Ep #271 – Steeve Breton – Full Time Career and Successful Real Estate Sideline
Here is some of what you will learn:
Starting out as a passive investor
Are you right for multifamily real estate?
Making your circumstances work
How to avoid the crutches that are circuit breakers
The value of “Fat”deals
How to develop your morning routine
What roadblocks to avoid
How to develop your intuition
The power of gratitude
Creating a powerful declaration
Integrity is key
The power of developing your success muscle
The model for multifamily team building
To learn more about our guest, please click here
Join us at a Multifamily Bootcamp, visit: MultifamilyBootcamp.com
Full Transcript Below:
Steve Breton – Full Time Career and Successful Real Estate Sideline (Ep #271)
Rod: Welcome to another edition of “How to Build Lifetime Cash Flow through Real Estate Investing”. I’m Rod Khleif and I’m thrilled you’re here. And today I’ve got a real treat because I’m interviewing a gentleman that I’m friends with and know quite well. His name is Steve Breton and he’s the founder of Velocity Capital, focuses on large multifamily syndications and he’s a partner in over 1700 units valued over a hundred and thirty million dollars and but what’s exciting about this for me is Steve’s been in my coaching program for some time now and I’ve been blessed to see his phenomenal growth and I mean now he’s even a panelist at my live event boot camps. In fact we have one coming up in Atlanta on November 2nd through the 4th and Steve will be there. He’s also a member of my multifamily boardroom mastermind but you know what I love about Steve is that he’s just a real giving soul and he loves to help other people and he’s all-around great guy. Steve I’m really glad you here my friend
Steve: It’s my pleasure thanks for having me.
Rod: Absolutely, so let’s start you know as I usually do by having you tell my listeners you know how you got started in real estate how did you know I know that’s not your, that wasn’t your core business you know talk about how the transition and really what that’s looking what that has looked like
Steve: Sure yeah I followed a traditional career path went to college, studied Information Technology, put my ladder up against that corporate wall and started climbing the ladder as quickly as I could, did very well and in 2008 with the financial crash, I saw all of my life savings get a serious hit. That started to clue me in as to maybe this isn’t the best way to save and to prepare for my retirement some time in the future. And so I started looking at real estate and other ways to invest. And that’s when I got the bug
Rod: Nice-nice did you start in single family or did you go right into multi? I don’t recall
Steve: I actually started with, my first one was a triplex and I just continue down that path it was pretty comfortable in other duplex or triplex and end up getting a sixplex at you know at some point I was at sixteen units and realized it’s probably not scalable like I thought it might be and it was also becoming a part-time job and I already had a full-time career. So it was difficult to balance all that so I started getting into limited partnerships. So basically more passive investing with people that were taking down much larger properties in other parts of the country
Rod: Rright right you started and a lot of people start that way. They start investing passively which is a fantastic way to start because and we’ve talked about this on the show before and then they ultimately become active like you did. And you know what’s great about starting that way is first of all you get some experience depending upon who you align with, the operator that you align with but it also goes on your resume and it makes it so that you know it’s much easier for you to get debt you’re gonna get a better interest rate. They classify it as experience and it’s just a natural transition so a great way to get started. So you know starting out talk about any aha moments that you had I mean you just mentioned one you are at sixteen units you realize it was a part-time job and you realize that the larger units made more sense. What else you know we talked about maybe some other aha moments in your career
Steve: I think the biggest aha was at the end of one of those limited partnerships that I was involved with. So I was the passive investor I had put money into the deal and I think we were about three years in and they cashed out and I got a pretty sizable check and I was like wow you know this is really profitable and I didn’t have to deal with tenants and toilets and all of the management aspects. And so I thought that was great but then I started wondering if I’m making this much money on this deal what does the sponsor making?
