How To Actually Get Real Estate Equity With No Cash

Seller-Financed Self Storage Investing with Karl Schlobohm

Seller-financed self storage investing is emerging as a powerful strategy for real estate investors looking to create outsized value with less upfront capital. In this episode of Multifamily Rockstars, Rod Khleif and Mark Nagy sit down with Karl Schlobohm to unpack how a full-time teacher and single parent structured a highly creative self storage deal that delivers massive equity growth and long-term cash flow.

Karl’s story resonates deeply with professionals and business owners who feel capped by traditional income paths and are searching for scalable, tax-advantaged alternatives. Rather than chasing conventional multifamily deals alone, Karl identified overlooked opportunities in self storage and RV/boat storage, asset classes that operate with apartment-like fundamentals but far lower operational complexity.

Why Seller Financing Creates Leverage in Self Storage Deals

A central theme of the conversation is how seller-financed self storage investing can unlock deals that traditional financing often cannot. Karl shares how he acquired a 27-unit self storage facility on major highway frontage using seller financing, allowing him to secure zoning, approvals, and time before bringing in construction debt.

The property was fully occupied yet dramatically underutilized, a classic value-add scenario. With additional acreage available, Karl and his partners structured the deal to expand the site to nearly 300 units, including RV and boat storage canopies. This approach minimized risk, reduced initial capital requirements, and positioned the project for a substantial valuation increase upon stabilization.

Key advantages of seller-financed self storage highlighted in the episode include:

• Lower upfront capital compared to traditional acquisitions

• Greater flexibility during entitlement and construction phases

• Strong negotiating leverage with long-term or elderly owners

• The ability to secure undervalued assets with expansion potential

Turning Distressed Assets into Scalable Value

Rather than viewing distress as purely financial, Karl explains that many self storage properties are distressed operationally. In his case, demand in the market far exceeded supply, yet the owners had not expanded or optimized the asset. This gap created a clear opportunity to add value through new construction, modern access systems, and improved visibility via on-site billboard advertising.

With construction financing layered on top of the seller-financed acquisition, the project is projected to increase the property’s value by well over a million dollars within a short timeframe. The discussion highlights why self storage continues to attract sophisticated investors seeking strong margins and predictable cash flow.

Building Wealth Through Relationships and Creative Strategy

Beyond the numbers, Karl emphasizes that relationships are his true superpower. From understanding seller motivations to partnering with experienced investors for loan guarantees, relationship-driven dealmaking played a critical role in closing both his storage and multifamily transactions.

The episode also explores how newer investors can participate without large cash reserves by contributing sweat equity, management expertise, or operational oversight. Karl’s multifamily deal, where he earned equity through active management rather than capital investment, demonstrates how creative structuring opens doors even in challenging markets.

About the Guest: Karl Schlobohm

Karl Schlobohm is a real estate investor, educator, and single parent who transitioned from a traditional teaching career into self storage, RV/boat storage, and multifamily investing. A member of Rod Khleif’s Warrior program, Karl focuses on seller-financed acquisitions, value-add development, and long-term cash-flowing assets that align with lifestyle freedom and community impact. His investing journey centers on creative problem-solving, strong partnerships, and using real estate as a tool to build both wealth and purpose.

If you want to hear the full conversation and detailed insights, watch the podcast video or read the complete transcript below.

Seller-Financed Self Storage Investing FAQ

What is seller-financed self storage investing?
Seller-financed self storage investing is a strategy where the property owner provides financing to the buyer instead of a traditional bank. This approach allows investors to acquire self storage facilities with more flexible terms, lower upfront capital, and fewer lender constraints. It is especially useful for value add or expansion projects that require time before stabilization.

Why is seller-financed self storage investing attractive to investors?
This strategy is attractive because it creates leverage without relying on strict institutional financing. Investors can negotiate interest rates, down payments, and timelines directly with sellers. Seller financing often opens the door to deals that would not qualify for conventional loans, increasing opportunity flow.

How does seller financing reduce risk in self storage investing?
Seller financing can reduce risk by aligning the seller’s interests with the success of the property. Longer interest only periods or delayed principal payments improve cash flow during repositioning. This flexibility gives investors time to stabilize operations or complete expansions before refinancing.

What types of sellers are most open to seller-financed self storage deals?
Long-term owners, retiring operators, and family owned self storage businesses are often open to seller financing. These sellers may prioritize steady income and tax advantages over a lump sum sale. Understanding seller motivation is key to structuring mutually beneficial terms.

