Larry has a ton of real estate experience and he’s on the show today to share some of that with us. Theo and Larry will dive into the details on Larry’s first syndication deal, and how he raised so much money on his first deal. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
“The more you talk to people and learn what they’re doing, the more it will help your business” – Larry Abromowitz
Larry Abramowitz Real Estate Background:
- Started investing in real estate in 2014 while running his flower importing and distribution company
- Has done over $30,000,000 in real estate transactions in the USA, Colombia, Costa Rica and Spain
- Closed first syndication deal in September of 2018 of 108 units in Daytona Beach, FL. Equity raise of $4.5M on first deal
- Based in Miami, FL
- Say hi to him at https://www.broadviewcap.com/
- Best Ever Book: Traction
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Theo Hicks: Hi, Best Ever listeners. Welcome to the best real estate investing advice ever show. I’m Theo Hicks, and today I’ll be speaking with Larry Abramowitz. Larry, how are you doing today?
Larry Abramowitz: Great, how about you?
Theo Hicks: I’m doing fantastic, I’m looking forward to speaking with you today and learning more about what you’ve got going on in your real estate business.
A little bit about Larry before we get started – he began investing in real estate in 2014, while running his flower importing and distribution company. He has completed over 30 million dollars in real estate transactions all over the world – in the U.S, Colombia, Costa Rica and Spain. He closed on his first syndicated deal in September of 2018, which is 108 units in Daytona Beach, Florida, and he was able to raise 4.5 million dollars for that deal. We’ll definitely dive into details on that. He’s based in Miami, Florida, and you can say hi to him and learn more about his business at BroadViewCap.com.
Larry, can you tell us a little bit more about your background and what you’re focused on now?
Larry Abramowitz: Yes. Like you said, I’ve started focusing more of my time in real estate around 2014, and I’ve started buying foreclosed properties in Miami… Which made it easier, since I was still working full-time; I was doing this locally. So I started buying houses from the court auction, or these auction websites like auction.com. I started doing all the eviction processes if there were any tenants or owners, remodeling the houses, then I either sold some of them or kept some of them as rentals… I did the same with some apartments, and then I did a warehouse deal, a retail office, and even a lot that I bought on a foreclosure. So I did a lot of different types of real estate.
I was self-managing all these rental properties, and it was a lot of work self-managing, so I wanted to do something bigger, where I could have a professional management company do the day-to-day of the properties. That’s how I decided to go into syndication, to be able to buy bigger deals.
Theo Hicks: So let’s go into details on that deal you did. So 108 units in Daytona Beach, Florida – how did you find that deal?
Larry Abramowitz: I was looking for deals in Florida, and while analyzing a deal in Gainesville, I was looking for property managers, and while interviewing property managers I was talking to one of them and they said that they sometimes get off market deals, and they’ll let me know if they get anything that they could send my way. About a month later they sent me two deals. One was in Largo, Florida, and one was in Daytona Beach. Basically, when I talked to them, they said that I need to make a decision within the next two days, to decide if I wanna move forward, and with which property, or if I wanted to do both.
I got in my car and started driving to see the property in Largo, early in the morning, and then I drove the same day to Daytona, and then drove back to Miami. So I was probably about 12 hours in the car. So I got to see both properties; I reviewed the numbers that the property manager had sent me, and I decided to go with the Daytona Beach property.
Theo Hicks: When you visited those properties in person, what type of analysis did you do? What was your gameplan, or what were you looking for, to help you determine which deal to move forward with?
Larry Abramowitz: Well, first I wanted to see the area around the property, and the city and the area where the properties were located, to see if I felt comfortable and I liked the area where the property was located. Then the location of the property within the area; the one in Largo was actually not on the main street, it was like half a block in, and it was behind the gas station. So even though it was a very nice property, I wasn’t crazy about it not being on the main road, for visibility, and the gas station in front of it.
And it had a bigger property across the street that was going through a remodel, and I felt like you couldn’t push the rents a lot higher; the other property had more amenities and it was a nicer property, so… That was kind of my concern with that deal, even though I understand now it’s performing very well… But that was pretty much why I didn’t go with that deal.
When I went to Daytona, I loved that the property was in a main street, it had a lot of visibility when you drove to the property; it has a lake right in the middle… So it’s a beautiful property to go into. And while analyzing the numbers, there was a lot of value add on the rents; there was a big gap difference on the market rents if I could remodel the units, which was the plan once we acquired it.