Rod: Right
Steve: Fortunately I was I was connected with a few sponsors and two of them were really good at sharing you know their experiences what was going on the deal, how they structured it, and I started to get a good look behind the scenes and realize that this is not only something that could help me with my retirement but it could actually be my second career
Rod: Right
Steve: There’s a lot more to it and that’s what I really got the bug for a larger multifamily
Rod: Right and I mean you’re with this incredible you know portfolio and you know what is it, over seventeen hundred units are involved in and you still you still have your core career right I mean you’re still doing that so you’re this is you’re able to do that on the side which is just incredible and hopefully you know guys those are you listening you know I get asked so often you know should I quit my job and you just don’t have to that’s what’s so great about you know this larger multifamily is you’re able to do it and you know what’s your goal? at what point do you anticipate you know leaving the corporate environment?
Steve: That’s interesting. So you’re part of that is
Rod: or do you and you know and
Steve: I certainly do at some point but for me it’s a matter of finding balance. Again I want to go fast in real estate I know I can. I know I would be very successful quickly but at the same time I have you know family. I’ve got my first son just went to college. I’ve got two more behind him. So I want to make sure I have balance in my life and spend enough time with the kids and have the traditional income to put them through school. So just trying to find that that right balance there. So it’s only gonna be a couple more years anyway at the same time I’m also right now focused on capital raising. So I’m not actually making those trips out to the markets and understanding you street-by-street neighborhood by neighborhood building the relationships with the brokers. I rely on my team to do that mmm if that continues to go well I’m not sure I would ever need to really leave the corporate job
Rod: Sure sure. So you’re aligning with other operators to do these deals as well and raising the money and bringing the money to the deals and by the way guys that’s a great business model as well. So you know you’re able to do it like Steve’s doing it where you know full-time job, family, kids in college, and still creating an incredible portfolio you know the way you’re doing it. So let me ask you this Steve what kind of person do you think is best suited for this business? do you think there’s a type?
Steve: I don’t know that there’s a type I think if you understand yourself, if yourself and you know what your strengths are, then you can apply those strengths to a team regardless of what that team looks like, you would pull together the right people around you to make up for your weaknesses rather than focusing on your weaknesses you focus on your own strengths and the people that’ll fill those weaknesses for you
Rod: Fantastic and I and that’s guys I you know that’s the way to do this is to is to either hire partner or align with people that shore up your weaknesses so that you focus on your strengths and that’s fantastic and you’re a testament to the power of that. What do you think’s the most challenging part of what you’re doing right now?
Steve: From a raising capital perspective well it’s really two parts of the business. So one of them is finding quality operators mm-hmm people with proven track record with high integrity with an abundance mindset. That’s not always easy to find although having joined your mastermind that’s really been a great source for me. So that’s half the business in that alone it’s a lot of phone calls a lot of getting to know people traveling different conferences or masterminds and really digging in and then the other side of it is obviously from raising capital perspective it’s getting to know your potential investors during those relationships building that trust with them that requires a lot of education
Rod: Sure it does and you educating them and you know it’s been said that managing your investors can be more intensive than actually managing the property and I totally believe that. So what’s your favorite part of what you do? what do you enjoy the most?
Steve: I pretty much enjoy that education piece the “aha” I see in people’s eyes when I tell them about how these deals are structured how they can work how much value they can add to their own portfolio and I’m coming from a place where you know that was my experience right, corporate guy, saving, got the 401 K, doing all the “right things” and at some point saying I think there’s something more to this there’s a better way to diversify my portfolio not just with stocks and bonds. So when I share that story with people and see their eyes light up and they’re like okay and then they get their first distribution from one of our deals together. That to me is really the payback
Rod: Sure sure or you inspire them to do it themselves as well. I mean you inspire them to invest actively as well and I know you do that because I’ve seen you do it and that’s fantastic you know so speaking to somebody that’s where you were, a corporate job you know no they want more, no they deserve more, no they want more for themselves and their family, what advice would you give them – you know – how to get started?
