JF2752: Why The Wrong CRE Insurance Could Lose You Deals ft. Danielle Lombardo

Do you find insurance and risk management hard to navigate? In this episode, Danielle Lombardo, Senior Vice President at Lockton, offers her expertise on selecting good insurance brokers and what common mistakes she sees investors make when choosing insurance plans.

Danielle Lombardo | Real Estate Background

  • Chair of Global Real Estate Practice within Lockton Companies, a global insurance broker and risk management consultant.
  • She’s an insurance broker and consultant for a variety of types of CRE firms. Within her specific team, they are focused on providing these services to real estate firms (owners, operators, developers, REITs, etc.) operating in all asset classes.
  • Based in: NYC, NY
  • Say hi to her at: dlombardo@lockton.com | LinkedIn
  • Best Ever Book: Twelve Hours’ Sleep by Twelve Weeks Old by Suzy Giodarno

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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, Danielle Lombardo. Danielle is joining us from New York City. She is the chair of a global real estate practice within Lockton Companies, which is a global insurance broker and risk management company. Danielle is also a broker and consultant for all asset classes. Danielle, thank you for joining us, and how are you today?

Danielle Lombardo: I’m doing great. How are you?

Ash Patel: I’m doing very well. 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?

Danielle Lombardo: Yes. I’ve been in the insurance brokerage business for the past 15 years. I started actually in Los Angeles, I did the opposite of what most people do, going from LA to New York. Clearly didn’t come here for the weather… But always been focused on real estate insurance and started in the multifamily space. One of my first clients grew from 100 units to 10,000 units in two years. During that process, I found out pretty quickly how hard it is to not only place insurance on behalf of real estate owners, but actually service it on a day-to-day basis. I spent an almost 15-year career building our expertise, not only on getting the best rates and coverage, which should be an afterthought with your broker, but really the day-to-day servicing and the psychology of risk management within an organization.

Ash Patel: Can we deep-dive into that? Because to me, it’s almost like title insurance; we don’t really know what we’re getting or why are we getting it. What are we supposed to look for? It’s one of those things that until there’s a disaster, it really is just not in the forefront of what you’re doing. So what are mistakes that a lot of multifamily or any commercial asset real estate operator makes? What mistakes do we make?

Danielle Lombardo: What mistakes? Wow, that’s a great question. First of all, I was talking with a client of mine earlier today. He’s one of the largest multifamily developers in the country. We were just chatting about how inefficient and opaque the insurance market is; no one really understands it. You have to go through a broker to get to the insurance carrier, insurance pricing has become very volatile the past couple of years; it’s causing deals to die, unfortunately. I’ve had multiple situations where people have come to me at the 11th hour trying to get cheaper insurance to make sure that they could actually close on a deal. So it’s become one of these service offerings that is becoming much less like a title, where it’s commoditized because it is what it is on the title insurance… And on the property and casualty insurance front, you can become a lot more strategic around how you’re placing the insurance, the deductibles that you take on, etc.

So if we want to talk about your last question of what do real estate owner-operators, where do they make mistakes – where I see the biggest disconnect is amongst acquisitions teams and the C-level of an insurance company, particularly in risk management, the CFOs etc. who are looking at the long-term coverage implications of insurance. When you’re on the acquisition side and you’re just trying to do deals, you’re trying to get the lowest possible coverage that will meet lender requirements, in general. I don’t want to paint such a broad brush, but I would say amongst all of my clients, that’s generally the perspective. Then, when you’re dealing with asset management, risk management, CFOs etc. they generally have the experience of dealing with the actual claims. So where you may be saving money upfront to get a deal done, from a long-term perspective when you’re looking at the financials of the deal, if you have to fund millions of dollars for a deductible that you didn’t anticipate or there’s a huge gap in coverage, that will absolutely affect investor returns as well. So you really have to take a look at insurance through both lenses – the upfront NOI perspective and focus, as well as more long-term IRR, how is this deal going to pan out if we don’t have the right insurance.

Ash Patel: I’m shocked. Do people really just find the absolute minimum coverage?

Danielle Lombardo: Oh, absolutely. Are you being sarcastic or you just — [laughs]

Ash Patel: No, I’m being serious. So I’m not in the multifamily space, I’m in the commercial space. But we usually get pretty decent insurance; we don’t want the minimum. I mean, we want to know that we’re covered. What horror stories have you encountered and what lessons learned can you help us with?

Danielle Lombardo: There are a lot, and that’s why I’m pausing right now, to see what would be most effective in terms of answering. I would say, at the end of the day a lot of your peers do focus on cost first, and coverage, as long as it meets lender requirements, can be an afterthought. I do see that perspective differing amongst different types of real estate firms. For example, real estate, private equity, and REITs might have more of a conservative standpoint, family offices, because it’s their own money. When I talk to more of my syndicator clients that are just trying to churn and burn deals, three to five-year holds, they’re just trying to make most of their money on the upfront acquisition fees; I think it’s a different perspective as well.

I’ve certainly seen situations where clients have had to do capital calls for insurance-related claims where the deductibles were a lot higher than they had expected. For example, when you’re dealing with catastrophe coverages, like windstorms or earthquakes, you’re going to see three, five, and sometimes higher percent deductibles of your total insurable value, which can be millions of dollars out of pocket after a significant windstorm, or earthquake etc. A lot of times you’re not putting aside that money for a rainy day, and you’re not really thinking through the deductibles on an upfront basis.

I would say the other mistake that I see across more middle-market to small operators is not purchasing general partnership liability insurance, which is essentially a blend of directors and officers and errors and omissions. When you’re dealing with claims of misrepresentation and other claims from investors when deals go South, for example, regardless of what your contracts look like or how good your relationships are, or you think they are, with your investors, they’re generally going to come to you to try to find some reason to recoup their money.

The other side of that too is if you’re the property manager, there are certainly errors and omissions-related claims as well. If you, for example, placed the wrong insurance or you don’t pick the right deductibles, then you have to come out of pocket and you didn’t appropriately advise your investors how you chose those limits or those professional services. There’s a lot there from a professional liability and a directors and officers liability standpoint. Everything else just really skirts the coverage gap conversation around why you’re choosing to purchase particular limits upfront, and what happens when there’s an actual claim.

Ash Patel: Can you dive into the general partner’s liability insurance? What exactly does that cover? Have you encountered a situation where an operator had a loss and they were sued, and this insurance provided some safety?

Danielle Lombardo: Yes, I have. These are typically what we would call catastrophic claims, meaning you’re not going to see claims for $50,000 or $100,000, and that’s why a lot of times the deductibles are much higher. These are claims from investors who say, “You misrepresented on this deal, and I invested as a result. Now I’ve lost money and I’m suing you for $5 million.” Those are the types of claims that we’ve seen. Depending on how the lawsuit is worded and a number of different factors, we certainly have seen significant claim payments on that type of coverage. From a professional liability perspective, if you’re doing property management, we do see, unfortunately, a lot of employee theft-related claims and things like that… Now it all falls within the realm of management liability, outside of what you’re buying on a property level.

Ash Patel: Danielle, we’ve all heard the horror stories where somebody has a roof that blew off of, a fire, and the insurance company doesn’t want to pay. What tips can you give our audience on how to deal with situations like that?

Danielle Lombardo: I have this conversation all the time. The insurance companies want your money ASAP, but they generally will wait to pay claims or will take a while to pay claims. Especially if you’re dealing with catastrophic claims, because you have adjusters that are just overwhelmed. So I would say a couple of things… The way that your coverage policy forms are written upfront is very important. Most of my clients have what are called master insurance programs, that have a number of different insurance companies sharing in the risk. We have a locked-in-based form that we write on behalf of our clients, that tries to make it bulletproof at the point of the claim, so there are no questions and there’s not as much back and forth.

As strong as the coverage might be, you’re still going to have issues getting the right attention from a claims adjuster. So you need to have a broker that has an internal claims advocacy group, that’s sole purpose is to interact with and project manage with the adjusters, and have relationships with those adjusters. It’s actually a fairly small underwriting and claims community, if you can believe it, so having someone internally advocating for you on the front end and then project managing it forward is very, very important to get the claim towards resolution.

I do think that dealing with your larger insurance brokers, they’re going to have the leverage with the insurance carriers to get claims paid not only faster, but to maximize the claims payment. So I do think having a larger insurance broker is certainly key.

Break: [00:12:35][00:14:32]

Ash Patel: At what point do individuals qualify to get insured by these larger insurance brokers?

Danielle Lombardo: It depends on a couple of different factors. You need to have a minimum premium amount. I would say that minimum premium amount, at least for me personally and within our group where we can add the most value, is usually around $500,000 in premium. That can be a couple of thousand units, that can be even a thousand units if we’re dealing with Florida, because the premiums in Florida are that much higher, it can be 500 units in New York, because general liability insurance in New York is that much higher… So it depends on the geography and the asset class. But if I were to look at premium amount, it’s usually about that $500,000 mark.

The reason why, for us, there has to be sort of a minimum there is not only the service that we offer. We really act as an outsourced risk management department for our clients, so we’re heavily staffed more than a lot of brokers in that sense. But also, when you’re dealing with smaller portfolios, there tend to be one-off regional carriers that are more competitive than our carriers will be. Think farmers, and state farms… They’re obviously not regional carriers, but I’m talking carriers that are focused on smaller portfolios.

Ash Patel: Danielle, Neal Bawa, if you know of him, a multifamily legend, a Silicon Valley guy who just applies a lot of data to real estate investments – he did a webcast recently where he talked about how insurance companies are applying a different level of risk based on climate change data and past weather patterns. Are you seeing that as well?

Danielle Lombardo: We are. It’s a great question and it comes up at least once a week from clients and prospective clients. How are we addressing ESG, and specifically, from a climate change perspective, what is the insurance industry doing. At the end of the day, the reason why there’s so much volatility, at least on the property insurance side, is as you have seen over the past couple of years, there’s been an increase in frequency and severity in weather events. It’s very difficult to anticipate outside of any model out there of how things are going to pan out for insurers. So it’s very hard to underwrite when there’s so much unknown.

With that being said, there are catastrophe models that now have modules to address climate change. Think sea level rise, flood, wind, and other variables that they’re overlaying across their portfolio. We’re certainly seeing insurers focus on it more and we’re seeing clients focus on it more. I will say any catastrophe model that I’ve seen, whether it’s climate change-focused or not, it gives you thousands of years of data. But when you look at how it actually pans out in reality after a storm, it usually is a little bit far off. I think insurance carriers and clients are just reaching for any sort of data to help them make decisions, but at the end of the day, the reason why there’s so much volatility within the insurance market is that there’s so much unknown.

Ash Patel: They’re going to reach and try to stay ahead of the curve.

Danielle Lombardo: They’re going to try to, so what they do as they try to paint the accounts with a broad brush, and really, an insurance broker’s responsibility is to try to beat them at the pass, meaning underwrite internally, have the same types of systems and analytics that underwriters use, so that they can anticipate and be proactive about having conversations around their concerns… Whether it be weather related issues, catastrophe related issues, liability related issues… From a liability perspective, most underwriters are using what is called crime scores in order to evaluate their exposure in different neighborhoods from a multifamily perspective… And to be able to get ahead of that and have conversations with deal teams around what’s really going on within the neighborhood, and what cap-ex is being discussed on the front end, and really what the value-add strategy is at that location, and how they’re going to integrate security as well… So it’s really a lot about having the internal tools, whether it’s climate change or anything else, to be able to have those conversations with underwriters.

Ash Patel: Danielle, what is your best real estate investing advice ever?

Danielle Lombardo: My best real estate investing advice ever, from an insurance perspective, I will say you have to be able to marry both perspectives of upfront pricing and long-term coverage. I would say my advice, again, through the insurance lens, is around making sure that you’re looking long-term at really hedging against the volatility of the insurance market, taking on higher deductibles, putting in place and thinking through potential captive and risk finance opportunities so that you’re getting out of the dollar trading in the insurance market, and being more strategic around how you’re buying insurance.

You don’t want to be where I’ve seen most real estate companies have been over the past year or two, where you are beholden to the insurance market and you’re losing deals because of it. Everyone’s complaining about insurance, and it’s become a real issue when people just want to get deals done.

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

Danielle Lombardo: I’m ready.

Ash Patel: Let’s do it. What’s the Best Ever book you’ve recently read?

Danielle Lombardo: Twelve Hours’ Sleep by Twelve Weeks Old.

Ash Patel: What was your big takeaway?

Danielle Lombardo: Getting my two-and-a-half-year-old and my one-year-old to sleep through the night.

Ash Patel: Got it. Danielle, what’s the Best Ever way you like to give back?

Danielle Lombardo: I love to learn about organizations that are close to the people around me, and continually evolve how I’m giving back. My passion is for at-risk youth, so any organization that focuses on at-risk youth, specifically teenagers, is where my passion lies. But I really do love to spark conversation with people around me, especially my clients and colleagues, what means the most to them and support them as well.

Ash Patel: Danielle, how can the Best Ever listeners reach out to you?

Danielle Lombardo: I think email is probably best, dlombardo@lockton.com.

Ash Patel: Danielle, thank you for your time today and sharing some insights on the world of insurance that’s often mysterious to a lot of us. Thanks for your time today.

Danielle Lombardo: Thank you.

Ash Patel: Best Ever listeners, thank you for joining us. If you enjoyed this episode, please leave us a five-star review and share the podcast with someone you think can benefit from it. Please also follow, subscribe, and have a Best Ever day.

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JF2745: How to Analyze Political Climate Effects on CRE Markets ft. Sam Liebman

Sam Liebman, Founder of WealthWay Equity Group, has witnessed the drastic changes one election can have on an entire real estate market. In this episode, Sam shares his decades of experience navigating politically changing markets and his strategies for adapting to these shifts to keep business thriving.

Sam Liebman | Real Estate Background

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Slocomb Reed: Best Ever listeners, welcome to The Best Real Estate Investing Advice Ever Show. I’m Slocomb Reed and I’m with Sam Liebman. He’s joining us from New York City. He’s the founder of Wealthway Equity Group which focuses on syndications. He has a 30-year career in commercial real estate and his current GP portfolio is over 1800 units and 30 properties in New York and Texas. He’s also the author of a book that was just published in the last month, in January of 2022, titled Harvard Can’t Teach What You Learn From The Streets. Sam, can you start us off with a little bit more about your background and what you’re currently focused on?

Sam Liebman: Yeah. First of all, thank you for having me, it’s a pleasure. I was a kid from Canarsie, Brooklyn; I came from a very poor family, dysfunctional family, and I just kept fighting, fighting, fighting. We call Canarsie the mafia minor leagues, because every [unintelligible [00:04:16].03] seems to be connected. But when you grow up on the streets, you learn certain street smarts, you learn to get your spidey sense tingling, you think out of the box; you have to, it’s survival. And I used those lessons from the street and I combined them with the traditional education to become street smart and know my stuff.

One of the things we did was mastered the fundamentals. Started off as an accountant, a CPA, had a firm for a while. Then when I was doing people’s tax returns, seeing what they made, I felt like everybody’s scorekeeper. They were making millions, I was keeping score. I said, “You know what? I want to be on the other side.”

Slocomb Reed: Every accountant I know tells the same story of how they got into real estate. You have a 30-year career in commercial real estate; how long have you been on the GP side of syndication deals?

Sam Liebman: Well, I started off as a GP. What happened was in 1992 — I had worked as a chief financial officer at Mountain Development Corp at 27, and I got what I call my Harvard education there, because the company started with myself, a secretary, and the owner, Bob Lee. Three years later, we had over 20 million square feet in five different states. So I really got tremendous exposure, which is really important in the learning process. Then through accounting, I had met one of the clients who called me in one day – this was in 1992 – and said, “We want to buy all the banks foreclosures.” That time, you could buy properties for three times rent roll; nobody wanted Manhattan real estate. I said, “Well, guys…”

Slocomb Reed: When was this?

Sam Liebman: This was 1992. Cap rates were going from 9.75% to I think 12%, interest rates were 10%, and I always tell people, the best time to buy real estate is when nobody wants it. The price you pay is a permanent cost; you can’t change that. But if interest rates are high, that’s a variable cost; you can always refinance, you could always pretty much go down, and that’s what we did. Those properties that I bought for $575,000 are now worth $15 million, for a lot of different reasons that we did, and that 9.75% initial interest rate is now 3%. Well, lower. So I said, “Guys, let’s do syndication.” “What’s that?” I said, “Well, instead of buying two buildings with your money, we could buy 10.”

That sounded appealing until they saw the documents. I managed to streamline the documents and we bought our first deal, 110-112 St. Mark’s place, I remember that. September 23, 1993, we closed; it was 22 two-bedroom apartments, 50-footer what we call, and two stores. $575,000. And I remember all we needed at that time was $290,000 in equity, including fix-up. At that time, under nine people, you didn’t need to do a full-blown PPM as long as it was under nine people. So if I got a guy who put in 50,000, now the average went down to 30,000. We had people put in in these buildings at the time $15,000, that and now $500,000 investors, and we bought 40 of those buildings for dirt cheap. We thought we’d fix them up, and we would have cash flow and appreciation. Did we ever think about these prices? No.

Slocomb Reed: So you’re talking about investments that happened 30 years ago, turning 15,000 into 500k. Now, how much of that appreciation do you attribute to the 30-year hold period and how much of it do you attribute to, say, other factors like you purchased a distressed asset and forced appreciation, or you bought in areas where there was – the buzzword now is gentrification of course… You bought in submarkets that have since shifted – how do you factor that appreciation over 30 years?

Sam Liebman: Okay, good question. For New York City, the main thing was the political climate that changed. In 1993, most of the buildings were rent-stabilized or rent-controlled buildings. We were only allowed to increase rents according to the rental guidelines each year, that ranged from 3% to 5%, depending if there was a one-year or two-year lease. Buildings were in horrible shape, because there was no incentive to fix up the building, because the rents were controlled. In 1994, they came out with vacancy decontrol, which was a game-changer.

Initially, what that let you do is if you could get an apartment vacant and the legal rent became $2,000 or more, the apartment became decontrolled. So if you had an apartment that was $1,200 a month and somehow you could get it to $2000, it became decontrolled. Now, what’s the importance of that? Well, they came up with this new technique, and it was basically if you put capital improvements in the apartment, you improve the apartment, you’re able to recoup one fourtieth of the cost, monthly. So if you put $40,000 in basically, you could raise the rent — and the tenant had to be out, the apartment had to be vacant. So for 1000, I put 40,000 in, make it really nice, get it over 2000… Ket’s say I only got 2500. That $1500 for the apartment, when you divide the extra income by the cap rate, it’s a lot more than the $40,000, of course. And by the way, in the city, because everything got better, that $2,500 apartment became worth 4000-5000. So the political climate was a major reason. Also, there were a lot of abuses in there; throwing tenants out. The game was to get an apartment vacant, by any means possible, [unintelligible [00:10:26].03]

This displaced a lot of buildings, but we became multimillionaires, and we did it the right way. There were tenant buyouts, again, using that cap rate formula to increase valuation. Over the years, the cap rates dropped, obviously. Now that was a change in the political climate. What I would tell your listeners now, if they’re looking for buildings, beware of the political climate where you’re investing. For instance, there’s a movement for national rent control, and it is horrible, because Minnesota, Minneapolis just passed, maybe two months ago, universal rent control, limiting new buildings to 3% increases. And they were all crying, “We need more affordable housing.” But what developer is going to sign a $30-$40 million construction loan when insurance is doubling, real estate’s doubling, and operating expenses and construction costs are doubling because of the pandemic, and then they’re going to cap you. So 10 projects immediately stopped, you could look it up.

Slocomb Reed: I want to hear a little bit more about your experience with the changing political climates and markets where you have been buying your properties. I know you have your current portfolio, some of it is in New York and some of it is in Texas… How much did the political climate of each of those states or each of those MSAs play into your decision to invest in those areas?

Sam Liebman: A big part. When we invested in Manhattan, we owned over 40 buildings or so at one time; it was a positive political climate. That has changed dramatically. I will not touch anything in New York City right now. I think I have a couple of buildings left.

Slocomb Reed: Sam, let’s go back to Manhattan. Can you give me a couple more inflection points? You talked about decontrolled vacant units in 1994. Can you give me examples of other political inflection points that drastically changed the commercial real estate landscape for New York City?

Sam Liebman: Sure, there’s a lot of them. Interest rates went down obviously over the last 30 years. The dollar became stronger; we’re talking about now. But over the 30 years, the dollar was weaker, so a lot of foreigners –and there was no virus… A lot of foreigners came into this country because they had cheap dollars. There was also a lot of political… Like the EB-5 program.

Slocomb Reed: What is the EB-5 program?

Sam Liebman: The EB-5 program, I think it was passed during the Obama administration. What that enabled was a foreign person, like Chinese or whatever, to come to the United States and invest, I think it was originally 500,000 and that became a million, and basically get citizenship. All the big companies now are getting all this EB-5 money that was funneled towards these big projects. So it was a way of getting tremendous amounts of foreign investment in this country. In fact, China was the biggest beneficiary. I remember probably about four years ago the quota was filled in January; that’s how popular it was. And there were other popular programs; there’s a lot of popular programs now, from the federal government.

Slocomb Reed: And you’re saying that the popularity of these programs for bringing non-US citizens to the United States is having a big impact on the real estate market in New York City.

Sam Liebman: Yeah, they were bringing in a tremendous amount of capital into the United States.

Slocomb Reed: So just to make sure, our Best Ever listeners and I are on the same page with you here… The influx of capital to the city increases property values, increases rent rates, correct?

Sam Liebman: Well, it increases demand. You bring in the money, you’ve got to do something with it.

Slocomb Reed: Yeah, of course. How long have you been investing in Texas? What about Texas attracted you to the markets where you’re invested there?

Sam Liebman: That’s a great question. I sort of saw what was going on in New York City, a little bit. About 2006 I think it was, somebody convinced me to go to Texas and take a look at what’s going on there. What I saw was tremendous potential. I saw infrastructure being built, schools being built, technology, and also there was a migration from California. I think it was close to, at that time, 200 people a day were moving into Austin. You had the West Campus part of Austin,  where the University of Texas is, and you had about a mile away downtown. And it was vibrant, it was entrepreneurial. And they had a master plan in Austin, it was called UNO – University Neighborhood Overlay. That plan really attracted me, because they were very pro real estate. They were rezoning areas, and they wanted capital to come in and build up the city. You had a young workforce, educated workforce. It had everything… Except water. But it had everything. They were building parks in Dallas, they were connecting uptown to downtown. So I saw all this going on, and I just said, “Wow, this is a great place.” And I just liked everything about it.

Slocomb Reed: So you said Austin had a master plan, UNO, and that plan excited you. On a smaller scale, Sam, in the city of Cincinnati, we’ve seen some tremendous revitalization of the urban core, and there were some major players, both governmental and private capital in making that happen. Since then, a lot of other neighborhoods and villages and jurisdictions in the MSA have come up with their own master plans for virtualization, publicized them, and many of them have not come to fruition at all.

When you see master plans like UNO in Austin, and you see potentially emerging markets that are demonstrating an intentionality about being pro real estate, how do you know that these are plans that will actually be acted upon and how do you know that they will actually result in pro commercial real estate growth?

Sam Liebman: That is a great question. The perfect example of that is Atlantic City.

Slocomb Reed: Atlantic City?

Sam Liebman: Right. Atlantic City, all the casinos, all the other things that are built there – Atlantic City failed because the jurisdiction there failed to develop the outer areas. The whole reason people came in was with that promise that they were going to build up the outer areas. It never happened, and that crushed Atlantic City. I’ll give you another area, Trenton, New Jersey. We bought a building there because we were promised — we’d met with the city council people and they were going to build the Mets… Or no, the Yankees had a minor league baseball team they put in; there was a hockey team put in, and they were going to do all these things. New jurisdiction came in, new political people – nothing happened. So you’re 100% right with that, that is a tremendous point. You don’t know, because one election can change everything.

Slocomb Reed: Is it really the elections that determine whether or not these sorts of master plans come to fruition?

Sam Liebman: Sure. Who’s controlling the money?

Break: [00:17:53][00:19:50]

Slocomb Reed: Let’s create a hypothetical situation. I’m tracking some emerging markets, let’s say, in the Southeast and in the Midwest. My investors and I are looking for cash flow, but we’re looking for long-term growth. I identify three markets, hypothetically, where I think strong growth is possible, and I am seeing a political climate that is favorable to the development of my asset class in these markets. If I see a brilliant opportunity, obviously, I’m going to pounce.

When I’m looking at not necessarily marginal deals, but when I’m looking at opportunities that would require that the market grow as is expected in the current political climate in order to reach my metrics, what should I look towards to ensure that the current commercial real estate favorable political climate will survive? Should I just be tracking elections? Is there something else? Is it possible, and how can I make myself certain that a market is going to remain with good conditions for developing commercial real estate?

Sam Liebman: Okay. Well, it’s a good question, and you have to decide if you’re going to be a pioneer or not. I don’t want to be a pioneer; I’m going to wait to see what’s being developed, how projects are getting approved or not approved. We do look at, in Austin for instance, how many student housing properties were put in for approvals. You can see, you can talk, but I’m going to wait until I see progress before I jump in, especially if you’re doing construction. You want to see unions, you want to see what the climate is there. Are they friendly towards developers? What are the views? We have an ever-changing political climate now, and depending on who gets in, it can change everything.

Just look at the president — not getting political, but from Trump’s policies to Biden’s policies, it’s a 360, 180-degree turn. So what I do is I follow — I don’t want to be a pioneer. I want to follow a pioneer and see how it is.

By the way, in Texas – that’s what happened in Texas and Dallas. There was a company called Power Properties, and on Gaston Avenue we bought over 20 properties. We watched our properties go in, renovate these classy properties, and we saw the rents they were getting. And they were the pioneers, we just followed them, and we were very, very successful. That’s a perfect example of what I’m talking about.

Slocomb Reed: Thinking about inflection points – you don’t want to be a pioneer, you want to follow the pioneers. I’d like to talk about this using Simon Sinek’s language around the bell curve of innovation. I don’t know if you’re familiar, let me give a quick summary for our Best Ever listeners. Everyone knows what a bell curve is shaped like. When you’re talking about innovation, you start the bottom left corner, and you look at the bell curve of the population. Let’s say it is the population for us; I’ll use two examples. One of them is the air pods from Apple that are in my ears right now. Someone has to innovate, and that’s where the bell curve starts. Apple announces that they’ve created this new headphone experience, this new phone call experience, whatever you want to call it. Apple is the innovator.

There is a group of people, a certain percentage, the moment Apple announces any new item, they immediately go wait in line in front of the store 24-48 hours, because they want to be the first to have it. Those people are called early adopters. The early adopters want to see an innovator or a pioneer come up with a great new thing, or create change in the marketplace, and then they want to pounce on it.

After you have the early adopters, you have the early majority. The early majority needs to know that not only has an innovation taking place, but some people have gotten positive results with that innovation. I would be early majority when it comes to these air pods. I don’t stand outside of a store and wait for anything in the cold for 24 hours. But as soon as I saw other people wearing them, I needed to know, because I hate holding a phone to my head. After then after early majority, you have late majority, and then you have what Simon Sinek calls the laggards.

I’m hearing you say, Sam, that you like to be either an early adopter or in the early majority when you see that a political climate is favorable in an emerging market for commercial real estate and development. Where would you put yourself, and how is it that you identify those moments at which you see that the innovators are innovating, or you see that there are early adopter developers coming in and that they’re seeing some success? How do you track that?

Sam Liebman: Okay. So it was an old saying in real estate, you’ve got to have a nose; a nose for deals. On my tax return, when it says occupation, you know what I put down? Opportunist. I’m an opportunist. I made it fortune buying other people’s mistakes. Now, you can be a frontiersman and go out in the wilderness if you choose. I choose to find other people’s mistakes, obvious value-add… My success and what I try to teach my students and followers is to master the fundamentals so you can see opportunities overlooked by others. That’s how I did it.

I don’t go with bell curves, I don’t go with this. Yes, I look at demographics, I look at all of that… But you have to get to a point, as you know, as a developer, where most of the stuff you do is on the back of an envelope, because you know so much that you get a few facts, and boom. That’s where you need to be. You need to be where a deal comes in, you can act fast, you know what to do, and that’s why I say I’m an opportunist. You haven’t yet, but if you asked me, “Well, do you want to go in the commercial sector, do you want to go in the residential sector?” It doesn’t matter, I want to go where the opportunity is.

Sometimes it’s development, sometimes it’s rehab, sometimes it’s in industrial, sometimes it’s what you explained to me, warehouse, which is very good. So that’s what I do. I get so many deals in that you have to weed through them and I have so much experience that I know pretty much right away which one I want to pursue and which ones go into the circular file.

Slocomb Reed: Back of the napkin math is incredibly helpful for deal analysis. I know doing my own off-market lead generation here in Cincinnati, I know apartments. Sometimes I don’t need the back of the napkin to know whether or not a deal makes sense if it’s an apartment building in the size range that I’m already operating. But I’m also looking at office, retail, other commercial uses, and I still need more information and more analysis before I know that I can pull the trigger on something. So that makes a lot of sense.

Sam Liebman: I’m going to tell you something that might differ with you. I think office buildings or retail – there’s going to be Armageddon, and you’re going to be able to pick up those prices at tremendous discounts soon. You don’t need to live in a city to do business with the city anymore. You know what the occupancy rate in New York City is right now? 30%. Now, in my humble opinion, I don’t think it’s ever going to go over more than 65%. If I’m right, all these leases that are going to mature — we have a law firm, 30,000 square feet; you’re paying $80 a foot. You only need half the space now. “Hello, landlord, we’ve got to talk. I don’t want to pay anymore $80. I can get better space for $55 across the street.”

Now, if you look at the ramifications of that, where the owner now has to retrofit the old tenants from his 30,000 square feet to his 15,000 square feet. Maybe the bathrooms are on the wrong side, he’s got to redo that; it costs money. Then he’s got to retrofit the new space for the new tenant, 15,000 square feet. He’s got to pay retrofitting it, he’s got to give TI to the new tenant, probably four or five months free rent, he’s going to have to pay a broker, and he’s going to have downtime. Now that’s one tenant. And this is what’s happening in Manhattan. So I hear people say, “Well, they’re going to be vacant. Maybe they’ll repurpose the space, convert it to residential.” Yeah, maybe you can do that. But actually, when you convert it to residential, it’s not that easy. You’ve got to cut the building, so you lose a lot of space.

I’ve been through it. Remember, I bought the buildings for 575,000 that were 4 million in 1993. I’ll tell you another story. We bought a package of 15 buildings in Dallas, we paid I think was 12.2; five years before that package was $56 million. So this can happen.

I believe that the retail sector, because of technology –and we’re seeing it happen– and because of the office building issue, there’s going to be Armageddon, and banks are going to be inundated with foreclosures. I have a lot of relationships with banks, and they agree with me; they’re gearing up for it.

Slocomb Reed: So whether or not you pounce on a deal has much more to do with the micro economic factors impacting that particular property and its particular distress, more so than trying to predict the markets that are going to see growth?

Sam Liebman: Well, again, the price you pay is, to me, the most important thing. The price you pay is a permanent cost, so yeah. If you’re talking about where I see it going – I could be wrong; actually, I hope I’m wrong, but I don’t think so. One of my successes is being able to time markets. I timed the market in the ’90s, I timed the market in the 2000s… And right now, we’re sitting back, we have a tremendous amount of capital, and we’re just sitting back waiting for the right time to pounce in again. There’s a shortage of rental housing, for a lot of reasons… So I do think that the rental housing sector, which is my favorite sector, because you can get tremendous financing. Who’s going to finance an office building or a retail building? You think you can get attractive financing for that? Maybe if you have a small shopping center with Triple A tenant, you will. But for an office building – banks don’t want to go near that unless you put in a personal guarantee, 50% cash, interest reserves… Who wants to do that?

