Episode Transcript
[00:00:00] Speaker A: My first deal, we had 250,000.
[00:00:04] Speaker B: That went hard, and going hard means it's non refundable. You're not getting it back.
[00:00:09] Speaker A: And so as the GP team, that was the amount of capital that was already in the deal. Hard already set. Capital partners decided to, for whatever reason, kind of walk away from the deal. So we lost our capital partners. I know I made the same thing. So 30 days prior to closing, something happened. They were like, we're so sorry, but we just can't do it. And so they were going to raise the whole capital stack. It was 3.5, I want to say, somewhere around that. And so we had to, as new operators, find a way to raise that capital to not lose that 250. And that was. Talk about sweating. Yeah, that was.
[00:00:46] Speaker B: How'd you do it? Did you get it done? How'd you do?
[00:00:47] Speaker A: We got it done. Yeah, it's closed. Got it done. It's going full cycle, obviously, this year. But how do we do it again? Talking to everybody, you know, I'm active in the space, and so being able to pick up the phone and call folks that I've met over the years at different conferences, meetups, like I'm very, this is not a business for you to do at home, at the computer. Like, it's a people business. So you have to really go out there and network with people, because when I call it pickup, because they know that I'm serious about this business. And so we just made phone calls, have different pitches, webinars talking to people, and so we got the funds to come in last minute prior to closing to get it done.
[00:01:30] Speaker B: Hello and welcome back to trust this, where we are dedicated to helping entrepreneurs aspire to a better life and help those around them aspire to a better life. It's what we do here at Aspire legal solutions and my land trustee. We're going to do that today. We do that through interviews with our wonderful guests who are gracious enough to come on here and share their expertise. And today we're going to focus on tips and tricks and techniques and focus on where success and failure has happened and hope you all learned something from that. Before I go on, I just want to remind everybody that this is completely free. We don't have any ads in our podcast, so we're not going to try to sell your dog food to you or anything like that, or new car insurance or anything like that. So we have no ads. But the fee that we do charge is, if you like it, we just ask you to comment, like, share, subscribe whatever it is on the platform you're on, watching us or listening to us today, we would just like you to do that for us. So you follow us and you get notifications next time we come out with a new show.
Today we're here with Bernardo, who has become this expert in multifamily at a very young age. Let me do a little introduction for Bernardo here. Of course, he's distinguished multifamily real estate operator, known for his exemplary track record and deep expertise in identifying and evaluating value added properties. His adeptness in underwriting and problem solving has established him as a leading figure in the field. As the founder of my REI Local, a central Florida Meetup Group, Bernadeau has cultivated robust relationships with both local and out of state investors, successfully managing over 100 units at 33 years old. Scary.
In 2022, he successfully closed a significant transaction involving a 66 unit condo portfolio. I want to talk to you about that. Further demonstrating his analytical prowess and reinforcing his reputation as an expert in the underwriting of value add multi family properties. His real estate portfolio currently stands at a valuation of $9.2 million. His commitment to empowering investors to achieve financial freedom prompted him to create a multifamily branch of my Rei local, enhancing his influence within the real estate community. Bernado's dedication and forward thinking approach continued to propel his success in the multifamily real estate sector. So welcome, Bernadette. Yeah, that's a lot. That's a mouthful.
That's a mouthful for a 33 year old. Definitely. I am impressed. I must say, I am very impressed at somebody. I mean, when you're 33, you don't think you're that young, but you are.
Yeah, well, coming from someone who's 20 years older than you, trust me, you've got a long way to go. You've just begun. You have just begun.
What did we not cover there? What did we not tell people about Bernadette in that introduction that. That you think would be important for people to know about you?
[00:04:41] Speaker A: Yeah, just a little bit more on the background. So at a high level. So I'm from Haiti, born and raised in Haiti.
Came here when I was nine years old to the states. And so, you know, I kind of went down the path of going to school, getting good grades, get a good job, because I was told by doing so, I would make it right. So I did that, and so I graduated, got a degree, and when I got there, I realized when I'm working, this is not what I had envisioned in my head. I was like, stuck in this cubicle, not really happy. And so, you know, I just got bogged down by it. And so, really, everything that you read here came from just me going down that path and realizing that I wasn't happy in working a job, you know, full time. And so here I am, just investing in real estate, trying to get to a different path, you know, in life.