Steve: I think you know mainly I would say to not use your corporate job as a crutch right not to use your situation whatever it is. There are people that are in far worse situations who do far more than I do. So realizing that so understanding your circumstance and then figuring out how do you make that work, how do you apply your strengths so you know I mentioned this earlier you could use whatever you want it’s a crutch once you decide and you actually make that decision to move forward, set your path, and go take action, everything starts to fall into place but if you sit there and think about all the reasons why you can’t do something it’s never gonna happen
Rod: And you know what and I talk about this in my live events. People have a story so you’re calling it a crutch it’s the same thing it’s a story the story they tell themselves which is a circuit breaker oh I’ve got this oh I can’t do that, and it just and it’s so they don’t feel terrible about themselves and they use that story or that crutch as it were as a circuit breaker um so they don’t get disgusted with themselves but I’m here to tell you guys disgust is a very powerful motivator and if that’s where you have to go to take action then do it you know and I’m gonna tell you that that and you’ve heard me say it before the life you want will require you to get uncomfortable and so you’ve got to push past those stories and push through those stories. So what would you say is the best advice you’ve ever received Steve?
Steve: A couple of things actually
Rod: They’re great great I wanna hear them
Steve: Short things but one of them was only do fat deals and you know that was early on. I was trying to figure out you know what deal am I going to do or how do I get a deal done right I want to just get into this business. So I was taking the action talking to brokers, talking to the sponsors, and you know I was on the fence on a couple of different deals as I went and spoke to the sponsors that I had already invested in over the past several years and you know they just kind of laughed it at the deals I was looking at they said that’s not good enough you should only be doing fat deals and there are enough of them out there where everyone can win without taking new excessive risk. So I’ve kind of followed that advice and took my time and did find three really good deals to act as a general partner in
Rod: Yeah fantastic and they are out there, I mean they require a lot more hunting but they’re out there and you know with a lot of people doing skinny deals right now and you know I hate to say it but there could be a reckoning at some point here with that and I hope not but it’s very possible. So if you went back to when you first started thinking about real estate in doing real estate, is there anything you might have done differently? to ramp where you are? or to enhance where you are?
Steve: For sure I would have started earlier. A lot of people when you’re podcasting and interviews are saying the same thing
Rod: Right
Steve: If there’s no doubt
Rod: Well people need to hear it over and over again guys get started and that’s the whole point here and that’s why I asked the same question because I want people to hear it repetition you know is what gets people to take action. So thank you for saying that you would have started earlier what else?
Steve: I would have started earlier and I would have gone bigger faster yeah you know when I got into my first deal I realized you know all the stories I told myself about why I can’t go big, why I can invest out-of-state, whatever it was you know who’s going to invest millions of dollars with me all of those things were minor things in the end I was able to clear those hurdles easily with the right team of course
Rod: Right right so do you have like a routine that that you contribute some of your success to do you have a morning routine do you have any habits the success habits that you could share with the listeners
Steve: I do a couple of things so the as far as the morning routine goes I meditate every morning always trying to bring the right things into my life and that starts with a positive morning routine. If the other thing I do a lot of is again the networking right. So I’m having your coffee or lunch with people probably three to four days a week several phone calls as well. So during my commute in and out of the city for my job. I’m on the phone with people whether it’s investors or potential partners that are sponsors in other parts of the country. So always building that network always talking about real estate about you know what that next deal might look like in surrounding myself with people that that have that right mindset
Rod: So tell my listeners what are some specific roadblocks, potential you know issues to look out for as they start getting into this business