How do investors add value with seller-financed self storage investing?
Value is commonly added through unit expansion, improved access systems, better visibility, and professional management. Many seller-financed deals involve underutilized land or outdated operations. Optimizing these elements can significantly increase net operating income and property value.

Is seller-financed self storage investing suitable for new investors?
New investors can participate by partnering with experienced operators or contributing operational expertise. Seller financing can lower capital barriers, making entry more accessible. Education, conservative underwriting, and strong partnerships remain essential for success.

How does seller-financed self storage compare to traditional multifamily investing?
Seller-financed self storage investing typically involves fewer tenants, lower maintenance, and simpler operations than multifamily. Income is less dependent on tenant turnover and interior renovations. These factors often lead to more predictable cash flow and reduced management intensity.

What risks should investors consider with seller-financed self storage investing?
Risks include mispricing expansions, zoning challenges, and poorly structured seller notes. Investors must also ensure clear legal documentation and realistic exit strategies. Thorough due diligence and conservative projections help mitigate these risks.

Can seller-financed self storage investing work in changing market cycles?
Yes, self storage demand often remains stable during economic shifts as people downsize, relocate, or seek temporary storage. Seller financing adds additional resilience by reducing exposure to interest rate volatility. This combination can support consistent performance across market cycles.

Disclaimer: This summary was written with the help of AI and reviewed by Rod’s Team.

00:00:29:01 – 00:00:49:22
Rod Khleif
Welcome back to the new version of Multifamily Rockstars, and because of feedback from you guys and the fact that we’re always trying to make things better, we’ve decided to make these episodes more about deep diving into our guests deals, which we’re going to do again today, and give you more practical and really actionable items for getting started and and ideally, doing your first deal, especially if you’re new to multifamily.

00:00:50:02 – 00:00:52:22
Rod Khleif
And of course, I’ve got my co-host Mark Nagy here with me. What’s going on?

00:00:52:22 – 00:01:02:18
Mark Nagy
Rod. Excited, and curious because, our guests here was telling us some kind of unique ways that we maybe haven’t talked about, that he’s gotten into deals today. So I’m excited to hear it.

00:01:02:20 – 00:01:14:00
Rod Khleif
Yeah. For sure. So we’ve got Carl. Shlomo, I’m here today, and, he’s a teacher by trade, a single parent. So he’s got his hands full and, Welcome, brother. Glad you’re here, man.

00:01:14:04 – 00:01:17:02
Karl Schlobohm
Thanks so much for having me, Rod. It’s, It’s a pleasure.

00:01:17:04 – 00:01:25:23
Rod Khleif
Absolutely. Well, why don’t you give our listeners, just a little background of who you are and why real estate and, and we’ll we’ll start there.

00:01:26:01 – 00:02:00:16
Karl Schlobohm
Yeah. So, you know, as you know, teaching doesn’t really provide for a strong, you know, prospect for financially, for future. So, I started looking into the prospect of investing in real estate on the side just to kind of supplement my teaching income and kind of build a, a portfolio as I work towards retirement. I came across the opportunity to join your warrior program and quickly discovered that, you know, I actually don’t have to teach forever, or I can go ahead and, you know, start my own way of doing things.

00:02:00:18 – 00:02:09:15
Karl Schlobohm
And that real estate is really a powerful tool to provide, the kind of cash flow that you would need to live, you know, financially free.

00:02:09:15 – 00:02:30:17
Rod Khleif
Yeah. It’s an absolute travesty what we pay teachers in this country. So, you know, I, I, I’m really glad that you’re here with us. So you we were starting to talk about some of these deals that you’ve done, which are intriguing. I talk about the, self storage deal you just did, and. Yeah, kind of give us the background on that thing.

00:02:30:17 – 00:02:30:24
Rod Khleif
Yeah.

00:02:30:24 – 00:02:50:01
Karl Schlobohm
So I kind of discovered, a love for RV parks. It’s part of my. Why I love the outdoors. And, of course, that that cash flows by the unit just like apartments do. And just like storage. I started a meet up on through the warrior group just to kind of see who else would be interested in looking at this kind of asset class.

00:02:50:03 – 00:03:19:15
Karl Schlobohm
And, one of the people I’ve met, through that meetup, actually brought up a good point that there’s a lot of RVs and boats parked along the highways. There are a lot of, you know, subdivisions and highways here in Florida that don’t allow you to store those kind of vehicles on your property. And this actually runs, you know, becomes a municipal problem where a lot of people are kind of parking their these vehicles on road frontages, taking away from the look of the community.

