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Ep #399 – Josh Cantwell – Real Estate Relationships
Here is some of what you will learn:
- Transactional vs Long-term investing
- Cash flow blunders
- Become top of mind reference
- Specialize, don’t generalize
- The importance of focusing on value
- Being strategic with time
- The importance of being intentional
- Perfecting your elevator pitch
- The importance of patience in fundraising
To find out more about our guest: click here To find out more about partnering or investing in a multifamily deal: Text Partner to 41411 or email Partner@RodKhleif.com Join us at a Multifamily Bootcamp, visit: MultifamilyBootcamp.com
Full Transcript Below:
Ep #399 – Josh Cantwell
Rod: Welcome to another edition of “How to Build Lifetime Cashflow through Real Estate Investing. I’m Rod Khleif. And I’m thrilled you’re here. And I know you’re going to get tremendous value from the dynamic gentleman we’re interviewing today. His name is Josh Cantwell and a little quick history. I mean, I’m going to have him tell you all about him. But, you know, he started out in finance and financial advising. His series 63-66 and then got into real estate and formed a company called Strategic Real Estate Coach in 2007. He’s done, you know, about 700 transactions. He’s presently in about 2,400 deals, some with some people I know quite well and some of the people that are in my mastermind, actually. And just got the pleasure of being interviewed on his podcast. What’s the name of your podcast?
Josh: It’s called the Accelerated Investor.
Rod: Accelerated investor. Awesome. Well, listen, welcome to the show, brother.
Josh: Hey, thanks a lot. Rod. Thanks so much for having me on and looking forward to this for a long time. And yeah, we have a bunch of mutual contacts, had an absolute blast meeting your business partner, Robert here at my office and building a relationship with him. And it’s great to be on with you.
Rod: Awesome. Awesome. Well, let’s have some fun today. Let’s add some value. So, take a minute and talk about your story in your words. And fill in some of the blanks.
Josh: Sure, sure.So, you know, my start in real estate was unique in that when I got to college, I actually became a financial advisor. My dad almost lost his marbles when he paid for this big expensive college education. And I got out of it and went to be an entrepreneur. I became an entrepreneur at 21 years old, got an internship and my dad almost lost it when he said, “Josh, I paid for this big expensive education and now you’re going to become an all condition salesperson in the financial services world. What are you, nuts?” I said, “Well, Dad, I’ve been watching you. You’re my first mentor. You’re my first entrepreneur mentor. You started an employee benefits business.” So why would I do anything other than after watching you would do anything else? But what I’ve realized Rod really quickly was that most of my really wealthy financial planning clients did not have their money in the stock market or did not have all of their money in the stock market. They own real estate, they own buildings, they own buildings with restaurants, multifamily apartments, they own cash flowing rental properties, rent rehabs, and they were building significant wealth outside of the stock market in real estate. So, I took notice 25 years old, I bought my first duplex. My first “multifamily property”
Rod: Where at?
Josh: In Cleveland, Ohio suburbs. We’re from Cleveland. And since then, you know, it’s been an amazing road, we focused on residential and wholesaling and rehabs for a long time. And then I got sick, and I’ll tell a little bit more about that story as we go. But, you know, I got sick with a pancreatic cancer that has just an 8% survival rate. I had the same exact diagnosis as Steve Jobs. And I found out pretty quickly that you know, that disease was a huge uphill battle. And it made me completely relook at the way I invested in real estate, my life on Earth, my relationship with my friends, family, and my wife and kids maybe re-evaluate everything, and completely changed my business perspective what I do with real estate, which we can elaborate a little bit more on today. But as I said, here now, like you said, we’ve been involved over 750 residential deals, you know, it’s very transactional, we’ve made over 400 private lender loans for both residential and commercial and multifamily. And we own 2,400 units of apartments and really, two big inflection points. I think everybody goes through this. Usually when they’re at their biggest challenge. My biggest inflection points for me was leaving the financial services world to get into real estate. It was a huge inflection point on the future of my wealth creation, wealth building and my relationships and the second one was getting diagnosed with cancer and I had to completely reevaluate everything that I did. And really understand you know, first of all is grateful to be alive, but also how is it going to rebuild my life? You know, similar writing some of the things that you’ve been through, like it’s in the depths, it’s in the abyss, that you realize, you know, what am I really here for? What do I really want to accomplish? What am I really doing? And since I’ve gotten clarity, which was forced upon me, back in 2011, life has been an amazing, amazing journey.
