Making Money While You Sleep

Intro
Hi. My name is Rod Khleif, and I’m the host of “The Lifetime Cash Flow Through Real Estate Investing” podcast. And every week, I interview Multifamily Rock Stars and we talk about how they built incredible wealth for themselves and their families through multifamily properties. So hit the “Like” and “Subscribe” buttons to get notified every Monday when a new episode comes out. Let’s get to it.

Rod
Welcome to another edition of How to Build Lifetime Cash Flow Through Real Estate Investing. I’m Rod Khleif and I am thrilled you’re here. And I’m really looking forward to this conversation with this gentleman today. His name is Todd Nepola, and Todd is primarily in retail and industrial. But we started talking before we started recording, and we’re going to have a lot to talk about and have a lot of fun today. So welcome to the show, brother.

Todd
Thank you, Rod. I appreciate you having me.

Rod
Yeah, for sure. Well, so, you know, I know you’re the president and founder of Current Capital, and I know your focus has been, you know, retail and industrial, but I know that you can add value as well. By the way, I want to mention your book. He’s got a book on Amazon. All the proceeds go to charity. It’s called “Keeping It Real on Commercial Real Estate”. So I have not had the pleasure of reading it, but I absolutely will. But there you go on that. And, you know, so, let’s start with where we are in the market cycle because everybody knows I’m super bearish. I really believe it’s going to be uglier than people say, but I also believe there’s going to be an opportunity. What are your thoughts on that?

Todd
You know, I’m going to be a mirror image of you, unfortunately, I agree that it’s going to get worse. I think that you know, the Fed Chairman Jay Powell was telling you, we’re going to feel some pain and we don’t want to fight the Fed. He’s telling you, it’s going to hurt. It’s going to hurt. But I also agree that when it hurts is when there are the greatest opportunities.

Rod
Yes. So, I know we were talking that you’ve got a shopping center do your closing at 60% loan to value, and, you know, you’re at 6% interest, which is so freaking painful because we closed on one a year ago at 3.2 as well, and we just closed on this last one at 5.4%. And, you know, so the rates keep going up. But, you know, you’ve been around a while like I have, and we were talking about the RTC and buying deals back then. And, you know, I remember– I’m 62. I remember when the interest rate was 18% and we did backflips when it hit 7%. So, guys just know what goes up comes back down and vice versa. But, you know, I don’t know how you feel about this, but I see a lot of opportunity. And, you know, some of these operators that have not gone through a downturn, don’t know how to asset manage, don’t know how to manage their KPIs, or maybe got some onerous debt. Now, I don’t know– so I’d love your thoughts on what I just said. Now, I don’t know because I’ve not done retail or industrial. Do they have bridge debt in that environment or is it primarily in multifamily?

Todd
They do. They have both.

Rod
Okay.

Todd
And that’s why I think it’s great that you and I have this conversation because we all know you’re an expert at multifamily, but you’re going to see a lot of similarities in what I do. It’s basically the same thing it’s just a different asset class, but they’re very equally aligned. And it’s the same situation you’ll see in residential, you’ll see in what we do as well.

Rod
Well, I don’t know about you, but I think there’s going to be some operators in trouble with bridge debt, that, you know, with or without a rate cap. Even with a rate cap, a 2% bump on a multimillion-dollar asset is a big deal. So I don’t know if you, you know, experienced any of that yet. I know we looked at our asset in Texas, I don’t want to say where to put a spotlight on the person, but their bridge debt was coming due less than a year and they bumped their reserves from 8,000 to 80,000 a month. And, I mean, that’s debilitating. Okay.

Todd
Yeah.

Rod
And, you know, I think there are operators out there that didn’t, you know, weren’t very conservative with operating reserves. You know like we always throw money in the bank just in case you know what hits the you know what. So, I don’t know, I love your thoughts on this.

Todd
You know, again, I agree with you once again because I see a lot of guys out there in real estate that have looked like heroes, but they’ve never seen a bad market.

Rod
Right.