So I go where the financing is, and residential is the place to be. I think residential is going to keep going up, for a lot of reasons. But the housing market is too big, too strong, too high; people can’t afford houses. There’s also a change in culture with millennials. A lot of millennials would rather rent. There’s a movement now called build to rent; have you heard about that?

Slocomb Reed: Yes, I have. It’s much more popular in other parts of the country than where I am in Ohio, because it has a lot to do with market rents. My understanding is it’s much more popular on the coasts than it is in the middle of the country, because the rents that you can command are proportionally higher there, relative to construction costs.

Sam Liebman: Well, my point was though is the change in the younger generation and the older generation, that they don’t want to own, they’d rather rent. Everything has become disposable and portable now, so you’ve got to look at that. Restaurants are changing the way they construct their restaurants now, because millennials would rather take the food, bring it to their house. It’s like my wife and I. At night, she’s on her iPad, I’m on my iPad. It’s getting to be where there’s no reason to leave the house anymore, which is sad, but it’s the reality.

So all these changes in culture, all these changes – there’s a lot of them. People have asked me, “So where do you think real estate is going to be?” The answer I say is, “It’s Bob Dylan’s song. The answer, my friend, is blowing in the wind.”

If the wind blows this way and interest rates go up, there are other factors or variables, and I can tell you which way I think it’s going to go. If the wind blows right, and interest rates go down, or something happens where they change the laws, I can tell you that. But I can’t tell you which way the wind’s going to blow. And that’s the problem, there are so many more variables than there were years ago.

Slocomb Reed: Sam, are you ready for our Best Ever lightning round?

Sam Liebman: Oh, I never did one of those.

Slocomb Reed: What is the Best Ever book you’ve most recently read?

Sam Liebman: My book, Harvard Can’t Teach What You Learn From The Streets. No, there’s a very good book that I read years ago and I read it again about two months ago… It’s called the E-Myth and it’s by Michael Gerber. I don’t know him or anything, so this is an independent one… But the premise is, to be a successful business, you need three qualities. You have to be entrepreneurial, you have to have management skills, and technical skills. And if you lack in any of those, your business will fail. I’ve found that to be — it’s only like 110 pages, an easy read. I thought it was a great book, really…

Slocomb Reed: Totally, foundational. What is your Best Ever way to get back?

Sam Liebman: That’s what I’m doing now. I’ve given up trying to be the richest guy in the cemetery. Honest to God. I wrote this book, Harvard Can’t Teach What You Learn From The Streets in English, with real-life stories. You can learn to build lasting wealth through real estate by mastering the fundamentals; that is what people don’t understand. You must master the fundamentals to build upon. It’s like being a tennis player and you’ve got a forehand, and right away you want to learn the backhand. But if you don’t master that forehand, there’s going to be a part in your growth where you’re going to play someone that’s going to take advantage of what you didn’t perfect.

So I always mastered the fundamentals, and I’m giving back by doing podcasts that I hope people will learn from, I’m giving lectures, I’m mentoring young kids… I love it, because a lot of kids are lost now. When you mention real estate, it’s a big, hot subject now, and you see these kids… I’ve got a kid coming in Tuesday, he’s in graduate school, and he’s going to come in and start, and I want to keep getting more kids involved. I love it. I love doing it. That’s how I’m giving back.

Slocomb Reed: You’re leading right into our next question here… What is your Best Ever advice?

Sam Liebman: Master the fundamentals, be a gym rat, be passionate. Develop passion. That’s what I did. Real estate was the perfect industry for my personality. Bricks don’t talk back. I never wanted to get involved with raises and salaries of people, but I love increasing property value; it really turns me on. I’ve never been focused on how much money I was going to make, I always focused on, “If I do this right, there will be money.” Master the fundamentals, love what you’re doing, and don’t take shortcuts, especially in due diligence.

Slocomb Reed: Sam, how can our Best Ever listeners get in touch with you?

Sam Liebman: samliebman.com. I’d be happy; if you go in – just join, it’s free. We have articles, see all my buildings. With the building, I put a story of what we did to it pretty much, which I think people will find very interesting. My passion right now is to teach. I’m working on an online real estate academy called Street Success Real Estate Academy. I market myself as the kid from the streets who overcame a lot, became successful, and I’m the same guy I always was; straight-talking, no bull, and that’s it. I’m who I am and I did alright.

Slocomb Reed: Awesome. Well, Best Ever listeners, thank you for tuning in. If you’ve gotten value from this episode, please subscribe to the show, leave us a five-star review, and please share this episode with your friends so that we can add value to them, too. Thank you and have a Best Ever day.

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JF2266: Hidden Investing Secrets With Holly Williams #Skillset Sunday

Holly is a returning guest from episode JF1600. She has been investing in real estate for the past two decades with multiple properties in New York, Texas, Mississippi, and the Carolinas. She also started syndications during the same time Joe Fairless did and in fact, was one of Joe’s first investors. Today Holly is going to be sharing with all of us some insights on her new book called “Hidden Investing – Secrets that the top 1% know”. 

Holly Williams Real Estate Background:

  • Spent 25 years in advertising as an executive while slowly dabbling in real estate
  • 2 decades of real estate investing experience
  • Portfolio consist of properties in New York, Texas, and Mississippi, Carolinas
  • Based in New York City
  • Say hi to her at: www.hiddeninvesting.com/book 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Multifamily syndications, has grown beyond my wildest dreams, and it’s changed my life ” – Holly Williams


Theo Hicks: Hello, Best Ever listeners and welcome to the Best Real Estate Investing Advice Ever show. I’m Theo Hicks and today we’re speaking with a three-time guest, or soon to be three-time guest, Holly Williams.

Holly, how are you doing?

Holly Williams: Hello, Theo. It’s so good to be here with you.

Theo Hicks: Oh, good. Thanks for joining us again. So her last episode was Episode 1600, so make sure you check that out. And today is Sunday, so we’re doing a Skillset Sunday, talking about a specific skill that our guest has, and we’ll be talking about her book called “Hidden Investing”, which is secrets that the top 1% know. So we’re going to get some of those Holly’s secrets today.

Before we get to that, as a reminder, she has spent 25 years in advertising as an executive, while slowly dabbling in real estate. She has two decades of real estate investing experience. Currently, her portfolio is in New York, Texas, Mississippi and The Carolinas.

She is based in New York City. And to learn more about her book and to get yourself a copy of her book, that we’re gonna be discussing today, you can go to https://hiddeninvesting.com/book.

So Holly, do you mind telling us really quickly what you’ve been up to since you’ve last been on the show? And then we’ll hop into that book.

Holly Williams: That’s great. And I thank you again for having me on the show. I’ve been involved in syndications as long as Joe has. I was one of his first investors, as your listeners may know or may not know. And then I began to work with him and kind of learned along with him, kind of at the same time, although he’s always been more advanced than me.

So little did I know — I knew that real estate investing was an amazing way to build wealth, I knew about the tax benefits, I knew a lot of those things, but if you have a full-time career, I was not focused on it, right? It’s very difficult, it’s a ton of work.

So, when I discovered multifamily syndications, it’s grown beyond my wildest dreams and it’s changed my life. By investing passively in syndications, I was able to build wealth, and I watched my parents along the same time do everything that we’re taught in school. I went to business school, I didn’t learn anything. I didn’t even know what syndication was. And when I started learning about it, the only reason I really got into it is because I believed in Joe. And throughout this journey, I’ve realized that we are taught in school – or at least I was, growing up in a middle-class family and going to a state college, all of those things that we do… I was taught many, many, many things, and a good portion of the things that I was taught to do from a financial perspective were really myths, and it didn’t work for my parents.

The whole system basically is really set up for us to die broke. When we put money in a 401(k) and we retire, through a financial advisor who works with us on a retirement plan, all of the things that you’re “supposed to do”, it involves withdrawing a certain amount of money every year. As a matter of fact, the IRS requires you when you’re retired to withdraw this money. So when you do that, it’s taxed at a [unintelligible [00:06:31].19] rate, which I didn’t realize. And once you sell the stock, it’s gone. So I think in our minds and I know in my parents minds, if you have a million-dollar nest egg, we think “Oh, the stock market’s going to return 8 to 10 percent a year, whatever, and that’s going to provide me with an $80,000 income” and that’s just not what’s going to happen in most cases. So it comes down to luck, and luck is not a real great strategy.

So the more I learned about syndication, the more I learned that you could invest passively in a private investment and bypass a lot of the huge fees and those sorts of things that Wall Street does, I began to awaken. And the more I looked around, the more I studied and understood, and sort of basically associating myself with people that are very wealthy and did grow up with this kind of learning… These guys know – there’s a whole world out there that you really have to know somebody; it’s a club… And it really changed my life. And that’s how the rich stay rich. So it’s just my belief. I’m not a financial advisor, I’m not a CPA. I’m just a person that’s telling my experience here with private investing. My eyes opened up the more I learned what was available, so I decided to write a book about it.

Theo Hicks: I think I heard in that intro — because you said in the book you go over 10 things at the top 1% know. And I think I caught a few of those in there, but I doubt we’ll get through all ten. Maybe starting at the most important and then going down, what are these top ten myths of investing?

Holly Williams: So the first sentence in the book is “Our belief systems run deep”, and a good part of the book talks about the mindset of the wealthy. And I’m going to speak for myself, and probably a lot of the listeners can relate to this… We get our values from our families, from what we learn in school, from the media. We’re bombarded with all of this stuff. And I go to school, and my antennae go up when I hear there’s an investment opportunity; I’m like, “Why didn’t I learn about it in school? Why didn’t my parents teach me about it? Is this about Bernie Madoff?” Because that’s all the media tells us about.

So the very first thing that happens is that I go back to my view of the world that I was given. And the wealthy – and I’m talking about the people that have generational wealth, and grow up understanding what I’m about to say, is that their view of the world and their view of how they relate to money, how they look at investing, how they live and what role money plays in their lives, is just very different. And they understand a lot more about how money really works.

When you go to a bank or you go and you invest in a mutual fund or whatever, they’re taking that money and they’re investing in private investments. So they understand that, and they understand how money works, and the velocity of money, and keeping it moving around, and good debt and bad debt… So I go into a lot of those things. And there’s nothing original in the entire book, but what I’m hoping to do, my goal with the book is just open people’s eyes.

You can research what I’m saying, and please, refute me. But it’s true, right? And people tell me, “This is too good to be true. This has got to be a scam, this has got to be–” And the wealthy know about this because their view of the world is shaped at an earlier stage.

The second thing is I was brought up to think that only one person can go to the top, or you have to win the Spelling Bee. We’re all very much brought up – or at least me – in a scarcity mentality; when you go to work in the corporate world, I’ve got to go up the ladder, and if I go up the ladder, you can’t go up the ladder. I’m going to go up the ladder faster than you. And all of those things — well, if you look around at what the wealthy do, they think of a job or whatever as a learning experience and a springboard, and they don’t think about that as the end game, or they don’t think about getting money as the end; it’s a tool to get to where they want to go.

So they plan their lives, and they realize that when Jeff Bezos gets wealthy, that he may very well be a jerk. I don’t know him. But I will say this – he’s not taking anything from me and you. There’s a large segment of the population today that wants to redistribute the wealth. You hear these people, and you see it all the time – people win the lottery and then they are broke in five years, or whatever. And then you hear stories about how people get wiped out financially and then they were able to build it back, right?  Well, it’s because of the mindset.

If you redistribute wealth, there’s a reason it’s just never worked in history, because it’s the mindset first, and it’s learning about money, and it’s changing those built-in behaviors, that frankly, society wants us to have, because it keeps us working, and a cog in the wheel, and it keeps the wealthy wealthy.

So it’s not really a secret; people talk about it. Warren Buffett says all the time that he pays a lower tax rate than his secretary does, whatever. And we just go past that. We don’t focus on that and begin to understand exactly what he’s doing. And what he’s doing is, yeah, he’s buying stocks, but he’s not going into his Fidelity account or E*Trade and buying stocks like you and I are. That’s not what he’s doing.

So it’s just a very different way of thinking about money. So the first couple of chapters is about that abundance mindset, that way of thinking about money. “The 1%” was a better title. It’s really the 0.5%. I mean, really, really wealthy people, that know how to build generational wealth. And again, what we’re taught to do is spend it all and die broke.

Theo Hicks: Perfect. I agree with everything you said. Keep going. What are some of the other myths? I’m going to let you talk, mostly because I want you to get as much of these myths out as possible.

Holly Williams: Sometimes I ramble, because I’m passionate about this. At the end of the day, my Why is that I watched my parents really follow the rules, and I watched myself follow the rules. I started out filling out the 1040-EZ form. 20 years later, I found myself not wealthy, in my mind, living in New York City and paying 50% of everything I made in taxes and watching it go poof. So I don’t believe that the government is a good steward of my money.

Another thing I talk about is the tax code is meant to tell us how much money we owe in taxes. That’s not what the tax code’s meant to do. The tax code is meant to incentivize us to take certain actions so that we can add value to the economy, and grow the economy. And many people smarter than me have figured out the tax code; and it’s not my job to decide if it’s good or bad, it’s my job to follow the laws of the land.

When people say “So-and-so is finding a loophole in the tax code” or whatever – that’s not what they’re doing. They’re following the laws of the United States of America. So by learning those and learning what the government wants me to do, and following what the government wants me to do, I add value to my life, to your life, we have employees, we’re able to grow wealth… And what’s been amazing to me is that I’ve been able to help people like my brother, who grew up just like me, and he’s like, “Oh, my goodness.” I’ve been able to help some of my colleagues in advertising and some of them say, “Oh my God, my accountant says it’s true”, and I’m like, “Yeah, it’s true.” So that’s one myth.

The tax code’s a gazillion pages long and 90% of it is how to do things that the government wants us to do. Another chapter is about — 9/11 really shaped me, and it shaped a lot of people. I watched people jump out of buildings and it was terrible. I was living in Manhattan, and had just flown on in that morning, and it was [00:15:25].05] day.

Now, Coronavirus, just before the pandemic — but I learned a lot from 9/11, right? You learn a little resilience, and that all people are not good, and you need to trust, but verify… And we were all down at ground zero, trying to help, and Christy Whitman was the head of the EPA at the time, and she was just conveying probably what she knew. I don’t think it was intentional, but she came out and said, “Okay, there’s nothing to worry about. The air is safe at ground zero.”

So one title in my chapters is “The myth is the air is safe at ground zero”, because cut to double-digit years later and I’m attending funerals all the time. And I have friends that are awfully sick. So the air was not safe at ground zero, and the experts didn’t know. And we’re seeing it today with Coronavirus. Do we wear the mask? Do we not wear the mask? What kind of mask do we wear? How is this spread? How is it not spread? You can fly on a plane. You cannot fly on a plane.

So all of those things – I don’t think that the quote on “experts” are intentionally going out and saying, “I’m going to lie to these people so that a lot of people would get this thing and die”, but I do think that they really believe, that that’s what they’re saying. But they’re not sure. Well, it’s the “not sure” part that they don’t really tell us. So we’re not taught to really think critically anymore in school, and we’re taught to take what’s given to us and go follow it. And you can still be very respectful of people, and the experts are very smart people, and you can still be respectful of people, but not just take everything they say as the Bible. And I would urge you not to take everything I’m saying. This is my experience. This is one person. So I’m hoping that this will spark some in people’s minds that, “Hey, I’m not the only one talking about it.” And if you start researching it, you can see that pretty quickly.

Theo Hicks: I think my last one is interesting. I’ve talked a lot of people who say that their best ever advice is — they have all the qualifiers, they say “Don’t listen to every single person [unintelligible [00:17:32].11] You’re going to find people who say, “Do not do this specific niche”, or say not to get into real estate in general, and they have all their different reasons why… And to, as you mentioned, be respectful, but make your own decisions.

Holly Williams: Correct. And there are many, many, many ways to invest in real estate, and in anything. And that goes back to looking at your values, looking at what values we were given, and the map of the world that we were given. That maybe it doesn’t work as well anymore.

So my husband, for instance, was taught and it was drilled into him that mortgage is bad, mortgage is bad. You have a paid-for house. Mortgage is bad. And you know something? We have two houses that are paid for. I know that that’s probably not the best use of that equity. I know all of that. I know all about pulling out money. I know all about how to do that safely. But you know something – if it were me, I would do that. But it’s not just me. So if it’s going to cause my husband to stay up at night and worry, it’s just not worth it.

So you have to really understand, I’ve dumped a whole lot of ideas from my map of the world or whatever that I was given, and that’s one of them that I realize is probably not the best financial decision… But not everything in life is a financial decision.

So you really have to decide what you want, and what you feel comfortable doing, and the kind of life that you want to live. I get it, I’m surrounded by all this positive thinking, and I’ve done all of that… But my husband isn’t, and he’s not going to. It’s just not worth it, right? Because I love him, and I don’t want to cause him to be super-stressed about anything. So that has value to me.

So I think it goes back to what kind of investor do you want to be? Where are you in your life? And where I am in my life is about cash flow and capital preservation. And real estate syndication is the way that I do it, and the way that a lot of other people do it; it’s all about not losing money. I need that money for retirement. So to me, that’s the kind of real estate investor I am. There is no doubt that you can take a burned-out building, and it needs a doctor, and go in and rehab it, and make it beautiful, and sell it, and triple/quadruple your money. I’ve made money with depreciation… But you’re depending upon the market. So I don’t do that today.

So it goes back to your values. But what’s key, I think, is to understand that. I know what I’m doing when I’m not paying off my mortgage. People say, “Oh, my God, you’ve got all this equity. What are you doing sitting on it?” And I’m like, “Hey, listen, that’s a personal thing.”

So I think that you have to really understand what’s important to you and what’s not. And the wealthy – that’s really all they care about, is what’s important to them. And a lot of it is maybe because they are wealthy. But if you want something, you’ve got to study people that have what you want, and do at least a little bit of what they’re doing.

Theo Hicks: Exactly. Well, Holly, I wish we could have gotten through more myths, but it is what it is. I think you said some really good ones. You said a lot that I probably missed, so it’s definitely worth relistening to as well as getting her book.

But the ones I did pull were number one, the mindset and realizing that the wealthy have a certain mindset that they got early on in their lives, most likely. We’re taking about people with generational wealth… And that was passed down to them, as opposed to most people are just getting their mindsets from school, from their family, from TV, from whatever. So realizing that and understanding what that wealthy mindset is, and getting rid of your values and adding their values.

The other one was the scarcity versus the abundance mindset. So the myth was that when you’re going out there doing a deal, you’re taking that deal from someone else, as opposed to having that abundance mindset, which is—

Holly Williams: There’s always another deal.

Theo Hicks: Exactly. What the wealthy have. And you gave a good example with, if you were to give it someone who doesn’t have a wealthy/abundance mindset a bunch of money, they’re just going to lose it all. Whereas the saying that “the hardest million is the first million” – because once you make your first million, you know how to make it again, even if you lose it all.

The other one was the tax code. So the myth is that the tax code is just telling you how to pay your taxes, when in reality, it’s something that’s meant to incentivize people to take certain actions to grow the economy, and the incentive is paying less taxes.

The other one was the myth that the air is safe at ground zero. And the thing there is that the experts while they’re smart and should be respected, you need to have critical thinking skills, and make your own decisions. So if someone’s telling you to not do a deal, just because they’re someone you perceive as an expert, doesn’t mean you should just listen to them; you should still pursue it further. Because again, they might have different values, and things that might be important to them that aren’t important to you… Which goes into the other myth you said, which is about the mortgage being bad, being good. And the lesson there was that just because something might be good financial advice doesn’t mean you should blindly do it. There’s other factors that come into play as well.

In this case, for you, you believe there might be a better use of that money, but it’s not worth doing because it’s something your husband isn’t comfortable with. And your husband is valuable to you, so that is one of your values. I thought that was really interesting and important as well.

And then for all those myths, you said they all kind of come back to the values. So again, make sure you pick up her book, it’s called “Hidden Investing”. I’ve got the link, it will be in the show notes.

Holly, I really appreciate talking to you, and Best Ever listeners, as always, thank you for listening. Have a best ever day and we will talk to you tomorrow.

Holly Williams: Excellent.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

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JF2231: Thought Leadership & Public Speaking With Alina Trigub

Alina is a returned guest from episode JF1750 and today we decided to bring her back to discuss and share her advice on thought leadership. She shares the steps she advices people on how to begin to build their credibility and presence so that eventually they can speak at public events and conferences. There are many benefits of public speaking and thought leadership, one for example is the “prestige” presence you will have when approaching deals and discussions of negotiations. You will also learn how to speak with more confidence to present your ideas across your potential buyer or seller.

Alina Trigub Real Estate Background:

  • Founder and Managing Partner of SAMO Financial, a boutique equity firm
  • Help clients over 1,200 doors, over 500 storage units and a $10M mobile home park fund 
  • Works with high earners to passively invest in real estate
  • Based in NYC, NY
  • Say hi to her at https://www.samofinancial.com/ 
  • Best Ever Book: Compound Effect by Darren Hardy 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Speaking on podcasts has helped me book speaking engagements on the big stage” – Alina Trigub


Theo Hicks: Hello best listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today, we are speaking with Alina Trigub.

Alina, how are you doing today?

Alina Trigub: I’m doing great. Hi, Theo. Thanks for having me. I’m really excited to be back here.

Theo Hicks: Yeah, so as Alina said, she is a repeat guest. You can check out her first episode, which is Episode 1750. Thank you for joining us. I’m looking forward to diving deep into a particular skill set, because today is Sunday, so it’s skill set Sunday.

We’re going to focus on a skill set that Elena has, that’s has helped her grow her real estate portfolio. Before we get into that, let’s go over Alina’s background.

She’s the founder and Managing Partner of SAMO Financial, a boutique private equity firm specializing in commercial real estate. She has six years of real estate investing experience and her portfolio consists of mostly apartment syndication investments, equity partner in multifamily mobile home parks, self-storage and a couple of condos. She’s based in New York and you can say hi to her at https://www.samofinancial.com/.

Alina, before we get into the skill set we’re going to talk about today, can you give us a quick refresher on your background and what you’re focused on today?

Alina Trigub: Sure, I’ll try to make it quick, Theo, so that we don’t take too much time. Hi, everyone; my education started in accounting and taxes. I started my career as a tax accountant early on, but quickly realized that it was not the field I wanted to spend my time in, because I was not enjoying what I was doing.

While searching for something else, I decided to switch to a completely different field by moving into the information technology world, where I work to this day. My roles have evolved with career progression, but they mainly revolve around being the liaison between business and technology within the information technology world.

While working, while progressing in my career, my husband and I had growing careers and growing income along the way, but I have always been thinking about finding ways to lower taxes as a former tax accountant; that’s been on my mind for many years. That led me to real estate. Finally, about seven years ago, I took action, and decided to do my research. After doing the research, I was skipping certain points, but they all led me to syndications where I became an equity partner. After doing that for several years, I decided to start my own company, with the sole purpose of helping other people essentially do the same thing I’ve done for several years – build passive income by investing in syndications and having a diversified portfolio. In addition to having a Wall Street investment, I would have a real estate investments.

That’s in a nutshell is my story.

Theo Hicks: Perfect. I think that ending point where you mentioned that you are now focused on helping other people do what you do is a good transition into the skills that we’re going to talk today, which is thought leadership. And then we’re also going to get a little bit more specific and talk about public speaking.

I’ll let you start off and give us your thoughts on thought leadership. I know you’re on BiggerPockets a lot, posting. Whenever I post on BiggerPockets or I go on BiggerPockets, I always see your name at the top of the list for a lot of multifamily forums. Maybe kind of walk us through what your thoughts are on thought leadership, and then we can transition into talking about public speaking.

Alina Trigub: Absolutely, yeah. I do see you a lot on BiggerPockets as well. When someone wants to start a business and the business involves working with other partners or maybe passive investors, they have to start building their own thought leadership platform.

The first step of the thought leadership platform is having your own website. The website doesn’t have to be too complex. The main things that it should have is a clean homepage that states what you’re in the business for or what are you offering people, what are you delivering, what are your services and so forth.

Then you should also have an About page that lists you and your team. If you have any social media, then have a social media page, where maybe you’re listing the podcast interview like this one, or articles where you’re quoted or articles about you. In addition to that, any speaking engagements that you’ve had.

A basic Contact page is also needed, so that people know how to find you. And that’s basically the main ones. People add various other pages, but it’s really up to you as to how much content you want to put.  The simpler the website, the better it is for the end-user to understand what you’re offering and what they’re going to get from it.

In addition to the website, which gives you a web presence, you also need to leverage social media to show your expertise and to build up your credibility. That’s also an essential part of the thought leadership platform as well. You can select one social media platform, say Facebook or Twitter or Instagram, or you can go on multiple. The world is yours. It’s really up to you to decide how many social media platforms you can do. But whatever social media platform you concentrate on, make sure you’re active on it. And you’re not just posting content, you’re actually contributing and offering value to other people by posting the content that benefits other people, and engaging in a conversation.

In addition to that, one of the essential components of building a thought leadership platform, is having speaking engagements. Obviously, they’re not going to come to you automatically, because you need to build up your name, build up your brand first.

Once you build up your brand, you can start networking with people. If people see that you’re bringing value, and that others are benefiting from your value, then you’ll be invited to speak at the conferences and events.

One of the greatest events is the Best Ever Conference show that Joe always has every year, which is a phenomenal conference, which I highly, highly recommend for everyone. I really enjoyed attending it.

In terms of speaking at the conference – again, it’s more or less the world is in your hands. If you are a great presenter, if people are benefiting and the conference hosts are seeing that you’re providing value, then you’ll be invited again and again to many other conferences.

What it does is it does multiple things. Number one, it builds your credibility. Number two, it gives you speaking experience, and number three, it is a way of indirect networking… Because it’s one thing when you’re just in a crowd, meeting people one by one and collecting business cards, exchanging information and just meeting everyone. But it’s a completely different experience when you’re on the stage, when you’re presenting; and not just presenting through your presentation, when you’re able to connect with your audience.

Mind you, you may not be able to find that connection from the get-go. Again, it comes with experience. But some people are natural, and this or any other skill may come natural to them. It will definitely come with experience if it’s not something you’re natural in. But it’s something that as a public speaker, you need to concentrate on finding a way to connect with your audience. Because when you connect with the audience, essentially, you have a conversation and your audience is instantly attracted to you. Well, guess what – when the audience is attracted to you, they want to follow up with you, reach out, and that may translate to deals potentially later, or passive investors, or various business opportunities.

It’s really critical—when you know that you’re invited to speak at the conference, it’s really critical to find out what kind of audience would be expected. Obviously, it’s not going to be one size fits all and there will be different people. But in general, you can get a sense from the conference organizers as to what’s the percentage of people they expect to be representing whether it’s service providers, active investors, and so forth. Based on that, prepare a presentation that will resonate with the majority of audience, and you will be not only your presenting, but it will also be beneficial for this type of audience. It’s definitely very critical.

I can talk about my own experience if you’d like, which will also give our audience a few examples.

Theo Hicks: Sure. Let me ask a few follow up questions first before we go to examples.

Alina Trigub: Sure.

Theo Hicks: I really appreciate you kind of breaking down the first initial steps for the website, and then the social media presence.

For the speaking engagements, is it typically going from doing a podcast or writing blog posts to going to being invited to a Best Ever Conference-type speaking event? Or is it better to do baby steps first, like speak at a small meetup group first and kind of work your way up? Or do you recommend taking that leap, or does it depend?

Alina Trigub: I would say a lot depends on the personality. Some people are charismatic by nature and very outgoing and extroverted. For those folks, they will feel pretty comfortable on stage and will be able to jump onto a big stage from the beginning.

For the folks on the opposite end of the spectrum, if someone is introverted, not charismatic, and just in general, feels extremely uncomfortable speaking to, say, more than two people, then practice is essential. When I say practice, speaking to smaller groups, speaking in front of the meetup groups, getting interviews on podcasts is definitely an essential experience.

It’s sort of similar to buying a property. The natural progression is people start with a single families or small residential multis, and then they jump to commercial real estate, which they may first buy themselves and then buy through syndications with passive investors.

Same applies here. If someone is introverted and just in general not comfortable on stage, then I would strongly advise by getting that practice first, getting the experience of speaking in front of smaller groups, and potentially taking on some sort of training. For instance, I took a training… I found this New York City producer who was well known for teaching people how to speak and present on stage. Her training actually took place in one of the small theaters in New York City. That gave me a tremendous boost, because number one, I was getting feedback from someone who’s been doing it for over 20 years. Number two, because the practice was taking place in a real theater. I was on stage from day one, and that was instrumental in helping me build up my confidence as a speaker and gain the experience which I did not have prior to that, prior to speaking at the conference.

Does that answer your question?

Theo Hicks: Perfectly answers the question. My next question is about how to get invited to these speaking events. Maybe in answering this question, you can go through the examples of conferences or events you’ve spoken at, and then let us know how that came to be. Did you reach out to them? Did they reach out to you? Maybe explain how you were able to get the speaking engagements.

Alina Trigub: All of my speaking engagements, in my case in particular, came from other people reaching out to me and asking me to speak. Partially, it was due to numerous podcast interviews that I’ve done prior to that. Partially, it was due to extensive networking. I’ve been always a good networker—well, not always. But when I realized that I need to network, I started networking with people, not just for the purpose of networking, but essentially for the purpose of meeting potential partners, creating joint ventures, collaborating with people and finding ways to bring value to other people. That was my ultimate goal.

Through these connections, I was getting introductions to conference hosts, and people started inviting me to speak at conferences. While most of it has been in real estate, some of them have been in more of an educational space. And again, this was because someone knew that I’m really passionate about kids and non-traditional education, and they invited me to one event, and then I was invited to another and another. That’s how the trickle-down effect works. When someone sees that you’re bringing value and you’re passionate about the topic, they’ll start inviting you.

You could be a real estate investor, but you may be able to speak on education, or maybe setting up your mindset. No matter what your main expertise is, you may have other skills and other knowledge that you’ll be able to share with other people, that they can relate on… Because you’re going to be sharing it from your personal point of view and from your personal experience. And nothing works better than sharing a personal story, because it’s relatable and it’s something that people can leverage when building up their thought leadership platform, and [unintelligible [00:16:52].

Theo Hicks: Perfect. We’re kind of stepping back and figuring out, okay, so here’s what you do when you’re doing the talks, here’s how you were able to get to talk, which was through being on podcasts and networking… So I think it would be important to kind of go over some of your networking tips; that seemed to be at the root of how this began. We obviously already talked about how active you are on BiggerPockets. Maybe walk us through some of the top three to five ways that you are networking. Again, ideally giving a specific example of what extensive networking event resulted in you having some sort of speaking engagement.

Alina Trigub: Sure. I’m a big proponent of Dale Carnegie’s How to Win Friends and Influence People book, which I read probably 15 to 20-some odd years ago. This book can be applied not only to your professional but also to your personal career. Essentially, what the book’s main point is, people like to talk about themselves. When you meet someone for the first time, try to refrain yourself by jumping on and talking and saying, “I, I, I.” Try to be genuine when you’re listening to the person who you talk to, and ask them questions when they say something. Let’s say they start talking about career progression, or how they started and then closed multiple businesses, or have a big or small family. Ask follow up questions, show your genuine interest in their personal and professional life.

People get attracted to people that show interest in them. And by doing that, and by sincerely being interested in another person, you’re establishing and building relationships. Obviously, it will take more than one conversation. But the first conversation kind of establishes that bridge between you and the person on the other end of the phone or the other end of the table, that you’re speaking to.