00:03:19:17 – 00:03:46:08
Karl Schlobohm
So we started to look at opportunities to either acquire an existing, distressed business or to just develop from scratch. And we quickly learned that, it’s better to, to start with a, distressed property because the zoning is already there. The a lot of the environmental approvals are already there. And so, we just started looking and actually found an opportunity on bids by sell.

00:03:46:10 – 00:04:18:16
Karl Schlobohm
For a couple of, owners of a 27 unit storage facility on a major highway frontage that also had extra acreage so that kind of hit a lot of our major criteria, our acquisition criteria that we were looking for at the time. And we, we went under contract, through a seller finance deal so that it would be seller financed until we get the proper approval, at which point a construction loan would come, come and take over, covering the asset and the construction of it.

00:04:18:21 – 00:04:19:07
Rod Khleif
Well, I.

00:04:19:07 – 00:04:35:02
Mark Nagy
Have a I have a couple of follow ups real quick on this if I could, rod that you mentioned, you mentioned distressed. What is distressed look like in self-storage because obviously you’re not dealing with tenants necessarily in there. It may be different. What does that mean exactly for the people listening that have interest in self-storage?

00:04:35:04 – 00:04:59:08
Karl Schlobohm
Well, I mean, I guess you can relate it to apartments in the aspect where if you’re looking at it, does it, does it capture the current demand of that market? And so we were looking at the market there or there were really weren’t any storage facilities in the area when they were, they were 100% occupied. And yet there’s this 27 unit building here that’s also fully occupied.

00:04:59:10 – 00:05:36:01
Karl Schlobohm
You can see right away that there’s extra demand. And, these guys just weren’t prepared to expand and capture that demand. So we came in. The facility isn’t in the best condition, but that will also be part of our upgrades. And so when I say distressed, it’s it’s more it’s not performing the way it should. And therefore it creates, kind of a value, going in value that’s, you know, it’s easy to it’s easier to go in and with an undervalued property and just go in and start making improvements.

00:05:36:01 – 00:05:53:21
Rod Khleif
Yeah, I wouldn’t, I wouldn’t call it distressed. I’d actually call it, a value add opportunity. Incredible value add opportunity because you haven’t even, you haven’t even, hit the home run here, as part of this conversation that you told us about before we started recording. So talk about what you’re going to do with this piece of property.

00:05:53:21 – 00:06:20:19
Karl Schlobohm
So we have 2.7 extra acres. And we also have billboard, right. So we’re going to put up a billboard on our own property. And we won’t have to pay a monthly advertising fees because we will already be advertising to 30,000 vehicles a day. And on the extra 2.7 acres we’re putting in, while total it will be 291 units as per our proforma, but we have the opportunity to go to 313.

00:06:20:21 – 00:06:35:06
Karl Schlobohm
That will also include some RV and boat canopies. Since that’s basically where we’re starting off looking for RV and boat storage. The feasibility study recommended that that just be a small portion of our unit mix.

00:06:35:06 – 00:06:56:06
Rod Khleif
So self storage of 291 and you’ll have boat, boat and RV canopies, which people love. So you’re not getting beat up by the sun, especially in Florida. Love it. Absolutely love it. You got you got seller financing to pull it together. You did this with another warrior. And you said you brought in another warrior as well.

00:06:56:06 – 00:06:56:18
Rod Khleif
Talk about.

00:06:56:18 – 00:07:18:00
Karl Schlobohm
Why. I mean, we all love the tax implications of investing in real estate. And, you know, just as my partner and I are trying to scale up, we realize our accountants are a little too good at what they do and aren’t really showing the actual, you know, taxable income that you could possibly show. And banks don’t really like that when they look at guarantor.

00:07:18:00 – 00:07:23:14
Karl Schlobohm
But we brought in another warrior, to help us guarantee this loan and get it to the finish line.

00:07:23:20 – 00:07:42:15
Rod Khleif
Yeah. Somebody I care deeply about Charlie. Charlie is a wonderful guy. And, he’s actually, he’s he’s an interesting story, you know, by himself because he already had been in real estate for, I think, 20 years, maybe 30 years before he joined the warrior program. He just wanted to go bigger. And, he’s a beautiful guy. Love, love, Charlie.

00:07:42:15 – 00:07:57:05
Rod Khleif
So let me ask you this question. What types of listeners do you think would relate to you and your story and where you came from, your background and all of that? And maybe really, whatever your your skill set is your superpower. So speak to that if you would.

00:07:57:06 – 00:08:21:13
Karl Schlobohm
So I think any listeners that have kind of gone through several hardships getting up to this point just kind of feel stuck in their jobs. I have a hard time seeing the kind of future that you want to imagine for yourself. People who are devoted to their families, real estate’s really a great opportunity to to address all of those whys, as we call them.