Todd
I mean, if you’re probably 35 to 40 years old, other than a blip on the radar in the spring of 2008, you haven’t experienced anything. So you’re going to see a lot of these guys that are just eternal optimists. They don’t know how to deal with what’s coming. And I know the days are coming like, you know that people can’t pay the rent and, you know, you got to start making changes. And a lot of guys did take these loans. And we’re also a property management company. We do third-party management as well. And I have clients who are enticed to take loans that are adjusted. And these were loans that were like 4%, four and a half percent at the beginning of the year. We’re talking 9%, and we’re going to probably see an increase next week. And I’m looking, I’m going these are not cheap loans, we’re talking loans in the millions, but they want it to be sub three a year ago, and it’s just skyrocketing and your entire profit is gone. And whether you have investors or not, you’re not making any money.

Rod
Not only that, your debt service coverage ratio is not going to be there, and have the ability to refinance.

Todd
That’s right.

Rod
So, you know, that’s a big problem. By the way, guys, if you don’t know what I mean by that, in commercial multifamily, in commercial real estate, period, the bank is looking at the asset’s ability to cover the debt. It’s called the debt service coverage ratio. And as a simple example, and it’s an annual calculation, if you’ve got, you know, let’s say, $100,000 in net income on an asset and $100,000 in debt, it’s a 1% debt service coverage ratio. And most banks, at least in the multifamily space, want to see at least a 1.25. So you’d need in that example, $125,000 worth of net income and $100,000 worth of debt. That would be a 1.25. And I don’t know if it’s similar in your space. Is it similar as far as the debt service?

Todd
It’s a little more. We’re looking– it was around 130, 135. We’re looking at 140 now.

Rod
No kidding.

Todd
The banks are scared. You know, the banks don’t like uncertainty and we have uncertainty. So yeah, they’re a little concerned.

Rod
Right. Well, I mean, that’s going to be an issue, you know, and I hope it’s not as bad as some people say. You listen to Kiyosaki and, you know, you’ve got your prepper stuff going on and all that, but even– you know, I did a Facebook Live on you know, could we be heading into a depression? And I pulled a bunch of headlines, and they’re sobering, man. I mean, 20 million families are behind in utilities. I used to– you know when I lost everything in 2008, 2009, I built a litigation support company, helping people save their homes that were in foreclosure. And we saved thousands of homes. But, you know, I sold that company a few years ago, and I had lunch with the guy that bought it and he said it’s like a freaking tidal wave coming to foreclosures. I mean, you know, they had that– not only did they do the moratorium on evictions, but they did the moratorium on foreclosures. And of course, those take time to ramp back up, but they’re hitting now. I mean, he’s overwhelmed with the number that’s coming. So, you know, not to get political, but I actually believe after these midterms that, you know, we’re going to be finished with pretty soon. I think the news is going to start getting really ugly because you know, I don’t know if you feel the same way I do, but I think there’s a pretty big political influence on most of the mainstream media. And if that political situation shifts as it’s expected to, I think they’re going to say things are really ugly. You know, the public’s perception is the public’s reality. And so, I don’t know. Do you have a thought on that?

Todd
I think you spot on. But before we scare anybody, I want to say, like you said, in 2008 and ’09, a lot of investors lost everything. And that’s when my management company exploded in growth because that’s when people who own properties were coming to me saying, how come you’re full? How do I get a tenant? How come this tenant doesn’t pay the rent? We’ve been so spoiled for the last couple of years, especially with PPP money. Tenants were excited to pay rent.

Rod
Right.

Todd
And leasing agents weren’t making a lot of money because there was no turnover.

Rod
Right.

Todd
You’re going to see that game go, and you’re going to see real opportunities. And you know what, you know I said, we’re a little older, hopefully, probably and a lot of your listeners are because then you have a very young audience. But these guys are going to be the up-and-coming, and they’re going to really grab this opportunity, and there are some great opportunities coming. [inaudible]

Rod
It’s coming. Everything’s going on sale, guys.

Todd
Yeah.