[00:05:26] Speaker B: What was that first job?
[00:05:27] Speaker A: My first job was working for the air force as a software engineer. And so I got my degree from UCF, and I went out there to Oklahoma City.
Yeah, who is correct? Tornadoes, earthquakes, firestorms, I still name it. I had everything that I've never seen before. Onion tv. So I was like, I need to get back to Florida because I'm not going to survive.
[00:05:49] Speaker B: Hurricanes are okay. Firestorms are not.
[00:05:52] Speaker A: Tornadoes, not okay.
[00:05:53] Speaker B: Right.
[00:05:53] Speaker A: I did three years, and I just moved back here, and I just began investing in real estate after that, so.
[00:05:58] Speaker B: Wow. Wow. Tell me about this 66 unit condo thing that you did. What was that about?
[00:06:04] Speaker A: Yeah, so I started in real estate as buying rentals. So, single family, a duplex. And so I began to say, hey, if I can buy a duplex, I can buy a 40 unit or 50 units. The same math just had a bigger scale. And so find this dodo broker. I underwrote it and saw an opportunity there, saw a gap in the rents and expenses being high, and so we just jumped at it, had a few partners with me and just took it down.
[00:06:29] Speaker B: Well, that brings up a good question. How do you identify properties as targets? How do you find them? How do you then evaluate them and then say, yay or nay, yes or no, you're going to do it.
[00:06:40] Speaker A: Yeah. So the reason, if I'm an engineer by trade, so I love numbers. And so talking to brokers, other investors, I get a lot of deals. And so just looking at the expenses, the income, and really see if there's a gap there for you to be able to add an opportunity to the asset, to be able to grow the NoI. And so it's more so just looking at numbers and kind of see if there's a thing that's not really seen by somebody else. Right.
[00:07:06] Speaker B: What are some of the gaps you see? What are some things that you look at a multifamily property, and you go, hey, if I add this, maybe high speed Internet or washers and dryers, new washers and dryers that you add? Something like that. What are some of those gaps that you see that you go, yeah, if I do this, I'm gonna get this kind of return out of doing maybe just fresh paint. What are some of those things?
[00:07:33] Speaker A: Yeah, I think so. For me, I look at how to reduce expenses first. A lot of times you see payrolls really high per unit. You see a lot of high costs for certain things that are just not needed. And so really just how can I cut down the cost first and really be lean but not cut any corners? Right. Is my approach. And from there you can add your pet rents, laundry. There's laundry on the facility. And so it's more so about those small things to add over time to raise the income of the property.
[00:08:00] Speaker B: You said an important thing there about laundry. I represent a lot of multifamily buyers, and one of the things that we've learned to look for are long term leases of the rent of the laundry facilities on the property. Have you had that or is there anything else that you've run into that you've been like, next deal, I'm going to remember this. I'm going to add this to my list and look for that next time in my due diligence.
[00:08:25] Speaker A: Yeah, this last, I bought 38 units in Houston, had a room of machines already set up, but not being used. And so really it's more. So how do I improve on that and get new machines in there and get that up and running? And so it seems like that it's already there for you to do, but the owner was not doing anything with it. Right. So it's free value to be added to the property.
Right now the folks are going across the street to do the laundry, but it's already there at the property. It's easier for them. Right value for us. Right. So it's stuff like that. It's very small things for you to do, but taking action to do so is the first step. Right?
[00:09:06] Speaker B: Yeah. Now, are most of your properties, do you try to keep them in the same state, in the same area, or are you just all over the place?
[00:09:14] Speaker A: So right now I'm kind of all over, which is not a good thing.
[00:09:17] Speaker B: Now, by all over, how all over are you?
[00:09:20] Speaker A: I'm mostly in the southeast. So, you know, I'm in Texas, I'm in the Carolinas, you know, I'm in Georgia as well and in Florida, so it's pretty much the south area in the southeast region.
