Ep #193 – Bruce Petersen has Syndicated 900+ Multifamily Units
Here’s some of what you will learn
- The importance of using resources such as LoopNet for finding deals.
- The benefits of syndication to close deals.
- The benefits of having leadership skills for success in the business.
- The importance of networking and benefits to meet up groups.
- The importance of being trust worthy to secure partners for deals.
- The reasons why you may choose multi family over single family.
- The ways to make money on a property through cashflow and returns from a sale.
- The importance of being transparency and empathy in developing relationships.
- Some important reading material that can help with your mindset.
- The importance of selecting the proper location for deals.
- The potential benefits of going with larger properties if you’re able.
- The importance of using your “seminars” as learning experiences.
- The key to knowing what you want and why you want it.
- The advantage of having multiple investors commit to a deal.
- The fundamentals to look for when evaluating deals.
- The importance of taking the first step and just getting started.
- The role of risk-taking in the business.
- The importance of finding your motivation to be successful.
- The importance of having the right mindset and remove mental blocks.
- The importance of getting past “analysis paralysis” and taking action.
Our Guest
Bruce Petersen can be reached at:
Full Transcript Below:
Ep #193 – Bruce Petersen has Syndicated 900+ Multifamily Units
Rod Khleif: Welcome to another edition of How to Build Lifetime CashFlow Through Real Estate Investing. I’m Rod Khleif and I am thrilled you’re here. I know you are gonna get a tremendous amount of value from the dynamic gentleman we’re interviewing today.
His name is Bruce Petersen, and in the last few years he’s created a $70 million portfolio in the Texas area. He’s from Austin, Texas. We’re gonna dig in to how he made that happen. Bruce, welcome to the show buddy.
Bruce Petersen: Hey man, thanks for having me.
Rod Khleif: Absolutely. If you wouldn’t mind start with your, the beginning of the story. Nobody goes from zero to 70 million overnight. Tell us how you got started in the real estate business and how you got to where you are.
Bruce Petersen: Alright. I’m an old retail guy, and an old stockbroker from the 90s, and I realized that it was time to move on. I was tired of working for somebody else.
I lived way below my means for 15 to 20 years of my life. I just socked away all my money, made good investment decisions in the stock market so I made a lot of money there. I was able to walk away from corporate America, which was… It was eating me alive. It really was. It was stealing my soul.
Rod Khleif: Wow.
Bruce Petersen: I got out of retail, and had to kinda think about, “Okay, now that I’m a grown-up, what do I wanna do with my life?”
Rod Khleif: Sure.
Bruce Petersen: “Let me figure this thing out.” So I dug in to real estate, educated myself and… It’s the best thing I’ve ever done, but with my background I had the skill set that I needed to convey into this because I’ve led people my whole life. I’ve been a supervisor, a manager, a leader of people, so it was a very easy fit for me.
I did have my self-educated, that’s fine. But what I did is I found a group of people that we developed a really strong bond with each other through a meet-up that I started, really, is what happened.
From that meet up, it started… Let me see. October, I believe it was, of 2011, and to this day, that thing is still going. The email list has grown to about four or 500 people.
Rod Khleif: No kidding. And this is in the Austin area?
Bruce Petersen: It is. It’s in the North Austin.
Rod Khleif: Wow.
Bruce Petersen: We meet every other Wednesday. We get about 30 to 50 of those people together any one week but that’s where my guys came from.
People ask me all the time, how do I do what I did? How do I raise money? You just got to figure put a way to inject yourself into the system, in to this real estate local system and provide value to people.
I did, I was sharing information. They were sharing information. They got to where they liked and trusted me, and they were willing to partner with me on my first deal with no fears.
Rod Khleif: So that’s how you found the equity. That’s fantastic. Yeah, in fact, those of you listening, I just started a Facebook group… Multi-family… What is it?… Multi-family investing… in like eight weeks, the social media is fantastic. I’ve got 4500 people on there already.
The reason I bring that up ‘cause you mentioned a meet-up group. There are meet-up groups forming inside of that Facebook group all over the country. I was in LA looking for a venue for my life event I’ve got coming up in April, and I met five guys there, they’d met though this group that’s only been around for eight weeks.