Rod: Yeah. Wow. Yeah, that’s something how, I mean, I hate to ask, but I have to ask how you doing with the cancer at this point?
Josh: Yeah. Thanks for asking. So, um, I was very fortunate that in 2011, I was diagnosed in September, had surgery in November, my surgeon, Dr. Matthew Walsh, who I still have a relationship with at the Cleveland Clinic. He basically saved my life on the operating table. I had a very advanced pancreatic cancer. It was actually as the tumor was as big as a basketball. It was bigger than your head, inside of my stomach. It was 12 inches by 11 by 10 inches wide. They took out everything rather took out my stomach, my gallbladder, my spleen, they took out this cancer that took out most of my pancreas most of my liver. They took out arteries out of my leg and had to rebuild the arteries into the back of mine, my liver, I had to relearn how to eat. I lost 50 pounds in three weeks. I’m a real how to eat because all of a sudden my esophagus is connected right to my small intestine, but the surgeon got all the cancer out so I didn’t have to go through any chemo or radiation. And I’ve been cancer free ever since. Today, because I have no stomach. The only thing I have to monitor is, you know, my vitamins, my iron, my B-vitamins, make sure I get that stuff but I’m cancer free and joy in life and full of energy.
Rod: Do you have children?
Josh: I do. I have three kids. Juliana is a sixth grader. She plays club volleyball, I coach club volleyball, it’s absolutely the best thing outside of my business life. My relationship with my wife is coaching my kids, I have a fourth grader Alessandra and a second grader Dominic and they’re, they’re blessed.
Rod: Wow. Well, you know, I don’t usually get that personal but, you know, when you have something like that happened to you, none of the other stuff matters. That’s the only stuff that matters and, and thank you for sharing that, that’s really amazing. So those of you listening, tell me your problems. Okay.
Rod: You know you miss out LOI, you missed out on reasons, you got kicked in the teeth, like, it could be a lot worse. Trust me.
Rod: Oh, yeah, big deal. You know, this is the stuff that matters. So, Wow. How do you transition into finance from that?
Josh: Let me tell you some of the lessons Rod like, you know, if its okay?
Rod: Yeah please
Josh: Lessons that I learned along the way, and I think it really starts with being transactional and business versus investing for the long term and I realized at that time had made a huge financial mistake, a huge business mistake. And I think this is something that a lot of people get into. When they jump into single family, when they jump into wholesaling, even wholesaling, apartments that they’re thinking about the big hit up front, they’re thinking about the big cash flow, the big one, the 50,000. But $200,000 assignment fee them I know a guy, that kind of million dollar assignment fee one time flipping an apartment. And I looked at all the transactions I had done, I realized all of a sudden when I was going to all these doctors appointments, and I couldn’t go to work and my wife had just given birth to my son Dominic, and I was wanted to be home with him. I realized Holy cow, like if I don’t get to work tomorrow, which now I can’t get to work because I’ve got to go to the doctors. I’m not really going to make the kind of money that I wanted to make.And so what happened was almost by accident Rod two weeks before I wanted for my surgery, I bought two properties with 100% private money, I raised private money, some private investors, friends and family bought these properties, hire the general contractor to do the work, I partnered up with the guy to do the boots on the ground. We successfully renovated these properties and flip them while I was basically in the hospital. What I looked at, what I learned from that was not another transactional deal. But what I looked at was, I could control transactions, I could control assets, I could control deal flow, if I could control the money. And it was my first real experience in buying something buying an asset that I had thought about holding long term, I ultimately sold those properties each for $40,000 profit, and thank God I sold them because that’s when I needed the money the most. Right when I was coming back from my surgery, I didn’t really make money for almost eight months Rod, you know, walking away from having a hugely successful business, doing millions of dollars a year in transactions and profits all of a sudden, no revenue for eight months. So now how sexy is being a transaction engineer? Now how sexy is it to be transactional? It’s not right I realized that made a huge cash flow blunder, which is I didn’t have enough cash flow. And I started thinking, how am I going to rebuild my business now and what I loved about being in the financial services world was I knew that I had struck a gold mine. I knew that real estate investing, I knew that multifamily and cash flow and private money was the key to owning assets. I just hadn’t really done it in my business because of the shiny object of the immediate cash that came from doing transactions. And I made