00:08:21:15 – 00:08:42:13
Karl Schlobohm
I think my superpower would be, I’m devoted to relationships. So first comes my family, and that’s really my way of doing this. I want to be able to spend more time with them and also provide them with a better life. A second way that would be relationships with, with brokers, with sellers, and with, you know, other investors in the network.

00:08:42:13 – 00:08:59:09
Karl Schlobohm
There are many different kinds of investors that you might want to have, you know, people who raise capital, people who are great with the asset management and just having, you know, maintaining strong relationships with that entire network is kind of where I feel my superpower is.

00:08:59:13 – 00:09:13:24
Mark Nagy
I want to stop there real quick because, Carl, you you’re like many of our listeners, you’re a teacher. Right. Nothing to do with real estate. I get that question all the time. I’ve never done any real estate. How do I get into this? So how did you take that superpower and then bring that into the first deal?

00:09:14:01 – 00:09:21:00
Mark Nagy
Did you have the relationship with the broker or did you call the seller? How did you get it? How did you take that super power and get you into this deal?

00:09:21:00 – 00:09:44:16
Karl Schlobohm
Yeah. So a lot of the relationships were actually already established, except for the seller. So when we found this opportunity, that was our goal. We knew that, you know, it wouldn’t be the smartest decision to just buy the property outright as they were wanting. So we kind of got to know the seller’s needs, what their goals were for, for the sale of their property and just for their lives in general.

00:09:44:18 – 00:10:09:03
Karl Schlobohm
And we were able to structure kind of a proposition that would help them meet their financial needs and also kind of see a benefit of having that extra, you know, interest income, flowing through the property that they’ve technically already sold, that they don’t have to touch anymore. So if, the seller relationship in that regard, when you want to go after seller financing is pretty important.

00:10:09:06 – 00:10:12:10
Rod Khleif
I was just going to say, were they elderly sellers or.

00:10:12:13 – 00:10:33:24
Karl Schlobohm
In this case, yes. One of them was pretty elderly. The other is still working in real estate, but it’s just not. I guess he got tied up in the partnership. So I guess that’s another talking point. Is partnerships and okay, look for in a partnership. But well having experienced that yet on my end, but I think that was the case here where they just weren’t, weren’t working well together.

00:10:33:24 – 00:10:40:09
Karl Schlobohm
They had let the finances slide, stopped doing their books and just anything that you can imagine.

00:10:40:12 – 00:10:56:22
Rod Khleif
So it was a it was a partnerships problem as well. Interesting. Yeah. The reason I brought up elderly is one of the things I teach at my boot camps is, you know, seller bonding when you’re dealing with an elderly seller and you and you bond with them, you know, they’re more interested in the relationship very often than they are the actual deal.

00:10:56:22 – 00:11:19:02
Rod Khleif
And certainly initially they’re very relationship driven. So, you know, I think that it’s especially one on one with sellers if, you know, when when I teach the marketing side of this business direct to seller marketing and you do mailers and so on and so forth, I tell people, mail somebody that’s owned a property for 20 plus years because you’re going to be dealing with every seller’s free and clear property.

00:11:19:07 – 00:11:31:03
Rod Khleif
You know, taxes, if they sell, they’re going to pay taxes because they’re fully depreciated. And so there’s just a lot more opportunity, to get seller financing. If you if you go after that, that particular demographic.

00:11:31:05 – 00:11:42:24
Mark Nagy
Well, that was going to be my question. What what were some of those clues as you’re talking to the seller that made you even bring up seller financing? Because if they had partnership problems, obviously, that they can sell and get out of it. Why seller financing?

00:11:42:24 – 00:12:03:13
Karl Schlobohm
To tell you the truth, that’s actually always one of my first questions. Even if I’m dealing with a broker. So that was another point I was going to make. Even if you’re going through a broker and you’re not just direct to seller, you don’t want to use the broker to pitch your seller financing deal, because they’re never going to understand all the nuances of that of that offer.

00:12:03:15 – 00:12:31:17
Karl Schlobohm
And so that’s what I always ask the broker is, hey, how can we get a line of communication with the seller so that we can get to know their needs more, and so we can communicate how this might be structured to benefit them? Brokers are generally more oriented towards, institutional lending. And so that’s why, even in this case, we, we were dealing with a seller’s broker, and we were able to still kind of establish at least with the seller.

00:12:31:17 – 00:12:50:17
Rod Khleif
That’s great. That’s great. Sometimes they won’t let you go through them. But but that’s fantastic. The way you to the way you articulated that was very non-threatening and and, really. Well, well stated. So, you know, what’s one action item? You know, we got so many listeners that haven’t done anything yet and they they’d go, they want to go do something.