Rod
Everything’s going on sale. And, you know, if— you’ve got to pick your vehicle, okay, maybe you want to do retail or industrial, then Todd to be a guy to talk to. If you’re going to do multifamily, for God’s sake, get your butt to my next boot camp, the next one, I think January 21st and 22nd. But pick a vehicle and get up to speed on it immediately. You know, whatever the asset class is or if you’re going to buy businesses or do, you know, trading, whatever it is, become an expert as fast as possible so you can capitalize on what’s coming. Because, you know, if you try to learn this, you know, a year from now, you’re going to miss the wave. You’re going to miss the potential opportunity. And, you know, I’ve been screaming this from the rooftops for the last few months that you know, I agree with you. I think there’s an incredible opportunity coming. You know in 2008 and ’09, I was hiding under a rock, or 2009 and ’10 really, I was hiding under a rock and, you know, licking my wounds, but not this time. You know, I got crushed by that wave. I’m surfing this wave, you know.

Todd
You said something so important. I hope all your listeners listen to this really carefully. You said, get to your boot camp.

Rod
Yeah.

Todd
And let me tell you, when I was starting out in this business, there was no podcast. So you wanted to learn this business, you had to read books, you had to buy audio tapes, and what I would do is I would go to seminars where people would talk about you know, flipping houses, whatever it could be, just to learn anything I can. There is nothing better. That’s why it’s such a gift. People don’t realize I have a guy like you, put your time into this to make a podcast, they got to go to boot camps. If they could get to yours, great. I don’t have one. I don’t do it.

Rod
Right.

Todd
But I think it’s remarkable when guys at your level give back, because the truth is, the money you make is peanuts.

Rod
No.

Rod
It’s good to see 20, 30 young guys walk through or girls go out there and learn from all your hard knocks because what you could teach them, they don’t understand how valuable that is. 20, 30 years of experience, it’s priceless. But they got to be going to these things.

Rod
Well, you know, I just came off of a virtual one, and we sold, I think, 700 tickets, didn’t all show-up, but a lot of them did. And, you know, my boot camps, at a whopping $97, okay, for two days of training. And I don’t sell anything there, so it’s kind of a– you know, hey, I mean, there’s no excuse, okay.

Todd
That’s right.

Rod
If you really want to learn this business, get your butt there. You can do it freaking at your laptop and your underwear, you know, at home. So there’s no excuse. But, you know, like you said and I said, there is an incredible opportunity coming. You know, so let me ask you this. You know, I like to dig deep a little bit on what drives people and, you know, what your drivers are and why you know, you’ve achieved such significant success. Now, you didn’t have mentors or boot camps and stuff when you started. Neither did I, honestly. And I made every freaking mistake you can possibly make. In fact, I have this T-shirt that the student got me that says #AskMeHowIKnow, because I always– at my boot camps are like, don’t do that. Ask me how I know. So they got me a T-shirt. Now, we actually have a bunch of them. We throw them away for free. But, you know, what would you say to– actually back to my question. You know, what’s the driver? What gets you to jump out of bed in the morning and go attack this?

Todd
You know, I bought my first property 25 years ago. I think I was telling you earlier, it was after the RTC collapse, and I bought a 13,000 sqft warehouse, and it was probably 60% vacant. And when I was buying it, I paid 575,000 for it and had to put 50% of the money.

Rod
Wow.

Todd
And I begged, borrowed, and didn’t steal, but begged everybody for money to get the deal done. And when I went to the closing, I was 25 years old, and even the lawyer during the closing told me, I’m insane to buy this. Friends were telling me, how are you putting all the money you saved at risk? How are you going into debt? And it became such a driving force almost to prove them wrong, that it worked. And I bought it in June of ’98. And by December of ’98, I refinanced it for $600,000. It was full. It appraised at $800,000. I got all my money back. I paid back the people that I borrowed money. I put it upon myself, but you know, I borrowed money from my parents, you know, everybody. And I was making $5,000 a month, free cash flow. Plus I was paying off this $800,000 note. And I would go to work and again, I was 25. This was in 1998. And I said, holy crap, I don’t even spend $5,000 a month. And from that moment on, it became an obsession. So to the point that I have over a million square feet of retail and industrial space now that I own, and we manage the million and a half on top of that. But I just love it. And it is almost like playing Monopoly. So people say, well, you must have cars and boats and houses. I don’t look at the real estate as a means to an end to go get a car. To me, the real estate is the end, because every time a property does well, I could go buy more and more and renovate more and redevelop more. And you know what? It’s going to be the best thing for my kids. But to me, the enjoyment is buying more properties and it drives me every day to get out of bed.