that mistake, and I swore I would never do that again. So instead of being on the, the investing side, and just doing that, I became really, really good at raising private money. I became fanatical in 2012, 2013, about raising money. And I knew I could control assets, I can control deal flow, I can control multifamily and single-family, commercial deals. And I went on to create my own private equity fund and then from there, but the big inflection point was realizing for most people, they never made me get out of transactional real estate or out of any other transactional business. You know, Wall Street, they all value businesses based on perpetual cash flow, I realized the businesses that have significant long term cash flow are the ones that have the highest valuation now, highest multiple, whether it’s a tech company, whether it’s real estate, whatever is that the highest multiple if they have regular, consistent contracted cash flow, and that’s what we have in rental properties. That’s what we have in tenants in multifamily properties is contracted cash flow. And so obviously, real estate offers tons more as far as tax benefits, but I realized, holy cow, it’s even though the transactional stuff seems so sexy, that’s really not where wealth is truly made. So, I would tell your listeners regardless, I know they’re mostly in multifamily already, but anybody who’s not there, maybe just getting started for so long to reassure them that they’re in the right place. If they haven’t done a multifamily deal yet. They’re in the right place because I made the mistake of focusing on transactional single family and multifamily deals but doing flips doing wholesaling. I mean, I had to be pulled away from it because the answer to really learn the lesson that we’re trying to convey right
Rod: That was the blessing and all of this you got the memo it took, sometimes the success is a double edged sword, particularly if someone is super successful in single family i.e me, you know, I did 2000 houses and my dumb ass would have gotten a multifamily or really completely shifted to multifamily. You know, I’d be on the back of my yacht right now. You know, my stories when the crash happened in ’08, my single families pulled me down, the multifamily’s doing just fine.
Josh: And so we get through a recession whether it’s an economic recession in the case that you went through or the personal recession in my case, my cancer, right, you get through it with cash flow, right. You can grow it with cash flow you can get through with cash flow, you can stop the bleeding with cash flow that can only come from owning assets.
Rod: Yeah, great, you know, I wrote a book and the subtitle is the new rules real estate investing i.e the new rules, at least for me is to focus on freakin cash flow net, you know, equity I’m sorry, value is out the window. But yeah, that’s an awesome story you know, and it’s funny I’m a member of a mastermind that I joined called Collective Genius which is all the biggest flippers and wholesalers I’m sure you’re familiar with it, you and you know, even those guys well, many of them have their own businesses so they have systems and they have a business but if they’re just doing, if they are if the business would stop without them, they have to go to work every January 1, you know, you buy multifamily assets and at some point you don’t have to work anymore. I’ve got students got retired from their core job because their income is depressed. They’re pretty high W2 incomes.
Josh: What I love about that multifamily space, is you can do big deals and because we know that the multifamily space is basically one big Joint Venture right. You typically have a general partner key personnel that kind of sponsor the deal. But it is truly a team effort because you have guys that maybe sign as a personal guarantor, on a bridge loan, guys that do asset management and things like that you can specialize in one of those spots, you don’t have to do all maybe three, four or five, six roles, you can do one, and for me, it’s in raising the money, for me, it’s in getting the equity because that’s where I came from, in the financial services world. And I’ve got this down now to a science and I currently manage about $35 million of true private money. So, you know, I can write my own ticket now. I can joint venture with the guys that I want, I can do multifamily deals because I decided the place I was going to set is in raising the capital. So that’s how I’ve become friends with guys in your mastermind. I’ve done tons of deals with 2,400 units without having to do everything and wear every hat. So one of the things I would pass along is to say look, you know being in multifamily it doesn’t have to be overwhelming. Pick the one spot whether it’s finding deals, whether it’s doing the asset management, maybe doing the value add, maybe you’re analyzing the deal in value at that one spot. You don’t have to be good at everything. I’m not a great boots on the ground guy. I’m not great at maybe the stabilization or the asset management, but I’m unbelievably good at raising the money side of things, and that’s allowed me to get into a ton of deals.