00:12:50:17 – 00:13:00:20
Rod Khleif
But what’s one action item you could deep dive into that you think would benefit a listener? So they could literally get started immediately? What would you tell them?

00:13:00:22 – 00:13:22:07
Karl Schlobohm
Yeah, I think well, that’s the answer I think to this is kind of twofold. I think first, you always need to start with a why some sort of why that that’s more than, oh, I just want more money. Because that’s never going to give you enough motivation to follow through with the things that you need to do every single day to be successful in this business.

00:13:22:09 – 00:13:42:15
Karl Schlobohm
And once you discover your why, I think it’s important to really think of, okay, what kind of investment strategy, what kind of pursuit really fits my why? Because, for instance, I realize I love the outdoors. Am I going to be able to spend all this time outdoors pursuing apartments? Maybe RV parks is a better fit. It’s a similar financial model.

00:13:42:15 – 00:14:10:22
Karl Schlobohm
And so I started asking myself these questions, and I found that really quite a few different asset classes fit my why. And so I decided to educate. I’m a teacher. I love, the idea that education is, is how we move forward in life, how we make a success out of ourselves. So, the first is to find a mentor, who can help educate you because they’ve already made all the mistakes.

00:14:10:24 – 00:14:34:01
Karl Schlobohm
They can help guide you through the process of what should you be teaching yourself first? Maybe make suggestions on how to structure your entity or how to find leads or, you know, whatever it is to get started. I really think that educating yourself, finding a program like this, finding a mentor, will really kind of help you save time on which steps to take first.

00:14:34:03 – 00:14:57:15
Karl Schlobohm
And so my first step here was just to go through the modules to introduce myself to the network. We’re kind of my first two steps that I took. And once I got a better idea of what the strategy is here, what the underwriting looks like and what the whole what the whole process looks like. I started, you know, having more conversations with people who I introduced myself with.

00:14:57:15 – 00:15:15:24
Karl Schlobohm
And I started establishing relationships there because I knew that, you know, there were a lot of experienced people in this group, much more experience than I had. And, I really think that, you know, education is centered on other people sharing their knowledge and their skills with.

00:15:15:24 – 00:15:36:13
Rod Khleif
You know, well said, well said. Yeah. And by the way, guys, if you are interested in a mentor or interested in applying to our warrior program, text the word crush to seven, two, three, four, or five and we’d love to help you crush it in this business. And and I don’t say that lightly. I warriors now own, I believe, upwards of 200,000 units, definitely over 190,000 somewhere in the middle there.

00:15:36:15 – 00:15:53:06
Rod Khleif
And that we know of and which are just super proud of. So again, if you’re interested in applying, text the word crush to seven, two, three, 4 or 5 and we’ll, we’ll, look you over, you look us over. And if it’s a fit, it’ll be probably the best decision you ever made in your life.

00:15:53:08 – 00:16:09:10
Rod Khleif
And if it’s not, you’ll still leave that call. Better than you got on it. So let’s shift gears. I mean, are really dig, dig deeper, you know, can you talk about some of the underwriting basics on that first deal that you got? Just you just talk about, you know, you know, what your what you paid for it.

00:16:09:12 – 00:16:11:16
Rod Khleif
Just give it a little more detail. Yeah. If you would.

00:16:11:16 – 00:16:41:05
Karl Schlobohm
So we found the where the purchase price was 425,000. And that’s and you’re thinking, you know it’s already a business that’s earning income. So, the property itself was is more likely worth more than that. We’re still getting an appraisal done even though we don’t technically need it. But just looking at those metrics, we knew we had a good deal, especially, the fact that we could go in with 40% down on a seller financing.

00:16:41:05 – 00:17:13:15
Karl Schlobohm
We weren’t even paying that much for it upfront. And then knowing that a lender could come through once we get everything approved to fund the construction. And, and that’s basically what we looked for as far as purchase price is, is the is the price undervalued? Are they asking maybe a little too little for it? We are also looking at location and the highway frontage aspect of this, especially since the majority of people who look for self-storage do so within a five mile radius.

00:17:13:17 – 00:17:40:17
Karl Schlobohm
Every everyone in that neighborhood is driving on that road, and we’ll see a presence of our business there. And then the extra acreage, obviously, is our major way of adding value by, by building new units that will have remote management. So you can let yourself in through the gate with your Bluetooth on your phone. And then the remote management can either grant you access or lock you out, depending on if you’ve paid your rent.

