Ep #300 – Special Edition – The Billion Dollar Real Estate Roundtable

Here is some of what you will learn:

Rod celebrates his 300th episode with some of the biggest hitters in the industry.


Glenn Gonzales
Maureen Miles
Kenneth Wolfe

Ah Ha moments that made a difference
Understanding Yield Maintenance
Building your Team
Key points to delegating
Thought on the market cycle
Insurance concerns
Importance of stress testing your deals
Understanding bridge debt
Getting started in today’s market
The importance of having a mentor
Building credibility

Full Transcript Below:

Ep #300 – Special Edition – The Billion Dollar Real Estate Roundtable

Rod: Welcome to another edition of “How to Build Lifetime Cash Flow through Real Estate Investing”. Wow this is our 300th episode. I cannot believe I’ve been doing this as long as I’ve been doing it. I actually didn’t think I’d like doing this and I’m having a ball, we are right at five million downloads for this podcast. And this episode is going to be my favorite probably ever because I’ve got three of my great friends on the show. I’ve got Glen Gonzales, Maureen Myles Kenny Wolfe, probably we’ve got pushing a billion dollars in assets on this call today okay guys. So you know if you’re in your car, pull over and listen you’re gonna get some incredible insights today. All three of them are in my multifamily boardroom mastermind. We get together three times a year we break bread and we’re all you know good friends we’ve all been joking around us before we started recording here. So we’re gonna have a blast today. Guys, welcome to the show. Maureen, welcome.

Maureen: How you doing? Thanks for having me

Rod: Absolutely. Glen, Kenny, welcome guys.

Glen: We’re excited

Rod: We’re gonna have a lot of fun. So you know I know you know Maureen’s in the thousands of units. Glen’s got you know had been involved in over 5,000 he’s owned he’s got eight hundred under contract, Maureen’s got five hundred under contract, Kenny’s pushing three thousand with another over eight hundred under contract, you know I was gonna ask you guys how you feel about where we’re at in the market cycle but you’ve all each of you who’s got hundreds of units under contract. So I know that you’re not concerned obviously but we’ll dig into that a little bit cuz I know a lot of people are. So we’ll have fun with that but you know I’m gonna ask each of you questions and and we’ll see how we go timewise. We’re gonna have a lot of fun with this today and so the first question I’ve got is you know you guys know a lot of my listeners are new they’re just getting started, maybe they own some small multifamily, just maybe they own some single-family, maybe they own hundreds of units I’ve got all of them on here but I want to ask you each, when you first starting out or as your career built did you have any aha moments? Ladies first, Maureen, we’ll start with you. Any aha moments?

Maureen: There’s a lot of aha moments. I remember taking like you know you go through the seminar different things to try to learn what you can learn. I’m just saying like I never heard of that before that was any of the courses I took but that’s why it’s so good to have the networking possibilities and going to events and things like that to be able to rely on some of those you know make those phone calls when you need to on people you can trust things like that. So that was an aha moment. I’m also kind of missing on some opportunities in the beginning that was probably one of my biggest drivers is you know I had I had a great deal on time on I mean it was just it was a trailer park but it was very lucrative and I knew it was but I didn’t know enough at the time to put it together myself. So the next event that I had went to for networking I made sure I found somebody that knew about trailer park. So I guess my aha moment is just realizing that when I go to different networking events sometimes it’s not even necessarily the value of what I’m being what I was being taught or what I was there to learn, it was more of the relationships in there and this whole whole business is really built on relationships and you know working with really good people that you can trust is, so make sure you always associate yourself with just top-notch people all the time

Rod: I love it yeah I love it no you’re absolutely right guys. This is a relationship business and and I’m sure you’re gonna hear that as a common theme. So Glenn how about you any aha Moment? So I mean guys Glenn started as a maintenance man. Now over five thousand doors another 700 plus under contract or I’m sorry guys 800 under contract it’s so you know any aha moments for you my friend?