Rod
No kidding. I love it. You know, when you love what you do, work is play.

Todd
Yeah.

Rod
And guys, you know, I tell people in my boot camps, you know, you can learn to love anything. You can associate pleasure with something and learn to love exercise even if, you know, you’re overweight and you don’t like exercise, you can learn to love anything. But I tell them, if you can’t learn to love this, for God’s sake, go do something else. Life is too freaking short. And there’s got to be something you love doing because when you love it, you know, you’re strong at it and you’re passionate about it. And that passion is required to influence people. And so, you know, you really need to do what you love. And the beautiful thing about commercial real estate is it’s a team sport, number one. And number two is, you know, there are lots of hats you can wear. Now, you know, you can be the person that finds the deals, does the broker relationships, you can be the one that raises the money, does the investor relationships, sometimes you can do both of those. You could be the analytical one that loves the spreadsheets. You could be the one that’s process driven or construction experience or project management experience that does the asset management. So there’s just a lot of places you can aim you’re at and make money. And I’m really proud of something. My students have been teaching for less than five years. My students own upwards of 100,000 doors that we know of and most of them were done between Warriors. Those are my students, my coaching students, and done between Warriors. And, you know, I’m super proud of that. So, you know, what suggestions would you have and– you know, I mean, I guess you’ve already said that. You know, but let me ask you this and see if you can answer this question with something that would add value even in the multifamily space. You know, starting out in your career or at any moment in your career, did you have any epiphanies, any aha, moments? You shared one with the 5,000 a month. I think that was probably an epiphany for you. Does anything else come to mind?

Todd
Yeah, I’m going to tell you, what I learned a long time ago is that you could have the greatest job. You could be the CEO of whatever company you want to be. You could be the top surgeon. But I learned a very long time ago, and this goes back to before the worst seminars. It was even Tony Robbins who taught this to me and he said, if you have to go to work for your money, you will never be rich. And that was one of the reasons I said, aha, but if I own real estate, I could be sitting on the beach, and I’m still going to collect rent. And you start to realize that it gives you financial independence.

Rod
Right.

Todd
And you’re right. There are a lot of hats you could wear. You don’t have to buy your own deal. What kind of states you can invest in other people’s deals? You could partner with people. You can do a lot of different things. But it’s a lot better to own real estate than– a conversation I had today with some, I think, Amazon report earnings after the bell. And I said, you know Amazon could be up 20% or down 20% today, and it will be okay. Nobody seems to care. I’m like if my real estate could swing 40% a day, I have a heart attack.

Rod
Right.

Todd
So I can’t live like that. So I said, it gives you certainty, and it gives you financial independence, and you can do it from anywhere in the world.

Rod
Good answer.

Todd
That’s one of my epiphanies that drove me to really invest.

Rod
That’s a good answer because that certainty is a big component.

Todd
Oh, yeah.

Rod
I mean, I got to tell you, if you’re listening and you got money in the stock market, I mean, you are walking a freaking tightrope as far as I’m concerned. Or, frankly, walking towards the edge of a cliff, in my opinion. But, you know, tell me– you know, you’ve had to have had some mentorship and some people you looked up to it’s along the way here. What do you think is some of the best advice you’ve ever gotten, Todd?

Todd
You know, when we say mentorship is great because guys like you have been doing this a long time. I was lucky a few years back, I go to real estate conferences. The one I go to is called the International Council of Shopping Center.

Rod
ICSC.

Todd
ICSC. And I had the privilege of meeting a guy named Gary Rappaport from Rappaport Real Estate Group out of Virginia. And this is a guy who has been doing this for 35, 40 years. I think Gary’s in the 70s, and I know he’s in his 70s and has $5 billion worth of real estate, and he buys, like, a deal a year. And he gave a whole speech about how you can invest in real estate, which you can do. And I was mesmerized by this guy and how he talked. And when I went up to him, I said, what’s the likelihood this guy will talk to me? But let me give it a shot. I went up to him and talk to him, and I said, you do everything I wish to do. And he said, so come to my office. I said, If I get on a plane, I’ll come do it. So I flew from Miami to Virginia, and this man took me to his office, 200 employees, a two-story office building.

Rod
Wow.