00:17:40:17 – 00:17:48:02
Karl Schlobohm
And it does that automatically. So that’s one of the reasons we love storage is the low operating expenses. If you set it up right.

00:17:48:05 – 00:18:10:09
Mark Nagy
And the numbers I’m seeing here. So you bought it for four for 25. Construction cost 2.1 million. And you think after that it’s going to be worth 3.8. So that’s, what, a $1.3 million value add? And if I heard you correctly, you said you put 40% down on what, 425 K? So that’s what, to 200,000 roughly out of pocket to close on this.

00:18:10:09 – 00:18:17:04
Mark Nagy
And it’s going to be a $1.3 million value add when you guys are all done. How long is that going to take the construction. Do you think.

00:18:17:06 – 00:18:20:08
Karl Schlobohm
So the construction will be done before the end of the year.

00:18:20:10 – 00:18:21:15
Rod Khleif
Wow. Yeah.

00:18:21:15 – 00:18:29:13
Mark Nagy
So testing so 200 K down and then 1.3 million and a year projected almost not a bad deal.

00:18:29:15 – 00:18:41:03
Karl Schlobohm
And the cool thing as the the construction lender is looking at this and saying we already have equity in the deal that we put in the down payment on the property. So we don’t have to put anything else down to get everything else done.

00:18:41:05 – 00:18:46:04
Rod Khleif
Wow. No kidding. Wow. Good for you. So you found you found a local bank to do this?

00:18:46:06 – 00:18:47:12
Karl Schlobohm
Yes. Correct. Oh.

00:18:47:12 – 00:18:53:05
Rod Khleif
Good job. Yeah, that was good. I assume that had to be a local bank with that. What? That what you just said. Fantastic.

00:18:53:07 – 00:19:05:01
Karl Schlobohm
And then. So actually pretty conservative. That’s at a seven cap. So if you actually look at the, if you look at it as a six cap, which is also kind of conservative, it’s more like 4.5 million.

00:19:05:01 – 00:19:11:15
Mark Nagy
Wow. And then so what, you just refinance the money out and pay off the construction loan. Is that kind of the end goal and then hold on to it.

00:19:11:17 – 00:19:16:02
Karl Schlobohm
Correct. This will be a long term hold just because it’s going to cash flow like crazy man.

00:19:16:02 – 00:19:20:19
Mark Nagy
That’s a five. It’s time return in a year on a new construction deal.

00:19:20:21 – 00:19:41:07
Rod Khleif
Yeah. The values push in 2 million. I’m sorry the amount of value I’m sorry the value is pushing 4.5 million at a six cap, which could be very realistic. And you know that’s a, that’s a $2 million, value added. It’s awesome deal, brother. Awesome deal. So so how’d you find it, by the way?

00:19:41:07 – 00:19:44:09
Karl Schlobohm
So we actually found this one on Best Buy. Sell since.

00:19:44:09 – 00:19:46:00
Rod Khleif
We. That’s right. You said that. That’s right.

00:19:46:01 – 00:19:53:20
Mark Nagy
So that’s just a website. Kind of like Craxi and Loop net where deals are listed or because I’ve never heard of this, or is it specifically just for business or.

00:19:53:22 – 00:19:56:00
Rod Khleif
Not just for business as businesses. Yeah.

00:19:56:03 – 00:19:56:20
Mark Nagy
Interesting.

00:19:57:00 – 00:20:01:16
Rod Khleif
Well, no one would look there for a real estate. One would look there for real estate. Awesome job man.

00:20:01:18 – 00:20:08:10
Karl Schlobohm
Yeah. So we just switched our criteria to businesses. So we had more platforms to search for an opportunity.

00:20:08:12 – 00:20:25:01
Rod Khleif
Oh, that’s a great idea. Businesses that own the land, I love it, absolutely love it. So that sounds like a Charlie suggestion to me because he he does that. Yeah. He is, you know, he he’s one of these guys, I, I love to say, that you, you know, he, he loves deals that have hair on them.

00:20:25:01 – 00:20:32:00
Rod Khleif
It’s called you know, where you where you where you got to be creative and innovative to make something happen. And, love it, love it, love it.

00:20:32:04 – 00:20:33:20
Mark Nagy
You want to jump into the multifamily deal?

00:20:33:23 – 00:20:46:16
Rod Khleif
Yeah. Let’s jump into the multifamily deal. So. So I understand that you did kind of a unique, deal with Charlie as well on on a 27, 27 unit multifamily that he owns, is that correct?

00:20:46:18 – 00:20:47:08
Karl Schlobohm
Yeah. Talk about.

00:20:47:08 – 00:20:48:05
Rod Khleif
That.