Glenn: You know I’ve had a couple of them just recently one of them is kind of high level and one of them is kind of in the weeds and I and I’ll kind of keep it brief but on a larger level, I’m selling a 650 unit apartment complex right now and I’ve got a yield maintenance that I’ve got a pay as I exit the deal some you know because it’s an agency debt and it’s tied to the 10-year Treasury right. So as that rate you know increases a little bit I pay less yield maintenance so getting out of it you know if that rate you know fluctuates it could either help me it hurt me. Well recently that rates been coming down which means I’m gonna owe more in yield maintenance when I exit and on this size of the deal, the way it’s the way that it’s adjusted in the last 30 days has just cost me one point five million dollars in yield maintenance, one asset on an exit. So you know we’re thinking about going back to the buyer and saying how would you like a gigantic credit if you just assume our loan runs a good in-place agency long. So you know we got to get a little creative because only exiting,it’s just as critical when you buy a deal but when you go full cycle and you get rid of exit deal boy that that was an aha moment to me I’m like wow that’s

Rod: No kidding. Those of you who are listening, yield maintenances is a version of prepayment penalty for those of you in the single-family space you understand you know the lending institution requires a certain yield on the on the loan and if you don’t meet it, you got to pay it to sell. So what was the second one button so the second one that was kind of in the weeds a little bit on operations. I was talking to one of I was reading a financial statement and then I noticed that all my financials the top line had kind of taken a dip and then went back up and on my growth potential well that’s not right you know your gross potential doesn’t really change every day or every week or every month. So I called the manager like I went right around the Regional and right around the bosses and called the site manager in like hey with what’s going on with your market rents? and she’s like, oh we adjusted those and we’re offering specials. I said oh you mean you’re asking rents is a little bit different shake no my market rent I mean no not your market rent so I said I realized so I called the bookkeeper on my bookkeeper, why did the market rent change? oh because the manager called me the market rents the change. I’m like no, those are just this week’s specials so they were going into the software and adjusting rents current mark so my aha moment was this you know, if your manager and your regional manager and your accountant are not all speaking the same language with the correct definition on how you define certain things it’s really gonna mess up your financial statements. And that was an aha moment digits occurred kind of this week and as I peel the onion back was able to talk to the manager and the regional and the VP and they all have the same aha moment oh well not all speaking the same language manager that’s not market rent that’s just a you know and asking price

Rod: Yeah and guys guys you know Glenn like I said started out in the management business as a maintenance man then managed upwards of you know five thousand or fifteen what did you say fifteen thousand doors and so you’re probably and now he’s gone full circle soldier management company and now you’re using third-party managers again and you’re probably a third party managers worst nightmare because there’s nothing … Kenny, how about you buddy?

Kenny: So I guess the first aha moment that we had was it like kind of marine you go to those two day events or those you know those networking events and so we’re sitting there in this this two day event they talked about single-family investing to first day and so my wife and I got excited we’re gonna buy ten units, ten single family units and do that and then the second day is how about multi-family so did we said you know no way we’re doing single-player jump right into multi-family. So to me that was the biggest comment was you can go bigger faster doing multi-family and that’s you don’t that that’s how we were able to scale up so quickly

Rod: Wow awesome awesome. So the next question I’m gonna ask you is you know what’s the most important part of your role now. Now you guys each have teams and and you work with teams and and I know some of the people you work with and some of we’ve worked together actually and but I want to ask you know what role you’re playing now and then what was it when you started. So you know Maureen we’ll start with you again

Maureen: Let’s see the role I have now is uh you know we all and I think the others will agree we are kind of the visionaries for the company right. We’re building up an asset management company I guess you can call it you know whether or not we have our management and house what kind of construction leagues we have, what we’re overseeing right now. We have I think our yeah well I have about forty people now that work full-time for me in the different aspects of the company but I mean as far as my role, it’s just trying to get everything as efficient as possible, delegating to the right people, we’ve gotten some great talent the past six months or so by past year that has just made my life so much easier. So I’ve learned a big lesson on delegating to appropriate people and really you know in the beginning you’re trying to cut costs, you’re trying to save money doing stuff, but sometimes you really you know the right people are a little bit more expensive but well worth it and you know I really like the culture that I’m able to build now in the company you know I come from a corporate background with one of the big telecom companies and I mean there were just days I hated going to work. I’m really driving down the highway said okay somebody cuts me off I’m not turning because I didn’t want to go to work go to work so that’s a sign by the way that you should

Rod: Yeah that’s called a clue.