By the way guys, if you’re listening, it’s MultifamilyCommunity.com. Definitely go check it out. Like I said, there’s already 4500 people there. And people are connecting all over the country.
Back to your story, you formed this meet-up group, and that’s where you found a lot of equity investors for your deals? Now, correct me if I’m wrong, you went right… You didn’t do the traditional path from single-family to duplexes, to fourplexes. You jumped right in, right?
Bruce Petersen: Correct. I had the money that I needed. I had all the time in the world. I’m now, kinda quasi retired at the point. So yeah, I realized early on that single-family was gonna be a lot more work than I wanted to put into it. And multi-family was a better way to scale, and give myself the life that I truly, truly wanted; deserve, as cheesy as that might sound, and knew, it was there, for me.
Rod Khleif: Okay. Okay. That’s very unusual. I will say, most people take that natural progression, and so you just went for it. What was the size of your first deal?
Bruce Petersen: First deal was 48 units in Austin, and it was 2012 when I closed. And we purchased it for about 1.625 million.
Rod Khleif: Nice. Nice. Tell us about that deal. How did it end up? Do you still own it? What happen with that property?
Bruce Petersen: No, we did sell it, after two years and four months.
Rod Khleif: Okay.
Bruce Petersen: We figured that going in the front door was a five to seven year hold. And then the Austin market happened; it got really, really hot, really quickly. So we took this property that we thought was a fully stabilized asset with returns 10 to 12% a year in cash flow. We would hold it for the five to seven years, sell it, make a little bit of money on the back end, but it was more about the cash flow.
Two years into this deal, I saw what was going on around us and I thought, “Well, you know what, it might keep going for another two, four, five, six years, it might not. So why get greedy, we can sell, and make a really large profit on this stabilize asset, if we sell right now.
So when we did sell after two years and four months, I gave a total return to my partners of 300%…
Rod Khleif: Wow.
Bruce Petersen: I gave them about an eight and half to nine-year chunk of cash flow, all at once.
Rod Khleif: That’s fantastic.
Bruce Petersen: We sold it, and moved on to bigger and better things.
Rod Khleif: That’s fantastic. You mentioned that you had leadership experience in your past life, in the retail world. In this real estate business what do you think, a leader in this business … What do you think are the most important qualities that a leader should have?
Bruce Petersen: It’s transparency. It is empathy, and just being able to understand what the other person’s going through. That goes for tenants too. Put yourself in their shoes.
Rod Khleif: Right.
Bruce Petersen: What would you want if you worked for somebody else? What would you want if you lived in somebody else’s place? I think that’s a big part of it. It’s being open minded, listening to the smarter people in room, and having a lot of empathy.
Rod Khleif: I love it. I love it. Now, you mentioned… Let’s talk about your superpower, your skill sets. I know you were a stockbroker one time, which obviously has an incredible sales component. Do you think… and of course, you led people in the retail world, tell me what traits that you learned in those two environments that you think helped translate into the real estate business, into the multi-family investing business rather.
Bruce Petersen: Right. Right. Right. Again, being a Big Box store manager for retail is what I was doing.
Rod Khleif: Okay.
Bruce Petersen: I have to address the troops, constantly. I’m always talking in front of a big group of people, 100 to 150 people. I know everything that comes out of my mouth, people are gonna, you know, they’re gonna live and die by that to some degree.
I learned very quickly how to conduct myself, how to address the troops. I did a lot of studying on that too; how to lead people effectively.
Rod Khleif: Okay.
Bruce Petersen: So that was probably the biggest thing I got, and learning how to co-exist other people, knowing that they were looking to me for leadership and guidance.
Rod Khleif: Love it. Love it. Are there any tools or books that you could share with my listeners that have really helped you on your journey?
Bruce Petersen: Well, I’ll probably forget some of the names up here, but The Seven Habits of Highly Effective People.
Rod Khleif: Awesome book by Stephen Covey.
Bruce Petersen: Absolutely. Who Moved My Cheese? For basic stuff.
Rod Khleif: Oh, that’s awesome too.
Bruce Petersen: Yeah. Very, very basic stuff, one of the best things that I read though was… I think it was A Thousand And One Ways to Incentivize Your Employees. I learned from that. It’s not about money. People what to be recognized and praised for a job well done. That believe it or not was a huge book for me.