Steve: You know I’ll tell you not being patient right. So one of the deals that I was looking at prior to my first deal that I actually did as a General Partner there was one I got very close on I spent probably three weeks with this sponsor looking over his underwriting and just the whole time I just had a gut feeling that he wasn’t really somebody of high integrity. I couldn’t quite put my finger on it but some of the underwriting wasn’t as conservative as I’d like the way he structured his fees it wasn’t really a win-win for everyone seeing maybe he was he was acting out of scarcity not out of abundance. It just you know again couldn’t quite put my finger on it I finally did pull the trigger on it I’m sorry I pulled the plug I decided not to do that deal but I stuck with it for probably much longer than I should have but fortunately I have enough experience as a limited partner you know in a lot of deals to really see how these things ought to be structured and the language people are you know use when they’re confident when they know what they’re doing. So I did pull the plug on that one. Today fortunately I’m much quicker to you know evaluate a deal and say whether or not it’s for me
Rod: Yeah know that’s great and that only comes through doing it you know through repetition the more you look at deals and guys those are you listening you’ve got to be out there looking at deals, you’ve got to be kicking the tires on deals, you’ve got to be mixing it up and that’s how you build that competence which will ultimately equate to the confidence for you to be able to go out and influence people put deals together influence brokers and sellers and potential investors but the one thing you alluded to that I want to kind of put an exclamation mark on as guys trust your intuition okay. When it doesn’t feel right there are so many subconscious, your brain is so powerful your subconscious brain is so powerful much more powerful than your conscious brain. And if your gut doesn’t feel right that’s your subconscious telling you something’s wrong and it’s almost always right. Every time I’ve ignored it I’ve regretted it and you know in partnerships and in relationships when you ignore that, I promise you it’s to your peril. So I you know and that’s it’s something you should really pay attention to I know that sounds really esoteric and foofy and whatnot but I got to tell you it is very very important and I’ve got you know my students get a whole list of questions and things to consider before they get into a partnership with somebody but one of those pieces is just that it’s your intuition. So you know
Steve: I want to add to that
Rod: Sure
Steve: You know going back to the morning routine yeah I also practice gratitude on a regular basis you know constantly reminding myself of what’s great in my life and I think that also helps with the intuition because you know if I recognize how great things already are, I’m not in such a rush to go do the next thing. I can take my time and say to myself you know I’m gonna raise you know one of my goals raising ten million dollars by 2020 in the right way at the right time. I always
Rod: Nice nice nice now I love that I love that and guys you should as you’re making these declarations to yourself add those things on the tail in like with gratitude or while I’m enjoying my life or you know at the end of your declaration I’m gonna make ten million dollars by X while having fun you know so I love that I’m really glad you shared that and gratitude so critical I mean I before we started recording I took you know my vision boards out of the shot because I didn’t want them to clutter the shot but there’s my gratitude board I mean so you know this is this is critical to success. Gratitude is foundational. So awesome so tell me about you know you know I don’t want people to think it’s all roses tell me about a time you got your butt kicked. Talk about a setback and in the learning experience you know we caught you know I call them seminars there’s always a learning experience. Talk about a time that you know didn’t always go it didn’t go perfectly in what happened
Steve: Yeah a little bit to the new or I spoke about this deal where I spent too much time with that partner mm it was far too much time for me three weeks when I’ve got a lot of other things going on and I was doing a lot of research on them, on their deal, on the market, trying to convince myself to do that deal so to me that you know that’s probably my biggest one in terms of raising capital. I’ve had some setbacks in the small multifamily properties but you know that’s just a different game it was more around being a landlord and those things happen
Rod: Okay okay so you’re a leader. What’s a characteristic that you should think every leader should possess?
Steve: Integrity, doing the right thing no matter what the circumstance
Rod: No I love it. That’s, I’m glad that came out of your mouth first, that’s foundational as well so
Steve: in this there’s there’s so much that can go wrong, you work you have toppy frothy in the market point things are gonna go a little bit ugly and if you’re not convinced that the people you’re working or working for or if you’re the leader yourself that you all can act with integrity no matter what the circumstance, no matter what the financial difficulties might be, then you’re in trouble
Rod: No question no question. No I love it. So what did you have to give up to be where you are right now?