Theo Hicks: So you moved forward with that deal. At this point in the process did you know how you’re gonna fund that deal, or did you have to raise the capital after you actually had the property under contract?
Larry Abramowitz: I had talked to maybe a couple of people about the deal, that might be interested. I was putting in 10% of the equity. The property manager was also investing; I think it was about 5% of the equity. So I was missing a big chunk of about 80% of the equity, which I still had to raise after we put it under contract.
Theo Hicks: And can you walk us through how you were able to raise such a large amount of capital? For your first syndicated deal, that is.
Larry Abramowitz: Yeah… That was a hectic process. First I prepared a really professional presentation or package to show the potential investors. Then I just started going through all my contact lists throughout all my years in business and meeting people, and just friends, and friends of friends, and family… I just started calling everybody and presenting the deal.
I got a couple of people to do some big commitments, which really helped lower a part of that pressure. I got a couple of half a million dollar investors. Then I had also a $100,000 minimum, which I think helps to have less investors; it’s easier to manage for your first project, even though it’s a little harder to raise maybe a higher number… But you’re always gonna get people asking for discounts; or not a discount, but I guess to invest less than the minimum, and having a higher minimum helped raise the money quicker.
I went through all my lists – contacts, Facebook, LinkedIn, my friends from the university, from my masters degree, and then family… Then some people started referring. The biggest lesson I learned is that when somebody says “No, I’m not interested, I guess you’ve gotta ask always “Do you know somebody that might be interested?” Most people will recommend somebody that invests in these types of deals, or might have an interest… And as you keep on asking that, you end up finding more and more people to invest.
Theo Hicks: Yeah, that’s definitely a good strategy. How many investors are on this deal?
Larry Abramowitz: 22, including myself.
Theo Hicks: And have you syndicated a deal since then?
Larry Abramowitz: I have not. I’ve been looking very hard, and it’s been hard to make a lot of these deals make sense lately… So I just keep on looking, and don’t give up. I keep on looking for deals.
Theo Hicks: How is this deal performing compared to those projections that you had in the beginning?
Larry Abramowitz: We are over projections right now. We just did a second distribution, or we’re doing it this week. In the first two quarters we’re at 6.4% annualized return, and we have projected about 5.8% year one because of all the value-add going on in year one. You really start seeing the improvements towards the second semester, and after you get enough units remodeled. This is already with the adjusted taxes. So even though we haven’t gotten our taxes adjusted, I’m already reserving for that… And looking at the tax roll, I think we’re gonna be under what I projected in the taxes this year, so we might make more… But I like to be conservative.
Theo Hicks: What was the biggest challenge you faced with this deal, either on the acquisition side or the asset management side?
Larry Abramowitz: I would say the biggest challenge was raising the money, just because the property manager brought me the deal, so that was not as hard, finding it. I would say that the hardest thing was raising the funds. Then we had other difficulties in the process, where we were ready to close and the seller was not ready to close. They had an issue with a loan they had on their properties over all their portfolio, that was affecting this property, and that came up towards the end… So they asked for one extension, and then we were ready to close the second time, and they still had a — sorry, the first time they didn’t request the payoff from their lender, so they couldn’t close; then the second time they had this issue with this loan, so they delayed the closing twice. So this process – we started at the beginning of May, and we ended up closing September 24th. It was almost five months to do the deal.
Theo Hicks: Oh, wow. How did you communicate that with your investors?
Larry Abramowitz: That I learned that it’s key – to keep everybody informed; because I had the funds in August, and some people even earlier, in June, and July, when people sent me the funds… And I didn’t communicate for a while, just because I was so into closing the deal that I didn’t send any new communication, and some investors started calling me and saying “What’s going on? We don’t know anything.”
The main thing that I learned is that you’ve gotta keep your communications consistent and very open with your investors, so I started sending every two weeks what was going on with the deal, just so everyone would know and be comfortable that we were still working on the closing. That’s the most important thing – keep everybody informed, all the time.
What I do right now is I send a monthly financial statement, and then I do a quarterly more detailed report when we do distributions – because we distribute quarterly – where I get into more detail of the performance of the property and everything we’ve been able to achieve.
Theo Hicks: Can you tell us a little bit about how you’ve put your team together for this deal? I guess you said that this is a property management that sent you the deal. Are they the ones that are managing it?
Larry Abramowitz: Yeah, they were already managing the deal; they knew it was going to the market, and they were able to lock it up before it went to market. Then they assigned me the contract. That was the way the deal worked.