[00:09:30] Speaker B: How do you manage properties that are that far apart and how do you. And talking about keeping costs down. A lot of my multifamily clients, they like to buy, like, oh, we stay in this one little county because we have our own property management. We have our own handyman and plumbers and things on staff that we just use. And how do you handle that when they're so spread out like that?
[00:09:55] Speaker A: Yeah. So for us, for me, I like to have partners in that area. So I have someone that's local that I can trust, and so all of my properties, I have somebody that I know that lives in the area, that knows, you know, Pennymans and other folks that I can leverage for the measuring the property itself. So, because, yeah, if you don't have anyone there, it's a little tricky to manage it, which is the property manager, because if there's schooling you around, you're not going to know. And so having a partner there is.
[00:10:21] Speaker B: Really key for your multifamily. Do you have onsite property managers, or do you usually contract out with a local company to handle the management? Finding tenants, getting tenants, and dealing with the tenant issues.
[00:10:32] Speaker A: Right. So so far, everything's been kind of mid range, under 70 units. And so I don't have somebody on staff that's at the property yet.
And so it's been folks who are just managing it close by, but not at the property itself.
[00:10:46] Speaker B: Okay. Okay. Because I know that's another thing that a lot of my clients in multifamily, they have that expense, and again, they want to keep them close, so they have just one property manager on staff that they keep nearby to do that.
What are, so, so that takes me to, what are some of the tips for not just finding tenants, keeping tenants happy, finding good tenants who will pay and not be a problem. What are some of your, your tips and tricks there that you've got so.
[00:11:20] Speaker A: That I live as a property manager, if I'm being honest with you, I think one thing that I've done in the past is try to create a community around the property. So if you do like a monthly gathering, maybe a free pizza day. Right. Something to kind of get them engaged and left in the property is one way to attract them and keep them at the property, because it's more of a shared sense of community at the property.
But other than that, I just leverage my party managers. I'm like, hey, you guys have systems already in place, so I'm going to trust you, but guide you on the way as far as my KPI's, to ensure that I'm meeting my targets on a regular basis. Right.
[00:11:52] Speaker B: That was important. You just said KPI's.
Do you use one software that everybody feeds into from all these properties so you can look in one spot or do you, does everybody sort of do their own thing and then report in and you have to compile that?
[00:12:08] Speaker A: Yeah. So it's a great question. Right now, everything's done via the app for you. It is different for each property. And so I get all those reports separately, and I have to kind of use my own excel, you know, backend for all the tracking of the KPI's occupancy vacancy and so forth. So it's a little bit manual right now on my end, but I get the same reports that I can kind of like, compare and look at and go from there.
[00:12:31] Speaker B: What are, what are some of the KPI's that you watch? And how often do you watch KPI's?
[00:12:35] Speaker A: So KPI's, I watch them every week because apartments, it's a business. And so if you let a week go by a month, you can really just go down the hill. So on a regular basis, every week, I'm tracking to see every movements of the KPI. So occupancy, expenses, loss to lease, vacancy, kind of see. Exactly. Are we going up the trend? Down the trend? And if we are, why is that? Right. So just pushing on the property manager to ensure that they're going in the right direction is key as an operator for that.
[00:13:06] Speaker B: Now you've got all these properties around.
How do you set them up? And you say you've got partners. Are you using llcs to do that with each one? Is that how you do it?
[00:13:20] Speaker A: Yes. So each property has its own entity.
[00:13:22] Speaker B: Okay. So you're setting up an LLC. So if you got, if it's in Texas, you're setting up a Texas LLC to own that property, but it's only owning that property. It's not owning everything you have in Texas?
[00:13:32] Speaker A: That is correct. Everything is separated by the property. Property.
[00:13:34] Speaker B: Okay. That's smart. Keeps them apart from each other. And I assume that you probably have just your own LLC that then everything flows through and it's the, it's what you use as your partner in all these deals.
[00:13:46] Speaker A: Correct.