Rod: Yeah, there are a lot of people that listen and I speak about this regularly. The different personality types that get into this business and they’ve you know, they’ve heard it from me ad nauseum that this is a team sport, and that but everybody has strengths and yours is raising money and you know, I’ve got students that you know, a very introverted and they’re like, how am I going to do this, I have to build relationships, and I told him, put it out there to the rest of the students. We call them warriors, that you’ll evaluate deals for them. And they’ve got instant connection. So there’s a piece, you know, and, and or raising money on and or, you know, going out there and finding deals. I mean, gosh, if you can find deals them, you’re the belle of the ball today because it’s so hard to find.
Josh: So the one biggest thing is you just have to become and this is what I tell my students and people that I know and that I coach and deals, you’ve got to become the Top of Mind reference for real estate by having a niche right, niche is rich, you’ve got to have a niche, but you got to become the Top of Mind reference because then whether somebody has a deal, let’s say it’s a commercial broker, they have a deal that they want to sell or a motivated seller or a lender or an attorney. You’ve got to become the top of my reference. If you really good at one thing, it maybe it’s evaluating deals, maybe it’s raising capital, maybe it’s an asset management or construction. But then you just want to got to get it out there to everybody because somebody could loan money to you, they could invest equity with you. They could sell you a deal. They could cheerlead for you and refer you to other people who could be on your team. They could buy a building from you or they could sell a building to you. So there’s so many different people that are involved in like I said, it’s a team sport, but you don’t want to be a generalist. And that’s one of the messages I want to convey to your group is if you can make that list of everybody that you know, and just go show them educate them about why multifamily real estate raising private money is an incredible way to build wealth. And they look at you as the Top of Mind reference. You don’t even have to sell them on an investing with you. You don’t have to sell them on doing multifamily. Just educate them about all the benefits they’ll naturally find where they want to play. Do they have capital to invest? or refer you a deal? So it really is a relationship game though and commercial no doubt about it.
Rod: Yeah, yeah, no question and, you know, and guys, you’ve heard me talk about this before as well and that is you know you live in the greatest time in history to build reach its you can build it free via podcast like this via creating a meetup group or, you know, a restaurant asks you to buy a drink or dinner to use their space and you can become, you know, a thought leader as it were. And if you’re adding, you can do a Facebook group, I’ve got the largest on the planet now for multifamily. You could do a YouTube channel, Instagram, LinkedIn, Twitter, there’s so many incredible free opportunities to build reach and create that team. But the key is what you just said, Josh, focus on adding value, you’ve got to add value, and you’ve got to do it without agenda. You know, like when I started my podcast, I told people when it first started, I’ll never sell you anything. I’m a liar now, but I never plan to, you know, it’s like we hit a million downloads. I’m like, should I better do something with this? And so I wrote a book and did the courses and all that stuff, but guys But I truly never intended to. And I used to do free phone calls from my listeners. And, you know, I’ll talk to you for 30 minutes. And I carved out a lot of time for these free phone calls. But you know it’s adding value.
Josh: That’s right. Yes, that’s the first thing. The first thing I have to do in this business is, and I think it’s one of the things I like to convey, right as people have to be strategic about their time, right? Because you don’t have it’s one of the things we don’t have. If you want to accomplish all your goals and give back and, and have an impact on the world. We all still only have a certain amount of time. So, what I did was I became real intentional about finding investors, finding private lenders, finding access to money, because now I can insert myself into a lot of deals. So, I became really intentional about, okay, first of all, let me make a list of all the people that I already know it’s a logical place to start because if you can’t get a friend, a family member, somebody within your circle to invest with you. You’re never going to have a stranger invest with you. Never, I mean, Uber, Facebook, Google, all these companies started with friends and family offers, right? You don’t have to go to your friends and family. You don’t have to be your first investor. But you’re going to have a harder time, right? So that’s step number one is make that list. You don’t have to go ask them for money, but just go educate them about why it’s an opportunity. And the second place to talk about reach is find a way to strategically go places where people have money, have deal flow, or want to talk shop. Like is it the country club? Is it the yacht club? Is it a Facebook group? Is it on a podcast? Is it at a meetup? Is it a mastermind? You have to be intentional about where you go, there’s so many different things we can do in today’s world. You have to be really choosy about what you get involved in and make sure that number one, it creates amazing relationships. I’m a relationship guy. I love relationships. That’s how I met you Rod is through relationships. But you only can have so many I can’t go to every mastermind. I can’t be involved at every Facebook group. So, which please can you go add value build relations ships that can also result in business. That can result in transactions right.