Rod Khleif: Yeah, I have that book as well, and you’re absolutely right. It’s not money. If you’ve got a team and you just take the time to sincerely praise them, you watch for the silliest little thing you can congratulate them for. In fact, I used to write it in my planner, “Praise one person a day”; my team.
I had a pretty large litigation support company at one… I still have it but we’re at 60 people. We’re down to 40 now. I would literally make it a point to speak to one of them everyday, and congratulate them, or praise them about something. Find a reason, talk to their manager, their direct manager, and praise them. Love it.
What markets do you love now? Are you still… I mean Texas is so freaking hot. Austin, I think is the epicenter of the hotness. Where are you looking now?
Bruce Petersen: Well, right here in my backyard, still, Austin, San Antonio.[overlap talk]
Rod Khleif: You are. Okay.
Bruce Petersen: I just closed a 484-unit, two-property portfolio, and one was in San Antonio, one was in Austin. I’m still finding deals that I can source at seven to 9% cash on cash returns. We haven’t found a need to branch out of Central Texas, for now.
Rod Khleif: Okay. Okay. So tell me, if you could go back to the beginning of your start, syndicating properties and going after these larger properties, what advice you might give yourself? What might you do differently?
Bruce Petersen: Go as quickly, and as large as you can, reasonably. Don’t be reckless you’re dealing with other people’s money…
Rod Khleif: Right.
Bruce Petersen: They will make or lose money based on your efforts, so don’t be reckless in any way. But go big. I was listening to Grant Cardone the other day and he was talking about that too. Go as big, as fast, as you can ‘cause it’s easier. It is honest-to-God easier. It’s more profitable. It’s more rewarding. And you get to help more people. You get to provide more income for more people. I would definitely go bigger and faster.
Rod Khleif: Huh. Wow. Okay. Okay. Everybody listening probably thinks, “Oh, this is so easy. There’s no speed bumps; there’s no hiccups. Tell us about some seminars. I don’t call them failures. I call them seminars. Tell about some seminars you’ve had. Maybe a real doozy, in this journey for the last five years?
[00:10:04]
Bruce Petersen: Well, I got two big ones.
Rod Khleif: Okay.
Bruce Petersen: A lot of people know what I do, when they find… “Oh, Bruce, I got to do that.” They see the dollar signs. Right?
Rod Khleif: Right.
Bruce Petersen: They’re chasing dollars. Then I share a couple of stories with them. I was closing on a property in San Antonio, about a year and a half ago as we were… The day of close, we wire 5.2 million bucks to close the deal. Well, the entire day passes, they still didn’t receive the wire. Everybody’s flipping out, and losing their mind like, “Look, I did it! I sent it. Here’s all the documentation for it.”
Nobody knew where my wire was. My wire is gone. And it’s not my money.
Rod Khleif: Right.
Bruce Petersen: It’s my money and my investors’ money, I can’t account for it. I don’t know where it is. It’s gone. Nobody could tell me where it is. So now, I don’t own a property, because I didn’t close. I don’t have 5.2 million dollars of somebody else’s money.
Finally, the president of the title company finally figured it out, a division of Homeland Security called, OFAC. They look at all wires that come through and when that goes to the FED, OFAC, comes in and looks, and compares all the names of this transaction and compares it to a database of known bad actors.
Rod Khleif: Wow.
Bruce Petersen: The name of the property was the same name as a known drug cartel in Colombia.
Rod Khleif: [chuckles]
Bruce Petersen: So they took my 5.2 million bucks, and they don’t have a nice little customer service department to say, “Dear Mr Petersen, this is where your money is and this is why.” Nobody knows what’s going on so that caused a little bit of stress.
Then the other one was about…
Rod Khleif: How long… I’m sorry I got to stop you… How long did it take you to clear that up?
Bruce Petersen: [chuckles] Well, it took…
Rod Khleif: I’m sure it felt like months, but I mean…
Bruce Petersen: Although, actually, it did feel like months, but it was only a few hours… [overlap talk]
Rod Khleif: Right. Okay.