Glenn: Rod man he knows clue

Rod: So what was your primary focus when you were just getting rolling your first couple of deals?

Maureen: Yes so we do have that infrastructure now but again when we started I guess like maybe four and a half years ago now it’s been when I bought my first property that was over a hundred units. I mean I did everything one of the reasons I was okay with moving forward with that first hundred plus deal is I stood at the bottom of that Drive when I said okay, you know what me and my family we could manage this sucker if we have to ourselves and so I felt confident pulling in a couple million bucks from investors because I knew I could control it. So in the beginning I mean we’re looking at you know we still look at every dollar spent I just have more help to do it but I mean you’re really you’re watching every dollar just like Glen had said, you’re looking at those income statements you know making sure that your third-party management company which is where everybody starts is doing the right thing you know you’re underwriting every dealer you’re involved with every pursuit you don’t have the ability to have that team yet so but that really is what gets you good and gets you to understand the business be able to keep everybody safe, all your investors safe, and then what I did is as I was having these pain points and things that I realized that if it was on my plate it would take a little longer to get done or I mean I work a lot, I love this business but there are certain things that I just know I’m not the best I said you can’t be good at everything. So I would find someone to kind of fill that role for

Rod: And this is recent for you right I mean learning really really owning, leveraging things because I remember we’ve had conversations where you just you know you get you’re handling it all so

Maureen: Yeah and I still try to make sure that recently somebody told me when you delegate you don’t you can’t lend it to them, you’ve got to give it to them.

Rod: oh that’s good

Maureen: And that’s something I’ve been really trying

Rod: That’s good I like that all right. Thank You. Glenn, how about you? and you know maybe very very similar maybe not. I don’t know

Glenn: you know first I think I’ll kind of speak to what I did in the past. I want answer the questions a little differently you know

Rod: okay

Glenn: When we grew the company you know we were buying one deal at a time. And my business partner and I we would do everything together right and so we were an acquisition mode then we were a transaction mode you know and then we’d get an asset management mode and then renovation but we did that kind of together but after your third or fourth or when we got to the fifth deal than we realize boy we can’t really continue to do all these things. So after being in the business for 30 years, I decided well gosh let’s assimilate some people that are really good at what they do. So I moved from doing everything myself which by the way gave me a great deal of experience and I think everybody should go through doing it themselves whether you’re good at it or bad at it or if you’ve never done tax appeals or closed on a transaction or renovated a unit, you should try that you know. I mean it’s gonna really make you good at what you do. Now granted like Maureen said and I’m the same way I’m not the expert in all areas right. So today I spend my talent time assimilating great people together right. I’ve got contractors that I know are good at it because I’ve been through two or three bad contractors but I found a group. I’ve got attorneys that will work on my part ship agreements that are really really good and very dialed in why because I worked with some that weren’t as good you know. So kind of it’s by trial and error but the other thing is you network you listen to podcast like this and you ask the group you know who’s really good at what they do and people will tell you

Rod: They are referrals yeah

Glenn: Yeah and when you have one-on-one conversations with people, they’ll also share with you what didn’t go so very well you know and that, that information is what you really need is what didn’t work very well. So I’ve now spent a great deal of my time assimilating people together right, relationships with great brokers that have good product that have decent prices good lenders, good title company, just you know you just orchestrate it all and then because of that you can really do great things right. If you try to do it all by yourself you’ll only get so good ya know I suffer from the you know

Rod: Yeah I suffered for a long time from the same thing you know in which what you come to realize is, well back to your assembling the best people the most successful people on the planet are the ones that are great hunters of people. They are great evaluators of people do you know they discover the best. Those are most successful people on the planet but as it relates to leveraging you know, I struggle with that for years myself and finally came to the realization there are people who do it a lot better than I can and you know you got to let the ego go and realize that there now that sometimes not but but very often they can so but love it in and like you said and Maureen said the same thing you should work in every piece of this business so you fully understand it so that you can properly manage down the road. Kenny, how about you my friend?