When they see that you’re interested in them, they will want to follow up, regardless whether you have some business in common, and they will want to come back to you because that interest that you showed in their career, personal life will remain in their mind, and they will want to follow up with you and potentially stay in touch and do business, or be able to help you in one way or form. I think what’s very, very critical is to show you interest in the other person.

Also, when you’re networking and collecting cards, don’t just collect cards. I’ve seen people do different things. Some people take a business card and ask to take a picture of the person whose business card was handed to them to have a face next to that business card, so they remember who they talked to.

Another example,  or what I typically do is I write notes on each business card that I get. I put the notes that help me remember some stuff about this person. Maybe it’s someone who went to one of my alma mater colleges or maybe it’s someone who I worked with at the same company in the past. Or maybe they were talking about their business, and I thought this was a great business idea and I wanted to follow up with them. Whatever is going to help you remember the person down the road, put that as a note on their business card. That helps you to remember and that will be a good conversation starter when you talk to them next time.

In addition to business cards, as I said, the third point is always follow up. Don’t just collect business cards and put them on your desk, but also follow up, ideally follow up right after the event. And then the if you see that the conversation has been started and  that you have things in common, then follow up again in a few months, find out how the person is doing or how is their business… Or just, if you know, for example, that they’re looking for a multifamily in, let’s say a town where you live, then offer some things that you heard about your town; maybe there is new construction going on, or maybe there is a new company that’s coming into the town. Offer those small tips of information to them, and you’ll be amazed how grateful the people are when you’re bringing the information to them without them soliciting any of it. It’s always rewarding to see a smile on another person’s face when they get those tips without asking for that. Hope this helps.

Theo Hicks: 100%. Is there anything else that you want to mention before we conclude the interview?

Alina Trigub: In general, I think if someone wants to establish and build relationships, whether they’re personal or professional, I think reading Dale Carnegie’s How to Win Friends and Influence People is a great starting point. I highly recommend that.

Theo Hicks: Awesome, Alina. Well, thanks for joining us again on the skill set Sunday and walking us through the power of thought leadership, and more specifically, we talked a lot about speaking engagements and public speaking.

You walked us through the three components of a thought leadership platform. The first is the website, the second is the social media and then the third is the in-person speaking engagements.

We went over a lot of reasons why speaking engagements are important; it builds credibility. And then we also talked about some more specifics on what to do during these speaking engagements. So make sure that when you are speaking, you’re providing value, because you’ll get invited again, and again, and again.

You talked about the indirect networking benefits. Rather than meeting someone one on one, you’re in front of 10, 20, 100 or 1000 people. And as long as you’re able to share your personal experience, tell your story, connect with the audience, then you’re going to be able to get people to follow up with you and then complete deals and partnerships.

From there, you mentioned that some people are natural at public speaking so they can just jump straight to these big conferences. Other people who are more introverted, are going to need some more practice. So maybe start by speaking at smaller meetup groups, start by being invited on people’s podcasts. Then you kind of compared it to the progression of real estate going from single-family home to a small multifamily to a large multifamily. And you also mentioned actually go to a training; you mentioned a training you went to.

We talked about different ways to get public speaking engagements, and you mentioned doing these podcast interviews, as well as doing networking. And then you gave your three tips for networking, which one was from the How to Win Friends and Influence People… Essentially, people love to talk about themselves. When you meet someone, try to genuinely listen to them, genuinely ask them questions and follow up questions, because people are attracted to people who show an interest in them.

Your second one, which I never heard this before, but—well, I heard that don’t just collect business cards. I’ve heard the note-taking before. But taking a picture of them I think is also a really good idea. Because again, you take a picture, you look at the picture, and you are likely to remember more about the conversation than just staring at the business card, you might forget who that person was.

Your third advice was to always follow up with the business card people or people you’re talking to in person, do it right after the event and then if there is a connection, you can follow up with them again a few months later. Then when you’re following up, make sure you’re adding value.

Again, I really appreciate it. I learned a lot in this episode. I’m sure the best ever listeners did as well. Thank you for joining us.

Best ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

Alina Trigub: Thank you, Theo. Great to be here.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

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JF2132: 100 Years Of Experience With Dean Marchi

Dean is our sweepstakes winner! If you were not aware, we did a sweepstake for the first time ever for a lucky listener to enter for a chance to be on the show with Theo Hicks and ask questions or discuss their story. Dean was randomly picked and is part of a family with over 100 years of real estate experience. Dean focuses on development deals for multifamily and buyers of apartment buildings. 


Dean Marchi Real Estate Background: (SWEEPSTAKES WINNER)

  • Full time in real estate development 
  • His family started in Manhattan in 1929, but Dean bought his first deal outside of the family in 2005 and did his first development deal in 2009
  • Portfolio outside of family properties consists of 4 multifamily properties, 2 development sites, flipped 26 apartments
  • Based in New York City, NY
  • Say hi to him at: www.GrandStreetDevelopment.com 
  • Best Ever Book: Best Ever Apartment Syndication Book 

Click here for more info on groundbreaker.co




Best Ever Tweet:

“Focus on every deal your involved in, build up a track record and people will begin to talk about it and you will find investors” – Dean Marchi


Theo Hicks: Hello, Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today, we are speaking with our sweepstakes winner. So if you didn’t know, we did a sweepstake where you could enter, all you had to do is subscribe to the newsletter and you have the opportunity to be interviewed on the podcast, and we are speaking with our winner today, his name is Dean Marchi. Dean, how are you doing today?

Dean Marchi: I’m great and I’m very happy to be here.

Theo Hicks: We’re happy to have you and again, congratulations on winning the sweepstakes. Maybe we’ll do it again in the future, so someone listening right now can be in your place in the next few months… But before we get into the conversation with Dean, we’re just gonna do a traditional interview, because Dean does have a strong real estate investing background. He’s full time in real estate development, his family started investing in real estate in Manhattan in 1929, so almost 100 years of experience in his family of real estate investing… But Dean bought his first deal outside of his family in 2005, and then did his first development deal in 2009. His portfolio outside of family properties consists of four multifamily properties, two development sites, and he’s also flipped 26 apartments. He’s currently based in New York City and his website is at grandstreetdevelopment.com. So Dean, do you mind telling us a little bit more about your background and what you’re focused on today?

Dean Marchi: Absolutely. So I really only do two things – I focus on either buying apartment buildings or building apartment buildings. And on the buy side, I’m mainly focused on Class B apartments in Class A or B areas where I see some upside outside of the building itself, and we try to do value add and bring our operational experience to improving them… Just focused on cash flow, and we always pray for appreciation. And on the development side, primarily we focus on what we call infill development in hot neighborhoods. So we’re focused on an area in Philadelphia called Fishtown, which has  a lot of similarities to what we did in Brooklyn, the development deals, the properties that we built there – Williamsburg, Brooklyn and Greenpoint in Brooklyn. We have a particular design, focus and style, but those are more Class A properties, exceptionally well located, and we try to bring a little flair to them; we’ve done well. So we’re regional developers of multifamily and regional buyers of apartment buildings.

Theo Hicks: When you started talking about the building – what did you call them again, infill?

Dean Marchi: Infill development sites. So in cities– so we don’t really do, what I would call, suburban walk-ups. Those we buy, but what we build is more of mid-rise apartment buildings in vibrant cities, whether it’s in Philadelphia, Brooklyn or northern New Jersey, where you can walk out the door, get on a subway, get your coffee, come home, there’s a wine bar or restaurant outside your door, that kind of development.

Theo Hicks: Sure. Okay, so you’ve got four multifamily properties and two development sites. So are those four multifamily properties to buy, and then the two development sites to build?

Dean Marchi: Yes, we’ve sold some that we built, and we’ve obviously sold those flips that you mentioned. There are 26 apartment buildings that we bought after the Great Recession, primarily REOs or short sales from lenders who took them back. We fixed them up and put them back into the market, stabilized them and ended up selling them. But we’ve held on to the rental buildings that we’ve built, and we also bought an existing apartment building, about 186 units outside of Baltimore, a suburban walk up as well. So we own and manage and outside of the family stuff, those buildings as well, ten apartment buildings in Manhattan as well.

Theo Hicks: Perfect. So how are you funding these deals?

Dean Marchi: Friends and family in, what I would call, super high net worth. So obviously on the equity side, we’ve only done one institutional deal; I would say more of an institution as opposed to a high net worth family office or just individuals.

So the first deal we did, I raised a few hundred thousand dollars from my parents, my uncle and my cousin’s girlfriend’s parents. So just very typical, sitting in people’s living rooms, raising a few dollars to get the deal done, and up to and including — quite frankly, there are a couple of billionaires who’ve invested with me, because with some humility, I’d expect my parents to give me a little bit of money if it was a good deal, but think of super high net worth people – they have tons of options, and for them to trust me with their money and like the deals that we do, that gives me a lot of confidence and a great deal of satisfaction.

Theo Hicks: For these billionaire super high net worth people, you did mention family office– are they through family offices or are these individual billionaires who are investing you in real?

Dean Marchi: Individual, yeah. There’s one deal that we did that is a family office that acts like an institution. So they’re so wealthy that they’ve set up a team of people to invest their money on their behalf. The ones that, in the past, have invested with us and continue today are people we’ve known through the years or met through friends and family and others who’ve recommended us and referred us. So it’s a pretty broad mix, to be honest. It’s great; it’s awesome.

Theo Hicks: Do you have any tactics, any tips, any piece of advice for someone who wants to eventually work their way up towards having these super high net worth, billionaire family offices investing in their apartment deals?

Dean Marchi: The best advice that I would give anybody is  focus on every deal that you’re involved in; the more successful the individual deal is, the more people around you are going to hear about it. So you build up that track record and then people start to talk about it, and whether it be the lawyer involved in the deal, or the broker who sold it or leased it up, whatever it may be, and you build a reputation. But it’s deal by deal; I don’t think you can leapfrog it; I think people trust in two things – the track record, and the person. So if you don’t have the track record, maybe one thing to do is to partner with somebody who does, and borrow their track record, if you will. Even if you get a small piece of a deal, it’s better because you’re building the track record, and over time, you can point to that experience. The other is that I think that people really do look to the individual. So if somebody likes you and trust you and you come referred by other people that worked with you in some capacity or another, that is really helpful for people, and quite frankly, I don’t think that changes from somebody investing $50,000 to somebody investing $5 million. I think those are the two things that people care about.

Theo Hicks: Something else you’ve mentioned too, and again, you might have the same answer – the track record and you a person, but you mentioned that these super high net worth people clearly have a lot of people wanting money from them. So obviously, I could have a really strong track record, and I could be a really good person… So did you meet these people just naturally, just word of mouth, eventually you got to them? But I would imagine that happens a lot. A lot of people are doing big deals, but not everyone has these super high net worth people investing, so once you’ve got that massive track record, what are the types of things, at least from your experience, that set your deal apart from, say, someone else who’s done the same number of deals as you, but is not attracting that type of money?

Dean Marchi: That’s a great question.

Theo Hicks: Does that make sense?

Dean Marchi: Yeah, it’s a great question. So I don’t do a ton of deals. As I said, I’ve been at this for a fairly long time and I haven’t done 100 deals. I do think that we are able to find better than average deals, and there’s no secret to that; it’s pounding the pavement; it’s driving the streets; it’s making the phone calls. But yes, we find, I would say better than average deals, but again, I just think it’s that track record, and what we try to do is to act like an institution in the middle market. So what I mean by that is, we like to do mid-size deals. So for example, the last building we built was 52 units. There are people who are putting up 800+ units in the same neighborhood. There are also a ton of people putting up four or five or six  or ten-unit buildings. So we like to be as sophisticated in our reporting and our approach to how we design and the team that we hire as the guy putting up 800 units, and make our deals though – because they don’t require hundreds of millions of dollars of investment – to make a deal available to somebody who has $100,000 or as I said, $5 million to invest.

So as I said, it’s probably true that we don’t really bother doing a deal that is, what I would call, an average deal, and beyond that, it’s just relationship management. It’s just the same thing, just talking to people, making sure they understand we have the same problems with our deals as somebody doing big deals or small deals, or the same kinds of deals. They’re not without issues, and we have had, fortunately, a track record where quite honestly, Theo, in the 90 years that we’ve been in the business, we’ve never even been late on a mortgage payment, and we started in the Great Recession, having gone through the Great Recession and COVID-19 related issues, and we’ve never even been late on a mortgage payment. So when I say it’s deal by deal, collectively over time you ended up with a track record of good performance, and we don’t oversell. Thank God, we’ve never lost money on a deal. All of our deals have performed at least as well, if not better than our pro forma. So people trust in that. And I always tell people, any deal that we’re going to do, eventually, something’s going to go wrong. We can’t keep it going forever. But I give them my solemn promise that I will treat their money more seriously than my own, and no matter what comes up, I will have at least three solutions for it. We’ll choose the best one at the time with all the information that we have, and try to make right. So people appreciate that and give us their money. So yeah, that’s it. It’s not that complicated, I guess.

Theo Hicks: That’s certainly perfect advice. Alright, Dean, what is your best real estate investing advice ever?

Dean Marchi: Well, I think there’s three things that I would say. Number one is buy apartment buildings… And not to be over simplistic about it, but Theo, what I would tell you is the first human being who decided to walk out from under the open sky and into a cave found that that was probably better than being out in the open, and I will say that if one day, human beings are living on Mars, I suspect that they’ll want a roof over their head. So it’s one of those essential needs, and I think you can’t go wrong with it… Subject to number two, which is not to use too much debt. I’ve seen people lose buildings, I know people who’ve lost their buildings when events beyond their control, such as the Great Recession or other events – it’s because they took too much debt. So there was a time before the Great Recession where you could buy an apartment building with no money down, all debt. So I would say, be cautious about taking on too much debt.

And then the third bit of advice would be to really think about holding it for the long term. That’s where you have really the greatest return. If I tell you what my grandfather paid for his first Manhattan building and what it’s worth today, it would spin people’s heads, but hold it for as long as you can, and I guess a little bonus bit of advice is try to get with people like you, quite frankly. Learned from your awesome book; wherever you can get with people who have experience in whatever you’re going to do, whether it’s real estate or anything else, that’s a goldmine that quite frankly, I think too many people overlook. Those are my three bits.

Theo Hicks: Perfect. Alright Dean, you ready for the Best Ever lightning round?

Dean Marchi: Sure, yeah. Let’s go.

Theo Hicks: Okay. First a quick word from our sponsor.

Break [00:15:01]:08] to [00:15:50]:04]

Theo Hicks: Okay, I’m gonna do the normal question, but I do have one question that I would like you to answer as quickly as possible, but I’ll get to that one in a second. So first, what is the best ever book you’ve recently read?

Dean Marchi: So without sounding like because I’m on your show, but certainly I would include in that answer The Best Ever Apartment Syndication Book by you and Joe. And one that’s overlooked, if you don’t mind my saying more than one, is Powerhouse Principles by a man, a hero of mine, Jorge Perez. He’s the CEO of Related Group in Florida. It’s development focused, but there’s a ton of good advice in that book. And then the Steve Berges book, The Complete Guide to Buying and Selling Apartment Buildings; those are three favorites.

Theo Hicks: If your business were to collapse today, what would you do next?

Dean Marchi: I would go and do exactly what I have always done. I would go and talk to everybody that I know and start over and do exactly what I’ve been doing for my life. Wouldn’t change a thing, just start over.

Theo Hicks: So the next question I want to ask you – I don’t know exactly how to ask this, but you hear stories all the time of how the one generation makes all the money, and then the next generation maintains it, and then the next one loses all of it…

Dean Marchi: Yes, 100%. I know exactly, yeah.

Theo Hicks: Yeah, you’ve got your grandfather who started the business, your parents are in the business, you’re in the business, all of you guys are successful… So what’s been the main thing that you can think of that has allowed your family to do that and not fall into the cliché trap that I just mentioned?

Dean Marchi: Wow, Theo. Awesome question. Honestly, my whole life, I don’t think anybody ever asked me that, and I think that the immediate answer is that one thing that’s really important to all of us throughout all three generations is that core family. It’s exactly what you said, it’s a business, but first was the family. So my grandfather passed along a lot of really strong Italian principles, if you will, which is where my family is from. Through my father– my father always taught me those lessons and I teach those lessons to my children. And the way I approach the business is that I am giving it and I am preparing what I do to be handed off to the next generation. So we build with incredible quality, we approach everything very honest with our tenants, we really try to honor them and to treat them well, so that when it goes to the next generation, if God Willing it happens, that the buildings, the business is well prepared for that transfer. And of course, I try to pass along every bit of advice that I gather from people like you and others and from my own experiences on to my children and make sure that they understand that they now have the responsibility when that handoff occurs, that they have the responsibility to prepare it for the next generation as well.

And always to remain humble, I think that’s the other thing. Nobody’s bigger than the market; that’s really important too. The way you phrased the question, that oftentimes the son screws it up, if you will, or the daughter goes and blows the business up… I think if you have some humility with what you’ve been given and a sense of responsibility to pass it off, you perhaps avoid some of that hubris that can lead to a business collapse.

Theo Hicks: Perfect. Great answer. I’m surprised no one’s asked that before. I had [unintelligible [00:19:06].25] but I forgot.

Dean Marchi: No, that’s awesome. I appreciate it very much.

Theo Hicks: Okay. And then lastly, what’s the best place to reach you?

Dean Marchi: Probably our website, which is grandstreetdevelopment.com. But my email is dean [at] grandstreetdevelopment.com, or we also have an Instagram page, which is @GrandStDevelopment; those would be the best ways to get me.

Theo Hicks: Perfect. Alright Dean, I really appreciate you coming on the show today. I learned a ton from this conversation. Some of the key takeaways that I got – number one, you talked about some tactics for being able to attract that money from the billionaires, the super high net worth people, the family offices, and at the end of the day, it really just comes down to, as you mentioned, the two things, which is the track record you have and then you as a person. So it’s just focusing as much attention as possible on every single deal to make sure that it is as successful as possible… Because then, once you’re successful, people start talking about you, you start building up a reputation, and it’s a snowball effect where eventually people know, like and trust you enough… And you’ve been referred enough times that you’re able to reach those higher echelons of investors. So you said it’s step by step; there’s really no hack or shortcut or cheat. It’s just going deal by deal and making sure each deal is as successful as possible.

A couple other things you mentioned too, that have helped your track record is, you said you act like an institution in a middle market. So you bring the institutional quality, the reporting and the relationship management; rather than focusing on these thousand unit deals, you do the middle 50-unit deals. Or you mentioned, you got very sophisticated reporting, and then for your family business, in the 90 years of business, you’ve never been late in the mortgage payment, never lost investors money on a deal, have always at least met the proformas… And then I really liked what you said is that you told them that if any issue were to arise, you always come back to them with at least three solutions, and one of those will obviously be used to fix the problem.

We talked about your best ever advice, which is threefold – number one, buy apartment buildings; housing homes are always going to be an essential need. I was just doing a syndication school episode today where they did a survey and asked people, “What’s your priority for paying expenses?” and above groceries, above car payments, above utilities was paying rent. So I could definitely reinforce that. Next was don’t use too much debt, and then thirdly was to think about holding for the long term, because that’s where you realize the greatest returns. And then you also talked about what sets your family apart from other family businesses – the cliché of the grandparent creates it, the dad maintains it and then the son destroys it. You said that it’s really about passing along strong values, and then I really like what you said, which is preparing to hand off the business to the next generation.

So not really taking any shortcuts to make money for yourself now that will screw over your kids in 30 years. Instead, you’re using good quality construction, you’re always focusing on having good relationships with your residents and the people you work with, and then passing along any advice that you get, but also included in that advice is letting your children know or the next generation know that, hey, you need to be prepared to pass it on to the next generation as well. So preparing them early on for that next-level transition… And then just being humble, as you mentioned, as well; no one is bigger than the market.

So again, Dean, I really appreciate you coming on the show. I learned a lot; glad you were our sweepstakes winner. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

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JF2048: Podcasting With Erik Cabral

Erik left corporate America after 20+ years and the catalyst to push him towards another path was getting laid off for the second time. He started by reading Robert Kiyosaki’s book “Rich Dad Poor Dad” and the rest is history. He now is the Founder/Co-founder and Host/Co-host of multiple businesses and podcasts.

Erik Cabral Real Estate Background:

  • Founder/Co-founder and host/Co-host of multiple businesses and podcasts
  • Left corporate America after 20+ years, and jumped headfirst into real estate investing
  • Helps investors grow their capital with different real estate investments and sits on the board of the South Jersey Real Estate Investment Association (SJREIA)
  • Based in NYC, NY
  • Say hi to him at www.podmax.co  

Best Ever Tweet:

“Doubling down on your strengths” – Erik Cabral


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 fluffy stuff. With us today, Erk Cabral. How you doing, Erik?

Erik Cabral: I’m good, man. I am a long-time listener, first-time caller. Big fan.

Joe Fairless: Well, I’m looking forward to talking to you and learning more, and a little bit about Erik – he’s a founder, co-founder and co-host of multiple businesses and podcasts. He left corporate America after 20 plus years, jumped headfirst into real estate investing. He helps investors grow their capital with different types of investments in real estate and sits on the board of South Jersey Real Estate Investment Association. Based in New York City. So with that being said, Erik, do you want to give the Best Ever listeners a little bit more about your background and your current focus?

Erik Cabral: Absolutely, Joe. Again, thanks for having me; it’s really an honor. So I left corporate America after two decades, and there was a catalyst there after being laid off for the second time in my career. There was a spark. I needed to find another way, another goal, and I started to think about ways to invest, because I had some relative success in stocks, but it wasn’t something that I wanted to really continue doing, and real estate was the next vehicle that made sense to me.

So as I started going down that path, I bumped into and took the purple pill, like most of us do, with Robert Kiyosaki’s book, Rich Dad, Poor Dad. It really changed my mindset, it really allowed me to see the zeros and ones, and I got really passionate about educating and saturating myself in as much real estate content and education as possible. So as I started to continue down that path, I started to realize this is really the way I want to create financial freedom for me and my family; I started to grow my network, I started to go to more meetings, and surrounded myself with people that were just doing it and crushing it.

I took down my first multifamily in the first year of investing… And what happened Joe, which is unique to my story, is as I started to do more and more networking and helping others and finding help from others, people would ask me, “Who does your logos? Who’s doing your website? Who’s doing your social media?” and it was all me. I was building it on my own. One person to another, “How can you help me?” “Oh yeah, I’ll help you,” and it became more like clients, and then it grew a creative agency. Then during that time, I also launched a podcast, and I realized then too that this is such a powerful platform. People started to listen and asked me, “Who’s doing your podcast? Who’s creating it?” And I said, “Well if you need help, I can help you.” That turned into a business. So now we produce and create half a dozen podcasts internally with 12 in our network… And then that evolved into a podcasting event, where we bring a bunch of entrepreneurs in for one day, and they all get to record four or five shows on top-rated business podcasts. Yeah, it’s a really wild ride I have to say. It’s pretty cool; a lot of fun.

Joe Fairless: Wow. So your focus now is clearly growing this network and building that business. Is that fair to say?

Erik Cabral: 100%, absolutely.

Joe Fairless: Awesome. So you did some real estate, but obviously, you’re being interviewed on a real estate podcast. So podcasting is relevant to real estate investors, for sure, so we’ll talk about that. I want to spend a lot of time talking about what you’re currently focused on, but just to backtrack a little bit – from a real estate investing side, what have you purchased?

Erik Cabral: My first deal, I started to dip my toe into flipping as most people do. What is wholesaling about? What is flipping about? I experienced some bad things, not necessarily losing my shirt or anything, but finding oil tanks and things like that, which– and I would lose my earnest money deposit. Then at the same time, I was still looking for buying holds. So a deal came to me, there was a multifamily duplex right down the road from me, and I took that down with the confidence of my team and the people and coaches around me that this was the perfect deal. A good friend of mine, a business partner, who you’ve had on your show, Justin Fraser, was like, “You need to manage it yourself so you get the experience.” So I started to do that, which I still manage, and it’s great. It was a great experience. It was a great way for me to leverage that experience and try to start positioning myself as a thought leader, because I knew that that was the path in any type of business. But then it really started to shift into more creative and more marketing and branding yourself.

Not a lot of people have a stigma attached to the word brand or have an idea about that, and I think it’s more about reputation, and I really, really doubled down on trying to help build not only my own reputation, but others in my network. So I started to really get comfortable obviously with real estate and investing, and talking to people every single day in that language. I still invest, more on a passive level. I’m a partner in the Renault Winery over in Egg Harbor Township, which is a massive project by another business partner of mine, Josh McCallen. I’m heavily involved in that, not on a day today, but I would say, more like a week or a month to month, in helping to promote and find investors for that deal and for next deals that are with that partner. So I’m still involved in a passive way, more also for the creative side of things. I’m the creative on the team, and coming up with ideas on how to get that performing, and how to grow the audience and the brand awareness for that.

Joe Fairless: Okay, got it. So what I heard is – perhaps, you didn’t go over all of them, but you bought one buy and hold single-family house and you’re a limited partner in a winery. What other deals have you purchased?

Erik Cabral: That’s pretty much the extent, because I really came to a crossroads, Joe, where I realized, “Do I continue down this path?” I started to look at larger deals, I made offers on 22-units, and I started to realize, “I think this is probably the place to go, in terms of creative,” because whether you love or hate Gary V, it’s all about doubling down on your strengths. When I really adopted that concept and that idea, I was like, “The industry and the people around me are really beckoning me to help them create within real estate. What can you do to help me in social media? What can you do to help me with a podcast?” So that was when I just decided this is a way I could service the community for now, while still trying to continue my financial freedom path and building my wealth from a passive side of things.

Joe Fairless: I’m a firm believer on doubling down on your strengths. Let’s talk about your single-family house, lessons learned, and then let’s talk about what you’re doing now. Just a single-family house, you manage it yourself. Is it New Jersey?

Erik Cabral: Yeah, it’s in New Jersey.

Joe Fairless: Do you still own it?

Erik Cabral: I still own it.

Joe Fairless: How much did you buy it for?

Erik Cabral: I bought it for $86,000.

Joe Fairless: 86k. How much do you put into it to date?

Erik Cabral: I’d say, we probably put $3,000 to $4,000 into it.

Joe Fairless: Okay, alright. So very little relatively speaking.

Erik Cabral: Very little.

Joe Fairless: What does it rent for?

Erik Cabral: The first unit rents for $1,000, and then the other unit rents for $800.

Joe Fairless: Okay. So, $1,800 rent, all in, for $90,000. That’s a screaming deal. That’s the 2%.

Erik Cabral: I know.

Joe Fairless: A lot of people aim for the 1%, rule but you upped the game to 2%.

Erik Cabral: And we recently refinanced it. So I pulled 75 k out of it, brother. Oh man, that was a big day. My wife finally said, “Why aren’t you doing more of this?”

Joe Fairless: What was your answer?

Erik Cabral: My answer was, “I want to build this agency with the same concept and idea that–” syndicators and operators, when we buy multi-families, you want to get it performing with the ultimate goal of selling the business.” So I have received offers to buy my companies, the seven-figure range, which is proof in the pudding for me that, wow, this is exactly like real estate.

Joe Fairless: What would they be buying?

Erik Cabral: The company, and everything we do, and all the people that are involved.

Joe Fairless: What’s the company name?

Erik Cabral: It’s On Air Brands.

Joe Fairless: What are the main assets of On Air Brands?

Erik Cabral: We produce podcasts; that’s our main bread and butter. So we have six shows that we produce, we create from scratch and we push out every single week, and then we have a network that we’ve built, of a dozen podcasters that are all part of the network. They get to join our events, they get to have us help promote their shows. We all have that abundance mindset, so everyone is all-in in promoting and helping to gain the followers and the listeners on each other show. The other things that we do for clients is social media marketing, and we also do live streaming events when we go to expos or conferences; we’ll Livestream there. Then on a lighter end, this is a heavier lift, Joe, is marketing, deep-dive marketing, and trying to figure out their business and new avenues and channels and platforms that they can really help to grow. They’re leads, we’re trying to create new leads for them.

Joe Fairless: What are some interesting ways that you’ve helped them find new leads?

Erik Cabral: Well, it’s always about social credibility; credibility that you’re an expert. We got to establish the “know” first, and then we get the “like”, and then we get the “trust”. So we first identify if that’s the path that they’re on. A lot of them already have it, because they’re small to midsize businesses, but then they don’t have a lot of social media presence. So what we do is we really clean up what they have. If it’s outdated– usually websites that look like they’re from the late 90’s early 2000’s, they all need refreshing, they need to be optimized for social media. A lot of brands out there don’t have logos that you can read when small on a phone. So we take it and we refresh it, and then we start to make it consistent, because a lot of these business owners don’t realize there’s LinkedIn, there’s Facebook, there’s Instagram, there’s websites, and it looks different on every single platform.

Joe Fairless: So on that note with social credibility, you mentioned having a social media presence, making it consistent. When you first work with a client, do you have a checklist of things that you want to make sure that you’re addressing with them, and if so, what are some things on that checklist?

Erik Cabral: We do have an assessment form, and they fill out the forms so that we can identify if they are the right match and we can help them. Some of the things are “Do you have social media, are you active on social media?” Some of the other things– one of the big ones honestly, Joe, is do you have a marketing budget? There’s a lot of people out there, especially in the real estate space, that are just starting up or solopreneurs, and they can’t necessarily afford to hire a team. So what happens there is, we’re more than happy to recommend them to someone, say, on Fiverr or Upwork; that’s a better fit for you as you build and grow, and then give us a call when you have a marketing budget.

Joe Fairless: How much is an actual budget?

Erik Cabral: Industry standard usually says you should be using about 10% of your revenue. So I often tell that to folks and it’s like sticker shock. But yeah, a lot of people don’t realize that they need to devote dollars and invest in marketing. Marketing is a broad term, but it could be something as simple as your business card, it could be something as simple as hiring a VA to help you manage social media, because I know it’s somewhat daunting for those who don’t do it or not comfortable in front of the camera. They could and should hire someone on the backend to help them out a little bit. But that is some of the criteria that we discuss with potential clients.

Joe Fairless: 10% of marketing budget. So you just found your ideal client, they’re ready to invest 10% of their revenue into the marketing budget; at least 10%. What is your ideal client’s business and what are their challenges?

Erik Cabral: Ideally, our clients – they’re in real estate. So whether that’s syndicator or whether it’s a flipper or whether it’s a self-directed IRA company, there’s a lot of different things in our space. Real estate agents… So their challenges are mostly leads. Everyone wants to spread the word out on how they can help and how much value they add to someone’s life for business. So we help them generate leads, or at least, what I love to do is create that credibility for them, that reputation. Like I said, that brand where it’s recognized. That was where I came from. I was a branding guy, I developed logos for Fortune 10 companies, and so the benefit of how powerful a brand can be if you do it right and you’re consistent about it.

But there are backend things that I can’t speak too much about because I have teammates that do that well, in terms of building those lead generation tools like landing pages and offering things of perceived value, like lead magnets we call it in the industry… And then that is a funnel, the first touchpoint; someone sees it, and they say, “I’m interested in that,” and they download it and now you capture their information, hopefully their phone number, and it goes into your database. So we help with clients on that end, but we really love creating podcasts and we love creating all that other front end stuff.

Joe Fairless: You’ve got this ideal client – they’re in real estate, they want to continue to build credibility and generate leads, they’re ready to invest 10% of the revenue into marketing, but there’s one caveat, and it’s a big one. You can only put that 10% of the revenue that’s going into marketing into two things. What are those two things you’re investing in for them to accomplish their objectives?

Erik Cabral: It depends honestly on their goals, where are they now, where do they want to be, what are they trying to accomplish. So it’s a different answer for everyone.

Joe Fairless: So, I guess, pick a scenario and what would those two things be for your scenario?