Bruce Petersen: The wire was issued at 9:00 o’clock in the morning. We found out about 5:30 in the evening but by this time we’re already gone. The day is done. It’s a Friday so we had to close that following Monday. But yeah, it…
Rod Khleif: Okay.
Bruce Petersen: A little consternation… [overlap talk]
Rod Khleif: Oh hell… Good god, yeah. Alright.
Bruce Petersen: Now I got to come home, that day, sit in my home office and type up a letter saying, “Hey, guess what, we don’t own anything, and I don’t know where the hell your money is.”
Rod Khleif: Wow.
Bruce Petersen: Yeah. That was a lot.
Rod Khleif: That’s scary. That’s scary. Well at least it ended up okay. What’s the next one?
Bruce Petersen: The next one, it’s bad for a different reason, but I got a phone call and a text one morning, about three to six months ago, and my lead maintenance guy on a to a 200-unit property sends me an email while the text comes across with a picture.
Rod Khleif: Okay.
Bruce Petersen: There’s a gentleman that lived on the property that had decided to go swimming in the pool at 4:00 o’clock in the morning, intoxicated. Blasted out of mind. He didn’t make it back out of the pool.
Rod Khleif: Oh, no.
Bruce Petersen: He’s on the bottom of the pool, looking straight up; rigor mortis the whole thing, with his eyes wide open.
Rod Khleif: Wow.
Bruce Petersen: Yeah. It’s not always rainbows and lollipops. It’s still the best thing I’ve ever done, the most profitable thing, the most rewarding thing. There are things that are going to happen no matter how well you prepare, how much you study, you get out there, you’re gonna get your mouth bloodied a few times and you just got to make it through it. Just keep your head down and keep going. It’s gonna work itself out. It’s just challenging some times.
Rod Khleif: Yeah. You’ve got to know what you want and why you want it because if you don’t, you’re gonna get knocked out instead instead of knocked down.
Bruce Petersen: Right.
Rod Khleif: When you get knocked down, you can get back up but yeah, I know. I get it… May I ask you this, comes first, finding the deal, or finding the money?
Bruce Petersen: Well, finding the deal, ‘cause I’ve got money on the sidelines. I’ve got pinned-up demand, basically.
Rod Khleif: Okay.
Bruce Petersen: The capital is usually pretty easy because we’ve got a track record now. Right?
Rod Khleif: Right.
Bruce Petersen: It wasn’t like that at the beginning.
Rod Khleif: Sure.
Bruce Petersen: We’ve proven ourselves over many years, many deals, so for the most part, I’ll go find the deal. Then once I get an accepted LOI, we will then draw up all the financial all the legal docs; get that out to the people that have expressed interest.
Usually, 50%of the people that initially express interest will still stick with us through the close… [overlap talk]
Rod Khleif: 50%. Wow. That’s good know. Guys, remember that. You have to always over commit.
Bruce Petersen: Yes.
Rod Khleif: I mean, basically, you just lost 50% of… What fundamentals do you look for when you look at a deal?
Bruce Petersen: I’m looking for a good, robust market. That’s really easy where I am right now. I don’t have to…
Rod Khleif: Sure. Sure.
Bruce Petersen: I’m not testing myself there much anymore but I’m looking for a net inflow of people. I’m looking for hopefully a changing dynamic in the workforce; if it’s an older workforce.
San Antonio is going through a big tech boom right now. They’re drawing in a lot of tech, a lot of young people are moving to this city. We’re looking for that. For the most part, I’m buying stabilized assets right now. I’m looking for a seven to 9% return to my investors.
Primarily looking at B, B plus properties now, because I can source the same return from a B plus property that I can from a C minus property. Why do I wanna screw with the C minus property if this much nicer property with less risk is gonna pay out the same?
Rod Khleif: Right. Right. What would you say is the best piece of advice you’ve ever received?
Bruce Petersen: Just do it.
Rod Khleif: Just do it.
Bruce Petersen: When I first started doing this… To steal the cheesy Michael Jordan, Nike line… When I first started doing this, I thought I was gonna go in, and buy single-family homes, buy four of them, pay them all off, and live off that cash flow for the rest of my life.
Then I got around people that were bigger brained than me, right at the level my thinking up, and I learned that, “No, no, I’m thinking way, way, way too small. I got to go bigger, and I just got to get out there and do it.”