Theo Hicks: Just out of curiosity, because I know for first-time syndicators a big problem is generating those off market leads, specifically coming from brokers or property management companies who have that rolodex of investors that they know are gonna close… Why do you think it is that they gave you this deal, even though they hadn’t worked with you before?
Larry Abramowitz: Well, I knew a few of the people that they do business with, and when asked for references, they gave me a couple of references, and they were people that I already knew, so I think that helped. And second, I also asked them that question, and they also said it’s because they like to diversify their portfolio of people they manage properties for. They were heavy on a few investors or asset managers and they wanted to diversify, so they tend to look to find properties for different people, so they can have a big, diversified portfolio. I believe that last year they had a big client that sold most of their properties, so they lost a big chunk of their business, and they’re looking to diversify their portfolio.
Theo Hicks: Alrighty. And for the money question, what is your best real estate investing advice ever?
Larry Abramowitz: I think that for me it’s been networking. Just to network with investors, with other real estate investors, with other syndicators, brokers, property managers… The more you talk to people and learn about what they’re doing, or just have conversations, I believe that it will just help you grow your business.
Theo Hicks: Alright. Are you ready for the Best Ever Lightning Round?
Larry Abramowitz: Yes.
Theo Hicks: Alright. First, a quick word from our sponsor.
Break: [00:14:07.04] to [00:14:51.20]
Theo Hicks: Alright Larry, what’s the best ever book you’ve recently read?
Larry Abramowitz: I would say “Traction: Get a Grip on Your Business” by Gino Wickman.
Theo Hicks: If your business were to collapse today, what would you do next?
Larry Abramowitz: I would just keep on hustling and finding another deal to keep on going. You’ve gotta just keep on going; get up and find your next opportunity.
Theo Hicks: How would you start over if you had little or no capital?
Larry Abramowitz: If I had little or no capital, I would look for either deals where I could get seller financing, or just talk to friends and family that will be willing to fund some of the deals to get started again.
Theo Hicks: What is the worst deal you’ve done?
Larry Abramowitz: I bought a house from the bank in foreclosure for 70k, and when we ended up starting the work, all of the wood frame was eaten by termites, so I had to basically redo the entire house – gut it out completely and redo it. Luckily, I bought it cheap enough that I still made money at the end, but it’s been a year and a half in that project. It’s been a drain.
Theo Hicks: And then lastly, what is the best ever place to reach you?
Larry Abramowitz: The easiest way to reach me is by email, email@example.com.
Theo Hicks: Alright, Larry, thanks for coming on the show today and speaking with us today about your first syndicated deal. I know a lot of listeners are interested in syndications, so I’m sure it was great from their perspective to hear the entire story behind someone who recently did their first deal.
Just to summarize what you discussed – you actually found this property while you were interviewing property management companies, and they ended up sending you two off-market deals about a month after your conversation, told you you had two days to decide which one you’re gonna buy, so you quickly god in your car, drove to both of the properties, looked at the numbers… And you said that your reasoning for disqualifying one and selecting the other one was due to the location of the first one – it wasn’t on the main street, and it had a larger property across the street that was going through pretty heavy remodel… Whereas the one you ended up buying was on the main street, had a lot of visibility, it was a really good-looking property and you identified that there’s a lot of value-add there because of the rents.
We talked about how you were able to raise capital for that deal. You put in some capital, the property management company put in some capital, which was great from an alignment of interests standpoint… But you basically said that you put together a package and just hustled – you called everyone that you knew, and you also set that 100k minimum, which helped you hit that raise of 4.5 million dollars.
Then – this was a key piece of advice – if someone said no, you didn’t just hang up; you asked them “Okay, do you know of anyone else who might be interested in investing?” And you talk with that person, and if they say no, you ask the same thing, and eventually you get to the point where you find someone who will invest.
We talked about the fact that you are actually beating your projections, and the biggest challenge aside from raising that capital was the fact that the closing kept getting pushed back… And one lesson that you learned was the need to communicate that with investors moving forward. Once you realized that, you sent them emails every two weeks.
And then lastly, about that deal, we talked about why they actually gave you the deal over other people, and that was because the property management company was in a situation where they needed to diversify, because one of their clients had sold off a large part of their portfolio, which made them lose a lot of their business.
And then lastly, your best ever advice was simple, yet powerful, which is just the power of networking and talking with as many people as you possibly can, because that will increase the amount of opportunities you receive.
Larry, thank you again for speaking with us today, thank you for everyone who listened. Have a best ever day, and we’ll talk to you soon.
Larry Abramowitz: Thanks. It was great being on the show, thanks for having me.