00:20:48:07 – 00:21:07:06
Karl Schlobohm
Pretty unique story, at least from what I know. In the few years I’ve spent in the warrior program, I actually came across this listing, in a for a, property in a town that’s about 30 minutes from me just across the Georgia border. I live in the Jacksonville area, and, I was just asking around.

00:21:07:06 – 00:21:26:11
Karl Schlobohm
Hey, would you like to look at this with me? Are the returns look decent? Even though I think it’s pretty, you know, they’re asking way too much for it. I asked Charlie, and he’s like, oh, yeah, that one’s mine. And so. And I was like, oh, funny. And I started getting in a conversation of, you know what?

00:21:26:13 – 00:21:57:05
Karl Schlobohm
What are your goals for the sale? And, he was just honest that, you know, management was charging too much. Any use? The listing price was a little high because it should. It should be more valuable than it is because the operating expenses, that ratio is just kind of thrown off kilter by the management expenses. So he actually made me an offer and said, hey, why don’t you step in for management if you’re up for it and you can have an equity stake in all the value add?

00:21:57:05 – 00:22:28:14
Karl Schlobohm
So our strategy for that is kind of keep rents where they are, maybe bump them up a little bit and clean the place up a little bit. And he is he owns it outright. So he’s financing the property to our partnership. And then in turn, I’m getting equity through the active management part. So that’s where I would tell the listeners is, you know, even if you don’t have a large investment account or a large bank account and you don’t feel like you can buy an apartment building, you know, you can be resourceful.

00:22:28:14 – 00:22:48:00
Karl Schlobohm
I call it sweat equity. And I’m also learning that I don’t want to be in active property management for the rest of my life. It’s it’s a really good learning opportunity, and it’s also teaching me that it’s something that I don’t want in the future. But our strategy for that is, is hold on to it for the next year or two.

00:22:48:00 – 00:23:02:14
Karl Schlobohm
Interest rates are going down. We can show a trailing 12 without the management expenses. It’s small enough property that, you know, a potential buyer could come in and self-manage just 27 units and achieve the numbers that we were getting.

00:23:02:16 – 00:23:24:08
Rod Khleif
And like you said, it’s an incredible learning opportunity for you. So, so, you know, you’ll get you’ll learn more just managing that 27 unit than then you can imagine. So love that. So what’s you know, what is a hot topic. You know, that you feel like you want to talk about in this business that we’re in right now in this multifamily space there?

00:23:24:09 – 00:23:26:16
Rod Khleif
And what jumps out at you when I ask that question?

00:23:26:16 – 00:23:54:09
Karl Schlobohm
You know, I think a lot of people would probably say interest rates. I think the other the other thing would be, would be all of the new build activity. So just right after Covid, you know, people’s investors started building new assets, that were kind of, you know, kind of drowning out all the competition in these other markets and kind of, watering down the rent in, in each market.

00:23:54:09 – 00:24:20:04
Karl Schlobohm
So, I was reading recently that, you know, new construction is actually way down compared to last year. Finally, I think, the whole lending situation is kind of caught up with investors that are seeking to build new properties because it’s just not realistic right now. And it’s actually, not really serving the markets that they’re intending to serve because they’re becoming oversupplied now.

00:24:20:06 – 00:24:28:20
Karl Schlobohm
And, you can see that happening out in Arizona. Particularly, so I think that would be the, the two hot topics.

00:24:28:20 – 00:24:42:03
Mark Nagy
Just in your opinion, how quickly do you think those two things are going to create opportunity that’s going to come and go in multifamily for their quote unquote, best time to buy or the bottom of the market, whatever you want to call it.

00:24:42:06 – 00:25:01:10
Karl Schlobohm
Yeah, I’m I don’t have any, I don’t have a lamp. I’m not a genie. But of course, a I would say cap rates are going to start going back down a little bit. And that just means, you know, less opportunity to get good value for what you’re paying for. In my opinion, that’s going to become more of a seller’s market again.

00:25:01:12 – 00:25:07:15
Karl Schlobohm
Right now it’s a buyer’s market, and the buyers have the leverage, especially if sellers are needing to sell.

00:25:07:20 – 00:25:26:23
Rod Khleif
Now, I couldn’t agree more. Let me ask you kind of an off topic question, because you’re a teacher and if you were teaching or coaching someone you really cared about, about this business, what would you make sure they learned in, say, the first 30, 30 or 90 days? What would you have them focus on in this multifamily space?