Steve: Oh yeah a lot of nights and weekends. So you know when I get home from my job I’m fairly tired I’ve had a long day it’s all good I’m adding value at work and I get lots of reward for that. Sometimes I’m still working when I get home as well jumping on email whatever it is but when I’m not doing that I’m diving into real estate. I’m updating my website. I’m doing analysis on the next deal, doing underwriting on a deal that I’m about to jump into, or where I’m calling investors whatever it might be. So it’s a lot of work yeah I’m definitely not here to say that it’s easy
Rod: but its worth it
Steve: yeah
Rod: And you associate pleasure with it correct? you love it
Steve: yeah hey I’ll tell you I was going to post this on Facebook but you know my wife I just bought this beautiful house on the water just last week so I’m sitting here my new office
Rod: Congratulations.
Steve: Thank you if I pan the camera it was just all boxes behind me right. It was not possible for us to do this let’s say a year ago right just by you know putting in the effort that I’m putting in this business, the additional income it’s bringing in, in my outlook on my ability to continue to bring in that income in the future everything changes. And now we’re sitting in this beautiful house looking out the windows at the water
Rod: Love it love it. So you know if you could give one piece of advice to my listeners the ones that you know they know they want to do this, they know they need to do this, what would you tell them?
Steve: I would say two things so first is understanding your reality again. So for me I live in a part of the country where there aren’t a lot of cash flowing deals. So it’s more speculation you’ll be buying and hoping for appreciation didn’t want to get into that business but in order to invest in other parts of the country I would have to either you travel to meet the brokers, travel to see the properties, I’d be spending so much more time away from home, jeopardizing like my job, right my career. That wasn’t really for me so that my reality was I can’t go and do those things so what can I bring to the table? And what I can bring is my ability to build teams that’s what I do my corporate job so I find the absolute best players in a particular market in the asset class that I’m looking for which is multifamily and I put together that team and they do all the work in terms of finding the best deal in the best neighborhoods for that market.
Rod: So there’s the model guys okay and this is a team sport it’s not a go at alone sport and so you know and you always want to find the best players and it took me a while to learn that from an employee stand point. Actually interviewed a marketing person today a high-level marketing person for one of my companies and we had this exact same conversation. Find the best people you can possibly find, associate with them, put them on your team, and you know and success is almost guaranteed. So let me ask you this, how about some bad advice? what bad advice have you gotten you know in your career in this business?
Steve: Yeah I don’t know if I’ve had any real bad advice I think people are quick to give advice so you know I’ve had when I first wanted to get into real estate this is you know a couple years before I actually really got serious in larger multifamily. I was thinking about it, I wanted to go in that into that space and I have a lawyer friend of mine who’s great guy, but his job as a lawyer is to keep people out of trouble. It’s sort of risk aversion and you know he was like you’ve got a great life why would you go and do this it’s risky and all they’re you know all those reasons that I was already telling myself that maybe I shouldn’t do this for, he just confirmed them for me
Rod: Reenforced them right
Steve: Yeah and then I just didn’t do it. So it took me a couple of years to come back around
Rod: Yeah guys be very very careful who you allow to influence you especially pay attention to what their advice is driven from. Is it from their own fear? is it from their own you know lack of courage to take action in their own lives? that’s very that’s I’m really glad that
Steve: You know I also get advice around how do you raise capital? how do you sell your deals? or how do you get investors? right and a lot of that to me is it’s very contrived and salesy if that’s a word so for me it’s more about just telling the story right so telling my story about you know where I am and how I invested in these things as a passive investor the results I got from those things and then if that strikes a chord with the person I’m talking with which is generally you know somebody around my age because that’s my network right those are the people I know. So oftentimes they’re like yeah I feel the same way about the stock market and yes I would like to diversify my portfolio and tell me more about this thing it just becomes sort of a natural conversation rather than anything that’s contrived. So you know you another bit of advice is good advice that is is to do things the way you feel like they should be done. Trust your gut again about what works for you because if you’re acting in a way that’s not I guess in integrity with who you are and how you behave especially your friends and family, they’re gonna see that they’re gonna sense it right away.
Rod: No question no question. If you’re not confident, you’re not gonna be comfortable. And you’re not going to be confident unless you’re competent either. So make sure that you don’t try to dabble in this thing because, and be yourself like you said and that mindset comes from being comfortable in your own skin which comes from being confident. So they all tie together and now I’m really glad you showed that as well. So do you have any favorite quotes that that you read regularly or on your desk like I do?