[00:13:47] Speaker B: Okay. Okay. That's smart banking. I mean, in all these different places, do you have just one bank or do you have banks all over that handle the deposit, the tenant security deposits and the rents coming in and all that? How do you typically handle that?
[00:14:05] Speaker A: Yeah, so for my renters, I have just my own account that I handle everything through one bank account. For the deposits, all the rents come into one account. From there, it goes where it needs to go. For the apartments, it's handled by the property manager. And we get, you know, our statements and our checks every month. As far as, you know, after the paid of debt, pay everything else. Here's our profits for the month.
[00:14:25] Speaker B: Well, that brings me something about rental payments. I have, it seems like landlords come down 50 50 on this. Some say, yes, I want the tenant to just be able to deposit the money. Ach, out of either I, ach, I pull it from their account or they sell it to me or whatever, however they get it to me.
And others go, no, no, no. I want to receive a check every month because then I can return it if they've violated the lease in some other way. And I'm trying to get them out. I don't want to accept their rent and have it automatically accepted. And now I have to start over with my notice to fix whatever the problem is. Maybe it's a there. They've got too many people living in the property, unauthorized people, anything like that. Where do you fall on that scale as far as automatic versus send me a check.
[00:15:16] Speaker A: I like it automatic, man. I don't want to check. I don't want no paper. Just come directly to the account. That way it's seamless, it's easy, it's efficient. If there's an issue I can block, I can say, hey, I'm going to block any payments coming in. So I can do it on my portal. So checks is something that I don't personally like.
[00:15:33] Speaker B: Is that app folio or is that through your bank that you can block?
[00:15:36] Speaker A: That's through my bank. I have a different portal as well. I use for my smarter stuff that I manage. I can kind of stop, stop, you know, accounts from going in.
[00:15:44] Speaker B: Okay. Yeah, I think that's the big thing. I think a lot of landlords who don't understand it, they just go, well, they've sent me the money, now I have to start over on the eviction process every single time, you know, and they didn't send me enough money, so now I have to reverse it and it becomes a pain for them. But if you've got a bank set up that you can just block it before it gets to you. That's, that's the dream. That's the dream. Do that. What's the, what's the worst tenant experience you've had out there?
[00:16:15] Speaker A: So I've been, I've been lucky. I haven't really had a horror story as far as a tenant.
[00:16:19] Speaker B: Wow.
[00:16:20] Speaker A: I'm knocking on the wood somewhere.
[00:16:21] Speaker B: Yeah, that's why we keep it right here. We keep wood right here.
[00:16:27] Speaker A: Thing go crazy. As far as, I mean, in the apartments, I had had stories of, um, you know, for the cops just showing up. Right. For an arrest. But there's more things that I manage myself. I'm very, very hands on, very strict on my, my tenants and approvals. And so I've been pretty lucky in that regard.
[00:16:47] Speaker B: Well, that's, that brings me sort of my next question. What are some things that you do, some strategies that you have that help mitigate risk and maximize your return as you're doing this?
[00:17:01] Speaker A: Yeah. I think the big thing is this is not a passive business, I would say.
[00:17:07] Speaker B: Right.
[00:17:07] Speaker A: So if you don't single family, you don't want to have family apartments, whatever it is you're doing, you have to be hands on. That's one. Right. So you have to know what you want and really be strict with your tenants approval. Right. So have criteria of exactly, credit score, evictions in the past, background checks. And don't say, hey, I'm gonna let this one kind of go through. Right. Because I'm in a hurry. So for me, I let my properties sit vacant if I need to, to get the right tenant, then to rush and get somebody in there. And so just being important to know that your property is really an important asset. So take your time to find the right tenant, to be able to put them in the property and not rush the process so much is really my approach.
[00:17:49] Speaker B: Where do you look to find out what you should be charging for rent? How do you know what you should be charging for rent? Being so spread out? I mean, it's kind of, yeah, it's a lot of different areas. How do you know?
[00:17:59] Speaker A: Yeah, so I start out with, you know, Zillow, Facebook rentometer. And from there I'll go to calling property manager in the area and say, hey, you know, I'm looking to buy a property here or rent a place in the area.