Erik Cabral: Yeah, it’s a biased answer, because I love podcasts and I’m doubling down on it, but if they meet that criteria and they seem like someone who could be a thought leader or they already are a thought leader, they’re just not leveraging it the way they should or could, then I would recommend a podcast, and what does that look like. But I’ll tell you, Joe, and you know this, podcast is a business; you can’t do it really as a side hustle. If you intend to use it as a lead gen and credibility play and positioning yourself as a thought leader, you really, really need to understand that this will grow and become a business if you’re doing it right.

So I tell people that, “Hey, I know it’s hot and everybody’s trying to do it now and they want to create one, but I implore you to really think about dedicating at least six months to a year, really figuring out what the strategy is, and what you’re going to be talking about. Is it adding value to people’s lives? And then also carving out time in your day, in your week to content and how you’re going to start, when you’re going to record, if you want it to be an interview format, who do you have connections with that can be on your show, are you going to be a solo person, is your personality big enough or interesting enough to be in that space?”

So there’s a lot of things and I always now push people just to “Don’t do it if you think you’re not going to commit to it.” But the other answer, aside from podcasts, is how does everything look? We’re painting a picture, like a tapestry, and we’re putting all the pieces together in a mosaic that is your reputation and your brand. What does that all look like from a 10,000 ft level? So that’s where we really look at and audit our clients and say, “We can help you here because there are pieces that are missing, and in order for it to all work together, we’ve got to do some tweaking and modifying here.”

Joe Fairless: What are some mistakes people make when creating a podcast, either the mechanics of it or the actual content piece?

Erik Cabral: Some of the mistakes are not being consistent. So, say you recorded 10 episodes and you stack them, and then, you get lazy about it, and you say, “Oh, I’m good for a couple of months,” and then they fade away. In the industry, we call it podfade, and statistically I hear– I think it’s a large percentage, Joe. I think there’s 800,000 podcasts currently and honestly, 60% of them are not active. It’s something crazy, and don’t quote me on that.

Joe Fairless: I think– I bet it’s higher. My guess is higher, yeah.

Erik Cabral: It’s drastic, yeah. So that’s what I want to tell people. Don’t be a statistic, create a podcast that’s going to add value. Here’s another thing that I want to make sure your listeners and audience understands. There’s so much out there. What am I going to offer? How am I going to help people? There’s too many podcasts. Well, there’s no podcasts with you and your experience and your voice. You’re unique, whether you believe it or not. So if you trust and believe in yourself, then it will resonate. You don’t need 8,000 downloads, 100,000 downloads per episode. If you have 100 people that are following you every single day, every week, then there are clients. Do you need more than 100 clients? Probably not.

Joe Fairless: Yep, I love your points, and it’s so true, and it’s also who you surround yourself with. So if you’re around a bunch of other people and you’re hearing that they’re doing podcasts– well, your friends might be doing podcasts, but if you take a step outside of your circle and you really look at the population in total, percentage-wise, 800,000 podcasts, that’s 800,000 people. That’s not a lot of people, relative to the population and relative to who actually listens to the podcast. So there’s still a lot of opportunity, and they’re becoming a more prevalent media channel, and it’s been great in a lot of ways. Okay. So taking a step back, based on your experience as an entrepreneur who’s also involved in real estate, but really your special sauce is on marketing and building brands, what is your best advice ever for real estate investors?

Erik Cabral: There’s so many good things out there, but I highly recommend you surround yourself with people who are just crushing it. Our mutual friend, Matt, he was one of the first people that I [unintelligible [00:19:14].18] myself next to and became a shadow, and really learned a ton just by being around people that were doing what I wanted to do. Really, when I started to analyze deals and get more and more comfortable with the concept of investing, then I would leverage them and say, “Hey, what does this look like? It looks great to me. Am I right?” and just having that voice and having that option to say, that guy’s done hundreds, if not thousands of deals, and he says it’s good or she says it’s good, then it’s good for me.

Joe Fairless: Yeah, we are a product of who we surround ourselves with, and if we want to elevate, we elevate our peer group and we’ll get to that level, assuming we follow what they’re doing. We’re gonna do a lightning round. Are you ready for the Best Ever lightning round?

Erik Cabral: Absolutely.

Joe Fairless: Alright. First, a quick word from our Best Ever partners.

Break: [00:20:08].23] to [00:20:57].19]

Joe Fairless: What is the best ever deal you’ve done, whether it’s business or real estate?

Erik Cabral: Yeah, I would have to say, I lent money, so I held a note. For roughly 90k – so let’s just round it up to 100k – and I got two points upfront, meaning it was 2%. So they paid me $2,000 just to get it started. Really just paperwork on the backend that’s done by my self-directed IRA company. Then I asked for 12, we negotiated to 11, and it went over a year, Joe. So they said they needed it for a year. I was like, “This is cool. I’ll make 11k,” and they went for a year and a half.

Joe Fairless: Even better.

Erik Cabral: Yeah. It was like it was inconvenient. They’re like, “We’re so sorry.” I’m like, “All day, just keep it. It’s okay”

Joe Fairless: Yeah. As long as you pay me back, eventually.

Erik Cabral: As long as you pay me back, yeah.

Joe Fairless: Right. What’s a mistake you’ve made in business?

Erik Cabral: In business. Staying in corporate for too long. But no, I would say, it was probably staying in corporate America for too long, brother. I really should have started my own company sooner.

Joe Fairless: What’s the best ever way you like to give back to the community?

Erik Cabral: Just networking and helping the people around me, constantly. I was telling you off the mic, I’m on the Board of Directors for SJREIA and we have a thousand members. So it’s nice to be able to give back to those thousand members, whether I’m in front of the room or not. I really, really love helping the community, since that’s where I received a ton of help, and if not one or all of my business partners now, I met through that REIA. Also, giving back and adopting the abundance mindset is something what recently was new for me… And when I started to realize that a rising tide lifts all boats — I heard it and I got it, but I didn’t implement that, and once I started to do that, Joe, I was like, “Wow, it’s changed my life.”

My staff, friends, my network; how do I help you and your goals, how do we get you to where you want to go? And the wonderful side effect is, it helps you in the long run. You just have to trust in that process and that it will help you.

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

Erik Cabral: They can go to podmax.co. So that’s our podcasting event. Or they can go to onairbrands.com, and that is our media agency.

Joe Fairless: I enjoyed talking to you about your focus, and that is your media agency, as well as podcasting, also learning about the results of your single-family home purchase. Thank you for being on the show. I hope you have a best ever day. Talk to you again soon.

Erik Cabral: Absolute pleasure, thanks Joe.

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JF2025 : The Differences Between Commercial & Multi-Family With Anthony Scandariato

Anthony is the Co-Founder and Managing Principal of Red Knight Properties, a value add multifamily and mixed-use investing company. Anthony shares some insight on purchasing commercial real estate and explains the differences between multi-family and commercial properties. 

Anthony M. Scandariato Real Estate Background:

  • Co-Founder and Managing Principal of Red Knight Properties, a value add multifamily and mixed-use investing company
  • They have over $500 Million of Commercial Real Estate acquisition experience and control 9 properties
  • Based in NYC, NY
  • Say hi to him at http://redknightproperties.com


Best Ever Tweet:

“Try to find a niche.” – Anthony Scandariato


Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and 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, Anthony Scandariato. How are you doing, Anthony?

Anthony Scandariato: I’m doing pretty good, Joe. And yourself?

Joe Fairless: I am doing well, and looking forward to our conversation. A little bit about Anthony – he’s the co-founder and managing principle of Red Knight Properties, a value-add multifamily and mixed-use investing company. They have over 500 million dollars’ worth of commercial real estate, acquisition experience, and currently have 9 properties with their company. Based in New York City, New York. With that being said, Anthony, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Anthony Scandariato: Sure. That was a great overview, Joe. I appreciate it. And for your listeners, we’re actually right outside of New York City, based in New Jersey; about a half an hour outside of Midtown Manhattan.

Joe Fairless: Where in Jersey?

Anthony Scandariato: [unintelligible [00:01:46].29] Morristown area.

Joe Fairless: Okay.

Anthony Scandariato: So we’re pretty close to New York… And we started our company – my partner and I – about  a year ago. In terms of the acquisition experience, I worked for an institutional real estate operating company in New Jersey, where bought office buildings up and down the East Coast, where we were renting to Fortune 500 companies and doing value-add plays, but on the office side. I kind of realized that for a long-term investment strategy, or even a short-term investment strategy, that office wasn’t the best thing to be in, at least in this point in the cycle… So I kind of decided to start buying a few deals on my own, deals that I could just buy and build a track record, and then bring on additional partners and investors once some of these deals came to fruition and returns were actually realized, to feel comfortable to actually be taking the leap doing this full-time at Red Knight in 2020.

Joe Fairless: You bought office buildings up and down — what did you say, the East Coast? Did I hear that right?

Anthony Scandariato: Yeah, we bought anywhere from pretty much New Jersey, all the way down to Florida.

Joe Fairless: Okay. Purchase price ranges were what?

Anthony Scandariato: For your listeners, very big range. It was anywhere from 10 million to 287. That was our largest.

Joe Fairless: Alright… Where was the 287 property?

Anthony Scandariato: It was a building in downtown Charlotte, Wells Fargo Center. Great market, for sure, for any asset class, I would think.

Joe Fairless: How many years were you working at that institution?

Anthony Scandariato: About 5,5 years.

Joe Fairless: 5,5 years, okay. And what was your role during those years, and did that role evolve or change at all?

Anthony Scandariato: Absolutely. So I graduated from college actually in ’14, so it was essentially a role out of school; I started out as a very low-level analyst, analyzing different opportunities for the company’s investment strategies. Then I kind of evolved into taking over the acquisitions department, and also at the same time getting involved with a boutique company and seeing everything from the acquisition, to the asset management, to property management, to development, to negotiating with lenders… Almost like running your own within the shop. So a great experience, and I’d recommend it to any of your listeners who are thinking to get into commercial real estate on their own long-term, but kind of want the experience beforehand, and kind of learn from really good mentors who have been successful.

Joe Fairless: To use your words, “a low-level analyst” – what do you do exactly in that role?

Anthony Scandariato: I wouldn’t really call it low-level, maybe that was the wrong term… But more of–

Joe Fairless: Entry-level?

Anthony Scandariato: Entry-level, yeah. Entry-level market studies, feasibility reports, comparable reports… Almost like a basic form for appraising properties. And then after you master that skill, you can look at analyzing investment opportunities for the company, and presenting to the company if this is a good opportunity to pursue, and if we’re gonna pursue it, are we gonna partner on it, and who are we gonna partner with… And kind of run it soup to nuts. It kind of just evolves from there.

Joe Fairless: Talk to us about a feasibility study that you would do, just the components of that please.

Anthony Scandariato: Sure. So you would obviously do a market study, which could be broken down by obviously started with the state, and then it could be broken down by submarkets is what we call them, in certain regions in different states… And as you dig deeper – it depends what asset class you’re looking at, but you look at historical trends for vacancy, you can look at historical trends for rent growth, and average rental rates, look at trends for any new construction, any new development coming on the line, looking at historical sales data, price per square foot… For a lot of your listeners, multifamily is price per unit, and cap rate… Many different metrics to determine if it’s a good investment to underwrite and present to either a limited partner, or another general partner you’re trying to acquire the property with. Nothing else starts without that general feasibility study.

Joe Fairless: Those different data points that you were talking about are variables that are assessed… I imagine that you all had a subscription to some third-party research company or database to pull a lot of that information. Is that correct?

Anthony Scandariato: Yeah, that’s the benefit of also working for a larger company. You have the [unintelligible [00:06:25].18] which is, as you know, the largest commercial real estate information company, at least in the country right now, and they’re trying to take over more… Reis is another good resource, primarily more catered towards the multifamily… And obviously, different news cycle reports, we could speak to different brokers on historical market reports… There’s many ways to get market intel.

Joe Fairless: So as an analyst you go get this information, but I imagine that doesn’t take very long to run these reports, because you’re just logging and running the reports… What are you doing with the information as an analyst?

Anthony Scandariato: So once you’ve found that information, typically — it depends on what asset you’re looking at, and what asset type it is. For example, I was buying office buildings. Typically, they come with an offering memorandum, which is the same that you  see in multifamily properties. You go through that, verify all the information the brokers are presenting to you are correct and accurate from your third-party sources, and then putting together after that a comprehensive financial analysis [unintelligible [00:07:38].18] you can use, and also working for a larger company, they’re able to buy subscriptions to software such as Argus, which is very expensive relatively speaking to just a general simple Excel spreadsheet.

With office properties there sometimes could be a hundred tenants at the property with different reimbursement methods, and different lease expirations, and [unintelligible [00:08:03].09] and expense caps… So it’s pretty comprehensive software. I haven’t really seen an office building modeled on Excel from scratch, but if anybody’s ever done that, I’d love that template. [laughter]

So  you kind of gather all the market information, verify what the broker is presenting to you is accurate, underwriting the property in either Excel or Argus to the best of your assumptions, and then seeing based upon your return criteria seeing if it’s a good investment or not, and then kind of presenting to your internal investment committee, and then it kind of goes from there, depending upon how you’re structured.

Joe Fairless: When you’re looking at the third-party research information and cross-referencing it with the information the brokers provided to verify that it is correct, when it is not correct, what are they typically fudging the numbers or their facts on? What categories or what stuff does that typically involve?

Anthony Scandariato: The number one thing I’ve seen is rent growth. Whether you’re buying a hotel, or self-storage, whatever it is, typically the brokers like to fudge those numbers, so that’s the first thing I look at – what did they assume for rent growth? Let’s just say you have a tenant paying $1,000 for a one-bedroom unit; did they assume that you’re gonna get a 7% increase year one, and then year two a 5% increase, without any renovations or justification for it? Even if you wanna compare that to your historical data, most of the time generally cut that in half, what the broker is saying… But it depends on every asset class, and where the properties are located.

If your property is located in a hot market like Charlotte, for multi I had to look at the 10-year historical average year-on-year rental growth there, and see if whatever they’re underwriting makes sense. And if it doesn’t, we adjust, and then we see how our numbers shake out, and we would go to the broker then and make an offer; sometimes it’s accepted, sometimes it’s countered, or sometimes it’s not accepted at all. That’s generally an overview of how we come up with an analysis.

Joe Fairless: For 5,5 years you were focused on buying value-add office buildings, correct?

Anthony Scandariato: Yes.

Joe Fairless: And you learned within a structured organization, but you were able to get a lot of really good hands-on experience, and have different roles over that period of time… And then you decided “I’m gonna take this experience and I’m gonna pivot in the multifamily.” Now, earlier you briefly mentioned that you moved to multifamily because office near and long-term wasn’t as good as multifamily… But let’s talk about that more. Why not office? Because as you were totally aware, I know, office is not as competitive – at least my perception of it; I’ve never purchased an office building. My perception is multifamily is much more competitive than office… And if you have that skillset of being in the industry for 5,5 years, it seems like that would be a great play for you to just double down on office, since you’re bringing that skillset already…

Anthony Scandariato: That’s a good point. What I would say to that is if you’re looking to pivot asset classes, I would try to find a niche within the asset class you’re trying to pivot to, that not many people are looking at. For example, for many obvious reasons [unintelligible [00:11:36].01] multifamily historically has been very recession-proof, and we can go into those details, but we’ll spare them for another time.

It’s more the fact of you kind of have to know your local market, and understand where all the investors are flocking to, and where some of the investors aren’t, because they’re not aware of the areas.

For example, I live in New Jersey, which we mentioned, and it’s very close to New York City, within half an hour… A lot of investors in New Jersey won’t touch anything West of the waterfront, which is Jersey City, Hoboken… Basically Hudson County. So we don’t stay in those markets at all. We like to go West of that, because that’s number one where we live, and number two where we know, and number three where we’re able to focus on kind of the middle market deals, anywhere from — a small scale we did was a million; we’re closing on our first syndication now which is 5,5 million, we just got another one under contract for 7,3…

So if you’re in between that 1 to 20 million dollar range, if you bought in Hudson County and you had that type of money, you’re probably gonna be buying only 15 to 20 units, whereas if you go further West, you can start to get in the 50 to 100-unit properties, with less competition and buying from very non-institutional owners, where you can really create value, and not many people are looking right now in those areas. But once the waterfront gets heated up, everything trends West, historically as well.

But office in general, to answer your question, you could be really good at repositioning office buildings. It takes a lot more time to do that, in my experience, than repositioning multifamily…

Joe Fairless: Why?

Anthony Scandariato: Vacancy… It depends where you’re at. I’ve done deals anywhere from Jersey to (like I said) Florida, Atlanta, Charlotte, Louisville, Baltimore… Even if you’re in a pretty hot market, lease for office buildings take sometimes months to negotiate, even if they’re only 10% of your rent roll and they’re signing a three-year lease. Sometimes it’ll take four months to negotiate a lease… And then you have to deal with the construction, which could take another 2-3 months, or potentially even six months, depending on how big the tenant is. And then they start to pay rent… And then you’ve gotta do it again. You’ve gotta keep constantly doing it…

So it’s a little different than multifamily, where traditionally you had your leases, and just kind of an expected turnover rate every year, and you kind of forecast that as you build your portfolio and you’re able to plan for it. So office is very fluctual, especially when you have a downturn as well.

Joe Fairless: If you were forced to only buy office, what would your approach be?

Anthony Scandariato: I’d say pretty similar to the multifamily – trying to find a niche. Stay out of C, B, D locations, in gateway markets such as New York City and Chicago and Boston. I would go to secondary markets, which we have, very similar to what we’ve been doing. The cap rates in terms of the spread between multifamily and office – they’re getting tighter. I’m seeing about 100 basis points spread right now on a stabilized property between office and multifamily, which is not anything to write home about.

Joe Fairless: Did I heard you correct, for your first couple deals you’ve used your own money?

Anthony Scandariato: Correct.

Joe Fairless: So what was that first deal?

Anthony Scandariato: It was a two-family house… [laughs] I still own it. I think it’s a great way to start out. It could be relatively affordable…

Joe Fairless: We’re gonna skip past that. What’s the next one?

Anthony Scandariato: Okay. Two-family house, and then I bought another two-family… [laughs]

Joe Fairless: Next… What else?

Anthony Scandariato: Another two-family, but I sold it…

Joe Fairless: [laughs] You got three two-families.

Anthony Scandariato: Basically, I started with three two-families, and then I met my partner through a mutual friend. My partner played for the NFL for eight years, Brian Leonard. He’s a great partner to have. He played for eight years as a fullback, so he’s local to the area that I live in. So we ended up partnering on our first deal. It was a very simple split between the two of us.

Actually, we bought a mixed-use building together. It wasn’t 100% multi; it was about 60% retail, 40% multi… A year ago, which we just turned around and did a really nice cash-out refinance.

So we went from the two, two, two, to essentially a ten. Then we bought another ten, and then we bought a 13, and then we bought a 20, and then we bought another 20, and then now we’re closing on a 51, which was our first syndication, and now we’re doing a 64… So you see the progression.

Joe Fairless: Yeah. Is the 60% retail, 40% multifamily the only mixed-use you’ve purchased?

Anthony Scandariato: No, we actually have three mixed-use properties, but the first property we bought was very local to the area I live in; I knew the building and I was very comfortable with the retail. The other two properties that we have, that have retail only, have one or two tenants, whereas the first building we bought had four retail, so the income from the residential and the other ones were anywhere between 70% and 80%… So it looked less risky.

Joe Fairless: Right. Okay. On that first one that you bought, that is 60% retail, what did you do that the person you bought it from did not do?

Anthony Scandariato: Sure. It’s a great case study. We bought it from a farmer family. They actually had 9 siblings that owned the property. Then what happened was there was a fire at the building a year ago, prior to when we bought it, that occurred. One of the tenants left the candle in the curtain over night, and the next thing you know the whole building was on fire.

It was a little bit of a disaster, but structurally, the building was still sound. They had a nice insurance claim that they collected on, and redid essentially the whole building. But this family is very non-sophisticated, and what they ended up doing was they kept everybody’s rent the same after that occurrence, even though you had brand new apartments and brand new retail space now, that they paid for. So everybody’s rent – let’s just call it $800 or so, on the market is more like $1,400. So we went in there and obviously we were able to increase rents, and we also were able to add a little bit more upgrades that the insurance company didn’t add.

So we added some upgrades, we got a substantial rent increase from all the residential, in addition to leasing up some vacant retail that was sitting vacant for years.

Joe Fairless: How do you go about leasing up vacant retail?

Anthony Scandariato: It depends how big the space is. With a local broker. In this instance it was 1,000 sqft. It was actually like a lot style, it was kind of lower-level… We didn’t even think we would rent it, to be honest, for a while, unless we gave it away… But we rented in two weeks after we bought it, and we just put it on the market with the broker.

Joe Fairless: Huh. How much?

Anthony Scandariato: We got $10/sqft, so about $1,000… But if [unintelligible [00:18:06].16] you just add a lot of value to your building, with one lease. So that happened, and there was also a retail tenant that was below market, that we knew was leaving. Every time we buy a building, we like to interview the tenants, if it’s retail or office; obviously, it presents more risk than apartments, and we like to see what’s going on.

So we knew they were gonna be leaving, but their rent was $500 below where somebody else new would come in… So they ended up telling us they were leaving, so we kind of planned. We had the broker market the space already while they were still occupying it. When they left, they got somebody paying actually $550 more than the previous tenant, with no turnover, no vacancy. That was really a slam dunk deal.

Joe Fairless: What type of business is it?

Anthony Scandariato: The new tenant – it’s like a curated goods for men’s supplies. They have men’s deodorant… It’s kind of a cool, crafty space. The space before that was a high-end women’s boutique.

Joe Fairless: Okay. Last question on that, and then I’ll ask you the question I ask everyone… How much did you buy it for? …and I believe you said there was recent refinance – what did it appraise for on the refi?

Anthony Scandariato: Sure. Pretty crazy numbers, and we weren’t expecting this… So we bought it for 1.285 million. Our all-in basis was around 1.3. It appraised for $2,110,000.

Joe Fairless: Excellent. Over what period of time?

Anthony Scandariato: A year.

Joe Fairless: Wow. I’m glad that you talked about what you all did, because that is what attributed to the value increase. Anything else that you didn’t mention, that attributed to the value increase?

Anthony Scandariato: People were flocking over the building when we were making offers. I think we positioned ourselves well. I was friendly with the broker, and we showed a proof of funds, and it was kind of a no-brainer… But we were very fortunate. Maybe it was a little bit of luck and market timing, but very fortunate to have bought that, and really looking to that as a case study for our future success… Even though every deal is not gonna be like that, but… A really good start.

Joe Fairless: What percent of money did you get out on the refi?

Anthony Scandariato: 100%.

Joe Fairless: And how much of that was Brian’s versus yours?

Anthony Scandariato: It’s a very simple 50/50 split.

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

Anthony Scandariato: Like I said before, find your niche, and find your niche asset class. Know your local market and where you think you think you can add value if you wanna be a value-add investor, which I’m assuming a lot of your listeners do. For cashflow reasons you could buy a very safe product that’s not gonna go anywhere, but you’re probably only gonna make maybe 5% to 6% on your money. Some people might be okay with that, but… I would say find your niche if you’re trying to create value, and eventually syndicate and bring on other partners… Find your niche.

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

Anthony Scandariato: Sure.

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [00:20:52].15] to [00:21:39].13]

Joe Fairless: What deal have you lost the most money on?

Anthony Scandariato: Knock on wood, nothing yet.

Joe Fairless: Best ever deal you’ve done?

Anthony Scandariato: I don’t think anything could beat the deal I’ve just described right now…

Joe Fairless: What’s the best ever resource you use in your business?

Anthony Scandariato: I think Costar is a really good resource for market intelligence.

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

Anthony Scandariato: We do a charity event every year for children with cancer, that my partner runs. We like to donate a part of the profits to that. And we run it in New York City every year.

Joe Fairless: And how can the Best Ever listeners learn more about what you’re doing.

Anthony Scandariato: You can visit our website, RedKnightProperties.com. Like us on Facebook, or you can add me on LinkedIn. I really appreciate the time, Joe.

Joe Fairless: Yeah, I appreciate you sharing the office experience that you have, and how you’ve applied that to apartment buildings, as well as some mixed-use projects that you’ve done, and how you and your business partner have created the company. I love the case study, as well as just talking about your approach when you were an analyst, how you approached the feasibility studies and the different components of it, and what you look for… And then trust, but verify on those offer memorandums brokers provide, especially the rent growth; as you said, that’s the number one thing you wanna make sure is accurate, is those assumptions.

Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you again soon.

Anthony Scandariato: Great. Thanks a lot, Joe. I appreciate it.

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JF2015: Networking Made Me Money With Jacob Busani

Jacob is a real estate broker based in New York City and he also focuses on raising money for multi-family syndications and has recently completed his first hotel deal. In this episode, he shares how he has been able to build a business through networking by attending events, LinkedIn, and reaching out to others on Facebook.

Jacob Busani Real Estate Background:

  • Real estate broker and syndicator
  • Has been involved in over $157M of real estate closings
  • Based in NYC, NY
  • Say hi to him at Jacobbusani.com 

Best Ever Tweet:

“The deal I didn’t do is the one I lost the most money on. ” – Jacob Busani


Theo Hicks: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. I’m Theo Hicks, I’ll be hosting today’s show. Today we’ll be speaking with Jacob Busani. Jacob, how are you doing today?

Jacob Busani: I am doing wonderful, thank you very much for having me.

Theo Hicks: Absolutely. Thanks for stopping by and talking with the Best Ever listeners today. Looking forward to our conversation. A little bit about Jacob – he is a real estate broker and syndicator, has been involved in over 157 million dollars’ worth of real estate closings. He’s based out of New York City, and you can say hi to him at JacobBusani.com.

Jacob, before we get started, can you tell us a little bit more about your background and what you’re focused on now?

Jacob Busani: Sure. My background has been in real estate over the last four years. I did a nice amount of closings and was involved in a bunch more. In the last year I kind of focused gears more on the syndicating end of things, and doing a lot of coaching and speaking. So that’s really where I have been focusing most of my time now, is growing my speaking and training career, and still playing around with a lot of syndications.

Theo Hicks: Let’s talk about your syndication business – what’s the number of units you’ve syndicated so far?

Jacob Busani: I raised money for deals. I raised money for Brooklyn deals, I raised money for Manhattan hotel development deals… That’s really what I do, I just raise money for the deals, and then I get a cut out of that.

Theo Hicks: So you said you raised money for hotel development deals… Is it mostly non-multifamily commercial deals, or is it all types of commercial deals you’re raising money for?

Jacob Busani: No. Where I’m most comfortable is multifamily. The hotel deal was purely accident. I just came across it and it happened to be a really good deal, so I put a bunch of people together for it. But really it’s mostly just multifamily, that’s what I focus on.

Theo Hicks: How did you get hooked up with the people that you’re raising money for?

Jacob Busani: I think it’s all in the network. I’m part of the CCIM. I sit on the board of CCIM in New York City… And I think it’s really just all the network, and it’s really just the people you know and how often you nurture those relationships and connections.

Theo Hicks: So these deals – you met these people through your CCIM?

Jacob Busani: I met those people through CCIM, through LinkedIn, through networking events… But primarily, they all came through the CCIM path at some point, whether at a networking event or they were on a phone call of some sort.

Theo Hicks: How does that conversation go? So you’re attending these events… Are people out there saying “Hey, I’ve got this really great deal and I’m looking for money?” or are you proactively going up to these people and asking them “Hey, I’ve got a network of high net worth individuals, I can raise money for it. Do you have any opportunities”?

Jacob Busani: It’s more of the second one. I tell them exactly what I do, this is what my investors are looking for, and just send me your deals. They’ll send me deals for a couple months, until there’s one deal that I like, and then we’ll take it to the next step.

Theo Hicks: How are you analyzing these deals that are coming across your inbox?

Jacob Busani: CCIM, that’s what we’re known for. We’re a commercial real estate education organization, and they teach us how to analyze the deals, from user base analysis, to investor base, to market analysis… So all of that together and my secular real estate education, and sometimes with some of the investors that I bring on board – that’s how we analyze our deals. We don’t have an in-house underwriter, or something.

Theo Hicks: Okay. So are you actually underwriting the deals  yourself, or are you looking at other high-level factors to determine if it’s a good deal?

Jacob Busani: It’s more of I underwrite the deals myself.

Theo Hicks: Okay. You’re using your own cashflow calculator you got through CCIM?

Jacob Busani: Yup.

Theo Hicks: Okay. And then you mentioned that when you are proactively reaching out to these people, you tell them what your investors are looking for, so you underwrite your deal… What are the metrics that need to be spit out in order for you to present that to your investors?

Jacob Busani: Everything has to make sense. The leases have to be in order, all the building work has to be in order, permits, approvals… For example, in Manhattan, whether there’s heir rights; now it’s a little bit more trickier than it was six months ago… Everything has to make sense before I present it. I can’t have one thing where I’m not clear about it… Because if I’m not clear about it, I’m not confident enough to go and present it to my investors, which would make me look not good.

Theo Hicks: Is there a particular return number or return threshold that’s kind of a go or a no-go?

Jacob Busani: Everyone’s different. My database is a little bit vast, so I have people who  all they care about is the cap. They’ll just look at 5, 6 caps in Manhattan. Then I have the people who are more on the cash-on-cash. They’re looking for their high teens, mid-twenties… And then if we’re going out of the boroughs, they’re looking at a little bit of a longer play… Everybody’s different. There’s not one specific… It’s more of a “Just send me the deals.” As long as I have not seen it, I’ll take it to the next step… And that’s when I start analyzing.

Theo Hicks: Are most of these multifamily deals existing properties, or are they developments?

Jacob Busani: I’d say 70% of them are existing. The development is a little bit longer-term, and that’s really where it is. So it’s more of a 25% to 35% development.

Theo Hicks: If you don’t mind, can we dive into that hotel deal that kind of just randomly happened? Do you wanna walk us through how you found that opportunity?

Jacob Busani: Sure. I met one of my father’s friends one day, and he told me that he has a guy and he’s actively looking for hotels. I told them I have a deal, but it’s partial development. They have the existing hotel, but you’re gonna need to develop it a little bit further. He said “Cool. Send me over the deal.” I told him I don’t have all the information yet. I go, I reach out to my guy who’s actually in Texas, he sends me all the stuff, and I send it back to him.

He gets back to me two months, he’s like “We’ll take it.” I come back, it’s still available… It was a nice deal. A very nice deal, actually. And we just went back and forth. It took us about a year and two months to close on it, but we finally did it, and that’s just how it happened. It was literally one guy wanted this, the other guy had that… And I made the connection between them.

Theo Hicks: And then did you raise money for that deal as well?

Jacob Busani: I raised just a small amount. I raised 2% as down payment, and that was it.

Theo Hicks: So how did you have to present this hotel deal differently to your investors, compared to the typical multifamily deal that you’re presenting to them?

Jacob Busani: Surprisingly enough, the team who had the acquisition firm that had the deal – they really knew what they were doing; they had somebody in the CCIM, or some CCIM crafted it, because everything was my language, the way it was presented… So it was really just a few modifications on my language of presenting the deal, and then just forwarding it on to my clients.

Theo Hicks: Okay, so since the team knew what they were doing, did you have to do much underwriting yourself?

Jacob Busani: I did not need to do much underwriting myself. Everything was practically done, and I just needed to do a couple of tweaks.

Theo Hicks: Okay. Alright, Jacob, what is your best real estate investing advice ever?

Jacob Busani: Relationships. I think that relationships can get you so far. So many people are too busy cold-calling; they don’t realize that the biggest opportunities are right in their backyard, the people that they already know. They just need to ask them, to  introduce them to more people. That’s literally how I got started and how I got to where I am today.