Todd
Took me to lunch, and he spent six, seven, eight hours with me. And I said, people who have this, like they’re very successful, they want to give back. And that’s one thing a lot of new investors don’t realize. Don’t be afraid to ask for advice. Now, be careful the advice is coming from guys trying to sell you something.

Rod
Right.

Todd
But Gary didn’t want anything. And this guy has been my mentor for years, and the best advice he taught me was when he said that question is don’t be afraid to ask for help. He said, call me anytime, email me any time. And I’ve been doing it for many years. And it’s incredible that this guy with $5 billion of real estate that he owns will take my call anytime. And I’m not the only person who does that for.

Rod
That’s pretty extraordinary. Yeah, that’s pretty extraordinary. I absolutely love that. You know, one question I love to ask successful people like yourself, you could go back and tell 18-year-old Todd something about– with what you know now, is there anything you would do differently or more aggressively or not do or whatever? How would you answer that question?

Todd
What I would definitely do if I could go back in time, I would definitely be more aggressive in buying real estate. I talked myself out of so many deals that I look back in hindsight and say, how did I not buy that? Not just because the market got better because I talked myself out for stupid reasons. And of course, yeah, time makes real estate go up. And now I look back on I really didn’t dream big enough. I’m doing much bigger deals now, but I should have been doing these deals ten years ago.

Rod
So let me ask you this. Is your model buy and refinance, or do you buy and sell as well? Me, I hate selling. You know, I had a billionaire on the show, my first interview, a guy named Albert Berriz, and he said something really resonated with me. He said I’m a real estate buyer, not a seller. And I just wonder what your framework on that is.

Todd
I am the exact same way. I never sell. And when I ask people to ask me, like, what’s your time span for real estate? I said, the rest of my life.

Rod
Yeah.

Todd
And I don’t sell on that first property I bought in 1998, I still own it, and it kills me to sell. I have made some sales, and I had some things, which are too good to be true. So I had to.

Rod
Yeah.

Todd
Some properties, you know, had problems. But strategically, when I go in, my timeframe is forever.

Rod
Yeah, I agree completely. So, let me ask you this. How do you define success? What’s your definition of success?

Todd
It’s a great question. You know, I’ll keep it related, obviously, to this. But, you know, success is a lot of things, but since we’re speaking about real estate, the fact that you can wake up in the morning and love what you do and you can give back, that’s the greatest thing. You know, I’ve been pretty lucky down here in South Florida and very well known, not trying to brag, but I’ve made a lot of money. I run a big company, but really that means nothing compared to the ability to give back which is why I want to do podcasts, which is why I reached out to you, which is why I wrote a book, which is why I have interns. But when you can help other people, man, it feels so damn good because you’re changing the trajectory of their life.

Rod
Yeah.

Todd
So that to me, is what success is really about, helping somebody else.

Rod
I couldn’t agree more, buddy. We’re very aligned in that regard. In fact, you know, I can show behind here. There are some hundreds of thank you cards from students over the years.

Todd
Amazing.

Rod
The whole green screen covers them. But, you know, that’s my greatest gift in the world. I mean, I literally get love every single day from somebody or another in some form. A gift, a letter, DM, an email, you know, thanking me for inspiring them to go take action. So let me ask you this question. I assume you’re a reader. I see books behind you on the bookshelf. What is the book that you’ve gifted the most to aspiring and– you know, or young or anybody. What’s the book you’ve gifted the most or book you would recommend or, you know, be more than one, but that you would suggest people read that have helped you?

Todd
You really hit a good one there because I’m more than just the reader. I’m obsessed. I mean, last year, I read like 60 books and I’m good for over a book a week. I love reading and I preach that all the time. And I was telling people one of the greatest books I like to give young people is a book called “The Third Door”. And “The Third Door” is a story about a young kid who was 18 or 19 years old and thought nothing was available. And his point was has nothing to do with real estate, how there’s always a way, there’s always one more door that’s going to get you access. And this kid who was at the time, 1920, by the time he got to this level, he was sitting in meetings in Bill Gates’s living room. He was hanging out with Elon Musk. He didn’t make a fortune of it, but he said it’s available if you just keep checking one more door. And I find a lot of young people are told no so many times. The first no, they back down. For sure, by the third or fourth they back down. But you as a salesperson know you’ve got to keep trying. So that’s one of the greatest.