The square footage, how much would this rent go? Right. So you got a few folks in the area and kind of get, you know, baseline of what they're telling you and what you're seeing online and kind of compare exactly what the range is for certain property. And so it's more. So get the phone call and find out.
[00:18:30] Speaker B: Call and chicks. A secret show. Yeah, yeah, secret show.
[00:18:34] Speaker A: You know, it's just, and I know I'm young, but I love just cold calling. People say, hey, this is what I'm gonna do. Or just be a tenant looking for a place to rent. And then you'll know pretty quickly exactly what the rent should be in the area, right.
[00:18:47] Speaker B: I know a lot of landlords, especially big, large institutional landlords, have started using this system where it feeds them what they, what the rent should be. It sort of uses an AI and it reviews everything and that's under attack a lot. I think that the DOJ is actually looking into it right now.
Would you ever use anything like that to help you set your rent? Where it's saying, you know, raise the rent, raise the rent, and you're sitting there going, I don't think we should, because we're not. Would you feel better saying, I'm happy with a 70% occupancy rate just as long as I'm getting super top dollar on the rent now? Because the computer tells me I should be doing that.
[00:19:34] Speaker A: Yeah. So I think, although I look at the stuff online and kind of what the rent should be and the max rents, I tend to really think about the tenant as well to make it a win win. So I don't try to squeeze the tenants for the top rent because ideally I want them to be at the property for 10, 15, 20 years. Right. So I tend to be below the top rent and kind of get to where I'm not at the bottom, but I'm not at the top. So I can kind of really have that balance there at the time. And so for me, it's a gradual approach. I don't tend to squeeze them. I tend to just be fair to where I can kind of naturally increase the rents over time, where it's small increase, but over time you get to rent that you need to get to for the property itself.
[00:20:16] Speaker B: I've sat in a couple of talks lately with economists. I was in one today at lunch, an economist she was talking about right now affordable housing is still very scarce. They're not building enough. And I was in a talk down in Miami a few months ago where the, the economist, the analyst was saying that pretty much all the apartment complexes you see being completed right now will be it for the foreseeable future. There are not many permits out there to build large complexes anywhere in the country. It's not local to Florida. It's anywhere in the country it's going to drop off. Are you seeing rents just going up? You see them stagnating? What are you seeing and what are you forecasting over the next, I don't go out over a year. Over the next year. What are you thinking rents are going to do?
[00:21:21] Speaker A: Yeah. So I think rents are actually dropping a bit and also being a bit more stagnant. I know in a few of my properties I've had to kind of drop the rents a little bit just to get more of a traffic at the property. And that seems to be the norm amongst other folks as well who are in the space. So I think, I just feel next year is going to be very kind of stagnant over time because it's not going much higher from, you know, 21 2020.
[00:21:45] Speaker B: Right, right. Yeah, we had a big run up there and I think, I think you're right. I think we are going to see it sort of become boring, I hope, for a while, and not really, I don't see any explosion. Housing is 30%. The economist was saying this earlier today, housing is 30% of the inflation number, shelter. So that includes homes as well as rentals.
But the inflation has, as of last month was at 5.5% on shelter.
But it's coming down. It's been coming down. And I think that was a good sign for the overall economy, but maybe not what landlords want to see, especially landlords who have recently gotten into it.
Speaking of, one of the things that they talked about today was how insurance has led, especially car insurance, but insurance in general has led inflation numbers. Car insurance as of April was up over 20% nationwide.
And how is that, is that a challenge for you? Has insurance been a challenge for you? I mean, it sounds like you're in states where weather is an issue. Yes, no matter what. I mean, Texas, Florida, the Carolinas, anywhere you're talking weather's an issue. So how has insurance affected your bottom line?
[00:23:20] Speaker A: It's been a killer. So my last deal, insurance really changed a lot. And so our initial quote before closing into after we close was a big jump.
And then deals. Now I'm looking at right now, don't pencil out because the insurance quote that I'm getting back are just so high per door that I can't make the numbers work. And so it's really been a struggle to find deals where the insurance makes sense. And so trying to be more creative now in a sense, is really our next target for property.