Kenny: Yeah so we got sort it out the same way. I mean everybody kinda have to bootstrap it and you know our first deal with seventy six units, third-party management. So you know we did everything from all righted everything from raising money to find the deal – don’t let the management company. There’s a lot of you know a lot of ways or a lot of ways that we were involved I was involved. And then now though we’ve really I’ve gone to where I’ve learned like everybody else here that I like to find the deals, I like to I like to be I’ll be a lot like to be the contact for new equity as well. So that’s what I stick to anything that falls outside of that I try to hire it out I hire it out so we’ve got a good team here now in our office

Rod: And so let’s talk about team for a minute. What are the different components do you have that you have in your team Kenny and then I’ll ask each of you just so people can get a feel for you know when they get to your scale the different pieces that you might need and I know Kenny that you just bought a management company so you’re you bring in your property management in-house I know Maureen’s had it for a long time and Glen sold his recently but what other members are on your team as it relates to the acquisition, the reposition, and the asset management

Kenny: So that for us is pretty light. We just don’t need a lot right now we can cover a lot so we’ve got an asset manager, and I’ve got a marketing/receptionist here in the office. The management company that’s you knowthey’re full-fledged they probably have 200 people you know on that side of it but made just on the investment side right now we just have to go looking for a third person here yeah

Rod: Nice nice so guys there you have it there you have it awesome. What about you Glen? I mean I know you just aligned with David but any other do you have asset management component or do you handle it yourself or

Glenn: So you know when I was with Napa ventures in our company, we had a couple of key people that were really really good what they did. For example when we were in acquisition mode and she’s still with us because acquisition now is just who does all the dispositions but her name is Divi right she got a degree from UT and she in finance and she came to us as an intern and Rob’s laughing

Rod: I’m laughing because when they start recording they were dogging each other about his you t-shirt that’s really funny, Kenny has given me a hard time about it that’s

Glenn: And then I put my boots on there on the table so yeah that’s all it’s all good. Okay refocus sorry about that but you know for example Divi is so good at our transactions that she crosses every T-dot every I nothing gets past our attorneys, title company, you know the buyers that want updated stuff for their due diligence, she’s so organized and we deliver stuff to buyers that are buying our assets in such an organized fashion that we get this feedback that it’s so impressive how organized we are but really it’s not the company it’s that organized, its Divi

Rod: Nice

Glenn: good right? We have two asset managers, they each had ten apartment complexes in their portfolio, and they would I would require them to visit properties and meet with the property management company on a regular basis, and they communicated with the investors on a regular basis. So they really you know so my asset managers I used to do that myself but I just when you had I had at one point 23 properties under an ownership at one time and I just couldn’t go visit all of them all the time. I just couldn’t you know physically. So I had to like Maureen said give it to them and they owned it start to finish, from operations all the way to communicating with the investors

Rod: Wow no that’s I didn’t, that surprises me actually because a lot of times you know the operators will hang on to those investor relationships so they have one person just for that for that role but the fact that you tied those in based on the properties that they’re overseeing, I love it. I mean that’s a great great strategy and that takes so much off your plate. I mean you’re obviously still available if somebody if something gets escalated in every one of your cases you know this probably an escalation process where you get involved. Maureen, is do you do it any differently?