Rod
That’s a great suggestion. I’m sorry, I just want to stop you for one second. That is such a great suggestion because you’re right, there’s nothing you can’t do. I usually say if you put the energy in and you don’t give up, I love that and I’m going to grab that book and I may gift it to my students.

Todd
Oh, it’s fantastic.

Rod
Okay, what else you were moving [inaudible]

Todd
One of the books that I got in, and I know a lot of people have different opinions about people, but I truly love and I tell everybody to read Robert Kiyosaki’s books on cash flow and real estate. It’s very basic. And the thing is it’s very easy to understand. So I tell everybody to read it, and then, of course, my book now.

Rod
Yeah, of course, your book, right, exactly. Again, his book is “Keeping It Real on Commercial Real Estate”. I’m looking forward to reading it myself. So, you know, what are some of the lessons that you’ve learned? And maybe– you know, I call them seminars. I don’t call them failures. I’ve built 27 businesses, several or tens of millions of dollars, most spectacular flaming seminars, but what are some seminars you’ve had or, you know, lessons you’ve gotten over the years that you think might add value to my listeners?

Todd
There are a lot of lessons that would go no matter what form of real estate you did, it could be an office building, which I don’t do, or multifamily. The lessons are to deal with problems right away.

Rod
Yeah.

Todd
If there’s a problem, don’t be afraid to pick up the phone. If you’re going to have a partner in a deal, that phone may weigh 10,000 lbs, but pick up the damn phone. People need bad news. And this is even when it comes to a problem with tenants, if you know a tenant is starting to become a problem, it’s not going to cure itself. Deal with it right away. Don’t let it linger. You got a problem with code enforcement, meet the code enforcement officer there before he really starts to hate your property. So deal with things very quickly. Don’t be passive. There’s nothing wrong with being very aggressive. This is your money and your family’s legacy, so you better be on top of things quickly.

Rod
That’s really good advice. So let me ask you this. Do you have any morning rituals, or do you set aside any specific times to like think about your vision, think about where you’re headed, think about life in general? Do you have any routines or anything like that that come to mind?

Todd
You know, I’m not one of those guys who meditate every morning, but I do read almost every single morning. Certainly, almost every day I read. And not that there’s anything wrong with reading novels. I believe that I put a lot of input into me. All the books I read are the psychology books, sales books, real estate books, and I still continue to read books. I just read one the other day about a guy who’s new to real estate. He’s been doing it for seven years. Financially, I’m leaps and bounds ahead of him, but I was curious to see what he had to say, so I keep immersing myself in that kind of stuff. I keep listening to podcasts. So, as long as you’re constantly learning, I think it’s always a great way to go.

Rod
Nice. Nice.

Todd
That’s the ritual that gets me going.

Rod
What do you think is the skillset or superpower that you have, that you embody, that has helped you the most?

Todd
I am a total eternal optimist. I believe there’s always a way to get something done. I’m not stupid, but I’m not afraid to take a risk. And I see a lot of people, and I have clients who do this, too, who have enormous bank accounts, and they talk themselves out of things. I’m always trying to talk myself into it. So they’ll tell me why they can’t. I’ll try and tell them why they can. I’ve always been like that my whole life, just like writing a book. I said, it’s got to be easy, but it wasn’t easy. It took me over a year to do it.

Rod
It’s a pain in the ass.

Todd
But once I got in, I was not going to stop.

Rod
Right.

Todd
There’s always a reason you can get it done if you have your why, and you got to just keep going after it. It won’t be easy.

Rod
What’s your why?

Todd
My why is self-satisfaction. It’s internal to me that I have to wake up every day and feel satisfied. I know when I’m screwing off and I’m not working hard, I know I’m sitting in my office and I’m being lazy, and that’s not always acceptable. Sometimes you want to screw up. Sometimes you want to get on a plane and go on vacation. But I got to believe that every day I’m pushing myself and, like, even offer business, you got to have other stuff. I love to work out. In fact, I’m an Ironman Triathlete, and I haven’t run a marathon or a half marathon in ages. I said you know what? I’m going to do the half marathon in Miami in February. I got three months to train, and I disciplined myself. I’m already losing weight. I’m picking up my miles. You know what? I’m saying, I will break a 1:45 marathon [inaudible] me to top 10%. And it’s an obsession just to keep winning and doing well because success, you know, it breeds in all areas. You can’t be good at only one thing. So, you got to go across the board.