Theo Hicks: Is there anything specific you do on an everyday basis, like “Alright, this morning I’m gonna get up and I’m gonna do A, B, C, D” in order to cultivate more relationships? Or is it just something that comes naturally to you and you just do it over the course of your everyday life?

Jacob Busani: Yes, every day I try to have at least a few new introductory meetings from people that I meet on LinkedIn. So whether they’ll be at coffee, or whether they will be just online… I attend a networking event once to twice a week, and I follow up with whoever I feel that I have some good synergy with… And it’s mostly just asking those people to introduce me  to other people, and then just having the [unintelligible [00:08:51].22]

On every given day I’m speaking to anywhere between 5 to 20 new people, and then just having my assistant following up with them and just cultivating the relationship and having them in the pipeline.

Theo Hicks: Alright, Jacob, are you ready for the Best Ever Lightning Round?

Jacob Busani: Sure.

Theo Hicks: Alright. First, a quick word from our sponsor.

Break: [00:09:11].25] to [00:10:06].12]

Theo Hicks: Okay, what is the best ever book you’ve recently read?

Jacob Busani: Five Dysfunctions of the Team, by Patrick Lencioni.

Theo Hicks: If your business were to collapse today, what would you do next?

Jacob Busani: Start a new one.

Theo Hicks: And what would that business be?

Jacob Busani: Exactly what I’m doing right now, just different.

Theo Hicks: What deal did you lose the most money on?

Jacob Busani: The deal that I didn’t do.

Theo Hicks: Besides your first deal and your last deal, what’s the best ever deal you’ve done?

Jacob Busani: The hotel deal.

Theo Hicks: You don’t have to answer this question, but how much money did you make on that deal?

Jacob Busani: I got a nice chunk of equity in the deal.

Theo Hicks: What is the best ever way you like to give back?

Jacob Busani: I like to empower the youth in my community and beyond.

Theo Hicks: And then lastly, what is the best ever place to reach you.

Jacob Busani: LinkedIn, Jacob Busani.

Theo Hicks: Alright, Jacob, thanks for joining us today and telling us about your syndication expertise. Just a quick summary of what we talked about – you raise money for mostly multifamily deals. How you find the money for these deals is through your current network, people you meet on LinkedIn, and essentially just networking with as many people as possible.

You mentioned that you’re pretty proactive about it, so when you meet someone new, you explain to them what you do, what your investor is looking for, and ask them to send you deals. Whenever they send you a deal, you use your CCIM expertise to underwrite those deals yourselves. You also look at other things, making sure the leases are in order, building permits are in order, that everything is completely clear and makes sense to you before presenting that out to your investors.

You also mentioned that you have a vast diversity of investors. Some care about cap rates, other care about cash-on-cash return, some people want short-term investments… So you present your deals to your investors based on what the outcome of that deal is going to be. Then the majority of the deal that you do are existing multifamily homes.

We went over your hotel development deal, which was your best ever deal, and how you kind of just found that through, again, networking. So the theme of this seems to be networking, which was your best ever advice, which is to focus on relationships. To do that, just ask people that you have in your current network to introduce  you to people that they know, that might be a good fit for you.

More specifically, what you do is that you’ll meet people for coffee on a daily basis, through LinkedIn or different network events you go to. You’ll attend different network events at least once a week, and whenever you meet someone, again, you ask them ot introduce you to other people to start that chain. Overall,  you speak to about 5 to 20 new people every day.

Jacob, thanks again for coming on. Best Ever listeners, if you want to learn more about Jacob, again, his website is JacobBusani.com. A link to that will be in the show notes. Have a best ever day, and we’ll talk to you tomorrow.

Jacob Busani: Thank you.

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JF2014: Digital Media Tips With Shoshana Winter

Shoshana is a digital media veteran with 30 years of marking management experience on both the agency and client-side. She ran marketing for audible for 4 years before they were purchased by Amazon. She has the skills to help early-stage business’s grow through marketing. In this episode, she gives some great insight on how to think like a marketer when it comes to growing your audience base, whether that is listeners, investors, or distressed properties. 

Shoshana Winter Real Estate Background:

  • Digital media veteran, bringing nearly 30 years of marketing management experience on both the agency and client side
  • Now working at iintoo, the company has managed and raised 357 deals and $600M with a gross asset value of $2.5B
  • Based in NYC, NY
  • Say hi to her at https://www.iintoo.com/

Best Ever Tweet:

“I think it’s not just about being lazy, I think we become lazy because we lost faith perhaps.” – Soshana Winter


Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and 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, Shoshana Winter. How are you doing, Shoshana?

Shoshana Winter: I’m doing great, thank you.

Joe Fairless: Well, I’m glad to hear that, and looking forward to our conversation. A little bit about Shoshana – she’s a digital media veteran, bringing nearly 30 years of marketing management experience on both the agency and client side. Now working at iintoo. The company has managed and raised 357 deals, 600 million, with a gross value of 2.5 billion. Based in New York City, New York.

With that being said, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Shoshana Winter: Sure. Well, you did a pretty good job of it. I come from an advertising marketing and media background. I’ve worked for many different large advertising agencies, and then spent a lot of time in senior marketing roles in digital startups. Probably the one that you guys are being most familiar with is Audible. I ran marketing for Audible for four years before Amazon purchased the company, so I’m very familiar with how to build audiences for early-stage companies using the internet as a tool

About two years ago I had the pleasure of meeting the CEO of iintoo, which was a relatively early-stage company in the online real estate investment space, at the time based in Israel. He was just about opening a U.S. office, because ultimately the real opportunity for real estate investments is in this market. I worked with the company for a while as a consultant, and then got asked to lead the company as a managing director of the U.S. headquarters about a year ago.

So I am new to the real estate space… Drinking from the fire hose would be an understatement of what I’ve experienced over the last 24 months… But what’s interesting is that I think a lot of my background, both working with early-stage companies, as well as understanding how to communicate and market directly to accredited investors is something that’s really coming in handy as we lead and grow this business in the U.S.

Joe Fairless: So your target audience would be accredited investors, it sounds like, yes?

Shoshana Winter: At the moment, the offering is just to accredited investors. As we look at the space evolving – and we plan to be here for a very long time – we are well aware of and interested in expanding that audience through different kinds of offerings. But in the short time we’ve been here in the U.S. market, that’s our focus right now.

Joe Fairless: I think a lot of people are gonna enjoy this conversation, because you have the deep experience in digital media and marketing in a way that isn’t typically brought to real estate investing and our industry… So what are some of the things that you all have done to reach accredited investors that have been effective?

Shoshana Winter: You said a couple things that I think are really relevant… I think that as much as — and I’m sure your audience is already pretty knowledgeable and excited about the real estate investing space… But I think that when you look at the U.S. investor audience more generally speaking, we’re a pretty conservative bunch, and in general we’re pretty passive when it comes to the way we both invest and sort of even think about portfolio diversification, for example.

So if you look at the big institutional players and the way we normally interact with companies where we have our IRA, or 401K, we pretty much either give it over to our financial advisor, or tend to invest in pretty traditional asset classes. So a lot of what we’re focused on is using digital communication – and I would say also traditional communication. This conversation, in many ways, is another form of audio or radio, that’s gotten much more popular… So we’re open to channels that work and that reach the right people at the right time.

But I think that ultimately, what we’re finding is working is understanding the American investor, what he or she is either knowledgeable or not knowledgeable about, and really being able to leverage digital channels, whether it’s search engine marketing, or doing partnerships with financial services, publishers like Forbes or Fast Company, to be able to tell our story in a way that really communicates the fact that this is a relatively easy, direct access way to get in on an asset class that traditionally had not been at our disposal.

So from a messaging perspective, we’re all about “This is easy, this is fast, you can do it on your own time. You don’t need to go through a financial advisor or a broker”, and the returns are, in many cases, higher than what the stock market and other traditional asset classes that are correlated to the stock market have been able to deliver.

So that’s sort of my long-winded answer to your question…

Joe Fairless: Yeah, that’s really helpful… When you think about it, it sounds like you think about it as 1) first understanding who you’re talking to, and from what you’re saying, the U.S. investor audience is pretty passive… Another word for it is “lazy”.

Shoshana Winter: [laughs] I didn’t wanna say that.

Joe Fairless: Yeah, I get it. It’s crazy to me, because the majority of people work so darn hard for their money, but then once they have the money, they don’t put some effort into growing that money so that they don’t have to work so darn hard continually. It’s a flawed logic, but that’s just how it is, and good luck changing that. So what you focus on – it sounds like it’s more about the category versus the product…

Shoshana Winter: Yeah, I think it’s both… Listen, anyone that’s in this space, or even in the investment space more broadly speaking, obviously knowing your audience really matters, because that’s going to drive where you talk to them, how you talk to them, and what you say. In their defense – just to speak to the “lazy” comment, which I completely agree with – I think it’s not just about lazy; I think we’ve become lazy because we’ve lost faith, perhaps…

In my own lifetime as an adult or working adult I’ve seen three major disruptions in the market that have affected my portfolio. There’s a book that was written about this called “Rational Exuberance”, which is although we look out the window today and in New York City it’s a beautiful fall day, with the sun shining, and the economy seems to be good shape, we’re always waiting for the [unintelligible [00:07:43].01] 2008 is not that long ago for a lot of us… So I think part of the passivity comes from a lack of transparency and understanding of what drives the market and how people’s individual portfolios are affected by things that they feel like they don’t have very much to do with.

And the beauty of real estate and what we really try to lean into is demonstrating to this target audience that actually this is a really transparent asset class. You can actually look at it and see it. It’s something that we’ve all experienced, because we live in homes and we go to work in buildings. This is something very organic and natural. And the way in which we choose to make those opportunities accessible is using that same kind of transparency.

So I think that it’s a marriage between understanding the audiences, the barriers to entry, the fear that they may have, or the lack of education, but I think more importantly, leaning into those trigger points that really help them change the conversation about what this could be.

I think the internet, even in the last 5-10 years, has demonstrated that if you do a good enough job at it from a product and experience perspective, people will begin to behave very differently. Look at the way we now think about booking a hotel room; going to Airbnb us now, the first thing people do. That was something that we wouldn’t have even thought about ten years ago.

So I think that we’re both part of an emerging group of companies that are trying to give traditional investors access to an untraditional asset class, but at the same time we’re also part of an internet revolution that’s giving consumers direct access to things they never had before, with better results… And those are the kinds of value propositions that we try to really leverage as we build the business.

Joe Fairless: Hypothetical scenario –  your marketing budget has been slashed in half (*gasp*) and you are only going to focus on one type of advertising. Where do you put that money?

Shoshana Winter: Any direct response marketer or direct marketer worth their salt (as they say) would probably say “Stick to what you know and what you know works.” So ultimately, as you yourself are a perfect example of this – this is a podcast that’s about a very particular subject… The marketing that really is most effective is one where a consumer self-identifies as being interested. So search is a great example of that. By the action of someone typing in “investing in commercial real estate” into Google, they are raising their hand and saying “This is something I’m interested in”, so therefore my ability to be able to capture their imagination and hopefully get them to visit my site and join is a lot more probably than, for example, if I decided to do a big billboard campaign all over New York City.

We know a lot now, we have a database of over 200,000 accredited investors, and the data that we use on a regular basis is not only to communicate directly with them, but to extract out demographic and psychographic information that we could then use when we go out and we buy a search campaign, or use social media. We’re able to create lookalike audiences based on all that data, so that we can really cut out the guesswork, if you will, around marketing and advertising, and only talk to those people that we have a shot at really converting from an interest level.

Obviously, as the category grows and this becomes (let’s call it) a less alternative way of behaving, I think that when you think about things like “I’ll advertise on television, or radio” – those things become much more interesting, because we already have a base of users that are pretty familiar with how this works, and are [unintelligible [00:11:48].14].

Joe Fairless: What are some demographic and psychographic information that you pull from your current database to create a lookalike audience to attract via digital ads?

Shoshana Winter: I’m so glad you asked about both, because I think in the data and marketing we tend to focus more on demographics. Obviously, because at the moment we’re going after a relatively small group of people in the United States – somewhere between 13 and 15 million accredited investors – because associated households’ income and personal wealth, they tend to be older and living in cities that are business hubs, versus rural areas, and they tend to be of a higher educational background. So all of those leavers, which I think are pretty obvious – and Fidelity is going after those people, and Schwab is going after those people – those demographics are pretty obvious. So obviously we take advantage of that. I think geography is an interesting one… What states or cities are there high concentration of accredited investors etc.

The second piece I think is where it gets really interesting… Which is to me, as a marketer and a business person, this is not just about how old you are and where you live. This is about an attitude. Somebody who’s going to feel comfortable after seeing an ad on Google, or on Instagram, to come through and either call us or sign up to create an account at iintoo, and then talk to a registered salesperson about the latest offering we have in Little Rock, Arkansas.

That person is probably a little bit more of a progressive thinker. He/she was probably an early adopter of other disruptive products, like Airbnb or Uber or Casper mattresses, or Warby Parker glasses. These are people who, despite their age – and I think the world likes to make us all feel very old and out of touch with technology… The truth is we have the most disposable income, and a lot of us are very much leveraging those kind of disruptive technologies to get more done in a day, to have more access and transparency to those things, and to do it in a way that feels personal to us.

So when we look at a progressive mindset, we look at things like “What are the other sites or services that these individuals are using on a regular basis? What are they reading? What products are they purchasing?” Those are the kinds of datasets that allow us to really think about our investor not as a number, but as a human being with a particular personality and a particular attitude when it comes to trying things like this.

Joe Fairless: And how do you determine what other sites are they on and what other products are they purchasing, what are they reading?

Shoshana Winter: Some may find this creepy, but the one thing that marketers and businesses have at their disposal today more than ever before is an incredible amount of data. I think a lot of us maybe speak about privacy, and issues like that, but at the end of the day, with the data that’s available to us, whether it’s buying a campaign on Facebook, or Google, and Amazon is becoming a bigger player here as well – those platforms, because of their scale, collect an enormous amount of data from their users. Where a user has visited before they came to the site; what are the groups that they’re members of if it’s a social site, for example…

These are old datasets, that although they’re never delivered to us in an Excel spreadsheet, they are used to create audiences based on certain kinds of attitudes or behaviors.

For example, let’s talk about the busy working mother; that would be an example of that. We’re able to take a group like that and go to a lot of our digital partners and provide them with the data we have – anonymized, of course – and say “These are the kinds of people that we’ve been very successful with. Can you find them on Facebook or Instagram?”

What most of these platforms are able to do because of the amount of data that they hold and use is to be able to identify those people within their own platform and allow us to target them with our advertising in a very precise way.

Joe Fairless: For someone who is listening and wants to learn from this process and do it, how do you do that exactly? If they have a list of people, like “You know what – I’d love to know more of what they’re reading, and what they’re purchasing… I have this database of people”, what are the steps that they would take in order to better target them and get that information?

Shoshana Winter: I’m gonna be honest about not being able to go through every step, because it’s not something that I personally do on a day-to-day basis…

Joe Fairless: Fair enough.

Shoshana Winter: I have a director of marketing and we work with a digital media agency… But even if someone had a relatively small business and they reached out to Google and said “I wanna do a campaign that reaches a particular audience. Here’s what I know about my audience”, the ad rep on the other side should be able to in some way, shape or form either extract the core parts of the data that the advertiser owns, without names, obviously, and/or replicate the demographic make-up on their own platform, and then allow them to create campaigns that are highly targeted to those groups.

Joe Fairless: Got it.

Shoshana Winter: It’s an art and a science in and of itself, and I don’t want at all to position myself as an expert, but I’m well enough versed in understanding how it works at a high level to know that where digital is really going and where marketers in this space and really in any category – the biggest asset they have is knowing who they’re talking to with as much granularity as possible, so that they’re not wasting their ad dollars on those individuals that are probably not going to be interested in being a customer.

Joe Fairless: It makes sense. On the flipside, what’s something that you all have spent money on marketing-wise, and you’re not doing that anymore, because that just was not a good ROI.

Shoshana Winter: That’s a great question. I think everything is all about timing. I mentioned earlier television and doing content on whether it’s Barron’s, or Fast Company, or in the world of financial services publications like the Wall Street Journal, where we know a large chunk of our audience probably is.

I think that the problem for a more early-stage marketer like us, or even let’s say somebody who’s starting their own business, is that those channels tend to be more expensive, and the impact that they have directly is sometimes harder to measure immediately. What you’re really doing – as we say  in the marketing biz – is more top-of-the-funnel: brand awareness, creating an immediate connection with somebody, but it might not result in an action.  So that’s not something we’re really investing heavily right now as we build the business, because really what’s gonna make it work at this stage is, as they say, getting to the low-hanging fruit. Those individuals that maybe have already expressed  an interest in this category.

Our company about six months ago made an acquisition of a competitive company in the space that had gone out of business, and with it we were able to inherit assets to their database of accredited investors. That in many ways was a piece of marketing. It was our ability to be able to have a larger addressable audience of investors that have already raised their hand and said “I’m interested in commercial real estate.”

I think that as we grow and we exhaust the low-hanging fruit  and we wanna start talking to maybe more of the mom-and-pop investor, who maybe is more conservative, or maybe is not as progressive, but who we know can really benefit from it, from a portfolio management perspective, then we would start to look to things that are perhaps a little bit more expensive and not as direct, but help us to really tell a story in a more compelling way and build interest over time.

So I think it depends on what stage you’re at. I think almost anything can work, but I think it has to be at the right time and with the right measurement.

Joe Fairless: Yeah. Thank you for that information. Lots of great information. Just so I’m clear on one thing that you’ve spent money on that hasn’t worked – what is that one thing?

Shoshana Winter: I would say  right now to do a big TV campaign would probably not be the best use of my marketing dollars, just from a pure return perspective. I do think there will be a time, hopefully in the near future, where that will make sense for us… But right now that’s not something we would consider.

Joe Fairless: Got it. So you’ve been strictly digital since you’ve been on board in this capacity, for the last 24 months.

Shoshana Winter: Yeah, I would say digital and content, where content can have a life outside of digital, but I would say those are our two main focuses… And then we do spend a tremendous amount of effort in what they call CRM (customer relationship management). So marketing directly to our own base of users, some of whom have already invested and some of whom have not… And really trying to get to know them and offer them – whether it’s access to webinars, or eBooks, articles that we create, that will help make them feel more competent and informed about the category, so the notion of investing becomes a little bit more accessible.

Joe Fairless: And how do you get to know your own database a little bit more, tactically speaking? How do you execute on that?

Shoshana Winter: I think a combination of email, as old as it is, is a very powerful medium. It allows you to create tiny little audiences based on how active somebody is, because we have all of that information. Audiences based on things like “Have they invested in the last six months? Have they not? Do they tend to invest in deals that are in certain geographies or not?” So what I think email marketing allows us to do is get very sophisticated about how we segment the audience, and then create really customized content or messaging, that we believe is going to work best with that audience, versus just sending out a lot of mass mail, if you will.

So email has been very powerful for us, both in terms of segmentation and then in terms of the data that we get back after an email is sent. What was the open rate, what was the click-through rate, what are people doing as a result of said email? That’s one, I think.

And then the other may sound kind of old-fashioned, but we’re an investment company, and at the end of the day this is about building a relationship between a registered investment professional that we have on our team, that will pick up the phone, welcome members to the platform, and through conversations over time enable them to feel comfortable enough and informed enough about a particular opportunity. And we keep all of the data that gets collected by the salespeople on an internal, proprietary platform that we have, so you can go into our platform as a salesperson and look up an individual investor and really get a full history of what he/she has/hasn’t done over the life of their membership at iintoo, which is incredibly valuable when we’re having a phone conversation or sending out emails.

Joe Fairless: What CRM platform do you all use?

Shoshana Winter: We’re using HubSpot as our marketing automation platform, and then some of our CRM is actually built on top of our portal, so it’s a combination of the two.

Joe Fairless: Anything else as it relates to this topic that you think we should talk about, that we haven’t talked about, before we wrap up?

Shoshana Winter: I think that those of us in the online real estate investment space – these are early days in a category that I think is really gonna change the way people think about their money. And I think it’s an exciting time to really be on both sides of it – as an investor, and on our side, as a business that’s trying to communicate and get that investor to invest a portion of their portfolio with them.

I think it’s just really incredible that regular retail investors that don’t know somebody in the business and don’t have to put in a million dollars can invest into a deal and see double-digit returns in a short period of time… So I just think it’s an exciting time to be in this space, to be marketing in this space and to be an investor.

Joe Fairless: I loved our conversation. Lots of really good tips for how to think about marketing to accredited investors, and specifically how to reach them. Some challenges, as well as some solutions. Shoshana, how can the Best Ever listeners learn more about your company?

Shoshana Winter: The website is pretty easy to follow, and there’s an email address on every single page, invest@iintoo.com, which gets answered personally every single day. Or you could just pick up the phone and call us, and we’ll talk to you.

Joe Fairless: Thank you so much for being on the show. I hope you have a best ever day, and we’ll talk to you again soon.

Shoshana Winter: You got it. Thank you so much.

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JF1984: From the Military to Multifamily with Phil Capron

Phil Capron went from running special ops missions with the Navy to purchasing his first property in 2010. His new book shows veterans and active duty personnel how, with a few strategic decisions early on in their career, they can acquire and manage enough real estate to separate from the military after a full career as a net-worth millionaire and, ideally, have a cash flow that would replace their active duty income. In this episode, Phil discusses how he conducts his multifamily missions with host Theo Hicks.

Phil Capron Real Estate Background:

  •     Purchased first property in 2010 while in Navy in Norfolk, VA
  •     Got real estate license, flipped homes, bought and held SFRs, got into MF a few years ago
  •     244 MF units
  •     Senior Mentor with Michael Blank
  •     Book: Your VA Loan and How it Can Make You a Millionaire
  •     Based out of: NYC
  •     Say hi www.philcapron.com


Best Ever Tweet:

“I’m not concerned about why something isn’t going to work, I’m concerned with how can we make it happen? How can we overcome this obstacle? And if you approach this business with that mindset, I believe you’re a lot more likely to succeed.” – Phil Capron


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Theo Hicks: Hello, Best Ever listeners, and welcome to the best real estate investing advice ever show. I’m Theo Hicks, and today we’ll be speaking with Phil Capron. Phil, how are you doing today?

Phil Capron: Theo, I’m doing amazing. Thank you so much for having me.

Theo Hicks: Absolutely, thanks for joining us. Looking forward to our conversation. Phil’s background is that he purchased his first property back in 2010, while in the Navy. At that point he also got his real estate license, and then flipped some homes and bought and held some single-family homes. Then a few years ago he transitioned into multifamily.

He currently has a portfolio of 244 multifamily units. He’s also a senior mentor with the Michael Blank program. He has a book coming out, or it might be out once this episode airs, and that is “Your VA Loan and How It Can Make You a Millionaire.” Phil is based out of New York City, and you can say hi to him at PhilCapron.com.

Phil, before we get started, can you tell us a little bit more about your background and what you’re focused on now?

Phil Capron: Yeah, for sure, Theo. Thanks. So that’s pretty much; I’ve just gotten out of special ops selection to become a Naval Special Warfare Combatant-Craft Crewman. It’s a lot of words basically for the guys that take Navy SEALs to and from their maritime missions on small, fast boats. We jump out of planes, shoot big guns, do some other pretty cool stuff.

I’ve just moved from Coronado, California to Virginia Beach, Virginia, and rented an apartment with a  couple of my buddies from my class… And I’d always instinctively known that there was something to this real estate thing. In 2010, looking back, obviously that was a pretty good time to buy… So I had to decide whether I got the two-bedroom/one-bath on the beach or close to, for what was my budget (about a quarter million), or whether I went into the city of Norfolk, which is slightly less desirable schools, and it just doesn’t have that Virginia Beach zip code, and get a four-bedroom/3,5-bath for the same price. So I chose that route, I moved my couple of roommates from my apartment in, as well as one other guy… They paid my entire mortgage while I lived there, and all my utilities… So of course, I reinvested all the money I saved into real estate. Just kidding. No, I didn’t. I wasted it on really dumb stuff.

The book that just came out, “Your VA Loan and How It Can Make You a Millionaire” shows veterans and active-duty personnel how with a few strategic decisions early on in their career they can acquire and manage enough real estate just with that program to separate from the military after a full career as a net worth millionaire, and ideally have a cashflow that would replace their active-duty income. So when they get out, they’re not forced to take a job that maybe doesn’t agree with them. They’ve spent a lot of time away from friends and family serving a country, and I believe that they have more to give; I want them to be financially free, so they can do things like coach little league, volunteer in their church, run for office, or even just chase a little white ball around or take their significant other on a cruise around the Mediterranean. I believe they’ve given enough, and via the VA loan I think that financial freedom truly is possible for these American heroes… And that’s what the book is about.

From there, as soon as I separated from the military, I started selling my buddies homes, and also listing them when it was time for them to transfer. I saw a lot of really bad advice was being dispensed. The saying that I have is “All men are created equal. All real estate agents are not.” So buying your first home is your largest financial decision to that point in your life; you’ve gotta make sure that you’re doing it right. It’s not like buying a car, or buying a jet ski, or something. There’s real consequences associated with it. And as many folks as I can get to understand how powerful of a vehicle it is, the better. So that’s my mission.

I sold a lot of homes, I got into flipping, did a few dozen flips over a handful of years, and actually locked in my first multifamily purchase. It was a 13-unit. I took one of my buddies who’s also a veteran and had about 30 units at the time; I took him to this property, listed around 900k, thinking this would be great, I’d get a 27k commission if I could get him to buy it.

They couldn’t make a deal, but then the other broker approached me and said “Well, if it was seller-financed, would you buy it? I said, “Well, I guess I’ve never considered that.” Long story short, I ended up buying it for 900k, 100k down, and negotiated seller financing for 30 years; a 30-year amortization and 30-year term, at 6%, without so much as a credit check, which is a pretty good result, in my opinion. Also, the first six months no principal payment. So the full  mortgage payment is just under $5,000; my payment the first six months was just over $800. So that enabled me to cash-flow just under $45,000 the first seven months.

It’s been some important lessons learned with that little property. It’s actually pretty difficult to manage, and I might consider selling it soon… But without it, I wouldn’t have acquired a little over 200 additional units in the last few years, so I’m very thankful for it. That kind of brings me to  present day, where I’m helping people get into multifamily, with Michael Blank and his program… And raising money and doing deals. I’ve been talking for a really long time, Theo… I’m gonna be quiet now. That’s everything.

Theo Hicks: [laughs] Thanks for sharing that. So for that 13-unit, with 100k down, how did you fund that? Was that your own money, or did you raise that capital?

Phil Capron: That’s a fun story in itself. I had a buddy who — we did a lot of flips together. He’s a military guy from the special ops. We went to class together… And I said “Hey buddy, here’s how this is gonna work – 50/50.” Two weeks before closing he said “You know what, I’m not comfortable with this, because my money is gonna be tied up for too long. I’m out.” So I now have to approach the seller and say “Hey, I actually don’t have the money anymore.” So he said “What CAN you do, young fella?” Because this guy was basically looking at the seller financing as retirement, and generational wealth for his kids. I had about 25k in the bank, or something like that, and I’m supposed to say something less than that, obviously; just simple math. But I got nervous, and I said “I could do 40k.” And he stuck out his hand and he said “Okay, let’s close in ten days, as planned.” I go, “Oh, no… Now I need at minimum 15k.” So I went on the hunt to other friends that we’d done real estate deals with in the past, ended up raising 35k, and I figured “Well, if I’m raising money, I might as well raise money.”

I closed on that transaction with $5,074 and one cent of my own money, which was pretty cool, being that we brought in 45k the first seven months. The ROI on that is solid. I don’t know how to compute it exactly, but it’s pretty good. So he gave me a second for 60k and a year to pay it back. So I did that at the end of year one, and now it’s not a killer-killer deal – it cash-flows about $1,500/month – but it’s extremely highly leveraged. And like I said, the law of the first deal, as Michael Blank likes to say; it got me into all these other deals because it’s a proof of concept.

Theo Hicks: Exactly.

Phil Capron: The rents start rolling in and I’m like “They were right! It just keeps coming. This is great!”

Theo Hicks: What about your second deal? Let’s talk about that.

Phil Capron: Okay. My second deal, a 108-unit portfolio, North of Virginia, six buildings. I’d learned a little bit on the first one, but still largely didn’t know what I was doing… But I was fortunate to surround myself with really strong partners. A commercial real estate broker with 30 years experience, one of the biggest residential brokers around, who owns a property management company… And then a classic contractor, the gentleman who I took to the original 13-plex to try to sell it to him to manage the construction. So we all put in an even amount of money, and took that down for what ended up being one of the lowest price-per-door sales of a stabilized transaction in the MSA’s recent history since maybe 2009, or something.

The great thing about it was that when the appraisal came in, it came in 1,55 million dollars higher than our purchase price, and the as-completed appraisal -because we did do about 500k in cap ex – was about 3 million dollars higher. So you could say that was kind of a grand slam.

From there I went on and picked up an 82-unit with a bunch of partners, and then I’ve picked up a couple 20-plexes since.

Theo Hicks: So it sounds like your ability to scale from a 13 to a 108-unit was because of your team, because you said you still really didn’t know what you were doing… But you found a really solid broker, a management company, and a contractor. Do you mind walking us through how you were able to find them, but more importantly, how you were able to convince them to come on your team with only having done one deal before?

Phil Capron: For sure. I like to bring things back to military analogies, because they make sense to me, and because I believe there’s a lot of value in there. When you’re conducting a mission, you need to understand what assets you need to execute the mission, and a multifamily deal is no different. In your Syndication School – guys, if you haven’t checked that out, definitely check that out. Fantastic information. You need obviously some cash to close, right? We needed about 1.3 million dollars. That’s one box we definitely needed to check.

Then the next box is with the loan, the first mortgage, we need a net worth that’s greater than what we’re seeking as a loan. That’s another box. We need somebody to manage, we need somebody to swing the hammer, because some of these units legitimately did need work.

And then, we needed somebody with the experience to keep the project on track and to anticipate problems before they happen, and to help us find the best solutions when they inevitably do happen. So my first priority was money and net worth. I achieved that with one partner.

Then the next partner was the construction piece. Then the next partner had the property management arm, instead of just a third-party, which – obviously, when you have a great property manager that’s  a third-party and you manage them, it can work out. But I’d much rather create that alignment of interest that they wanna see my project succeed as much as I do.

So once I had all those boxes checked and we negotiated terms within the partnership, away we went. I make it sound simple there; it wasn’t, to actually put it all together… But if you’re considering your first or next deal, I invite you to write it out – what do I need? Who do I need? What do I need them to do? Where do I fit in? What value am I bringing and what’s that worth to the marketplace? That’s the key to this whole business.

Theo Hicks: Okay, thanks for breaking that down. That’s really good analogy. I’m sure a lot of your skillset acquired from the military make you a fantastic investor, just by listening to you break that down like that.

So you said that the first piece was the money and the net worth, and that was one person. Who was that? Was it somebody you knew? Was it somebody you had to find?

Phil Capron: It was somebody I knew, and we were actually flipping houses at the time, so that was pretty easy, so to speak… And then I approached actually the contractor next, and he told me no. He’s like, “Phil, I love you, but do you really think that we have it to do this?” I said “Yeah, I do. This is a screaming deal. Deal of the century. Let’s do this.” He’s like “Well, I don’t know. The way you frame it looks pretty good, but I just don’t know.”