[00:23:53] Speaker B: Yeah. I've had three clients deals fall through since January where they were either selling refinance, one was a sale, one is a refinance, and one was a purchase that fell through because the insurance was just, it just could not work no matter what they did. One of the tips that I heard, I was in another, all these banks invite me to things, and I was at this great sort of roundtable where they brought in all these insurance professionals and one of the commercial insurance professionals they brought in, she said that you don't have to insure for 150 miles an hour winds from the beginning. So she talked about how they can tier insurance and the rates. So your rate at winds, sustained winds up to 75 miles an hour, that will be at a rate, and you'll pay a premium for that. Then you'll have winds 75 to 100, then 100 to 120, and then 120 to 150. And the chances of having sustained wins at 150 or above in certain areas is so low that if you tier it like that, it brings your entire premium down overall. Just sound really interesting to me. It's a thing I've been throwing out there to a lot of clients who have commercial properties is get a really good commercial agent, number one, and it sounds like you need one. It's definitely nationwide that you can just go to a good broker who knows how to, how to do those things.
Turn to when you are in the midst of buying something, you're bringing in partners. So you're sort of negotiating on two hands at the same time, you're negotiating with a partner to bring them into the deal, and you're also negotiating with your seller to sell you the property at the best price you can get.
How do you juggle and what are your negotiation? Do you have any specific negotiation techniques or anything that's worked for you in the past or things that have happened to you during negotiations that have gone well, gone bad?
[00:26:03] Speaker A: Yeah, this is a good question because I have been a lot of syndication, so it is a bit of negotiation with the seller and obviously a partners as well.
For me, the deal that I mentioned in South Carolina was the condo.
It was gonna be a bridge debt on the property, was our quote, but that fell through, and so the deal was gonna pretty much not pencil out because we had to be at a certain amount of occupancy for the lending to make sense, and we're shy 2% or whatnot. So we talked to the seller and said, hey, if you want this to go through, you have to carry the loan like, you know, and because it was a paid off on property, and so he agreed to carry it for five years at similar rates as the other loan. And so really just knowing that he had no way out, that we're the only option to get this deal done, we're so close to closing. And so being able to talk to him about that was just being honest, like, hey, this is not going to close because we're a month out and we need to make this deadline as far as occupancy, we're not there. You're not there. And so him not wanting to deal, he had to pretty much come out and carry the loan for us.
[00:27:14] Speaker B: Essentially, when you're going into all these states, I heard you say syndication. So lawyer, you're going to be closing in a state or an area where you've never gone before. Lawyer, brokers. How do you find the best lawyers and brokers and property managers and all these people to use when you're going into these areas?
[00:27:40] Speaker A: Yeah, so I'm very involved in the business. And so before I even engage in that aspect of the business, I'm going conferences, I'm going to different meetups, I'm going to different, you know, some event that I'm at. So I tend to kind of know exactly who the best broker is for insurance, for SSE, attorney, property manager. So I have to already pre lined up when the deal comes, I know who to call. Kind of get things, you know, corroborate.
[00:28:04] Speaker B: Them for the dogs, essentially for your financing. You said one was a bridge debt. Are you, are you doing mostly conventional Fannie Mae, Freddie Mac borrowing or are you going more private lending?
[00:28:21] Speaker A: Yeah, so I've been doing more fixed lending. Fannie Mae Freddie Mac loan assumption deals, fixed interest rates. I'm very boring in that way. It's very, I know people doing bridge and buying, you know, insurance cap or cap on the interest. I like, you know, just fixed rate over time that I can really take time to get the property to where it needs to be at before I exit on the back end.
[00:28:45] Speaker B: I'm having a lot of my clients, when they're doing the Fannie Mae Freddie Mac, that they're requiring a lot of reserves upfront of payments, a lot more than they used to, and they're requiring a lot of reserves for repairs, for deferred maintenance that has occurred. Are you seeing the same thing out there?