00:25:27:03 – 00:25:48:03
Karl Schlobohm
Yeah, I think for the first 90 days, it’s, like I said, it’s the educate, educating yourself and then expanding your network. And that also include finding a mentor, like I said, you want to find somebody who you can trust in who who, you know, can dedicate the time that you would need to to learn this business.

00:25:48:05 – 00:26:11:20
Karl Schlobohm
So education and network, I think you get both in the warrior program. So it kind of started me off with a huge head start when I joined. Just knowing that there are all these trainings, there are all these modules that I could look up at any time. And at the same time, there’s this close network of experienced real estate investors who are looking to meet new investors.

00:26:11:22 – 00:26:16:03
Karl Schlobohm
I just can’t think of anything that would be more valuable to me as a new investor.

00:26:16:03 – 00:26:20:23
Rod Khleif
Well, thank you for that. I’ll slip you a 20 later. That was good. Thank you for that.

00:26:21:00 – 00:26:36:03
Mark Nagy
That was an honest project to sell for, for where you’re going now. Here, Carl, you’ve told us kind of what you’ve done, the two deals. What do you think it’s going to take for you to get to financial freedom or leaving your teaching job, whatever that is? And how are you going to do it? Are you going to do it through RV parks?

00:26:36:03 – 00:26:39:00
Mark Nagy
Multifamily makes it both. What? How do you see that going?

00:26:39:00 – 00:27:06:12
Karl Schlobohm
Yeah. So, I kind of have a mixed approach to the future, I think. But eventually I want to start expanding the storage. We, we like to build a chain of storage facilities in, in the Gainesville area. And so one thing I was thinking is I could use the equity from this partnership on the apartments and do a 1031 exchange into a brand new facility, and kind of upscale from there.

00:27:06:14 – 00:27:26:14
Karl Schlobohm
As far as the RV parks and, and campsites, that’s something I’d like to do by myself, I feel like. So, I just want to get in a stronger financial position to take on those opportunities myself. And, just the storage deal alone will replace my teaching income by, the end of the next.

00:27:26:16 – 00:27:48:02
Rod Khleif
Just the fact you were able to accomplish this on your salary, you know, with, with with, as a single parent, you know, it’s just it’s it’s I salute you, brother. And I mean that sincerely. So let me ask you this. Where do you see yourself in five years? What’s the what? I know it’s crystal ball stuff, but but you know, I know if you’re if you’re in my program, you’ve done your goals.

00:27:48:02 – 00:27:50:21
Rod Khleif
So talk and talk about where you see yourself in five years.

00:27:50:21 – 00:28:27:22
Karl Schlobohm
So I think, in five years, I’ll have, a bus built out that I’ll use to travel around the country in the, in the summers with my daughter, just to different, RV parks and other assets that I’ve acquired over that, that time. And, I also want to start a nonprofit. So, if I, if I ever do have a mind to leave teaching, I want to continue that through, through a way where I have a choice in it and where I can, you know, kind of custom tailor what how I want to give back specifically and use my background in teaching to do that.

00:28:27:24 – 00:28:52:02
Karl Schlobohm
So I’d like to start a nonprofit that that serves adolescents in the community, teaches them about finance, about life skills, growing your own food, cooking, all these things that, just aren’t taught in school anymore, that if you do it in a practical and, fun way, you know, I think students would flock to it and it would really, serve the community.

00:28:52:02 – 00:29:05:17
Karl Schlobohm
So that’s another one of my wise is right now, I just feel like I can’t give back in the ways that I would love to. And having that kind of financial freedom would allow me to make a bigger impact than I am right now.

00:29:05:22 – 00:29:20:09
Rod Khleif
What a great answer, brother. What a great answer. Well, it’s been a real treat to spend this time with you, my friend. And, I there’s no question in my mind you’re going to achieve those that five year plan. But, thank you for coming on. I really appreciate it. Real quick. Yeah.

00:29:20:10 – 00:29:24:23
Mark Nagy
Carl, where can, people that like your story want to reach out, talk to you? Where can they reach you?

00:29:25:00 – 00:29:37:05
Karl Schlobohm
Oh, yeah. So Facebook is probably the best way. That’s where I do most of my networking. And if you just search my name that you see on the episode here, you’ll see I’m friends with Rod Cleef. And that is what we me.

00:29:37:05 – 00:29:46:03
Rod Khleif
And it’s all all downhill from there. Yeah. Okay. Good. All right. Thanks. Thanks, brother. I appreciate you coming on. It was it was a lot of fun. It’s great to see you.

00:29:46:05 – 00:29:47:04
Mark Nagy
Thanks so much.

00:29:47:04 – 00:29:48:13
Karl Schlobohm
For having me, guys. It was a pleasure.