So then when I brought in the commercial broker, who also was gonna provide some net worth and that experience piece that we really needed, a little bit of guidance, I had my contractor come and walk him through our plan and improve my (at the time) planned improvements. It went really well, and afterwards I said “Hey guys, let’s go to lunch. I’ll treat you the lunch. I appreciate your time.” And the commercial broker said “Phil, I hope I’m not speaking out of turn here… This is a great deal, you’ve got a great deal, but the only way I’d be comfortable with it is if this gentleman (your contractor) is on the team, doing the work as an owner, not as an employee. And I said “Well, no offence, I invited him first and he told me no.” Then the contractor said, “Well, Phil, if he’s in, I’m in if you’ll have me.” And I said, “Alright, cool. We’ve got a deal. Let’s do it.”

Theo Hicks: So it sounds like you knew the first guy, the money/net worth, you knew the construction person… Did you know this commercial broker as well?

Phil Capron: It was a referral from my accountant. So I knew of him, and we got to know one another, and then I invited him down… Just actually more for counsel than necessarily as a partner, but it ended up unfolding perfectly. So did I get a little lucky? Sure. But luck happens a lot more often when you’re doing the kind of problem-solving that I described and you’re finding solutions.

Theo Hicks: Exactly.

Phil Capron: So many people, even students of mine, they’re like “Oh, I can’t buy this. The cap rate’s wrong.” Okay, why is the cap rate wrong? When we were going through the financials in-depth on another deal, the 82-unit, I found a discrepancy in the water. Two years prior it was 50k a year, then it jumped to 75k. So I asked the person, “What’s up with this?” This is pre-LOI even. “Can you figure out what the deal is?” And he said “Oh, they just sent the water company out and the meter was broken on the city side and just spinning, to the tune of $25,000/year.” At an 8 cap, what is that? It’s a lot more. So everyone else is lazy underwriting, didn’t catch that. We caught it, got to the bottom of the problem, had it fixed, and it enabled me to save several hundred thousand dollars on that particular transaction.

So I’m not concerned about why something isn’t gonna work, or why we can’t do it, I’m concerned with how can we make something happen? How can we overcome this obstacle or this problem? And if you approach this business with that mindset, I believe you’re a lot more likely to succeed. If you’re looking for obstacles, or even if you’re not, they’re gonna occur… But if you tackle them head-on with “How do we overcome this? I’m not accepting defeat.”

There’s actually another story on that point, with the 82-unit, if we have time… It’s kind of funny, but… Sorry, I’ll let you get back to it there, as I think I’ve tangented a bit.

Theo Hicks: I was gonna jump into the money question, which we maybe might have just been over, but… What is your best real estate investing advice ever?

Phil Capron: My best real estate investing advice ever is on that same kind of thread, or in that same vein… You have to not be willing to accept what is, you have to be able to think of what can be, and work to make it so. A lot of folks these days – again, if you’re playing in the big multifamily space, deals are really hard to come by, guys. Kind of like the special ops, we do missions that other units are incapable of doing, they don’t have the tactics, the training, the equipment, whatever… The personnel, most importantly. I look at a lot of the big operators and whatever their criteria is, mine is gonna be about the opposite, because I’m willing to do work that others in the marketplace aren’t willing to do, so I have access to deals that they don’t have access to.

So my advice would be if you are observing that it’s tough out there right now, what can you do different to basically create a little niche for yourself?

Theo Hicks: Alright, Phil, are you ready for the Best Ever Lightning Round?

Phil Capron: Absolutely.

Theo Hicks: Alright. First, a quick word from our sponsor.

Break: [00:17:32].22] to [00:18:10].18]

Theo Hicks: Okay, what is the best ever book you’ve recently read?

Phil Capron: Best ever book I’ve recently read was a re-read, and it was The Millionaire Real Estate Investor, by Gary Keller. If you’re just getting started, it’s a fantastic overview of what it is to invest in real estate.

Theo Hicks: What deal did you lose the most money on?

Phil Capron: It was a combination of deals. I had five flips going at the same time, everything was going great, with a new contractor… So I was out in California, surfing with buddies, in Vegas, hanging out… They asked for money, I sent it; more money, we sent it, sent it… Eventually, I got back home and found out that really no work was done on any projects, and that cost me tens of thousands of dollars, by taking my eyes off the prize and not verifying. I certainly trusted, but I did not verify that everything was continuing to go well, even though the past projects had.

Theo Hicks: What is the Best Ever way you like to give back?

Phil Capron: The best ever way I like to give back – I actually have  a  charity called See Them Soar. I’m embarrassed to admit that we haven’t done an event in over a year, but our mission is to enrich the lives of cancer patients and their families by providing an opportunity to go indoor/outdoor skydiving at no cost to them. After the military [unintelligible [00:19:20].29] indoor skydiving center. As an instructor – I’m still an avid skydiver – I had the opportunity to take some cancer patients flying… And it’s a total transformation. It’s a vacation from everything they’re dealing with – their friends, their families are there… It’s an amazing experience. So I need to get back engaged and get some more events booked, because it’s very fulfilling to do those types of things.

Theo Hicks: And then lastly, what’s the best ever place to reach you?

Phil Capron: The best ever place to reach me – probably Facebook, embarrassingly enough. Phil Capron is my name. You can also go to PhilCapron.com. Hopefully, by the time this is out, your VA Loan and How It Can Make You a Millionaire is out, and doing stuff with that… So yeah, Facebook or the website. Just be patient with me. I’m kind of a one-man-band at this point. But I will get back to you if you reach out though.

Theo Hicks: Perfect. Well, Phil, I really appreciate you coming on the show today and sharing your experience, your advice… Just a few things that stood out to me – you talked about how you lucked into your first multifamily purchase. You were actually visiting a friend who couldn’t bring it on deal, and the broker offered seller financing. As you mentioned, your mindset is to not be willing to accept what is, and you took advantage of an opportunity to get into multifamily.

You mentioned you had some issues along the way, someone pulling out the funding last-second, but you were able to close on that deal. You might consider selling it, but as you mentioned, it’s the key that opened the door to multifamily for you.

We also talked about your second deal, the deal of the century, as you said, or at least the deal of the decade, because of the lowest price per door in the MSA’s recent history, and how it appraised for over a million dollars above the purchase price and three million dollars above the all-in price.

We talked about how you built your team, and you succinctly broke down exactly how you need to approach any type of project in life, which is to figure out exactly what needs to be done, and then where you fit into that, and then write out a list of all the people you need, and then prioritize them based on what you need most, and then work  your way down that list, and we went over that. The cash to close, you needed the net worth for the loan, you needed a management company, a contractor, someone with experience, so we broke down exactly how you did that.

And then lastly, your Best Ever advice, which I’ve kind of hit on already, which was you have to not be willing to accept what is, and think about what can be, and work to make it so. Then you kind of gave an example of you were looking at a deal where the water was really high, and you found out it was because it was a broken meter, which saved you a ton of money on the acquisition, as well as ongoing expenses.

Then you also mentioned that another way to approach this is to have criteria that’s the complete opposite of what everyone else is doing, and pursue opportunities that people are ignoring.

Again, really solid advice, very applicable, especially in today’s hot market. Best Ever listeners, thank you for stopping by. Have a  best ever day, and we’ll talk to you soon.

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JF1961: Replace Security Deposits With Low Cost Insurance with Adam Weiner

Adam has something a little different to share with us today. We’ll hear about Rhino, a company that helps investors and renters skip large security deposits by having the tenant pay a low monthly fee. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“It’s all about hiring smart, driven, hungry people” – Adam Weiner


Adam Weiner Real Estate Background:


The Best Ever Conference is approaching quickly and you could earn your ticket for free.

Simply visit https://www.bec20.com/affiliates/ and sign up to be an affiliate to start earning 15% of every ticket you sell.

Our fourth annual conference will be taking place February 20-22 in Keystone, CO. We’ll be covering the higher level topics that our audience has requested to hear.


Theo Hicks:  Hello Best Ever listeners, and welcome to the best real estate investing advice ever show. I am Theo Hicks. I will be hosting today’s show, and today we will be speaking with Adam Weiner. Adam, how are you doing today?

Adam Weiner:  I am doing good. How are you doing, Theo?

Theo Hicks:  I am doing fantastic, thanks for asking. I am looking forward to our conversation.  A little bit about Adam – he is a Managing Director at Rhino which is a company that replaces security deposits with a low-cost insurance policy. He joined Rhino as employee number five, and now leads a team of eight other people. He is based out of New York City, New York. You can say hi to him at www.sayrhino.com.  Alright Adam, before we get any further, do you mind telling us a little bit more about your background and what you’re focused on now?

Adam Weiner:  No problem. Thanks for asking, Theo.  A little bit about me – I’ve been in tech sales for  the last seven years. I’ve been at companies like Yelp, and Google… For the last four years I’ve been in property technology at a company called Nestio, prior to joining Rhino, and helped build out their business development team seed round through series B, and now I am over here at Rhino where we are changing the way that renters rent, and hopefully change the way that owners can manage their properties.

Theo Hicks:  So I mentioned in the intro that Rhino replaces security deposits with a low-cost insurance policy. What exactly does that mean?

Adam Weiner:  It’s real simple.  Traditionally, when someone gets approved for an apartment, the managers or the owner says “Okay Johnny, you’ve been approved for the apartment.  We are going to need a cash security deposit in X amount.”  That could be 300 dollars in Texas, or it could be 3,000 dollars in New York City.  And what we do is we go ahead and replace that deposit with an insurance policy. So it’s a reduction in upfront cost for the end user, that being your resident, and it will really grease the wheel so to speak with regards to leasing velocity, and your ability to effectively market the apartment.

In essence, we are just cutting out a major bottleneck that prevents people from getting into apartments quickly, to benefit landlords, and it’s a great way to tackle the affordable housing issues by helping people out during what’s a super-expensive time in someone’s life, moving.

Theo Hicks:  So when you say it’s insurance policy – are you working directly with renters, or are you working directly with the owners? Or is it both?

Adam Weiner:  That’s a great question.   We view ourselves as a true B2B2C model. My team’s job is to form partnerships with landlords throughout the United States.  And they this in turn offer Rhino as a financial amenity to the renters.  So it’s really an equitable equation for everyone involved.

Theo Hicks:  Okay, so you said typically what happens is I want to rent an apartment, the landlord approves me, and instead of me paying them $300 — I wish my security deposits were that low.  Typically, it was like a month’s worth when I was in Ohio.  So I pay $1,200 upfront, plus first month and last month’s rent.  That’s like $3,600 right away.  Whereas for this strategy, you said that it replaces it with an insurance policy. Does that mean me as a renter rather than paying $1,200 upfront, I am paying something each month, like I would with other insurances?

Adam Weiner:  Yeah, you hit the nail on the head. It’s a monthly payment that the renter pays.  The general rule of thumb is for every thousand dollars of protection the landlord needs.  So to replace your exact deposit, it would have cost you about $5 a month with Rhino.

So, the resident is psyched, because they don’t need to shell out $1,200 bucks in addition to all the other fees – first month’s rent, last month’s rent – and that’s a huge reduction in cost, which benefits the landlord initially. And to your point, $300 [unintelligible [00:05:32].14] in Texas. In San Francisco or in New York City, where we have partners on the landlord side, they are charging resident three, four, upwards of seven, eight thousand dollars in terms of deposits.  So it’s really a universal fit for a renter, and depending on socio-economic status, it will vary as to what we’re actually replacing.

Theo Hicks:  Okay, and how does the exit process work with the insurance policy?  I am a landlord, my tenants lived there for a year, they’ve paid their let’s say $500 per month for insurance, and then they move out. And then let’s say that the damage that I incur is — I don’t know, let’s say 2k.  Well, does the insurance policy cover all of that? What will the insurance policy cover?  Is there a process for explaining what issues I had, is that different…? Because obviously, if I just take a security deposit, I kind of am the one who’s looking at the property, seeing what damage was incurred, calculating the costs, and then taking that out of the security deposit before giving it back to them. How does the exit process differ with this policy?

Adam Weiner:  Yeah, totally.  The claims process is really easy. Effectively, we need to be as good or better than cash.  If landlords or owners weren’t able to get their money quickly and in a really in an efficient way then no one would be working with us. Right now we are in about half a million apartments, and we’ve ensured upwards of 150 million dollars in leases, for owners and operators throughout the US. So, from a claims perspective, it’s all done digitally online.

We need some photos for damages, for loss of rent or late fees, just a copy of a lease ledger, or arrears on the account.  You upload that information with the claim, actual amount, and click Submit. You will be alerted automatically that we received the claim, and then we process that claim in an hour. So it’s very, very fast.

Theo Hicks:  Okay, this sounds very convenient for the landlords.

Adam Weiner:  Yeah, take car insurance as an example. You go rent a car, and they don’t say, “Hey, Theo, we’re going to need $5,000 to drive the car off the lot.” You give them your information, you take on an insurance policy, and it’s a really effective way to protect the asset.  Same exact principle applies to real estate.

Theo Hicks:  Taking a step back and looking at Rhino’s business perspective – again, I don’t know much about how insurance companies operate, but you mentioned that you ensure up to about  150 million dollars in leases throughout the US. As a company, do you need to have a lump sum of cash on hand in order to make sure you can cover all of these claims processed? How do you know how much money your company needs to make sure it can cover the potential of 150 million dollars or whatever that number would be? I am just curious.

Adam Weiner:  Yeah… Well, it’s called an MGA, which is a Managing Group Agent. So it’s our policy, it’s our marketing, it’s our branding – we handle end-to-end processing of the entire insurance process, from collection of premiums all the way to processing of claims. We operate on carriers balance sheets,  so we are backed by a company called State National. State National is a roughly 14 billion dollar A-rated excellent insurance carrier.  They basically trust in us to write [unintelligible [00:08:41].01] policies in a way that we find appropriate, and it’s actually them [unintelligible [00:08:45].20] fulfilling claims when landlords file them.

Theo Hicks:  Okay. And another business question – it sounds like you joined this company pretty early on. What was the size of the company? …whatever the main metric is. You said that you ensure 150 million dollars in leases now; maybe that will be the metric. How much money worth of leases did you guys ensure when you first started working there?

Adam Weiner:  That I don’t have off the top of my head, but to give you an idea, when I started a year ago, we were working in an eight by eight office, with seven of us on a good day.  Now we are in a 5,000 square foot space, we are a team of roughly 40. So the company has grown, and that’s really to keep up with the volume and demand of both renters that we service, and landlords that we work with.

So when we started off, we had roughly just south of 100,000 units on the platform, like 50 or 60 thousand, and now we are upwards of 300,000.  So we are growing really quick, primarily from an institutional owners standpoint… So a couple of folks on the [unintelligible [00:09:45] and then we work with everybody in between.

Theo Hicks:  Okay, so just because this is an insurance company, it doesn’t mean the kind of concepts that are used to scale don’t apply to real estate… Because I could start with me doing everything myself and having a small number of units, to eventually having a team of ten people.  So what were some challenges you faced, or maybe the lessons that you learned, that other people can apply if they want to get to the point where they’re not just a one-man show, they’ve got people working for them and that enables them to scale their business? What are some of tips you have for people who want to scale the number of people they have working in their business, so that they can grow their real estate business?

Adam Weiner:   It’s all about hiring smart, intelligent, driven, hungry people. Everyone in the office understands what the mission is, we are super-collaborative, and it’s really about hiring A-players early on, and A-players will attract other A-players.  So I think the advice would be surround yourself with good people.

Theo Hicks:  Do you have any involvement in the hiring process?

Adam Weiner:  Yes.  I am hiring key people in our business development team right now.

Theo Hicks:  Can you give us some tips on what to look for when you are hiring people? I mean, I know you mentioned smart, intelligent, driven people, who are aligned with your mission, but is there any specific tactics that you use when you are interviewing, that maybe is unique to your business?

Adam Weiner:  Yeah, I try to have a conversation with someone, rather than ask generic, arbitrary interview questions. I try to really see if a person can connect with me and have a real conversation, and try to learn that way. I think that’s kind of indicative of the way that we approach business development.

Ultimately, Rhino is a free product for landlords, it costs nothing.  So my team’s job is to form strategic partnerships with progressive-thinking folks in real estate.  So it’s really about doing exactly that – having a conversation, building rapport.  I think that’s a huge part of what I look for.

Theo Hicks: You mentioned [unintelligible [00:11:46].16] landlord, so you making money off of the insurance payments that the tenants pay… So part of that goes towards covering the claims or whatever, and the rest of that is profit for you guys, correct?

Adam Weiner:  Correct. That’s how the business model works.

Theo Hicks:  Perfect. Alright Adam, what is your best real estate investing advice ever?

Adam Weiner: My best advice ever would be if you’re a multifamily operator, to get your apartments off of deposits, and to have them use an alternative like Rhino.  I think that’s where the market is heading right now, and the advantages greatly outweigh the disadvantages. The only reason I could think of not using a service like Rhino is if you are in a state that allows you to use deposits for capital improvements. But most states — it’s  few and far between that allow that.

Theo Hicks:   Perfect. Are you ready for the Best Ever Lightning Round?

Adam Weiner:  Yeah, let’s do it.

Theo Hicks:  Alright. First, a quick word from our sponsor.

Break: [00:12:42].27] to [00:13:27].29]

Theo Hicks:  Alright Adam, what is the best ever book you’ve recently read?

Adam Weiner:  War Journal, by Richard Engel. It’s  a history, or conflict [unintelligible [00:13:35].19] It’s very, very interesting.

Theo Hicks:  If your business were to collapse today, what would you do next?

Adam Weiner:  I’d probably go into brokerage works. I’ve always had a real interest in that, and I’ve never done it… But I’d probably go into the world of brokerage.

Theo Hicks:  What deal did you lose the most money on? I guess as you aren’t technically an investor, I guess it could be “What business decision resulted in a loss of money?”

Adam Weiner:  When working at a company, the worst deals are deals that hurt the company. The worst deals that I have ever lost were deals that did just that, [unintelligible [00:14:10].20] probability deals.

Theo Hicks:  What is the best ever way you like to give back?

Adam Weiner:  The best ever way I like to give back is a charity called Shatterproof that I’ve given back to, that helps people who are dealing with substance abuse.

Theo Hicks:  And then lastly, what’s the best ever place to reach you?

Adam Weiner:  Text or email is the best way. Adam@sayrhino.com

Theo Hicks:  Alright, Adam, I really enjoyed conversation. This is one of the first interviews I’ve done in a while where it’s been kind of completely foreign knowledge. I really don’t know anything about the insurance process, and I’ve never heard this before. It was very interesting, and I am looking forward to diving into this more.

Just to kind of summarize what we talked about… Rhino is a company that replaces security deposits with a low-cost insurance policy. So rather than me as a landlord collecting a security deposit from my renter, instead I will partner with Rhino and my tenants will pay a monthly fee instead.

Adam Weiner: You nailed it.

Theo Hicks:  And the benefits of that are — both benefits to the landlord and to the renter, because the upfront fees are going to be lower, so I don’t have to worry about losing the residents that can’t afford thousands of dollars upfront. I can lease my units faster.

You also mentioned that  from a business perspective your company is backed by a large company called State National – that’s your insurance carrier – that lets your company handles the entire insurance claims process. So if you are working with Rhino, they do the entire process.

You mentioned that the claims process itself is all done digitally, so rather than me having to do all the calculations of myself, I just upload photos, upload copies of leases for any late fees, and then your company calculates how much money it’s gonna cost to cost to fix all the damages.

We talked about how to scale… So when you first started out, you had seven people on a good day, really small office, you managed around 60,000 units. Now you have a big office, 40 people, managing over 300,000 units. The tips were to make sure that you are hiring the smart, intelligent, driven and hungry people early on, who in turn attract more smart, intelligent, driven and hungry people, and you’ve got the snowball effect. So make sure you are focusing on hiring right people early on, that will help you scale long term. More specifically, when you are hiring people to see if they are smart, intelligent, driven and hungry, make sure you are having a conversation with them, rather than asking them a list of generic questions, to see if they can connect with you.

And then lastly, the best ever advice was to get your apartment off of the deposit system and use an alternative like Rhino. The only exception you said would be if they have the ability to use the security deposits for ongoing cap ex, because if that’s the case, you can multiply that money by investing into the property and forcing appreciation.

So yeah great interview, great conversation, lots of great content. Best Ever listeners, I am sure you’ve learned a lot. Thanks for tuning in, have a best ever day, and we’ll talk to you soon.

Adam Weiner:  Thanks so much.

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JF1953: 60 Homes, 12 Units, And One Storage Facility In Just Three Years with Angad Guglani

Angad started in this business as a real estate agent in college. He got that business rolling by helping students find housing. Now with a bunch of single family homes, multifamily units, and a self storage facility, Angad has a ton of knowledge to share with us today. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“Figure out where you’re going to get the money to buy the deal and where the revenue is coming from” – Angad Guglani


Angad Guglani Real Estate Background:

  • Real estate investor for three years
  • Has built a portfolio of 60 single family houses, 12 multifamily units, and a self storage facility
  • Based in NYC, NY
  • Say hi to him at http://cooperacq.com/
  • Best Ever Book: The E-Myth


The Best Ever Conference is approaching quickly and you could earn your ticket for free.

Simply visit https://www.bec20.com/affiliates/ and sign up to be an affiliate to start earning 15% of every ticket you sell.

Our fourth annual conference will be taking place February 20-22 in Keystone, CO. We’ll be covering the higher level topics that our audience has requested to hear.


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

Angad Guglani: Doing well, Joe. How are you?

Joe Fairless: I am doing well, and looking forward to our conversation. A little bit about Angad – he’s a real estate investor for four years, has built a portfolio of 60 single-family homes, 12 multifamily units, and a self-storage facility. In three years. We’re gonna dig into that, I’m very curious how you were able to do that. Congratulations, first off… And secondly, based in New York City, New York. Where you do you live in New York City?

Angad Guglani: I’m actually in Greenwich Village. I went to NYU, so I kind of stayed in the area.

Joe Fairless: Oh, a very nice area of New York City. Alright…

Angad Guglani: Yeah, we have some parks here… It’s nice.

Joe Fairless: Do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Angad Guglani: Sure. I started in real estate about 5,5-6 years ago. I started when I was 19, I got my real estate license. I went to NYU, I went to the business school there (Stern). I know we’re kind of in the headlines the last couple of days…

Joe Fairless: What happened at NYU? I don’t know.

Angad Guglani: Well, the class president of the grade below me just got put away for insider trading at 23…

Joe Fairless: Oh, busted. Okay.

Angad Guglani: Pretty young. I hope I didn’t give it any more PR, but anyways… I was a student there, and I kind of ran into someone who was doing rental brokerage. He told me he was making a lot of money doing it, so I said “Let me get my license and let me see what this is about.” So I got my license and I realized actually I have no business, I have no clients, I have no owners I can represent… But I ended up coming up with the idea that I could basically start a student-run brokerage for college students looking to get apartments… Because at NYU and other colleges in the city about 20,000 students move off-campus every year, so it’s a lot of rental deals that happen. And most of them had a broker involved, and the broker made about a month to two months’ commission, which for their average rents of 3k-4k it was  a pretty good chunk of change.

So anyways, I started a business that kind of tapped in that market. At first it was just me, and then  I hired ten of my friends to go run around and show apartments.

Joe Fairless: When did you have that business? At 19, or 20?

Angad Guglani: At 19 and 20 — I basically ran it all throughout college.

Joe Fairless: What year were you in college when you started the business?

Angad Guglani: I was a sophomore. I think that was back in 2015. Anyhow, so I ran that and we were doing really well. I was making six-figures a summer, three months.

Joe Fairless: Wow.

Angad Guglani: The numbers were pretty good. We would do 100 deals a summer, because most of the kids would move during the summer, and the average commission was between 3k and 6k. And because I kind of ran the team, I would get splits off of all the friends that were working for me… So I would make money on my own deals, and their deals.

Joe Fairless: How many friends did you have working for you as a sophomore in college?

Angad Guglani: The biggest we ever got was ten or eleven. And they were all licensed. You have to be licensed by the state of New York to represent someone in a real estate transaction. So it’s pretty easy to get a license; I’d kind of coach them through, I’d get them on the online class, and that’s how we were doing it.

Joe Fairless: And how did you advertise?

Angad Guglani: Actually, I created a website called OffCampusApartments.nyc. It’s still up there. If you ever google “student housing new york city” our website still comes up on number one or two. And then I also made a partnership with NYU directly, so if you were to call them at the time and ask for a broker, they would send you to my company.

Joe Fairless: Did you get the majority of your leads through that?

Angad Guglani: About 50/50. In the beginning the majority, then the referrals from the school, and then as our website got SEO, as it got web presence, we got a lot from the web page, and then we did Facebook ads… It was  a good time, because brokers were doing really well back then. Now margins have compressed a lot, because most of the listings are available online, through different websites [unintelligible [00:05:02].05]

Joe Fairless: What did you have to do in order to get that partnership with the school? I know you were a student at the time, but did you have to do anything else?

Angad Guglani: It just came down to going to the guy’s office and just sitting there for a couple hours, until he took with the meeting, and… He was a nice guy. I think it was the guy who ran the student affairs at the time… So it wasn’t as hard as you would think.

Joe Fairless: Had someone else approached him about this idea before?

Angad Guglani: A few people had, but most of them were not students; they were older people. It’s pretty frustrating, running around with college kids and showing them apartments, so a lot of people start businesses like this and then quit after a year… But being that I was 19 or 20, and just very ambitious, I took it in stride, so I kind of enjoyed it.

Joe Fairless: And what aspects would some people find frustrating, working with college students trying to find apartments?

Angad Guglani: Oh, New York renting is crazy; it was crazy then, and it’s still crazy now. You have to get a whole dossier of documents, like tax returns, bank statements, photo ID, employment letters, pay stubs… You have to assemble that. And because kids aren’t working themselves, you have to ask their parents for this information. And kids are pretty disorganized, so you basically end up having — if you’re doing a two-bedroom or three-bedroom deal, you have three kids, three sets of parents, you have to assemble all these documents, and they’re kind of running around like a chicken who had their head cut off… It’s a lot of coordination, and a lot of times these deals don’t even go through. So unless you’re really passionate about it, it can get pretty frustrating.

Joe Fairless: Alright, so that’s this business. Then what happened?

Angad Guglani: Like I said, I was doing pretty well. I was making some money and I was living very inexpensively, because I was 19 or 20. I wasn’t spending any money, so I was saving it… And I realized the money in real estate is not on the brokerage side. I’m not saying — I mean, there’s certainly brokers who make a lot of money, but I’ve always wanted to be on the ownership side. And through a mutual friend I met someone who lived in Philadelphia and he turned me on to Camden, New Jersey. He said this area is getting about 2,5 billion dollars of government money put in in the next 5-10 years. It used to be the highest crime area in the country, but there’s real signs of change…

When it started, it was me and two best friends; we went there for a day, saw some property, and realized the numbers really do work.

Joe Fairless: Okay. So what did you do?

Angad Guglani: So we bought our first house — like I said, it was me and two partners; not because I needed the money from them, I just wanted to share the experience with–

Joe Fairless: How much did you have in your bank account after the brokerage stuff, before you bought your first house?

Angad Guglani: Between 200k and 350k.

Joe Fairless: Good for you. Isn’t that incredible? Do you think that’s incredible? It’s tough to look at it from your own perspective, I know…

Angad Guglani: Living in New York you see people that spend that much money on one week vacation, the people in hedge funds..

Joe Fairless: [laughs]

Angad Guglani: Especially the startup guys. I read stories about guys that are 24-25, raising a hundred million bucks, and I’m like “What am I doing?”

Joe Fairless: Well, that’s different. They’re raising that much money; you earned this money yourself. There’s a difference there.

Angad Guglani: No, I’m very appreciative–

Joe Fairless: I’d say it’s more impressive what you did than raising a hundred million dollars.

Angad Guglani: Thanks for that, Joe.

Joe Fairless: Alright, so Camden, New Jersey, you bought your first house, two partners… What information should we talk about regarding that transaction?

Angad Guglani: Sure, I can run you through it. So we bought it on an auction website, totally blind; we had no idea what we were doing. We ended up getting a pretty darn good deal. We bought it for 33k, put about 12k into it, so we’re in for 45k… And we had the property management company running it, and they were kind of wrong company, so it sat vacant for 4-5 months, and my partners got frustrated… So I ended up buying them out.

So I bought them out, and eventually it was just me in a single-family house… And we ended up getting a tenant – or I ended up getting a tenant – and I think I rented it for $1,450 a month. We were all in 45k at this point… So that was the first deal. The rents came in every month, and it was great.

Joe Fairless: How did you and your partners structure that deal?

Angad Guglani: When I had the partners, it was basically a third, a third, a third. We each put in about 15k. It was into an LLC.

Joe Fairless: So that was the first deal. You have 60 single family homes, 12 multifamily units and a self-storage facility… So what happened?

Angad Guglani: Yeah, that was in 2016 when I bought it; 2017 was when I bought the partners our. In 2017 I bought about five houses, because I had the equity, the couple hundred grand… So I was able to buy these houses in cash, fix them up and rent them out.

After I built a portfolio of about five I realized I really can go to a lender; that was the hardest part, was finding a lender… Because lenders don’t wanna lend to LLCs when you’re buying houses for 50k. I mean, it’s very hard to get the financing. But I found a lender that would do a blanket refi, so they basically tied the five properties into one loan and fully cashed me out at 75% LTV.

Joe Fairless: Okay. And then what did you do with it?

Angad Guglani: I basically got the money I started with, plus a little bit more back out after the cash-out refi at the end of 2017. And then in 2018 I kind of got my feet wet; I learned the different players in the market, I aligned myself with a really good property management company, I trusted and aligned myself with some good brokers that were kind of the guys who were doing the most deals in that market… So I was able to pick up 30 single-family houses. Actually, not 30; probably 25, and then I bought a five-unit building in 2018.

Joe Fairless: So how are you running the numbers and evaluating if  these homes are worthy of purchase and not something that you’re just gonna sink money into?

Angad Guglani: Sure. My business is buying distressed real estate, as a lot of people are. So you basically need to figure out what this thing is gonna be worth once you fix it up, what the bank is gonna appraise it at… The numbers work. This is a high-yield market. You can go on the MLS and buy 10%, 11% caps all day long. But I like to buy deals where I get unlevered returns of 16%, 17%, and the only way to do that is to buy them distressed… So we’re talking REOs, estate sales, people that need to sell them quickly, off-market deals… Those are the types of deals I buy. And on those deals, as long as you know [unintelligible [00:10:58].08] on the back-end,  you know what you can buy it for, and you can guesstimate what you can fix it for, and you have a pretty good formula.

Joe Fairless: So you’re renting them out though, right?

Angad Guglani: I rent all of them out, yeah. I sold a handful for strategic reasons, but the majority of my business is BRRR method – buy, rehab it, rent it, and then refi on the back with a commercial blanket loan, tying all the assets together, pulling it out.

Joe Fairless: What are some strategic reasons why you sold some of them?

Angad Guglani: I realized that I don’t want to do construction jobs more than 25k, reason being I live about two hours away from the market… And you’re not gonna get an ace contractor that’s willing to work in Camden. Most of the contractors in that area wanna work in the suburbs, where they can do retail jobs. They don’t really wanna work for investors.

So if I’m gonna be hiring sub-optimal contractors, they’re gonna overcharge me, because I have a New York cell phone number. They think everyone in New York has a bunch of money. I’m just gonna get eaten alive.

So I would rather sell that deal off and make a little bit of money because I bought it well, to some guy who’s gonna do the work himself, [unintelligible [00:11:58].17]

Joe Fairless: And how do you manage that process? Even if it’s less than a $25,000 construction job.

Angad Guglani: Less than $25,000 my property manager has a handful of handymen that do a lot of work for us, that can take those jobs on. We’re talking patch and paint. New flooring, new kitchens, some painting and a little bit of drywalling. It’s not major structural or mechanical stuff.

Joe Fairless: So right now you have 60 single-family homes?

Angad Guglani: Correct.

Joe Fairless: What do you think the 60 single-family homes are worth?