Rod: And what is relationships? Nothing more than a friendship. Just making friendships. Don’t overthink this guys, you know you’re adding value and making friendships right? Would you agree with me Josh?
Josh: Absolutely adding value, building relationships, when I add value, see I look at money, people’s capacity to invest in our multifamily deals or involves invest in our real estate deals, I look at that opportunity for them to invest and get a great return in a very stable asset. And also, you know, a piece of the transaction tax benefits. I look at not only people say, well, what about value wouldn’t do it but first of all, teaching talking, teaching somebody something new, giving them a great experience, having positive attitude, that’s all value. But it also value can be if somebody is a totally passive investor, how can you give them an opportunity they wouldn’t otherwise have? People will have opportunities that they can’t find from their local stockbroker they can’t find from their local financial planner. So, one of the things I do every single day to create value was I tell everybody what I do in a very cool way people say, Josh, what do you do? I think you’re in real estate. What do you do? I don’t say I’m a real estate investor. I don’t say I invest in multifamily. I don’t say I manage a real estate Private Equity Fund, which I do all those things. What I tell people is, I raise capital for real estate, we buy distressed multifamily properties, and we pay our investors a double digit return. Why? Because I want them to immediately be thinking back to step number one, how do I become the Top of Mind reference for them? So when people ask me if I’m sitting at a bus stop, or an Uber pickup or whatever, you know, if I was sitting at my kids volleyball game, to give you a real example, and somebody asked me and say, you know, especially us guys Rod like women tend to have very deep conversations with each other. Men tend to have sort of surfaceyconversations about sports, the weather, and then it’s well what do you do with business, right? It’s typically what you know guys do. So, inevitably, if I just asked another male, after we have the surfacey type conversation, total strange person, if I asked themwhat they do, and they tell me they’re a doctor, they’re an attorney. They’re in medical sales, they’re a nurse or whatever. What do you think they’re going to do in return? They’re going to ask me, well Josh what do you do? Right? And then I get into, Well, I raise private capital for real estate, we buy distressed properties and multifamily properties, and we stabilize those when we pair investors at double digit return. And then almost always, they jump in and say, Well, how does that work? What do you mean? Like it totally catches them off guard, right? How does that work? Say, well, it works great.Right? Tell them actually how it works because you got to leave them a little bit of wanting more information.
Rod: So that you know, that can be called an elevator pitch what you do, it’s just telling people what you’re doing, and guys, would you agree Josh, you better have this memorized so so that you don’t have to think about it when someone asks you what, what do you do you want it, you want to have practiced it on your dog, your, your wife, your kids, and just be really comfortable in saying it. But I love the fact that you that you leave them wanting more. So when they tell you when they want more said, you know, so well, how do you segway that?
Josh: Yeah, so what people start now is another like, well, you’re in real estate, double digit return. And I’ve been doing this a while. So I have that credibility as well. But people start to really kind of poke and say, well, Josh, how does it work? Like, what do you mean double digit return? You’re in real estate. I said, Well, look. And this is where I’m able to immediately defuse the pitch. Because I want to take this conversation. Imagine we’re in a soccer game. We’re at a volleyball game. I’m meeting with maybe a friend or a family member or somebody new that I met online, maybe somebody that watch this podcast says hey, Josh. Now I have to think about the rules right, the legal Securities and Exchange Commission rules of raising private money. If I’m using a 506B exemption, for example. I need to make sure that I’m following the rules. I can’t just pitch them a deal. I’ve got to create a relationship with them and keep the conversation offline. So, I use the SEC to my advantage. And this is what I would suggest all of your listeners really think about using is I said, Well, look, you know, we invest in these multifamily properties, I manage a bunch of money, we pay investors a great return. However, the SEC requires that we have a prior substantial relationship before I can really do a deep dive with you on any type of deals or the specifics because people will start asking me. Well, what’s the minimum? Well, how do I get my return? And you want to slow roll people? You want to slow people. The slower this what I found over reason, $35 million of private money, which I managed right now, the slower I go, the longer I take, until I actually pitch them a deal. The more money they invest, and the more often they invest. Yeah, so again, it’s the,
Rod: it’s a little bitof a takeaway.