Rod
And energy is such a critical piece.

Todd
Oh, yeah.

Rod
I’ve got 260 or more students coming on Friday and Saturday to an event here in Sarasota that I’m teaching. And one of the things I’m going to talk about is the importance of energy. You know, if you’ve got a core job, in their case, you know, they might have a job, a W-2 or business, and then they’re doing this side hustle of multifamily. They might have family, kids. Energy is critical, and the energy comes from what? Health, right?

Todd
Right.

Rod
So I exercise a lot. I already exercised once a day, and I’m going to do it again later. But let me ask you this. Do you have any favorite quotes? Any favorite quotes that– you know, I’m a big quote person? If not, it’s cool.

Todd
Yeah. I don’t have one at the top of my head.

Rod
Okay. No worries.

Todd
But I do love quotes. I read tons of books on quotes, so nothing really off the top of my head.

Rod
No worries. No worries.

Todd
But if I had to pick just one, since we’re in a real estate, I would say, “don’t wait to buy real estate, buy real estate and wait”.

Rod
Yeah, baby.

Todd
And I love that because it’s so unattractive sometimes when you go in, all these risks you got to take and how much money you’ll make in the beginning and balancing out all the leases. But if you have time, that duration of time, you’re going to say, wow, and I don’t know anybody who’s owned real estate for you know, more than five or ten years that won’t agree. I don’t know anybody.

Rod
Right. So what are you doing right now to get ready for the opportunity that’s coming? Are you getting into some cash? Are you conserving cash? You know, what sorts of things are you doing to get ready for what’s coming?

Todd
Right. Well, in our properties that we manage, the other ones we own, and third-party management, we’re being much more tough on the tenants to make sure we’re collecting rents. No one could have trailing balances. You know, we know that they’re going to have a little harder time in the future. I am still buying properties. I am still going. I don’t buy properties that are only interest rate sensitive. The deal has to stand on its own. If the deal only makes sense because the interest rate was low, you’re going to be in trouble.

Rod
Right.

Todd
So that doesn’t affect me. And since nobody really knows what’s going to happen next year, we really don’t know. We anticipate what can. You just got to keep rolling. You got to be smart and know what’s happening and you got to be very alert, but you got to keep rolling. You can’t say, I’m going to sit on the sidelines and wait this out and see what happens in the year because you’ll miss everything.

Rod
Yeah.

Todd
So I play it day by day.

Rod
Yeah. What’s your market? Are you in Southeast Florida? Or are you all over?

Todd
We’re all over, only Florida, but we go all out to Florida, up to Melbourne, which you know, is across from Orlando, and we manage a lot of properties up there. We have nothing on the west coast. It’s all on the east coast.

Rod
Interesting.

Todd
And we pretty much started Miami, Broward County, and go up and Broward would be our core, Broward county.

Rod
That’s a tough market. That’s impressive. That’s a tough market. A lot of hitters down there, a lot of money, and a lot of very, very experienced operators. For you to succeed in that market is very impressive. And I’m definitely looking forward to coming to Miami with my bride. And we’ll need to connect and have a meal or something because I really enjoyed–

Todd
Absolutely. I’d love that.

Rod
I really enjoyed our conversation, but, well, listen–

Todd
I just want to add one thing, you know.

Rod
Yes, please.

Todd
Can I say one thing to something you just said? You just said like, you know it’s a tough market. But one thing I also want to tell you, your listeners is, the reason I get a lot of deals that are off market too, is because brokers know I’m not full of it.

Rod
Yeah.

Todd
And if I say I’m going to do a deal and then I get it done.

Rod
Yeah.

Todd
Don’t go up and waste broker’s time. If they know you’re the real deal, if you can’t do a deal, tell them upfront. But if you say you’re going to do a deal, you burn brokers, you’re done.

Rod
You’re done.

Todd
You’ve got to treat these guys good. You got to treat them really good. Sorry to interrupt you but it’s very important [inaudible]

Rod
No, that’s critically important. That’s critically important.