Angad Guglani: They’re worth probably around 80k a door, so about f.8 million…

Joe Fairless: That’s great. And about how much cashflow do you receive on a monthly basis as a result of having them?

Angad Guglani: Right now I’ve kind of grown pretty quickly… Which has been good, but it hurts you in the beginning as far as cashflow. So I’m buying properties — I buy about five a month, so I have a backlog of about 18 houses that aren’t rented right now, that are undergoing minor construction, that are gonna be on the market… But as far as my underwriting goes, I make about $300/door in cashflow after it’s fully financed.

Joe Fairless: Okay.

Angad Guglani: So the 60 would be about $18,000/month in free cashflow, and you’re amortizing your loan, so that’s another kicker to it.

Joe Fairless: What lender do you use?

Angad Guglani: I use two local community banks, but I’m kind of now in the process where I’m speaking to some of the national commercial mortgage lenders. There’s a few that have entered the space in the single-family rental aggregation space, and I’m speaking to them.

Joe Fairless: And who are they? The rental aggregation lenders.

Angad Guglani: You have CoreVest… CoreVest was spun out of Colony Capital, and that’s owned by a bank. They’re pretty big. Blackstone has one called Finance of America. There’s another one called Rock Capital. Goldman Sachs has one called Genesis Capital… There’s 3-4 of them. I’m sure there’s more that I’m missing, but…

Joe Fairless: What type of terms are you looking for with a group like that?

Angad Guglani: Rates have gone down a little bit, which is nice, but we’re looking at 5.5% to 6.5% on a 7/1 ARM loan, that seven years fixed rate and then adjust every year after that, on a 10-year or 30-year term, that amortizes over 30 years.

Joe Fairless: Cool. And you have a self-storage facility.

Angad Guglani: Correct.

Joe Fairless: Tell us about that.

Angad Guglani: It sounds a little glamorous, like self-storage facilities are these big facilities… [laughs] To be honest with you, this one is about 20 garages. Each of these garages is 20×10, so it’s about 4,000 sqft. of storage, and then there’s about a 1,000 office that’s leased to a single tenant, on the other side of the lot.

Joe Fairless: And how much did you buy that for?

Angad Guglani: I got a really good deal, I bought it for 120k.

Joe Fairless: What’s it worth today?

Angad Guglani: It’s tough to say. There’s no real comps… But I’m projecting a net operating income on that facility of about 40k… Plus we have a lot that we can build some more units on. So once we finish building them out, we have to go to the zoning board to get approval to build out some more units… But I wanna get the net operating income up to about 50k. So if you wanna back that into like–

Joe Fairless: Yeah, I just did… So that’s the cap rate, you’d say, about 10%-12%?

Angad Guglani: 10%-12% cap, because it’s not a core buy for anyone, so they’re gonna want a real nice yield if they were to buy it. So you’re talking about – what, 400k?

Joe Fairless: Yeah, 50k in NOI, 12% cap, 416k valuation.

Angad Guglani: Yeah. And I didn’t even spend any money on it. To build the units it’s probably gonna cost 70k-80k.

Joe Fairless: How did you find that deal?

Angad Guglani: That deal was actually on the MLS.

Joe Fairless: Huh.

Angad Guglani: But it was on the MLS for like a day… My whole strategy is buying deals directly from the listing broker, especially on stuff that they don’t wanna sell. Most of the listing brokers don’t wanna sell properties in Camden because they’re low on the nominal value amount, where they’re not gonna make much commission off it. If you go directly to them and they’re getting the full 6%, they’re gonna put your deal first, and they’re gonna get your deal done.

Joe Fairless: So are most of your deals marketed deals, and then you just reach out directly to the listing broker and make offers?

Angad Guglani: I would say 15% of the stuff I buy is MLS-listed… I have relationships with some REO companies, asset managers, so I get a lot of deal flow through that… And then I have a direct to consumer line called Cash for Camden, where we do direct marketing, and we’re getting deal flow through that…

Joe Fairless: Right. What percent of your deals do you get through the REO companies?

Angad Guglani: About 50%.

Joe Fairless: That’s a lot. Okay. And I won’t ask you specifics about them, because —

Angad Guglani: Yeah, it’s pretty paramount in the business, so…

Joe Fairless: Yeah, yeah, so I won’t. But I wanna ask you about it conceptually. How did you get introduced to them, or how did you choose to introduce yourself to them?

Angad Guglani: I  got kind of lucky… An attorney that I had been introduced to to help me on another matter – they were a client of his. So he put us in touch. That’s how I got that direct relationship.

Joe Fairless: Let’s say that relationship went away; if you would try to replicate this, how would you got about replicating this?

Angad Guglani: Something I’m trying to do now – I’m really trying to build systems and processes. That’s my goal for 2020, is really get a lot of this stuff automated. But what I would do is look at the deeds. I’m obsessed with the county clerk’s office. I look at all the deeds and all the mortgages; that’s how I get all my data. So I look at the deeds and I look at who’s selling a lot of stuff. If there’s one entity that’s selling a lot of stuff, they probably are an REO entity. Figure out who’s behind it, look at the addresses on the deeds and work  your hardest to try and get in touch with them.

Joe Fairless: Love it. What’s a deal you lost money on?

Angad Guglani: There’s one deal I lost money on, and that was because I got scammed by a contractor. That’s when I put that rule in place that I’m not gonna do jobs over 25k. It was pretty terrible.

Joe Fairless: [laughs] He really did a number on you, where you made it  a policy moving forward not to ever work with [unintelligible [00:17:33].20]

Angad Guglani: [laughs] Yeah, it was a tough one. This was in 2017-2018 I think it was… But  did my job right. My job is buying distressed real estate cheap. I bought the house for 20k. I could have sold it the day of closing for probably 30k-35k, but I didn’t. I wanted to fix it up. So I hired a contractor who had grey hair, who really talked the big game, said “Stanley’s been doing construction for three generations”, and I really trusted him.

So we had a really trusting relationship, and speak every day, and he started trying to add value to me. He’d drive around and say “Hey, did you see this house?” So I really trusted this guy. And I would give him his draws by bank wire whenever he asked for them. It started out good. He did some good work, he would send me pictures and I’d wire the money right away.

And all of a sudden, coming around Christmas time he started saying “You know what – this job is costing me way more. You need to frontload some of the draws”, because the roof needed way more than he needed… And I know nothing about construction. And by this time I had a really good relationship with this guy… So I basically paid him the entire draws for the project, 45k, and the project was only about 40% done. That’s when things really got wrong. He basically walked off the job. And if you were to google him, you’d figure out this guy’s been sued a bunch of times, he went to jail… I had actually done that, I had actually read that, and he explained it away. He’s like “You know what, don’t trust what you see… There was a lot more to that story. I’m a good guy.” And I trusted him… But I learned my lesson.

So I bought it for 20k, I spent 45k with this contractor, then I had to hire another contractor. It turned out all the work he did, he never pulled permits for. The 20k worth of work he did, we had to rip it all out. It cost me another 40k-45k.

Joe Fairless: Aw…

Angad Guglani: So I bought it for 20k, I’m in 90k for the rehab, so we’re in about 110k, and I listed it at 115k or 117k, something like that… So I think I lost about 10k between holding costs, commissions, and all that stuff.

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

Angad Guglani: Have a business plan, figure out what your niche is, what your strategy is, and figure out where you’re gonna get the money to buy the deal and where the revenue is gonna come. Are you just buying it for yield, are you buying it because you’re trying to refi it out, or are you buying it to flip it? Really figure out the sources and uses.

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

Angad Guglani: Yeah, sure.

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [00:19:58].28] to [00:20:40].03]

Joe Fairless: What’s the best ever book you’ve recently read?

Angad Guglani: I read it about two years ago, The E-Myth. It really changed the way I think.

Joe Fairless: What’s something from that book that you’ve incorporated into your business?

Angad Guglani: Really focusing on trying to build the business, and systems and processes. It’s really hard for me; I’m not a systems thinker, but I think that’s really the only way to build a lasting organization, is to have processes and employees [unintelligible [00:20:58].16]

Joe Fairless: Best ever deal you’ve done?

Angad Guglani: Most of the best deals have been this year, but I’m superstitious. I don’t like to talk about things until I’m done with them… So I’d have to say probably the first deal, I think I did pretty well on that one.

Joe Fairless: Best ever way you like to give back?

Angad Guglani: My goal is once the portfolio is fully stabilized, it’s to give 10% back to local charities; 10% of the net operating income. I haven’t started that, because I’m cash-strapped as we’re growing this… But eventually, that’s my goal, is to really give 10% back to the community.

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

Angad Guglani: Sure, you could check us out online. The company is Cooper Square Acquisitions, cooperacq.com, or you can reach out to me directly at ag@cooperacq.com.

Joe Fairless: There are a lot of impressive things about what you’ve done, and I won’t summarize all of them, but I will say what you did as a college student, and what you built, where you saw the need and then — I mean, six figures, a third of  a million dollars earned as a result of the brokerage business as a college student – it’s just inspirational for anyone… And then what you’ve done to build the portfolio, and the smart ways you’ve gone about finding deals, and getting deal flow, and then obviously executing… Because anyone can be a spreadsheet millionaire, but it’s all about the execution. So just very impressive… I really appreciate you being on the show.

I hope you have a best ever day, and I’m looking forward to talking to you again soon.

Angad Guglani: Thanks, Joe. I really appreciate your time, and I hope to speak to you soon as well.

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JF1937: 3 Tips for Entrepreneurship #SkillSetSunday with Dana Corriel

As real estate investors, we are usually business owners and entrepreneurs as well. Dana is also an entrepreneur who is here to share her story and help us with some tips on entrepreneurship. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“Every successful entrepreneur at some point has to say no and disappoint some people” – Dana Corriel


Dana Corriel Real Estate Background:

  • Board certified internist and creative entrepreneur
  • Was one of the Top Ten Internists to follow on Twitter in 2018 and featured on the LA Times front cover in 2019
  • Based in NYC, NY
  • Say hi to her at  doctordanacorriel@gmail.com


The Best Ever Conference is approaching quickly and you could earn your ticket for free.

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Our fourth annual conference will be taking place February 20-22 in Keystone, CO. We’ll be covering the higher level topics that our audience has requested to hear.


Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and 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.

First off, I hope you’re having a best ever weekend. Because today is Sunday, we’ve got a special segment for you called Skillset Sunday. The purpose of this episode is to help you hone or even create a skill that you may or may not have already. The skill we’re going to be talking about today is the three tips for entrepreneurship.

We have a successful entrepreneur who is joining us today, Danna Corriel. How are you doing, Dana?

Danna Corriel: Good, I’m great. Thank you for having us on.

Joe Fairless: Well, I’m glad to have you on, and looking forward to our conversation. Dana is a board-certified internist and also an entrepreneur. She was one of the top ten internists to follow on Twitter last year, and she’s featured on the Los Angeles Times front cover this year, 2019. With that being said, first, do you wanna give the Best Ever listeners a little bit more about your background and how you got into entrepreneurship? And then let’s dig into  your three tips for entrepreneurs.

Danna Corriel: Right. So I am just your standard, traditional physician. I trained really hard to get my medical degree, and upon earning it, I sort of entered the work field, and at some point became a  mom… And did the whole medicine thing. Then at some point I actually took a break, because I felt like I needed that time to connect and bond with my children. But during that time, I also discovered that, lo and behold, it might have been myself that I needed to connect with, so there were suddenly all these things that became apparent to me, that I just never realized that I could do. So I started to create, and I entered the medical work field again three years later, with a whole new sense of clarity.

I decided to sort of never give up that creative side that I somehow had found, and I decided that I would somehow mesh it into medicine. That’s where I became a creative entrepreneur.

Joe Fairless: And what were you doing exactly? You said you started to create and you wanted to hold on to that.

Danna Corriel: Oh… I started to live. I know that sounds raunchy, but that’s literally what I started to do. I literally learned how to cook, and learned how to bake, and learned how to connect with my kids, and I learned how to host people, and how to really make an impression, and I learned how to design, how to collect vintage and refinish furniture… I started kind of dabbling into arts, and I realized suddenly that I actually had a talent, and it had nothing to do with medicine. And I  don’t think I ever would have known that if I didn’t take the time to not be a doctor.

Joe Fairless: So how the heck do you merge that into being a doctor?

Danna Corriel: Actually, that’s the dilemma I found myself in when I actually entered the workspace, because to be honest with you, there was a time where I didn’t want to go back to being a doctor. That’s how much I loved what I was doing. My husband made fun, he said that I was in early retirement, because we didn’t think I was going back… But I did decide to go back, and I said “I’m going to find a way to do this”, and it’s taken me a few years to really get into how, but I actually found it, and it evolved into where I am now.

What happened was that I started to create content virtually and online, I started to take photos of the world around me, and to create just like magical photos just using my iPhone. I suddenly got attention of people around me, and I started to write, I started to blog… And I started realizing that that catches people’s attention. People are actually interested in hearing me being funny, and hearing me being a human… Because I’m a doctor, and a lot of times doctors — we have this traditional hiding behind our coats, and we kind of can’t be human, to “be taken seriously.” And that’s a little ridiculous. Of course, we’re human; I’m a human being, I just also can treat you.

So I started taking these really beautiful photos, and I’m like “Oh my gosh, I can leverage the creativity in my photos to teach medicine, or to teach a point from my life”, or I can use my words on my blog to teach a life lesson and actually teach people about medical topics, or about behavioral medicine that they can learn from.

That sort of evolved, and I started to write my own blog, and I started instagramming, and I started sharing content… And then at some point it caught the eye of physicians, and then I was like “I need to really empower other physicians to do this”, because I’m just n of 1, I’m one person, and I don’t know what the specialists know. I’m an internist, I know a little bit of a lot. But the specialists know a lot of that particular thing; I need to literally empower them and give them the power to shine. And that’s where I created my brand SoMeDocs, and that’s the brand that I am now entrepreneurially taking on.

Joe Fairless: I’d like to learn more about SoMeDocs, but first, what’s an example of a piece of content you created to then teach a lesson in medicine, or even a life lesson?

Danna Corriel: Wow… So, so many examples. And actually, if people wanna check them out, they could check me out at @DrCorriel. That’s my brand name all over Instagram, Twitter, any platform. But just to give you an audio description, a great piece of content is something that was  very controversial, that actually landed my name on the front cover of the L.A. Times… And that’s that I posted on just an innocent post on social media, on the fact that we got the flu vaccines in to our office. I had an image of someone holding up the vaccine very innocently. That piece of content went very viral; I got crazy engagement. Good, bad, I got attacked, then I had healthcare come and rescue me… It was amazing.

The bottom line of that is that I had to take it off after some time, because it really got to be too much for me. But months later, I actually got my own flu shot, and I decided to create a piece of content that was relevant, but also kind of fun, and also kind of make a commentary on health. It was Halloween, and I put on a little — it wasn’t a little, it was a big mushroom cap, kind of like for Mario Brothers… Because my friend is an artist, Anne [unintelligible [00:07:51].10] and she made it. And I was like “You know what – let me use that as commentary.” I have a photo of myself flexing with it, with my bandaid over my flu shot area. And I say something like “On Halloween, this doctor powered up.” It was sort of like my clever response to that vaccination mayhem from months before. And I was making a commentary on vaccines, like — look, I tell people to get their vaccines, but I practice what I preach; so here I am, using that. And it was a really nice photo. If your audience wants to look it up, it’s there, in all of my content. It’s a cool photo.

So that’s the kind of information nowadays that really sells, and those are the kinds of things that go viral – just things with cool visuals, with cool wording, and things that really grab people’s attention.

Joe Fairless: Your evolution as a public figure is applicable to anyone in business, and especially real estate investors, because as real estate investors, the perception might be we have to be very analytical, we have to have a suit and tie on… This might not be a perception that everyone has of real estate investors, but some people might perceive if you’re starting real estate, “Hey, I need to always have a suit and tie, I need to act a certain way…” But the challenge you came across is you are a doctor, and there is a certain perception that people have about how doctors are supposed to act, and your challenge was “I want to actually be myself, show my personality, but I also need to continue to be taken seriously as a doctor.” So you broke through that by saying “You know what – I’m gonna do what fulfills me, and I’m gonna share this, and it’s ultimately gonna help people.”

So I think it’s inspiring to hear your story for anyone who thinks they need to act a certain way, to be someone that they’re not. And I can tell you firsthand, I came across this when I was leaving the advertising world, and I was going into real estate investing full-time. I did a photoshoot, and I had a suit — well, it wasn’t a suit, it was a tie, and a long-sleeved buttoned-down shirt. I got those pictures made, tweeted them out, and my former boss said “Who is this guy? I don’t know this guy. I’ve never seen you with a tie on in my entire life.” He said it playfully, but it resonated with me.

That wasn’t me. I’m not that guy. And I was l like “You know what – I need to really stay true to who I am, because people will end up gravitating towards me a lot more than if I try to pretend to be someone I’m not.”

Danna Corriel: That resonates me to such a high degree. I am so finding myself in the same place as you, literally… Because no other field is more traditional than medicine. You don’t know how many times people have come up to me when they get to know me, and they say “You’re so not like the person I’d imagined as a doctor.” I look at that as a compliment. It’s not an insult. Some people get insulted by those kinds of comments… I truly find that to be a compliment, because that’s what sets me aside from everyone else. And that’s going to market me in this world. And that factored into my deciding that I wanted to be an internist. I could tell you that internists are primary care general doctors, and we succeed by making these connections with our patients, even more than the things that we know.

So for me, it helps me that I stand out, and I do wanna be true to who I am. So I can tell you that when I started doing this – no joke; I can relate to you – people were telling me “What are you doing?” I would have friends who would tell me “You’re making a mistake.” I even had family say that, “You are just doing things that don’t make sense.” And I said to them “I can’t not do this. I really not only believe in this, but I am truly passionate in how I feel. And I know that someday it’s going to speak to someone… But even if it doesn’t, it speaks to me, and it satisfies this urge that I have to work on my passion.”

So that’s, I think, part of why I’ve succeeded with my brand and my company and my vision, and we’re still growing.

Joe Fairless: Real quick, what are SoMeDocs, and then let’s get into your three tips for entrepreneurs.

Danna Corriel: Sure. SoMeDocs stands for Doctors on Social Media, because SoMe is the way of saying social media nowadays.

Joe Fairless: I did not know that. Thank you for telling me.

Danna Corriel: Oh, yeah. Absolutely.

Joe Fairless: I’m such an old person, in life and in heart.

Danna Corriel: Oh, please… I am also an old person in heart, but I strive to be — at least functionally speaking, I strive to be somewhat more of a millennial… Because they really know how to utilize social media. So that’s what I do with SoMeDocs – I’ve created this brand that has presence on several platforms. We are present on Facebook, we have a Facebook group called SoMeDocs, and it really is physician-only. I vet physicians in there.

And just to mention the sister Facebook group, because that’s more relevant to your audience, because your audience can actually join that group… I have a group also called SoMeDocs Public. It’s the same as SoMeDocs, but meshing together both the medical and non-medical world, so anyone is welcome to join that.

The purpose is just to brainstorm through ideas, through collaboration, make connections. Maybe somebody has an idea for the next medical device, or maybe someone needs to find a special expert in a certain field, or someone that they consider an influencer in a certain specialty. That’s a place where you can connect, because I have a lot of my SoMeDocs joining that, and then I have a lot of other people, either from industry, like publishers, and investors, and writers, journalists… And then I moderate it to sort of make connections. So that’s what I’m working on. That’s one platform.

Then I have a website for SoMeDocs, where we feature doctor voices and we collaborate there in that way, but it’s more public. And then I’ve got Twitter, where we spread brands of physicians using the SoMeDocs hashtag, and we retweet it to sort of gain visibility.

I can tell you that in the last month I’ve had something like over 45 million impressions using the SoMeDocs hashtag. Physicians are valuing the brand and the hashtag, and the value in using it, because they get that it gives you visibility for your voice and your words.

And then we have other things. We have SoMeDocs engage, which is like live networking sessions for physicians, where we get together to just network. We talk about, among other things, social media, and how we can leverage our brands, and build brands in general, in healthcare. But we also network and talk about other things, like some people wanna talk about finances, and other people wanna talk about where they can invest their money in real estate. So that’s yet another platform. But we have a lot that’s coming.

Joe Fairless: Top three tips for entrepreneurs.

Danna Corriel: Okay, so my top three tips are – first and foremost, some of you may have this need to always be nice, and I know that physicians can relate to this especially, because we’ve got this extremely altruistic side. But once you decide to tackle something from an entrepreneurial level – like, once you decide that you’ve spent so much time on something and that it’s really something powerful, and you need to invest all your time in it, then you need to grow it from an entrepreneurial perspective. Don’t mix the altruistic nature of being a physician or being that person with that necessary grit of becoming a successful entrepreneur… Because every successful entrepreneur has to, at some point or another, say no, and to disappoint some people. But you’re also building a good brand, and people will follow if it’s quality.

Joe Fairless: Okay, it makes sense.

Danna Corriel: So that’s one. Okay, do you want me to go on to the second?

Joe Fairless: Yes, please.

Danna Corriel: The second one I thought of in my journey is that you have to tackle your plans head-on, but you always have to be realistic and set realistic expectations, and you have to always brace yourself for the possibility of a loss… Because otherwise, you’re basically putting all your eggs into one basket, and you literally fail. I think that’s a big one for people that are starting out, that really believe in their idea. Because I myself had this grand idea, and I felt like at some point I will succeed… But I have taken so many different turns in my role there that it’s really taught me a lesson that I’m now passing on.

Joe Fairless: I think it’s great for people who are — in addition to starting, people who are in growth mode, to brace ourselves for a possibility of a loss, because we’re in growth mode, we’re growing, and we might think it will always be that way… But we’ve got to have a back-up plan. Or maybe not even a back-up plan, but a contingency plan  – which is kind of  a back-up plan, I guess – where we have some cushion, should things not continue to go as according to plan.

For example, having a six-month emergency fund that you can live off of, or being aware of the debt that you have and the income that you have, and how diversified is that income, and does that service the debt that you have as an individual. The lenders take a look at the properties that we purchase, but are we taking a look at the debt that we have as a person and the income that’s coming in, and the income sources, and is that income coming from one source, or is it coming from multiple sources, from different types of methods or different types of earning opportunities?

Danna Corriel: Absolutely. Diversification is huge, and that’s actually part of why when I set up my brand and my business, I decided to create multiple platforms, because I honestly saw the advantage of each one, and I was like “Let me see, maybe one will take off, and you know what – I could always steer it in that direction.” But secondly, what you said is actually exactly the third one I was just going to say, which is “Do you have  a plan moving forward?” Yes. “Do you wanna be rigid in the path towards that plan, or towards the endpoint of that plan?” Absolutely not. You have to always be flexible, and be malleable. You want to get to your endpoint, but when you steer in a different direction, that’s not always a bad thing. Always maintain an open mind and give things a chance. You may be surprised at where the road leads. It sometimes actually leads you to an even more successful road. So that’s my third tip.

Joe Fairless: How can the Best Ever listeners learn more about what you’re doing and get involved with your stuff?

Danna Corriel: I’m branded across social media as Doctor Corriel, so you can literally find me under the handle @drcorriel. That’s on Instagram, that’s on LinkedIn, that’s on my website, drcorriel.com, and that’s on my email, DrCorriel@gmail.com. And then we have SoMeDocs.com for the bigger brand.

Joe Fairless: Yes, and the SoMeDocs – that is pretty darn easy to find, and so is your Facebook page. And you can actually search “SoMeDocs”, and your Facebook page also comes up.

Thank you so much for being on the show, sharing your journey, the evolution… A lot of Best Ever listeners are doing work right now that they would like to do less of, and they’d like to do more investing or doing more of something else… And it’s wonderful to hear how you’ve taken your journey and how you’ve evolved your approach, and how you’re doing things that fulfill you, and how you’re building a community around it.

Robert Kiyosaki talks about the richest people in the world build networks, and everyone else looks for work… And I completely agree with that, and you’re clearly building a network.

Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you again soon.

Danna Corriel: Thank you so much, Joe. I appreciate it.

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JF1886: From Skyscrapers To Retail & Multifamily with Donato Settanni

Donato worked for a company building skyscrapers in NYC, one of those projects sold apartments in the building for $90 million. Once he had an education base Donato wanted to do his own thing, and branched out to create his own company. We’ll hear some about his skyscraper experience, then we’ll hear more details on his own current investments which total a value of $25 million and growing. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“The best way to learn is to do it for yourself” – Donato Settani


Donato Settanni Real Estate Background:


The Best Ever Conference is approaching quickly and you could earn your ticket for free.

Simply visit https://www.bec20.com/affiliates/ and sign up to be an affiliate to start earning 15% of every ticket you sell.

Our fourth annual conference will be taking place February 20-22 in Keystone, CO. We’ll be covering the higher level topics that our audience has requested to hear.


Theo Hicks: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. I’m Theo Hicks and I will be the host today. Today we’ll be speaking with Donato Settani. Donato, how are you doing today?

Donato Settani: I’m doing great, thanks for having me.

Theo Hicks: Absolutely. I appreciate you coming on the show, and I’m looking forward to our conversation. A little bit about Donato – he is the managing partner of DXE Properties, has managed multiple projects in closing, totaling over 3 billion (billion with a B) in value. Based in New York City, New York, and you can say hi to him at DXEProperties.com.

Donato, before we get started, can you tell us a little bit more about your background and what you’re focused on now?

Donato Settani: Sure, no problem. So I started my career in New York City in the construction industry. I’ve then decided that that wasn’t necessarily for me, so I went back to school for a masters degree in real estate development, and then went on to work for a couple of owner in New York City, including Macklowe Properties and Oxford Properties, two very large owner-developers in Manhattan, where I had the opportunity to build some mega-tall skyscrapers and close on huge properties, upwards of 3 billion dollars, in real estate.

Since then, I’ve recognized that you should work for yourself, and split off and created DXE Properties with a friend of mine, and we currently own seven properties, around 25 million dollars in real estate, and we plan to keep going.

Theo Hicks: Are the properties you own through DXE – are those also skyscrapers, or are they a different type  of real estate?

Donato Settani: No, they are totally different. The properties we currently own – we own two retail properties (one has a development component) both outside of New York City, and then we own five multifamily properties, scattered throughout the South-East mostly.

Theo Hicks: Alright, let’s talk about the skyscrapers first, because not every day you get to talk to someone who develops a skyscraper. Do you wanna tell us maybe about one particular project that you worked on, that stands out? Talk about the height, the cost, and what all goes into developing a skyscraper, from a preparation standpoint?

Donato Settani: Yeah, no problem. Building in New York City is quite difficult; we always call it building on a postage stamp. One of my most notable projects was with Harry Macklowe of Macklowe Properties. There we developed 432 Park Avenue, which was the tallest residential building in the Western hemisphere. The total height was about 1,400 feet tall, 106 apartments. The most expensive apartment went for over 90 million dollars, so it was an extraordinary experience to be a part of…

As far as the planning, he bought the site back in around 2006-2007. It was [unintelligible [00:04:24].18] He bought it for 400  million dollars, and then had to slowly assemble land around it. Eventually, he demolished the site, but the economy turned, so the project stalled. Harry Macklowe  is a very tenacious developer and was able to convince a large equity partner to step in and continue on with the development. From there, we planned this 1,400-foot tower which had never been done before in New York City, for high-end condos. Overlooking Central Park, you could see all the way out to the Atlantic Ocean when you’re up nice and high. So we planned it, we pre-sold a lot of units, and there’s only a couple units left today.

Theo Hicks: So did most skyscraper developers — would they build it and then they will also manage it, or sell the units afterwards? Or do they typically build it and then sell it to someone else who then actually sells the units or rents out the units?

Donato Settani: Most developers in New York City, when they’re developing condo units, they will build it, manage it and sell off the units. Some of them, depending on which company, will keep property management in-house. There’s a couple reasons for it. Number one, you wanna make sure tath the units you sold to the tenants – that they’re happy tenants, and the best way to do that is to keep managing the property. Number two – in New York City there’s a sponsorship requirement that you’re responsible for any defects in a property after you build it and sell it… So it’s best to manage it and know what defects might come up firsthand, and be able to fix them before you get into a lawsuit.

Theo Hicks: What are the profit margins on these types of developments? I’m pretty familiar with multifamily development… Just mid or low-rise apartments. What would be the ROI you would estimate was made on this project?

Donato Settani: This project was very unique. I can talk about it from when it was recapitalized on forward, with the new equity that was brought in as a starting point… But I would say that Harry was visionary in putting it together at the right time, and we also had some good, dumb luck, and hit the market right… But in terms of returns, we could loosely say that the project cost around 1.3 billion dollars, and the sellout, including the retail, was over 3 billion dollars.

Theo Hicks: Okay, and just out of curiosity, how did you get into — not why you decided to get in this skyscraper development, but how were you able to get on this team, for these large projects? So if I’m someone who’s interested in becoming a skyscraper developer, or at least working on a team of a developer who makes skyscrapers, what’s some advice you would have for how I could get picked up by someone?

Donato Settani: That’s a great question. I worked out of school — so I went to school for engineering, and  out of school I worked for a major construction firm in New York City. I actually was able to be on the team that built the new Yankee Stadium up in the Bronx, and also in Madison Square Garden renovation projects… So that gave me some big-time experience on the order of magnitude of billion-dollar projects.

I then went back to school to try and get onto the owner’s side. That’s what a lot of people do… So I went back to school for real estate development, and I actually took a job interning for free when the market was bad, because no one wanted to hire me. So I’d read somewhere that if you really wanna do something, do it for free… So I took a job, interning for free for a smaller owner in New York City, got some experience with that smaller owner, and the equity partner of that smaller owner happened to be the equity partner with Macklowe Properties on this huge project… And they called me up one day and said “Hey, how would you like to build the tallest skyscraper in the Western hemisphere?” and I said “Sign me up.”

Theo Hicks: That’s really solid advice. That’s actually how I got started working for Joe. So whenever anyone asks me “How can I get into a unique industry, like skyscrapers or multifamily syndication, what’s a really good way to quickly climb the real estate ladder and find your way working for a multi-million-dollar or multi-billion-dollar company?”, working for free is a great answer. It sounds like for you — you didn’t even work for free for this large company. You started really small, you got that experience, and then from there you were able to jump to the higher levels… So yeah, really good advice.

Let’s talk about your DXE with your friend… I guess my first question is what advice do you have about partnering up with people? How do you make sure you’re selecting the right partner? And then maybe talk a little bit about any challenges or benefits of partnering up with a friend, as opposed to partnering up with someone who you’ve met pretty recently?

Donato Settani: I’d say that we both had a decent amount of caution on partnering up. I had done my own development project outside of New York City by myself, and he had bought a bunch of multifamily, mostly in the Midwest and some in the South-East on his own. So we weren’t used to working together by any means, and used to just doing things on our own.

I would say that we took about a year to formalize the relationship. We did a couple deals together using our separate entities to make sure that the relationship was going to work, and then we came up with a pretty strong and robust operating agreement over time, as we really got to know each other on a business level, to make sure that we could move forward in the right way and create a long-standing company.

Theo Hicks: Alright. And then those seven deals that you’ve done – you said you currently own seven properties, 25 million dollars; two of them are retail properties outside of New York City, and then you said five are multifamilies in the South-East. So it sounds like you’re kind of focusing on the areas that you know, which is in New York City, and then focusing on — I think you said that he owns some multifamily properties in the Midwest, but I guess he was the guy that knew the multifamily. Do you wanna walk us through one of those retail deals in New York City? How you found it, how much it cost, what you did to it, and then maybe what’s its value right now?