Josh: Yeah, it’s a little bit of you got to be really patient because everybody’s like, I’ve got this multifamily deal, I got a fund, I need $2 million to fund this down payment. I need money today. So, you got to start building these relationships before you actually have a deal. Right? So I tell him, students change commission, this is all regulated by the SEC, I need to make sure that we follow the rules. And the SEC requires prior existing relationship. So you know, and we’re also here at this volleyball game, we don’t really want to jump into it now. But I’ll tell you what, here’s my thing. Here’s the key, right? Here’s my cell phone number, I give them my cell phone number, plug this in your phone, right? Here’s my cell phone number, go and plug it in, and they’ll type it in. And so why don’t you call me back right now? or text me back right now. So I have your information. And why don’t we get together next week over you know, a beer or coffee or soup or whatever. And we can start to build a relationship because SEC requires that we could talk a little bit more about real estate. So, give them the pitch. Real quick.Totally defuse the situation. Now because I haven’t pitched them, I have a much higher likelihood of creating a long term relationship, because now they think they’ve, Josh has something cool that I’m sort of interested in. But Josh was also cool about it, because he didn’t just throw up on me about his real estate deal. Right right there. So I use the SEC to my advantage. I take them offline. Now, what else did I do? I also was able to get their cell phone number, I was able to get the most valuable thing, not their business card, not their email address, their cell phone number, and how did I get it? I gave them mine first. So Rod, I’ve raised millions of dollars, tens of millions of dollars this way over the last 5, 6, 7 years since my surgery, and I’ve perfected this down to a situation where now I’ve got their phone. I’ve built a relationship in a very short amount of time. I’ve done it in a very respectful way. Now if I go to meet them offline, now I can dig into some questions about their accredited, non accredited, have they invested before I’m done all that, that I’ll get to the point down the road when I say, hey, I’ve got you know, this is some of the multifamily deals I’ve done in the past and they look like this. If I found something like this again, would you be interested in potentially investing? They always say yes, absolutely. This is awesome. Because I’ve now walk them through some deal flow, walk them through down that road. And now I truly feel and Rod this is where it really comes from the conviction, the passion for raising money or this for this business of multifamily investing, comes down to this one statement. A friend of mine, who’s a digital marketer, he’s an amazing marketer, a student of sales. His name is Francis. Francis said to me one time he said, You know what, Josh, if you have something that you really feel can provide a lot of value to somebody else’s life and they’re going to be better off for doing it. You have a moral obligation to sell it to them right. How powerful is that?
Rod: No, agreed, agreed. You know, whenever you believe that, and it’s the truth, then you show up differently
Josh: you show up differently.
Rod: Yeah, you really do you show up a total congruency and passion.
Josh: That’s right. So when I feel you like somebody can invest in one of our multifamily deals I’m not just saying like I want to have them invest in one of our apartments or in my private equity fund, because it’s all for Josh, it’s all for my company. How much management fees can we make, how much equity can we make, how much capital we can get? What I really feel like because I was a financial advisor, I know what a financial advisor sell, right. Remember, the average return in stock market over the last hundred years since JP Morgan founded the stock market, the average return in large cap equities is 9%. In a blended portfolio, which means stocks and bonds combined, the average return of last hundred years 7% and a bond portfolio about three and a half. So if you take that that’s the gross return. Now remember, when stocks bonds mutual
Rod: before fees,
Josh: Before fees, before taxes, there’s no tax shelter. And there’s no leverage to be able to get loans and you can do margin accounts. But that’s really what I’m talking about that you’re really leveraging with multifamily with apartments or real assets. I truly believe when I present somebody, I think, if they don’t invest with me that they are worse off. So I have a hard time letting them go, because I keep telling them at the end of the day, look, you’re going to be better off long term. Now I’m going to give great return but tax advantages, stable asset, cash flow, all these things Rod that you’ve been preaching about for years about multifamily is so true, but if you really know the mechanics and the numbers behind it, it’s so easy to get passionate for. And then if you do it the right way. Raising money is a piece of kit. Now if you got access to money, now you can really have a lot of credibility with brokers a lot of credibility with sellers to be able to put together an amazing offer.