Todd
Yes.

Rod
And, you know, this is a small world we live in.

Todd
Oh, yeah.

Rod
You know, I’ve been to ICSC a couple of times. I was thinking if I was toying around with retail, and I went and I really enjoyed it. And I know quite a bit about the business. I don’t know anything about industrial, but I know quite a bit about retail. But, you know, it is a small world. Everybody knows everybody. And you screw some people around, you screw some brokers around, you don’t deliver it, you don’t close, and you’re going to have a problem getting deals.

Todd
Every deal I did this year was off market that brokers bought me because they knew that I could close and they know that I don’t try and retrade the deals. Your reputation is everything. Be honest with the brokers and you’ll be okay. You don’t have to do the deal. You just got to be honest with them. They’re on your team.

Rod
And be responsive. You know, don’t be a black hole. When they send you a deal, let them know why it didn’t work.

Todd
That’s right.

Rod
Don’t just ignore it. But yeah, no, very good advice. And you’re a broker as well, so you have–

Todd
I am a broker. We don’t actually broker deals. I have a broker because we lease and manage properties, third parties. So we have to.

Rod
Right.

Todd
But we went on broker. We don’t really do any sales here.

Rod
Right.

Todd
So, in order for us to lease and manage other people, we have to be licensed.

Rod
Tell me about your team. You know, do you have a partner or do you just employees? Tell me about that.

Todd
Well, I have a life partner, my wife.

Rod
Well, of course.

Todd
So she’s my real partner.

Rod
Right. Same here.

Todd
Current Capital started about 20-plus years ago, and it was just me, and a lot of people laughed at that too when I started the business. But I realized there was a market here that people would want to learn and help me manage their properties. And I went from one employee to two employees, and now we have 25 employees here, and we do all the leasing and management of the properties. Like I said, we don’t really broker deals, but we do– we collect the rents, we do a code enforcement. And not only do we do my properties, we do others, which is a great availability because then I also make leasing fees and management fees, and that’s to keep the lights on here.

Rod
You bet.

Todd
And we have economies of scale because now I have nearly two million square feet of properties that aren’t mine, but tons of tanks that have you know, synergies with my other property, so I can move them around. And it gives us a great footprint down.

Rod
And, you know, because you’ve got that sort of scale, you know, you’re able to have, you know, some combined purchasing power and certainly, some influence with vendors and contractors and so on and so forth. So that makes a big difference.

Todd
Absolutely.

Rod
Well, listen, brother, I really appreciate you coming on the show. This has been a hoot, and like I said, I’m very serious. I definitely want to get together the next time I’m down. You’re in Miami or where are you?

Todd
I’m in Miami. North Miami area. It’s nice, it’s sunny out.

Rod
North of Miami. Okay. Oh, yes, sunny. Love it. Love it. Yeah, no, we go to South Beach all the time and just to hang out and relax. But listen, I appreciate you coming on the show and sharing some wisdom, and I’m sure we’ll talk again very soon.

Todd
Thank you, Rod. I appreciate being here. Have a great one.

Rod
Alright. Take care.

Outro
Rod, I know a lot of our listeners are wanting to take their multifamily investing business to the next level. Now, I know you’ve been hard at work helping our Warrior students do just that, using our “ACT” methodology which is Awareness, Close, and Transform. Can you explain to the listeners how they can get our help?

Rod
You bet. Guys, we’ve been going non-stop for three years building an amazing community of like-minded people, and our coaching students which we call our Warriors have had extraordinary results. They’ve purchased thousands and thousands of units and last year we did over a thousand units with our students. And we’re looking to grow this group and take it to the next level. We’re looking for people who want to follow a proven framework that’s really step by step and then leverage our systems and network to raise equity, to find and close deals, and to build partnerships nationwide. Now, our Warrior community is finding success in any market cycle. So if you’re interested in finding out more about how you can become more of our incredible network and take advantage of the incredible opportunities that are coming very soon, apply to work with us at “MentorWithRod.com” or text “CRUSH” to “72345” and we’ll set up a call so you can check us out and we can check you out. That’s “MentorWithRod.com” or text “CRUSH” to “72345”.