friends of theirs, and other co-workers and things like that. I’ll tell you that, again, the Cincinnati REIA has been a great place where I’ve found other passive investors, because you think, “Hey, the REIA – that’s probably all people that want to do it actively,” and it is, but some of them maybe kind of get frustrated with that or they can’t find a deal. So they end up investing with us passively.

The other thing is too, some of them want to be active, but they also have a self-directed 401(k) or a Roth IRA, and you can’t be active with that. So they’ll be active with their own money and find their own deals, but they’ll invest with us in their self-directed IRA.

Ash Patel: That’s a great insight. Have you advertised or spent any marketing dollars looking for investors, or has it all been organic?

Lee Yoder: It’s all been organic. I do a podcast as well. I’d say that has helped a little bit; and I just do social media stuff. We can’t advertise for our deals, because we do 506(b) offerings, which means we can take non-accredited investors. So that means we cannot advertise at all. But I can still talk about what we’re doing, talk about the properties that we’ve already taken down, and just kind of show what we’re doing. So people that know us and have heard of us will kind of see what we’re doing, and then they’ll ask about it.

Ash Patel: And Lee, on your 45-unit, do you still own that?

Lee Yoder: Yes.

Ash Patel: What’s the return to investors, projected return?

Lee Yoder: We always do a preferred return, but the way we usually like to look at it, Ash, is that there’s an annualized return. So if we were to sell, our projected return is at — over five years, if you look back what they’ve made and what they make from the sale, it would be an 18% annual return for them.

Ash Patel: Thank you for using that metric, versus multiple IRR and all the other crazy numbers. I honestly just want to know, what’s my annualized cash-on-cash return. So if I take the amount of money I get back divided by the number of years I’ve had it, that’s all I want to know. Thank you for that. I hate when people say, “Oh, we’re looking for 1.6 multiple.” I don’t know what that means, man. Like, how long are you going to hold it?

Lee Yoder: Oh, that’s—

Ash Patel: Yeah.

Lee Yoder: —that’s two years, right?

Ash Patel: Yeah. It could be a 5x multiple and you’re going to hold it for 50 years. That’s just—

Lee Yoder: Right.

Ash Patel: Yeah, again, I appreciate that, and I wish more people did that. Awesome. What’s the deal that you’re working on now?

Lee Yoder: Now, we’re working on a 96-unit, also up here in Dayton, and it’s actually kind of a unique one, Ash, because they’re all quads. So it’s 24—

Ash Patel: A lot of roofs.

Lee Yoder: A lot of roofs, yep, but they’re all right on this like little roundabout. So it kind of looks, acts and breathes like a 96-unit apartment complex, but it’s actually all these little quads. So there’s a lot of roofs, and we’ve got a big CapEx budget for that, but we also just love the little brick branch boxes on a slab, electric baseboard heat; just very simple, easy buildings to maintain.

Ash Patel: Are they all single story?

Lee Yoder: Yes.

Ash Patel: I would imagine they all have a yard.

Lee Yoder: Yeah, there’s a lot of green space.

Ash Patel: How did you find this deal?

Lee Yoder: This one was through a broker relationship. A brokerage in Cincinnati that we’ve gotten a really good relationship with. They brought to us our last two deals, our 47-unit and our 96-unit came from them. We weren’t the only people they showed it to, but it wasn’t listed, so there was probably five or six people they’re showing it to, and we’ve gotten into that small group of people. So there’s still some competition, but not like being listed. We’re not bidding against — I was putting an offer in on a property the other day, 35 five offers; so we’re doing better than that, but there is still some competition. They’ve given us kind of that chance.

Ash Patel: How did you win against the other people, the prospects? Was it just price?

Lee Yoder: We were competitive on price, but on the 96-unit, we were not the highest price. I think on the other one we may not have been either. I’ll tell you, on the 47-unit this wasn’t the case, because this was the first deal we closed with this broker. Because we made that so easy on them, and we’re just very easy to work with for the brokers, they really liked working with us. So they really presented us to the sellers of the 96-unit that we were very good buyers. We’re going to do what we say we’re going to do, we’re not going to try to retrade a lot. We’re just going to be very easy to work with, and we’re just good buyers. So that’s definitely been a part of it, that we’ve been able to start to build that credit with the brokers. But also, we did do hard money; and now a tough pill to swallow, not something I was thinking about doing, but in this competitive environment, that is another way to compete. We don’t waive inspections or anything like that. There’s no way I’d do something like that, but we did allow some of our money to go hard immediately, and then we allowed the rest of our earnest money to go hard after inspections. So they did let us tour the building, the 96-unit. Our property manager is already managing the property, so that was a way for us to feel very comfortable with the property before even doing our inspection, and things like that. So we did some things to try to get comfortable enough to do that, but the hard money does speak, because the brokers and the sellers, they want a certain price, but they really want to know that you’re not going to mess around for 30-45 days, and then make them do it over again. They want to make sure you’re going to close, and hard money says that you’re probably going to close.