Steve: You know probably my favorite one is the secret to living is giving
Rod: Love it love it and you live by that brother I got to tell you and I love where your heart set you you do everything you can to help other people and you know any you know anybody that adds value like you do is destined for success and that’s why you’re successful. I mean it’s the bottom line you know. So you know in that vein if you were coaching somebody you really cared about what would you tell them to focus on their first 90 days or so in this business? you know they want to get in this business what would you tell them to focus on?
Steve: I think you know the one of the biggest things is understanding what a good deal looks like. There’s so many things to do in the first 90 days it’s like
Rod: Yeah that’s not a fair question that’s not a fair question I apologize
Steve: No you know if they dig in a bit and start to understand what the business looks like what is a good property look like? what’s what a cash flows come from it? what sort of income can a sponsor make from that? then they can get a better picture of you know what is this business? is it for me? how does it really work and is it worth working for? is there going to be enough pleasure in this thing for me to put in all this effort?
Rod: Right right right right good why do you think people fail in this business or give up yeah let’s start with fail but then I want to say why do you think people give up in this business?
Steve: I think it’s both of those things right so they’re unable to see I think the big picture though the long term benefits of all of the work that you have to put in upfront
Rod: Right right right they just can’t see that the ultimate goal they can’t envision themselves getting there may be because they’re forcing overwhelm on themselves by thinking they have to you know do it all or know it all before they get started and really that the message there is just get started. Now I know you’re like I said I know you’re gonna be at my Atlanta event guys if you’re listening I hope you can come meet Steve and all the other incredible very successful people that I’ll have on the stage in my panels. Go to rodsbootcamp.com, there’s some tickets left for the Atlanta event. Last couple of questions, what hurdles you know what hurdles did you have to overcome to do this? I mean you know I know you’re a very hard worker and you come from a place of gratitude and giving but you know there’s no question you had to overcome some hurdles what think about what that was?
Steve: Yeah you know a big one for me was really believing that I could do it that I can do this and still have you know juggling the family life, the work, and then you know this hobby of mine of this real estate or a habit as my wife sometimes cohabit but you know I you know I don’t tell a lot of people this but you know I was talking about it again
Rod: How about you tell how about you tell about fifty thousand people right?
Steve: Yeah I’ll tell everybody right. My son’s gonna get a kick out of this one so talking about it for years wanted to go big, was still dabbling with my you know 16 units and in my passive investments and my older son who was seventeen a couple of times asked me you know when are you gonna go big what are you gonna do this thing you’re talking about and I just wasn’t doing it and I really had no excuse. So one night at the dinner table he hadn’t asked me in a while but he just knew he asked me and I you know was kind of hemming and hawing again and he said when are you gonna stop being such a wimp?
Rod: Haha
Steve: He didn’t use the word wimp
Rod: Yeah I got you I know the word he used
Steve: And I was like I was almost shocked you know I did didn’t know if I should get up and you give a punch or if I should just take a good hard look at myself which is what I ended up doing. And I end up thanking him for it because you know that at that moment the next morning I was out on a bike ride I blew my friends often just went for a long bike ride solo and really thought long and hard about what is it that I want and what am I gonna do about this and you know I think within a couple of weeks we were on the phone talking about your coaching program.
Rod: Nice nice pivotal moment. Well I’m you know one of these you need to bring him to one of you one of one of the events here soon because I’d love to meet him and I know he’ll get value. So please please make that happen on me okay bring him on me but that’s fantastic. Well listen it’s been such a treat to work with you and see this incredible growth and you know and see how much you care about other people and guys I hope you can come see us in Atlanta you’ll be glad you did. And Steve thank you so much for being on the show brother it’s been a real treat and I can’t wait to have you back on when you’re at 4500 units
Steve: Thank you very much Rod. This was fun.
Rod: All right buddy take care see you
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