[00:29:06] Speaker A: So I haven't seen that personally. I've been kind of lucky in that regard. So it's been pretty kind of normal as far as reserve flows, but I've had that raised upfront as well prior to the deal. So it's never been an issue on that end.
[00:29:19] Speaker B: When buy reserves, let me also, let me explain to the listeners.
You may take out a loan. Let's imagine you're buying a house and you're taking out $100,000 loan. Let's keep this really simple because I don't do math well.
So you're borrowing $100,000 to buy a house. Now, imagine your lender says, but it needs a new roof, it needs to be painted, the foundation's cracked. So of that 100,000, we're going to pull out 20,000 for that. And then we're not sure if you're going to be able to make your payments for six months or a year. So we're also going to hold back that amount, and we're basically going to make your payments on your loan, from your loan for however many months it is. That is common in especially multifamily that I've seen with Fannie Mae and Freddie Mac and even some of the private lenders, they go, we're going to hold this money back and not give it to you at closing. So now that means you and your syndication partners have to come up with more cash at closing, and it can be a real gut punch right there at the end. And also deposits on multifamily, you're not talking about $1,000 earnest money deposit. A lot of times you're putting up $100,000 as a deposit around money, and all of a sudden you're going at the last minute, you know, you've gone through all your due diligence, you've gone through your loan approval process, and all of a sudden something falls through and you're going, you're sweating. I've had that call at 1011 o'clock at night from the client going, oh, crap, I'm about to lose a hundred thousand dollars that I would just. It's just gone. And it's not my money, it's my investors money. They're not going to be happy with me. I mean, have you ever faced anything like that? Have you ever had anything like that?
[00:31:07] Speaker A: Yeah. So my first deal, funny enough you mentioned, that's my first deal, we had 250,000 that went hard, and going hard.
[00:31:18] Speaker B: Means it's non refundable. You're not getting it back.
[00:31:20] Speaker A: And so as the GP team, that was the amount of the capital that was already in the deal, hard, already set, and all capital partners decided to, for whatever reason, kind of walk away from the deal. So we lost our capital partners. I know, I made the same face. I made the same face, y'all.
So 30 days prior to closing, something happened. They were like, you know what, guys? We are going to walk away, you know, from the deal. We're so sorry, but we just can't do it. And so they were going to raise the whole capital stack. It was 3.5, I want to say, somewhere around that. And so we had to, as new operators, you know, find a way to raise that capital to not lose that 250. And that was. Talk about sweating. Yeah, that was.
[00:32:07] Speaker B: How'd you do it? Did you get it done? How'd you do it?
[00:32:09] Speaker A: We got it done. Yeah, it's closed. Got it done. It's going full cycle, actually, this year. But how do we do it again? Talking to everybody. You know, I'm active in the space, and so being able to pick up the phone and call folks that I've met over the years at different conferences, meetups, like I'm very, this is not a business for you to do at home, at the computer. Like, it's a people business. So you have to really go out there and network with people because when I call it pickup, because they know that I'm serious about this business. And so we just made phone calls. We had different pitches, webinars, talking to people until we got the funds to come in last minute prior to closing to get it done. So.
[00:32:49] Speaker B: Wow.
[00:32:49] Speaker A: It's not passive, you know, on the water, on the beach, hanging out, kind of, you know, approach is very, very hands on, very active, you know, approach.
[00:32:59] Speaker B: That's one of the things that drives me crazy. These gurus, mentors. They get up there on the stage and they're like, oh, it's just passive income. There is no business that you own. I don't care what it is. It could be a hot dog stand. Nothing you own is ever passive income. It's, it's work. It's work. It's work. It's network. It's, it's everything. Pulling it together. And, yeah, you go on vacations, but you're not on vacation.
[00:33:26] Speaker A: You still think about the past, this deal, issuers, fires. Yeah, it's, it's attractive, right? So you have to love it to really be good at it, so.
[00:33:35] Speaker B: Right, well, and that's the thing I've said, if you're doing what you love, you never work a day in your life. That's the old saying. But lately I've come to believe is, like, if you love what you do, you work all the time. It's not, it's not that you don't work a day in your life. You are working all, but you love your work. And it's not that. It's just not that bad.