Ash Patel: How much of the money went hard instantly?

Lee Yoder: 50% of our earnest money.

Ash Patel: How much was that?

Lee Yoder: $50,000.

Ash Patel: So $50,000 went hard?

Lee Yoder: Day one, and then another 50k after the inspection period.

Ash Patel: Yeah, so I’m starting to see that a lot more. That’s pretty crazy. There was no way to get your money back?

Lee Yoder: They had to provide us a clean title. So if they can’t provide a clean title, then we would have gotten it back. But outside of that, no. We’re not getting it back. If we walk away—it’s not like you can’t still negotiate some. So if we come in, and we find with the 47-unit that the foundation is going to need 300k worth of work, we’re going to go back and — we’ve already got 50 hard, so they can say, “Hey, we’re not paying for a dime of that $300,000,” but they also know if they want to sell the building, the next buyer is going to find that, too. So they may have to negotiate with them.

Ash Patel: They’re almost incentivized to you to be like, “Alright, see you later. I’ll keep your 50.”

Lee Yoder: Yeah.

Ash Patel: That’s a tough one. Good for you for having the stones to do that, man. That was good.

Lee Yoder: It’s worked out so far. You’re right, though. It is very common. Everybody’s doing this.

Ash Patel: Yeah.

Lee Yoder: Obviously, it’s a seller’s market.

Break: [22:20] to [25:13]

Ash Patel: What was the purchase price on this property?

Lee Yoder: On the 96, $6 million.

Ash Patel: And how much did you raise?

Lee Yoder: We’re in the middle of that, but $1.65 million.

Ash Patel: Okay, so that’ll be your total raise?

Lee Yoder: Yes.

Ash Patel: How much of that is going to be CapEx?

Lee Yoder: Well, the nice thing today, Ash – you can get really good financing for your CapEx for a rehab budget as well. So we’ve got a rehab budget of $600,000, but the bank is going to give us 80% of that. So we only have to raise 120 of the 600 out of our CapEx budget. So there’s 120, and I’d say probably another 50. So we’re only having to raise $170,00 of our $650,000 CapEx budget.

Ash Patel: Got it. And each unit will be renovated. How much will the rents go up?

Lee Yoder: Rents are $160 under market rent. So we think we can get them up $110 with doing very little, but we do plan to renovate nearly all the units over five years. It’s a five-year plan, and get them up to at least $800. I think we’ll probably be pushing that, especially 2-3 years from now.

Ash Patel: And it sounds like there’s a lot of roads in this development. Is that your responsibility?

Lee Yoder: No, it’s not our responsibility. It’s just one. It’s one roundabout road, and they’re all around the outside and the inside of this little route.

Ash Patel: Okay, good. Perfect, and what’s been your biggest challenge on this property so far?

Lee Yoder: I guess I would say the biggest challenge was probably winning the deal. There was a lot of competition, and we really had to sharpen the pencil, figure out how to make this work… Getting good financing, obviously, is a big part of that. As you know, that’s why prices are so stinking high, because financing is so good. So you have to take advantage of that, in my opinion and in my experience, in order to compete. So we had to say, “Okay. Well, what if we can finance the rehab budget?” Because raising $600,000 from investors, versus getting [unintelligibl [00:26:58].20] of the $600,000 at 3.5% financing is a big difference. You know, as we mentioned, we want to pay our investors a lot more than 3.5%. So the more cheap money you can get, the more you can offer. And you can say, “Well, I don’t want to do that.” Well, the people that are bidding against you likely are doing that. So that’s why they’re able to offer more. So that’s something, Ash, honestly — it’s crazy. As I mentioned, I really got into multifamily toward the end of 2019. And it’s hard to adjust how far we’ve come in two years. I bought the 10-unit at 30k a unit, sold it for 60k, but I’m still buying. So now, I’m buying for 60k, and it’s hard to be on the other end of that, but that is where the market is. So with this one, honestly, it was very difficult for me to say, “Okay, well, because of the financing, because of where rents can get to, it is worth this high price. It feels like I’m overpaying”, but with getting good debt and room to grow rents and where I think it’s a good investment long-term… And you end up getting comfortable with it. That was definitely the hardest part of this one for me.

Ash Patel: Lee, would you consider turning some of these into condos?

Lee Yoder: I haven’t considered that, Ash. I wouldn’t say that I wouldn’t consider that, but that’s not part of our business plan.

Ash Patel: Yeah, it’s almost interesting if you run the numbers. What these people pay in rent, they may be able to pay the same and own their property, and you might be able to get a higher sale price per unit if you do that. So worth looking into.