I told a guy that was kind of giving me some advice that, “Look, I don’t know how to do this.” “You know what, it’s easier than single-family. You have the skill set in your prior life. Get out there and do it.” That’s the big thing; get out there and do it.
Rod Khleif: What did you have to give up, or sacrifice to get where you are today?
Bruce Petersen: That’s hard to say because the career I had before this in retail, I was working 90 to 110-hour weeks for somebody else. So the thing I had to give up, I guess, is a little bit of security. I had to… A lot of my friends, “What are you doing, quitting? What about insurance?” Holy crap, I can get my own insurance.
Rod Khleif: So you quit before you took down the first one?
Bruce Petersen: Oh, yeah.
Rod Khleif: Wow.
Bruce Petersen: Yeah, I just…
Rod Khleif: About how long of a period in between that, “Take this job and shove it”, and you got your first property?
Bruce Petersen: About two and a half years.
Rod Khleif: No kidding? Wow. Okay.
Bruce Petersen: Again, I did well for myself, so I had… [overlap talk]
Rod Khleif: You had a cushion. Right.
Bruce Petersen: Yeah, I did. I gave up some of the certainty, but what the certainty was doing was killing me. ‘Cause the certainty meant I worked for somebody else. I was physically nauseated everyday I went to work.
Rod Khleif: Wow.
Bruce Petersen: And I just realized, it’s not worth this. It’s not worth it. So I like the responsibility of everybody’s return riding on my shoulders and knowing that there might be another dead guy. I’m okay with that. I know how to deal with it; handle it.
The one thing, I guess, I did sacrifice was the safety of getting a paycheck from somebody else.
Rod Khleif: Sure. Now, those of you listening, please do not quit your jobs…
Bruce Petersen: [chuckles]
Rod Khleif: And then go buy properties. Okay? This gentleman is an anomaly and he saved money for 18 years, okay. So unless you’ve got that kind of a nest egg, don’t do it. You can do this on the side. I’ve interviewed enough people that have built multi-million dollar portfolios on the side. So please take that advice.
Many people ask me, “Should I quit my job?” I always say, “No. Not until you’ve got… unless you’ve got the cushion. If you’ve got a big enough cushion, and it should be a damn big one.”
What inspires you buddy?
Bruce Petersen: Giving back. Honestly.
Rod Khleif: Yeah.
Bruce Petersen: We won the 2016 Independent Rental Owner of the Year for the entire nation…
Rod Khleif: Wow.
Bruce Petersen: With the Apartment Association. But what got us that, for the most part, is we like to create community everywhere we buy.
We have a property that, 120 units, very working class neighborhood in Austin. These people have a hard time providing for themselves day-to-day, so what we did on that 120-unit property, we had 83 students; middle school and below.
We went out to each and every school that these kids were gonna go to by grade, and got the list of school supplies needed. What we did then is we went and got a backpack, 83 different backpacks, boy and girl. They got to come through, pick up their backpack, and then they went from the room that they were getting the backpack from, to the other room where my 21-year old autistic daughter is standing there… I’ll cry if I’m not careful…
She asked what grade they’re in and she hands them the bag for that grade. They get this and they load up their backpack, they walk out, and the biggest smile you’d ever seen on these children’s faces, they now have school supplies that they otherwise wouldn’t have had.
Rod Khleif: Oh, brother…
Bruce Petersen: That’s the good stuff. We make money but it’s that’s stuff that gets you going.
Rod Khleif: Oh, man, I got to tell you, and I don’t wanna steal your thunder… That is unbelievable, and it’s fantastic. It’s dear to my heart because we do the exact same thing. I’ve done thousands of backpacks with school supplies with my foundation… So my hat’s off to you my friend. I don’t meet people that do things at that level very often and so my hat’s off to you.
In fact, this Saturday, we’re doing a I think about 1500 baskets filled with food to the local children here. We’ve done… I’ve fed now, 55,000 children over he last 18 years. But we’ve done backpacks just like that. It’s just so amazing when they come and you can hand a child a backpack that wouldn’t have one filled with school supplies. I mean, we’ve…
Then we also do teddy bears that we give to the local police departments for the officers to keep in their cars when they encounter a child.