Rod: So are you just to get technical from it, are you using any of your series licensing for this stuff that you’re doing?
Josh: No great question. I get that a lot that I let my licenses lapse all back in 2007. And I let them go. So we do have private placements, you know, 506B and 506C that we use. But none of that none of the licensure I used to have
Rod: And with your private equity fund, it invests just in real estate?
Josh: That’s it. And primarily in the fund. We’re primarily doing lending for a residential and also small balance.
Rod: So it’s for loans, okay, got it
Josh: And then we invest equity outside of that and
Rod: Right, so you raise equity for deals. And so you’ll come in with equity. Are you playing, Are you coming in as a funder you coming in, just with your individual investors?
Josh: Both. We’ve come in, we’ve made investments for fund. I’ve invested my own personal money and then we also have one off investors that go directly into a, into a deal we’ve done we’ve done all of those
Rod: Now, when you bring the equity to a deal, you know, are you a GP on that deal? Or do you play an additional role or talk about that.
Josh: Yeah, great question. So you know, I invest with guys that I already know So I’m not you know, out just soliciting people, hey, I can invest in your deal, right?I just like most people in this business, Rod you know
Rod: You got to know the operator is and know, their track record and, and trust them and all of that, if you’re going to, particularly if you can bring other people’s money to their deals.
Josh: That’s right. So I structured joint venture partnerships up front. So sometimes we’re, you know, we’re signing the personal guarantee on the bank loan. We’re always sitting on the GP side of the deal. We’re also you know, a lot of times raising money for the deal. We also due diligence for that transaction. But you know, we’ve got one which is 164 unit, which is in my backyard, were more involved with that, because it’s right here. And then we’ve got about 2000 units that you know, in the southeast, where I honestly don’t live there. So I can’t be the boots on the ground. So we’ve joint venture on those deals with other operators that we have really strong relationships with.
Rod: Yeah. And the reason I asked the question is, is, you’re doing it the right way, but there are people out there doing it the wrong way. You can’t, guys, you cannot just raise money for a deal to come into the deal. You have to be actively engaged in it. Otherwise, you’re breaking the law, frankly, you can’t
Josh: They look at your equity as a condition for raising money.
Rod: Right. And so you have to play a role be a due diligence, be it asset management, you know, be an investor relations, whatever, and it has to be real. So and I’ve had attorneys on the on the podcast speaking about that. Well, listen, you have added tremendous value about raising equity. I hope you guys took notes because your way of bringing an investor into the fold is really very very powerful and you know guys. He’s got a great book if you’re interested in flipping called the flip system it’s getflippedsystem.com and it talks about his story with the cancer and flipping which is a great way to raise money and make money while you’re building equity and things for this multifamily gig.
Josh: That’s right
Rod: But listen Josh, I really appreciate you being on the show brother and definitely need to get up to Cleveland one of these days
Josh: Yeah we could meet out at one of your buildings I know you got one down there Dayton. The tornado deal I saw that
Rod: Yeah just destroyed. It’s finally back online with not completely but we’re finally renting units again. Thank god nobody died and no kids got hurt but that was a that was a quite an experience. Yeah, we’re up there regularly. And I know that’s why Robert stopped in and pop
Josh: Yeah. It was great to meet up with Robert face to face and yeah, when your next time you’re in through town. Hopefully we’ll make it out to one of your events coming up this coming year. And really appreciate you having me on. I’m so grateful for the opportunity to connect with you and your audience and look forward to being at your events, learning more and meet more of your audience and more of your students.
Rod: All right, thanks, brother. It was a pleasure
Josh: Take care Rod.
Rod: Thanks a lot. See you.
Josh: Bye bye.