Lee Yoder: Yeah. Since they’re separate buildings, yeah. We could get creative.

Ash Patel: Or sell off the quads, yeah. Sell off to investors individually. People love quads, right?

Lee Yoder: Yeah, they do.

Ash Patel: Yeah. Lee, what do you say to people that — right now there’s a lot of buzz, “Uh, it’s too hard to find a deal. There’s no good deals out there.” What do you say to those people?

Lee Yoder: I would say, it is very competitive, and I think you do have to be careful. But there are still deals trading, and I would say — again, what I kind of just went through, Ash… Financing is very different today, and rents have risen a lot. Now, I don’t think you need to project the rents are going to keep doing what they’ve done in the past year, but I also don’t think rents are going to drop a bunch, or any at all. Maybe they’re going to plateau here a little bit, but I do think there’s a lot of buildings where the owners have not kept up with the rent increase that we’ve seen as an entire country. So a lot of people will say, “Between 2020 and 2021 rents went up 14% to 17% nationwide” and if you can find a property where they’re nowhere close to that and you’re checking in all the rents in the area, or at least a lot of them are $150 higher, then you can overpay for that property a little bit, and still be made whole by just bringing rents up to market. I think that’s a solid strategy.

So I would say it is very expensive, but you can get very good financing. That’s why it’s expensive. So you’ve just got to be willing to take advantage of that good financing, and have a plan to get rent up. If you’ve got a building where they’ve already achieved that market rent, then you don’t want to overpay for that, because if you’re buying at a five cap, it’s going to stay at a five cap, and that’s not a good way to make money. But if you buy at that low cap rate, but you can increase rents significantly, then you’re going to turn it into a much better operating cap rate, and it is going to be a good investment for you. So I would just say, see where you can find where they have not kept up with the market, and you can raise rents significantly, get good financing, and you can make a good deal.

Ash Patel: Good advice. Lee, what is your best real estate investing advice ever?

Lee Yoder: You know, Ash, I would say get clear on what you want to do in investing and get started early. I think the best way to do that is networking. I would go and find some people that are doing what you want to do, shadow them a little bit, talk to them, see if that is really what you want to do, and then if it is, just try to glean from them, do something for them, learn from them, start getting educated, and then you’ve just got to jump at some point. You’ve got to jump in. And probably, a great way to do that is to find somebody that’s already doing what you want to do and add value. Maybe you just underwrite like crazy, and you end up finding a deal and bring it to them. Let it be their deal, but let you be a part of it, and that’s going to get you started.

Ash Patel: Lee, are you ready for the Best Ever lightning round?

Lee Yoder: Yeah, I think so.

Ash Patel: Let’s do it. Lee, what’s the best ever book you recently read?

Lee Yoder: I would say one that I recently read was Who, Not How. That was a really good one for me as we start to think about scaling our business a little bit. If you want to scale, you often are going to have to delegate some things to other people, while you focus on the more important tasks. And Who Not How kind of teaches you to start saying—when a problem comes your way you don’t say, “How can I do this?” You say, “Who else can I get to do this?” If you want to scale, I think that’s a good book.

Ash Patel: Yeah, that book impacted a lot of people in a positive way. Lee, what’s the best ever way you like to give back?

Lee Yoder: You know, Ash, my wife and I, we have two young kids, and we really like to involve them, and so we’re actually working now — my wife has been working on this in the past couple of weeks. Getting just like a small gift to give to our residents, and just give them something. We’ve done this in past, when COVID hit, we gave some Kroger gift cards to our residents. We’ve done some gift cards and a little gift at Christmas. It’s fun just to give back to the residents. We’ve got these people right here, some of them are hurting in different ways and in different situations. So – so far, we really like to give back, and it’s fun involving our kids, to teach them that God has really blessed us in a big way through real estate, and we think we need to be good stewards of that blessing and try to bless others, so we’re trying to teach our kids that. It’s fun that we can involve our kids, and do that with our property, and mix our work with that.

Ash Patel: That’s awesome. And Lee, how can the Best Ever listeners reach out to you?

Lee Yoder: Yeah, Ash, probably the best way is to check out our website, threefoldrei.com. Definitely check us out there. And then you can find me on Facebook and Instagram too, Lee Yoder. Look me up there, but check out our website for sure.

Ash Patel: Awesome. Lee, thank you again for coming on the show,  sharing your story. In just two years going from a physical therapist to acquiring hundreds of units. Incredible story. You’re just getting started, man. Again, thank you so much.

Lee Yoder: Absolutely. Thanks, Ash.

Ash Patel: It’s our pleasure. Best Ever listeners, thank you so much for joining us and have a best ever day.

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