Bruce Petersen: How awesome.
Rod Khleif: Yeah, we’ve done thousands of those. But my hat’s off to you my friend that is absolutely beautiful.
[00:20:03]
Bruce Petersen: Appreciate that.
Rod Khleif: Yeah… Now, you stumped me there because that really moved me. That’s so awesome what you did, and congratulations on national award, I mean that’s huge, that was the National Apartment Association?
Bruce Petersen: Yep. It was. Yeah.
Rod Khleif: Wow. That’s fantastic. What last bit of advice would you give… Actually, you know what, I don’t wanna go there yet. Let’s talk about due diligence for a minute. Tell us how you go about your due diligence. Do you use third-party management? I think you mentioned you have your own management now. You’re managing yourself?
Bruce Petersen: Right. So there’s no due diligence on that part ‘cause we do have our own management company. We have our own asset manager, management company, construction company. So due diligence on the deal, I underwrite everything.I get with my mortgage brokers, my DUS lenders but as far as like the on-site, that physical asset, what I like to do and it’s really rewarding for our investors; we open it up to the investors. “Who wants to come look at the property with us and help us inspect units?” Unit by unit, by unit.
Rod Khleif: Love it. What a great idea.
Bruce Petersen: You have the subsystems, the major systems, the roofing, the pest control, the foundation. Of course, we have professionals come in for that, camera all the lines, make sure that we’re looking good there. But yeah, we like to have as many of our investors as will participate with us and come out, and share in this process with us. It’s a way for them to learn and they’re more likely to follow us.
Rod Khleif: Sure. No question. That’s a great idea. Those of you who are listening, that is a fantastic idea.
Alright, let’s go to the last question. What bit of advice would you give an aspiring investor, that hasn’t taken action yet, that knows they want this, knows they want more, knows they want out of the rat race, what words of wisdom would you share with them?
Bruce Petersen: The first thing I would say, “Get out of your own head. Get out of your own way. People sabotage themselves all the time. You are usually your worst enemy. Get out of your own way.”
You got to get yourself educated but then education without action is worthless. Level yourself up. Don’t get rid of friends, keep them as friends but when you’re talking about your professional life now, you have to love yourself up. Surround yourself with people that have what you’re trying to accomplish, and just emulate them.
You are what? The sum average of the five people you spend the most time with. If you walk into a room on a professional endeavor, if you walk into a room and you’re the smartest guy in the room, get the hell out of the room.
Find a room where you’re the stupid guy. Learn from others. But then, once you learn and surround yourself with like-minded people, when you find a deal that makes sense, you got to go. There’s never gonna be a perfect deal. Don’t over contingency everything, if you are an engineer type. If you are, you got to figure a way past that. Don’t get into the analysis paralysis thing. You have to assess it, trust your abilities, and just go.
Rod Khleif: Fantastic advice. In fact, I’m doing a live event that’s sold out in Tampa, here in January. I’m spending a good amount of time on taking action, on pushing past limiting beliefs, on peer group, and addressing the analytical guys in the crowd to either get past that and get uncomfortable, or align themselves with an outgoing personality like yours. It’s one or the other.
And there’s been some fantastic matchups between the analytical personality and the outgoing personality. Those are sometimes matches made in heaven. You’re supplementing each other’s deficiencies. But otherwise, at the very least, you got to get uncomfortable, and push yourself and take action. Get out of your head. Fantastic advice, my friend.
Well you’ve added a ton of value today. How do people get a hold of you?
Bruce Petersen: My website, A-P-T dash guy so it’s apt-guy.com.
Rod Khleif: Okay. Fantastic.
Bruce Petersen: I’m… I just drew a blank there. You can get me atHYPERLINK “mailto:Bruce@apt-guy.com” Bruce@apt-guy.com also.
Rod Khleif: Okay.
Bruce Petersen: So yeah, I’m pretty easy to find.
Rod Khleif: Okay. Well thanks for adding value, my friend. I’m really excited to see where you’re at a year from now, at the trajectory that you’ve already accomplished in the short amount of time. Appreciate having you on the show my friend.
Bruce Petersen: Alright, man. Thank you so much for having me.
Rod Khleif: Alright. You bet. Take care
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