What advice would you give somebody who's just starting out?
They, let's say they've been doing sort of like you started out single family, maybe they started out in wholesaling, then they moved into buying and holding single family. Now they want to get into multifamily, or maybe they've even got some quad, quadruplexes and they want to go into. No, I want to do a ten unit complex. Now what, what are some pieces of advice?
[00:34:25] Speaker A: Yeah, I would say if you try to do multifamily, you know, one is know what you're good at. Right. And what you're not good at, because it's a lot of moving pieces involved, and you have to really know exactly how to fit the puzzle into one. And so you have to know how to look at deals, how to underwrite deals, how to talk to brokers owners, how to get capital. And so for me, I knew that my strength was underwriting, analysis of markets and properties, talking to people. So I leveraged that to be able to get into the business. And so once you know what you're good at, then go find the other piece. Right. Is it capital? Is it deal finding? Right. To put it together, to be able to buy 40, 50 units, you know, even higher. And so it's more so about know who you are, know your strengths, and then find what you're not good at, to bring it onto your team, to leverage that for, you know, buying a building and so forth.
[00:35:14] Speaker B: Yeah. Spreadsheets, that's my weakness.
[00:35:16] Speaker A: I, that's my. I love that.
[00:35:18] Speaker B: Yeah.
I think you're either great at it or you're horrible at it. I'm horrible. I'm horrible with spreadsheets. I can, I can use them. Very basic. But when I sit down with a master like you, I'm just, you could be pulling a rabbit out of a hat for me. As far as, as far as I can. As I know. Well, one of the things closing out, number one, is there anything else that you feel like people wanting to get in this business or people who. Well, or if there's anybody out there who wants to get out of this business, I'm sure they can call you things that they may want to know. Some last words on that as far as advice mean.
[00:35:57] Speaker A: Yeah, yeah. I would say just take it easy.
Don't run, walk, take your time. You know, I know folks who just took off in the business, bought a lot of properties over leveraged, and then they got to an endpoint, but then it all came down because it was just done too quickly. And so take your time, talk to people, be active in the space, and then you'll get there. And so if you leverage what you know and you go out at a good pace, you know, you will get your invocation. So that's my advice. Don't rush baby steps. And as you crawl, you'll walk and.
[00:36:29] Speaker B: Then run well and network, getting groups like your mastermind your groups and get to know people before you jump into it. It's definitely, definitely. Well, one last question. I always ask all of our guests, regardless of what we're talking about, I always ask everybody, our mission is to help people aspire to a better life.
Who in your life has helped you get where you are today? Aspiring to a better life?
[00:36:58] Speaker A: Yeah. So I will say two folks. One is my mother. You know, she's always kind of pushed me to say, hey, I can do x, Y and z. I can accomplish this even though I don't know how to do x, Y and z, but I believe that I can do it right. So her belief in me has kind of pushed me to kind of strive for more. And then my wife is another woman because she is very supportive of, you know, my journey, even though she doesn't understand what I'm doing. But she, she believes me enough to go out and make things happen. Our first property you bought, she never saw it. She never looked at it, just said, hey, go ahead and make it happen. And so having those folks in your corner that believe in you to push you, I mean, these two are the ones who are my core foundation as far as how I got here so far.
[00:37:42] Speaker B: You've got to have that foundation. You've got to have that foundation of support to build on. I don't care what it is. You got to have that. Well, I want to thank you so much for coming on today. It's been very enlightening, very helpful. I'm sure listeners will appreciate it, too. And we're going to put your social media and contact information down in the comments, in the sections explaining everything about this today so everybody can get in touch with you. So just be prepared. But again, thank you very much for coming on. And again, if you liked it, please like it online comment if you got any other questions, put them down in the comments section. We'll try to get your answers for everything that you may have a question for. And until next time, we'll sign off. Thanks for listening to this edition of trust this. If you got something out of it, please press like and subscribe and give us a five star review to help us reach others who can benefit from this series. Until next time, keep aspiring to a better life.