Donato Settani: We bought a small, small property up in Upper Westchester in New York. It was a small retail property. It has three retail tenants currently, but what we liked the most about it was it had four acres of land right behind it, and it was located right in the center of a wealthy town in Westchester County, which is a major suburb of New York City. So we bought the property… The major tenant, which was Chase Bank, was leaving. We were able to get the property off market, through a lawyer that we knew, just at a compelling price. We actually got it well below the recent appraised value, and have had offers since to purchase the property from us just as a flip, which we have denied.

We’re hopefully able to secure a new bank tenant in there. We’re currently working out a lease on that, and just trying to get to the end on that one. Then we also have the opportunity to develop further behind the property, which really makes our basis on that land a zero. So if we get this lease done, which we’re confident on, I’d say within the next year from purchasing the property we would have doubled the value of the equity in the property, at a minimum, not even including the potential development further down the road.

Theo Hicks: And as the reason why you’re targeting a bank – is that just because banks are really good tenants, or is it just because the current unit is set up for banking?

Donato Settani: It’s really both. The current unit is set up for banking. It actually has a drive-through; the town won’t let you use the drive-through if you don’t continue the use as a bank, so there’s advantages to going after a bank… And then furthermore, everyone knows that a bank is a credit tenant. So when we go to sell the property, selling the property with a credit tenant is gonna be a lot more valuable, especially in this tenuous retail market, than selling a property with a restaurant owner, or a day spa.

Theo Hicks: What is a credit tenant? What does that mean? Just out of curiosity. I don’t know…

Donato Settani: Sorry, a credit tenant is just a name used for a national tenant, whether it be in the retail space or the commercial space. So you would consider a good bank a credit tenant, or on the larger retail side something like a Stop & Shop, or a Target, or a CVS. Those are all credit tenants. On the office side –  a major office player. Basically, even if the office went dark or the retail went dark, you’d still be getting your rent payment, because the overall company is not going to go bankrupt… Forseeably.

Theo Hicks: Yeah, that makes sense why you’d wanna target someone like that. So it’s not like a small business and that’s the only location they have. Something that’s got thousands of locations across the country are preferable to those smaller mom-and-pop type shops. Alright, Donato, what is your best real estate investing advice ever?

Donato Settani: Best real estate investing advice ever is it’s really hard to take the leap into investing in real estate. As I said, I had a full-time job and was investing on the side… Really, what you need to do is you just need to jump in with both feet. You need to be smart about it, obviously, and not take a dumb risk… But the best way to learn is to do it for yourself. Once you do it, you’re never going to turn back. As you see the fruits of all your work, you’re just gonna get more and more excited about doing the next deal.

Theo Hicks: Alrighty. Are you ready for the best ever lightning round?

Donato Settani: I am.

Theo Hicks: Alrighty. First, a quick word from our sponsor.

Break: [00:14:26].19] to [00:15:08].12]

Theo Hicks: Alright, Donato, what is the best ever book you’ve recently read?

Donato Settani: The best book I have ever read recently – I would have to say Tim Ferriss’ book. I’m pretty sure the name of it — it’s called Tools of Titans. It’s a great book about a bunch of podcasts that he’s done over the past couple years – he put all the best information into that book.

What I really like to do – I’ve read the book cover to cover, and then I go and seek out all those podcasts that I really liked what he talked about, because there’s just so much more information in the podcasts than he was able to put in the book… So it’s really like a continuous learning experience, over and over again.

Theo Hicks: Alright. Well, what’s the best ever Tim Ferriss podcast we should all listen to?

Donato Settani: Best ever Tim Ferriss podcast… He does an interview with Tony Robbins, which was really good. I’ve recently listened to one with Seth Godin, which was very good. And the third one I would say is he interviewed one of the founders of Google, which was just fantastic.

Theo Hicks: If your business were to collapse today, what would you do next?

Donato Settani: I always say — it’s kind of a joke, but if my business were to collapse today, I’d just go be a pizza man. I’ve got the name for it.

Theo Hicks: There you go… It’d be Donato, singular, not Donatos Pizza. What is the worst deal you’ve ever done?

Donato Settani: The worst deal I’ve ever done… I would have to say that that’s a tough question right now. We’ve been riding a very good market on the way up, and we’ve been lucky enough to not have too many bad ones. I would say that there’s skill involved in that, but we also have to understand that we’ve been in a good market, so… Only time will tell, and I’m sure there will be a bad one in our mix, but the goal is to not have any.

Theo Hicks: On the other hand — besides your first deal, the one we already talked about, and then your most recent deal, what’s the best ever deal you’ve done?

Donato Settani: Best ever deal I’ve done – I’ve built a townhouse development outside of New York City, in Westchester County. The whole deal took me 18 months from the day I closed on the contract to the day I sold the last condo and got out of the deal. We did really well on that deal. All the investors were very happy, and I actually now live in that same village, because I like the experience of building and the people that I sold to so much.

Theo Hicks: And then lastly, what is the best ever place to reach you?

Donato Settani: Best ever place to reach me – if you go to our website, www.DXEProperties.com. Or my email address is dsettani@dxeproperties.com.

Theo Hicks: Alright, Donato, I’ve really enjoyed this conversation. Lots of good information. Just to recap some of the main takeaways – you talked about how you started off in the construction industry and were able to transition into working on the tallest residential building in the Western Hemisphere, and then from there you learned that you wanted to go off on your own and start your own business…

We talked about some of the things to put in place when you’re going off on your own and in creating a partnership. In this case it was with a friend, but these lessons really apply to any sort of partnership. A few of the main things were to make sure you do a few deals together via your separate entities first, just to make sure everything works out, before jumping in and starting a business together and having the same LLC. You mentioned how you worked together for a year first, to make sure everything worked out, and then also make sure that you create a strong operating agreement to set yourself up for success.

You also talked about how you were able to go from working in the construction industry to working on the tallest residential building in the Western hemisphere – one of the main takeaways was intern for free. So if you want to get into an industry, find a smaller owner in the industry and work with them for free to get that experience, and then hopefully pursue a larger firm, leveraging that previous experience.

Then I also learned what a credit tenant is, which is essentially a national tenant. So if you’re in the retail space, there are advantages to having a credit/national tenant – that’s a company that isn’t just a one-off company; it’s like a Chase Bank, or a Target, or a CVS… Just because you’re lowering your risk of them not paying for rent.

And then I guess lastly was your best ever advice, which I whole-heartedly agree with, and it’s how I got into real estate, which is — it’s obviously pretty difficult to get into real estate. The best way to do it is to just jump in with both feet. Now, obviously, be smart about it; don’t do anything stupid, and set yourself up for success, but educating yourself and building a strong team… But the best way to learn, the best way to stay in the game long-term is to actually get in the game. So just do a deal… For me – I house-hacked a duplex, put 3.5% down… It was small, but I got into real estate that way.

Again, Donato, I appreciate you taking the time to speak with us today. Best Ever listeners, thanks for stopping buy. I know this episode was valuable to you… Have a best ever day, and we’ll talk to you soon.

Donato Settani: Thanks a lot for having me.

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JF1869: Apartment Syndication Leads To Quitting Full Time Job with Pancham Gupta

Pancham was in a similar situation as a lot of real estate investors, or people that want to invest in real estate, working full time and looking for a way out. He started apartment syndications just a couple of years ago and has already been able to leave his full time job. We’ll hear how he was able to put together his first couple of deals and grow to the level he is at now. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“A constant effort of being in touch with them” – Pancham Gupta


Pancham Gupta Real Estate Background:

  • A Principal of Mesos Capital
  • Has bought and invested in properties in 5 different states and internationally,  recently quit his high paying job in Fintech to do syndications full time
  • Has successfully built a portfolio which is cash-flowing in double digits, manages and controls over $32M in real estate
  • Based in NYC, NY
  • Say hi to him at:
  • Best Ever Book: Turning Pro


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Our fourth annual conference will be taking place February 20-22 in Keystone, CO. We’ll be covering the higher level topics that our audience has requested to hear.


Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and 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, Pancham Gupta. How are you doing, Pancham?

Pancham Gupta: I’m doing great, Joe. How are you doing?

Joe Fairless: I am doing great as well. Looking forward to our conversation. A little bit about Pancham – he is the principal of Mesos Capital. He has bought and invested in properties in five different states, and internationally. He recently quit his high-paying job in fintech to do syndications full-time. He has successfully built a portfolio which is cash-flowing in double digits. Manages and controls over 32 million in real estate. Based in New York City, New York. With that being said, Pancham, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Pancham Gupta: Sure. Thanks, Joe, for having me on. I came to the U.S. in 2003 for my masters in computer science, and it was not until 2012 when I decided to invest in real estate here in the U.S. I bought my few investment properties here in New York because I actually bought my own house, and they were all single-family homes. Over the next few years I ended up buying properties in five different states. Again, these were single-family homes, duplexes, triplexes, and I was doing all this part-time; my main focus was the job, and I was spending more time managing these rental properties.

Slowly I realized that this strategy was not scalable at all, and I started looking into bigger multifamily deals. Syndication seemed like the way to go, and it was not until 2017 when we bought our first syndicated property. Since then we have done four syndications, all the way from two million to 19 million dollars.

Joe Fairless: Did you say 90 or 9?

Pancham Gupta: 19 million dollars. So two million and 19.

Joe Fairless: 19, okay. None of the above, Joe. 19… [laughter] Two million to 19 million, got it. Okay.

Pancham Gupta: Right. And now I’ve quit my full-time job, like you mentioned, and I’m focusing full-time on the syndication business, and also doing a podcast to educate high-paid and juniors about personal finance.

Joe Fairless: You bought in five different states… Why is that?

Pancham Gupta: There is a story behind that. I live in New York, and it’s not the cheapest city in New York. Every house here, if it’s in a decent location, was somewhere half a million dollars to a million dollars. They were cash-flowing nicely when I bought them in 2013, but after that, they were not really cash-flowing that well. So I started looking out of state for investing opportunities in the areas which were still growing and the price point was  not that high. Slowly, from one state to the second state, to the third state… So it kind of mushroomed into five states.

Since then, I’ve sold most of my portfolio and focusing full-time just on the syndications and bigger deals.

Joe Fairless: Your first syndication was a two-million-dollar property, correct?

Pancham Gupta: That is right, and it was in Charlotte. It was a 44-unit deal.

Joe Fairless: Okay. And how much money did you raise for that?

Pancham Gupta: For that we raised exactly $781,000, from friends and family.

Joe Fairless: And who’s “we”? I think you said “we”.

Pancham Gupta: It’s me and my partner – one of my partners who we bought together and have Mesos Capital. We both raised from our friends and family.

Joe Fairless: Okay, so friends and family, $781,000. How much did the investor who invested the most bring, of the 781k?

Pancham Gupta: Our highest investor was one individual – he invested 100k. [unintelligible [00:05:11].29]

Joe Fairless: We don’t need to know his name. He would get a lot of emails and phone calls if you did that. Okay, 100k… So it was pretty spread out, I imagine, then. There wasn’t a 300k, 400k, 500k investor in it.

Pancham Gupta: No, it was that guy, and both of us invested close to 100k as well.

Joe Fairless: Each?

Pancham Gupta: Each, yes. So 300k was just like that, and 481k we raised from other individuals, anywhere ranging from 50k, 75k and 100k each, from these guys.

Joe Fairless: How many of the individuals are family, compared to friends?

Pancham Gupta: I would say one is family, and all the rest are friends who are like family.

Joe Fairless: Yup. And how do you know those friends who are like family? Tracing back to — what’s the origin of how you met?

Pancham Gupta: So either they’re my former classmates, or former colleagues, at this point. I met them in school, and at my full-time job… And the same thing for my partner as well.

Joe Fairless: Okay, got it. So you either went to college with them, or you worked with them at your full-time job. And you were making approximately how much at your full-time job? Just to get an idea of the type of people you were working with?

Pancham Gupta: All of these are high net worth individuals, north of half a million dollars.

Joe Fairless: A year?

Pancham Gupta: Yes.

Joe Fairless: Okay, so they were making a lot of money a year, and you were talking to them about it… So people who hear that might think “Well, no wonder Pancham had such an easy job raising the money. He’s around people who are making 500k+ a year.” What is your response to that?

Pancham Gupta: My response would be that you can meet high net worth individuals anywhere. First of all, I’m very grateful having friends and family making high incomes, and I would kind of agree to part of that question, where it is easier knowing those people… But for a person to write a check of $100,000 or $50,000 or $75,000 to you in order to invest in your deal, you need to add value into their portfolio in some way or another. They need to first trust you, and then they need to see the value that you’re bringing to the table, and how you’re actually solving their problem, which is they have too much money to invest, but not have either time, energy or motivation to learn about investing outside of Wall Street, into different products… And you’re bringing that to the table and you have to educate them, spend time with them, to really make them understand the value that they will get out of investing in these deals. So you have to do all that upfront and really make them understand.

So yes, it is easier than talking to a person  who’s making, let’s say, $50,000/year versus that person who’s making $500,000/year. They definitely have more spare cash than the other person… So that’s what I would say – regardless of how much money they were making, you still have to go through the process of educating them and really creating that trust with those guys.

Joe Fairless: And I would even argue that it’s gonna be just as challenging, if not more challenging, speaking to someone who has earned over half a million a year, about a new investment opportunity that they might not have invested in before, because they’re constantly being pulled in different directions to invest in certain stuff. So their guard is up a lot more than someone who isn’t at that level of income. Maybe they’re at $250,000 or $300,000, and they don’t have a job on Wall Street, so the perception isn’t that they have buckets of money, so they’re not bombarded with a bunch of opportunities.

So what are some tips for people that you can share who are speaking to individuals who are the half a million plus earners, when communicating to them about the opportunities, or even your business?

Pancham Gupta: I would say — you hit on this a little bit. These guys are constantly getting bombarded by different kinds of opportunities. So if I have to give advice to someone who is starting off, I would say first creating trust between that individual who’s making half a million dollars and what you bring to the table. They have to hear from you more, they have to really understand the asset class that they’re investing in, and also what kind of risk and reward profile they would have to bear with this asset class.

So this is a constant effort of being in touch with them and making them understand the asset class, and having  trust in what you do. The way we have done this is by constant one-on-one conversations with these guys. Meeting them for a coffee, telling them about what we are doing on a constant basis; they are investors who I’ve spoken to for the last at least three years, and it’s only now they want to invest in our next deal; they have not even invested yet.

So it has taken us three years for some of these guys to actually finally realize what we bring to the table, and trust us that they can rely on that we’re not gonna just run away with the money, and actually really give a return and do what we promise.

Joe Fairless: And what about the thought that, okay, it’s having the time with these individuals, sitting down with them… But that’s not scalable. What’s your response to that thought process?

Pancham Gupta: I would say that is absolutely correct, in a way. My response is that it takes time. And for us, what we’ve done is now we’ve created a newsletter that we’re trying to send out on a constant basis… And we get a lot of word of mouth business where people recommend their friends, and they talk to us, and we like it that way as well.

And then we also partner up with other people who have these connections across the board, and with high net worth individuals, and they bring on their network to bring on to our deals to invest.

So for me, I would say it’s one-on-one conversations and meeting people physically – it would create the most trust. And that’s how I would go about investing my own money, and that’s how I’ve gone about finding everyone who has invested in our deals, to create that relationship and trust.

Joe Fairless: Let’s talk about the next deal… The first one was a 44-unit in Charlotte. What about the next one?

Pancham Gupta: The next one was a 76-unit, again in Charlotte. That was a ’99 build, class B property, 4.56 million dollar deal. Again, very close to this first deal that we had. And by the way, the first deal that we bought, we’ve just sold it a few days ago.

Joe Fairless: Oh, congratulations!

Pancham Gupta: Thank you.

Joe Fairless: You bought it for two… What did you sell it for?

Pancham Gupta: We sold it for three million dollars.

Joe Fairless: Three. How much did you put into it?

Pancham Gupta: So our 781k was equity, and we put in about 250k. We redid the roofs, we did a lot of structure work; there were issues with the structure. We built out trenches… There was a lot of infrastructure work that was bad with this property, that we fixed, and also some units that we upgraded. And we sold it for three.

Joe Fairless: Excellent. So you bought it for two, and — sorry, how much money did you put into it about? I’m just trying to figure out the profit.

Pancham Gupta: Yeah, $250,000.

Joe Fairless: Okay, so $750,000 profit in just two years.

Pancham Gupta: Yeah, it’s about 23 months. Less than two years. And $750,000 actually includes broker commissions and some of the closing costs… So I would say $650,000.

Joe Fairless: Wow, congratulations on that. So the second deal – how much was the purchase price?

Pancham Gupta: 4.56 million.

Joe Fairless: And where was that?

Pancham Gupta: That was in Charlotte MSA as well, but it was a class B property. The previous property was a class C, this was a class B.

Joe Fairless: How many units?

Pancham Gupta: 76.

Joe Fairless: What about the third property?

Pancham Gupta: Our third property was 28 units. That again was in Charlotte, very close to our 44-unit property.

Joe Fairless: Okay. And purchase price?

Pancham Gupta: About two million as well.

Joe Fairless: Okay. And what about the fourth? I’m guessing that’s the 19-million…

Pancham Gupta: Yes, that’s the 19-million one.

Joe Fairless: Unit size?

Pancham Gupta: 242, in Jacksonville, Florida.

Joe Fairless: Okay, in Jacksonville. So I think we all notice a trend, except for the fourth. You went to Jacksonville, from Charlotte, NC. So why Jacksonville?

Pancham Gupta: Like I mentioned before, I’ve recently quit my job… So  we were very focused on Charlotte before because we’re not able to spend enough time, and wanted a market which was very close to New York City, and Charlotte was one of them. So since I wanted to quit my job, I wanted to expand into more markets, and we had Jacksonville as one of the markets that we wanted to expand to, because it met all the criteria that we were looking for in a city to invest in… And it just happens to be that we came across this deal, and one of our partners on this deal brought this deal to us. She actually is part of our mastermind here in New York City [unintelligible [00:15:11].05] and that’s how we got connected. We partnered together on this deal, and we simply closed on it a month and a half ago.

Joe Fairless: On 28-unit – you bought 44 units, then you bought 76 units… What made you want to go down in unit size to 28 units?

Pancham Gupta: That was mainly more of a strategic decision, because that was only a mile from a 44-unit property, and we wanted to kind of scale the operations with this 28. But it did not pan out that way. We actually sold that property as well to one of our partners, who bought it off market from us… And since we were planning on selling our 44-unit as well – so we kind of sold both of them. So at this point, we don’t wanna go anything below 75 or so units for any of our acquisition. But it’s a good question; we  probably wouldn’t do that small of a deal if it wasn’t close to our 44-unit property.

Joe Fairless: And what are some disadvantages of doing, as you say, that small of a deal?

Pancham Gupta: Our biggest disadvantage is the economies of scale. If you have a smaller property, you still need a leasing agent on-site, especially if you’re not local. And if you have a 28-unit versus a 44-unit versus a 76-unit or  a 100-unit, you probably need one leasing agent per 90 or 100 units… So the overall expenses, fixed expenses that you have kind of go much higher on a smaller-unit property, as compared to a bigger property. We’ve realized that over time, and that’s why we have gone towards a higher and higher number of units, and that’s the trend that everyone follows once they start investing, from a single-family to duplexes to triplexes to bigger properties.

Joe Fairless: On the execution of the business plan, what’s been one thing that hasn’t gone according to plan, and how did you resolve it or attempt to resolve it?

Pancham Gupta: We had one major issue with our 44-unit property where we had a structural issue with one of the buildings, where in the crawl spaces, some of the joists were completely rotted out, and one side of the building was also bent. I say that quite lightly, but there was a huge bent in that. We knew this while going in, and we actually raise capital to fix this. We had a $50,000 raise just to fix this problem; we got some estimates before that… And it ended up costing us $102,000, so almost 100% more than what we estimated.

We were okay with this cost, because we had raised a little bit extra upfront anyway, because it was our first syndicated deal… But the lesson was that whenever you have any issue or you’re raising capital, always try to raise a little bit more than what you have anticipated, because there are things that come up. That’s the nature of this business.

We know people who have brought this thing to science, where they know exactly how much they will spend on every single unit and every single issue that they encounter during due diligence, but we have not reached that stage yet, so we raise a little bit of extra capital always, to make sure that we are covered.

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

Pancham Gupta: My best advice is to go where the growth is. The areas which are growing in overall jobs, in population job diversity… We look at the areas where millennials are moving in, where builders are developing… Because even if there’s a downturn, that area will be the last one to see the impact and the first one to come out of it.

Joe Fairless: And how do you determine that it qualifies.

Pancham Gupta: There are a lot of free reports and public — census.gov, and different free resources that you can go online and get this data from (and historic data), and also there is local paid research that you can buy, from different agencies, to get this data. We do both, and look at this data and see if it qualifies all the things that we have on our checklist.

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

Pancham Gupta: Absolutely.

Joe Fairless: Alright, let’s do it. First, a quick word from our best ever partners.

Break: [00:19:51].01] to [00:20:32].08]

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

Pancham Gupta: The recent one that I really liked was Turning Pro by Steven Pressfield. It really taught about what kind of mindset you need to become  a professional. Since I was quitting my job, this book really hit home, everything that I thinking through, and helped me quit my job.

Joe Fairless: What’s a mistake you’ve made on a transaction that we haven’t talked about already?

Pancham Gupta: It’s not vetting out the PM company beforehand. I had a duplex in Cleveland, Ohio where this PM was charging a lot of money for rehabs, and turnarounds, and I lost a lot of money over there. I changed the company a few times, but it still didn’t work out. I ended up selling that property and made some money on selling it, because the market was going up. But my worst deal and my biggest is not properly vetting the PM company before actually hiring them.

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

Pancham Gupta: I would say one of the deals in Cleveland also. It’s a single-family house where I lost very little money, but that’s the most I lost.

Joe Fairless: And how much?

Pancham Gupta: About $1,000.

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

Pancham Gupta: It’s two ways. One, I have contributed to LLS, which is Leukemia & Lymphoma Society – money for cancer research. My grandmother and two of my aunts passed away because of cancer, so I do events, and I’ve done events in the past and raised funds for them. So that’s one. And second, I’ve started educating people on personal finance, I’ve started a podcast to educate high-paid professionals, especially the software engineers, on how to convert their high incomes into long-term wealth.

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

Pancham Gupta: They can email me at p@thegoldcollarinvestor.com. The Gold Collar Investor is the name of my podcast as well. They can connect with me on LinkedIn, I’m there as well.

Joe Fairless: Pancham, thank you so much for talking about how to speak to accredited investors, how to approach those conversations, how you’re in it for the long game, how  you’ve had some conversations with people and it’s been three years and they haven’t invested yet, but they’re starting to show interest, and in the meantime you’re doing your thing, you’re building your business, and again, you’re just focused on the long-term relationships versus the transactional approach where you’re trying to rush things, and getting frustrated because certain relationships aren’t bearing fruit.

Thanks for talking about the pros and cons of the types of deals that you’ve bought… The 28-unit, a smaller deal, and congratulations on the recent sale of your first deal, the 44-unit.

Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you again soon.

Pancham Gupta: Thanks, Joe, for having me on.

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JF1832: Step-By-Step Guide For Acquiring Properties In NYC #SkillSetSunday with Elliot Bogod

Most of us know that the real estate market in New York City is both expensive and competitive. Elliot has become a specialist in his market, and he can typically find deals for himself and/or his clients. He even wrote a book on the subject that he has been working 12 years on! If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“Commercial real estate is supported by the economy and the economy is strong” – Elliot Bogod


Elliot Bogod Real Estate Background:

  • Real estate author, educator and blogger
  • founder and managing director of Broadway Realty, a New York brokerage
  • Has personally sold over $2 Billion worth of Manhattan residential and commercial real estate
  • Based in NYC, NY
  • Say hi to him at https://broadwayrealty.com/


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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. First off, how are you doing, Elliot Bogod?

Elliot Bogod: I’m good, Joe. How are you? I wanna say hi to all your listeners from New York City, Manhattan, and happy to be here.

Joe Fairless: We’re happy that you are joining us, and we are going to be talking about today — this is a special segment, Skillset Sunday, and we’re gonna be talking about today step-by-step guide for acquiring properties in New York City.

A  little bit about Elliot – he’s a real estate author, educator and blogger. He’s a founder and managing partner of Broadway Realty, a New York brokerage. He’s personally sold over two billion dollars (with a B) worth of Manhattan residential and commercial real estate. Based in, of course, New York City.

First, Elliot, do you wanna give the Best Ever listeners just a little bit more about your background? Then we’ll get right into the step-by-step process for acquiring properties in New York.

Elliot Bogod: Sure, Joe. I’m not a New Yorker, I wasn’t born in New York, but I consider myself a New Yorker for 30 years now. I came to New York in 1999, and finished college here in New York, and then started working for a company called Cushman, which is a big brokerage firm. Soon after, I started working for myself, and for my investors and clients.

Broadway Realty is the company I own, and I’ve been a president of Broadway Realty for many years, for over 20 years now. I’m specializing in commercial and residential real estate, and mostly in Manhattan, even though we do some business in other borders of New York.

Joe Fairless: What are some commercial projects that you’ve brokered?

Elliot Bogod: This year a garage building. It’s in the Midtown West, in Hell’s Kitchen, and that deal will be a development deal, which is secured by a storage company, which will develop it into a self-storage facility.

Joe Fairless: Okay, got it.

Elliot Bogod: They got advantage of the zoning, which is a very good zoning for them, for M2 zoning, manufacturing zoning, so they will change the use of it; they will develop it into — instead of a garage, it will be a self-storage facility.

Joe Fairless: What were other potential buyers wanting to do with that piece of property?

Elliot Bogod: You know, this use is a broad use for many commercial users. You cannot do residential, and you cannot do a hotel, but you can do all other uses applicable on the M zoning, which is manufacturing.

Joe Fairless: Got it. So let’s talk about the step-by-step guide… You wrote a new book called “Get Rich in Real Estate: Your Step-by-Step Guide to Acquiring Properties in New York City.” Can you walk us through the outline of your book? Let’s just talk through that a little bit, the step-by-step process.

Elliot Bogod: Sure. The book is about six weeks out, it’s a new book that took me a long time to write; about 12 years, since before the Great Recession we had in the real estate business in New York… Now we are fully recovered, and I believe this recession has changed to a much more stable market. We saw a lot of purchases, a lot of refinancings and a lot of transactions that happened in the New York real estate, and it’s happening this year as well.

We have a strong market, even though the residential part of it I think got softer… But commercial real estate is supported by the economy, and the economy is strong. We see the real estate, which is following the stock market, and the stock market has never been stronger. The job numbers are rising, the actual employment is great, so I think it’s a good time to be in the New York real estate markets.

Joe Fairless: Okay.

Elliot Bogod: My book talks a lot about New York [unintelligible [00:06:32].16] a lot of New York transactions, but this is a model for other real estate markets, and I think that people who do business in other parts of the country – they watch closely and if they see a good deal, they invest in New York real estate, so it helps them.

This book talks a lot about the next happening things, about the New York cycles, about market cycles, and it shows you models and things that will be hot in the next cycles in the markets in New York.

Joe Fairless: Okay. What’s an example of something that will be hot next in New York City?

Elliot Bogod: New York is moved by technology. First we saw dotcoms in the ’90s. Now New York is a big technology hub. We have a lot of companies, such as Google. Google just bought another building in Chelsea, and it all starts with a billion dollars big office building.

So for them, such big multi-million dollar transactions – they move markets, and people look at those transactions and sometimes they secure it for themselves, sometimes they become anchor tenants. We spoke a lot this year about Amazon. Unfortunately for the real estate markets it didn’t happen, but many other companies are looking to get into the New York if they’re not here already.

Amazon, by the way, has a big presence in New York, and we have a lot of people who work for Amazon; it’s a well-paid workforce, and they rent expensive apartments, they also buy expensive apartments… So Amazon workers are very good for the economy, and all the technology sector I think is a very promising sector… So as long as they do well, the real estate market around the industry does really well, for office building as well as residential, and so on.

Joe Fairless: Knowing that that’s the case, that technology is driving the New York City expansion or evolution, how can we as real estate investor capitalize on that?

Elliot Bogod: In New York you can be a small investor who buys just an apartment, a condominium apartment, or you can be a developer who develops big buildings, multifamily buildings and rents them. For those who work in the industry, it’s a great time and a great opportunity to build new housing. It will attract a lot of new buyers, first-time buyers, people who started working in the technology sector.

I think for first-time buyers it’s a big opportunity for both – for developers and investors, people who buy new apartments, who build new condos… They’ll do well in this market.

Joe Fairless: The challenge that a lot of people might be thinking of is “Well, it’s not gonna cashflow, or if it does cashflow, it’s not gonna cashflow very much. I’m gonna have to hope that the market continues to appreciate.” What’s your response to that?

Elliot Bogod: I think that you look at the cap rates in the rental markets today – four, up to five-cap, in the areas that are [unintelligible [00:10:20].24] Brooklyn, Queens… You get debt services for 4%, low fours for developers, and I think that’s what the big moving factor is – they’re getting [unintelligible [00:10:37].08] money at low rates, and that makes it so the banks are still attracted to new developments, and they’re building.

Joe Fairless: You talked about earlier that your book has New York City cycles and market cycles… Let’s talk about New York City cycles – what should we know about the cycles that New York City has gone through, and in particular how that can be applied to the future, as we move forward?

Elliot Bogod: A big downturn in Lehman Brothers in 2008-2009 times – we had few transactions in the years 2009 to 2011. It changed dramatically after 2012. 2015 I think was the highest market in New York… So it gave us a big lesson that the market can change; it can go high or it can go really low, so we saw discounts in the market of 30%-40% from the tops of 2008. That was the top market. The next top market was in  2015, and now we are in a softer market, which is three years after. The prices are still top prices, but it’s a buyers’ market now. Buyers will get good deals if they are careful; they have secured financing, so… Old sellers are listening to buyers now. That’s the situation with the market now, and that’s how it changed.

I talk a lot in my book about the market cycles. The New York cycle is anywhere between 3 to 5 years. The next cycle I think will happen in 2021. That’s when the next [unintelligible [00:12:27].05] market is coming.

Joe Fairless: And what causes it? Because even if it does happen every 3-5 years, it won’t happen just because it’s supposed to. Something triggers it, so what do you think will trigger it in the next three years?

Elliot Bogod: The population growth in New York – New York now is 8,5 million people city, and we have a lot of people looking for upgrading residences, they’re looking for larger apartments, family-size homes… So the residential market has always affected the trends, and that buyers or sellers market. Of course, interest rates is a big factor. This year we had good news about interest rates. They are still low, and it doesn’t look like it’s gonna be increased, even though at the end of the year we can have surprises… But so far, the interest rates are back to the lows.

In the last 3-4 months we had interest rates for mortgages decrease, so I think it’s a good thing for the market. We sold a lot this year, and something that didn’t move last year because of the interest rates, we saw this inventory started selling again. Law interest rates is good for the liquidity.

Joe Fairless: How can the Best Ever listeners learn more about your company?

Elliot Bogod: Broadway Realty has a website, broadwayrealty.com. My book is on Amazon – Get Rich in Real Estate, by Elliot Bogod. We’ve got a lot of good coverage already for our book, and people like it; we got a lot of good reviews, and we’ve also got a lot of books sold, so we have a lot of interest in our book.

Joe Fairless: Outstanding. Well, Elliot, thank you for being on the show, having a conversation with us about New York City real estate, the market cycles, where you think the market cycle will end – the current one – and when it will begin, in New York City in particular, and then the technology companies really driving the ongoing evolution of the city and its real estate.

Thanks for being on the show. I hope you have a best ever day, and talk to you again soon.

Elliot Bogod: Thank you, Joe. Thanks for having me, and good luck to all your listeners, and best of luck in the real estate business. Have great deals and success in real estate.

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