Maureen: Yes I mean we do the same thing. I have, I realized that when I was caught up on closing deals and working you know kind of overseeing some of the heavier lifting projects we were doing that I was losing the pursuit activity. So my first thing was the first person we brought on find that key role was an acquisitions guy just to help with that pursue stay in contact with the broker say because you know when you’re looking for a deal, you’re hot heavy you build these relationships like a snowball, it builds up, you started getting feedback and I’m sudden you get busy when you’re doing it yourself and you shift into okay getting the deals under contract closing them and you kind of lose focus on that. So keeping that ball rolling has been probably the biggest difference the acquisitions and there’s many ways too. You don’t have to just hire a guy you can find someone that wants to be rewarded with maybe a piece of the deal or there’s other ways to do it without having to come out of pocket for that salary so that was huge along with like an EA or an admin person like Glenn’s baby just somebody that can keep track and just kind of help organize all that stuff my most recent one and again this is kind of keeping the property management out of it like Kenny had said my most recent is more of a CFO position so I have the admin I have my acquisitions that’s will my admin is Gen and then I have Roberto I recently brought in who is the CFO and he’s really great at all the processes and procedures and just making sure that everything’s flowing correctly between the different entities and keeping track of all that. So that’s that’s really those three positions have been really

Rod: That’s that’s awesome that’s awesome and that just gives people an idea of you know when they get to your level what what’s involved. So let’s talk about how you guys feel about where we are in the market cycle because I mean I know you’ve all got hundreds of properties under hundreds of doors under contract what might you be doing a little bit differently now if anything in your deal analysis you know, what are you doing to stress test and get ready in case you know when that when things pull back which they inevitably will. Glenn, we’ll start with you

Glenn: Sure you know when you look at the big global picture, I’m in that cellar. So I’m still in far more of assets and I am currently lying right. Yes I bought some yes I have some under contract but for the most part if you’ve held your property for a little while to get time to sell. So now there’s always needles in haystacks right. You can always go and you can force and you can create value and when you find stuff that’s mismanaged or has a lot of deferred or just you know people are asleep at the wheels and they’re not raising rents those are great opportunities even in today’s market right and and I still go after those things. I find them you know you get to know that on who is you know a great operator, not a great operator. You can see you know traditionally where values have been and where they are so you can see which may be which management companies aren’t the most effective out there and just there’s all kinds of little things that you could really kind of hone in on. In terms of the market where we are today, yes I’m still buying but I’m very very cautious about a couple of things, my debt and how I structure that because if I don’t hit that value add as much as I thought I’ve got to have a plan B going into it my lender has to be on board with that. Some lenders traditionally have not been you know you stick to the business plan and there are certain bridge lenders. I’m doing more bridge debt right now that I am doing agency. I think that’s a temporary moment right now and probably asset specific. I would also say that the deals that I’m finding are in the just on the outside of some of these you know they’re not tertiary markets but they’re in core markets but they’re in places that they haven’t really looked in the past. People haven’t bit up prices because they’re not on people’s radar but they’re so close to the action and if they’re in a high-growth area or population is booming and jobs are coming like up and Dallas right. That’s really going on in Dallas not so much in San Antonio but certainly lots of opportunities at Houston as well. So you know you just got to know your market, you got to know what you’re looking for. I think the other thing I was gonna mention that really stress testing is with all of the damage and it’s gone on with fires and hurricanes and stuffs across the United States in the last year or two, insurance rates are for me going through the roof on new quotes and that is a tough you know that’s a that’s a fixed line item when you buy a deal. So if you want to write a deal in your it I’m just gonna pluck a number from the air right seventy five thousand dollars for an annual premium or you’ve been at two hundred and thirty dollars a door and insurance cost, you know you’re gonna be pushing three hundred bucks a door and Maureen’s laughing for some reason because then yeah

Rod: Maureen Maureen you know we won’t talk about fire when it comes to Maureen but

Maureen: Nothing to do with what you’re saying coming right through my skylight in my eyes

Rod: Okay okay okay

Glenn: Just over five more feet will block the light you know

Rod: Talk about for a second what what sort of a stress test you’re doing on deals to make sure that you’re in good shape you know are you like right now we’re doing you know we’re looking at the deal 15% vacant, we’re looking at a rent pullback anywhere from you know 10 percent on a rent pullback and we’re just we’re looking at what our break-even point is that kind of something the same thing you’re doing now Glenn and I’ll ask each of you the same

Glenn: Yeah the break even ratio is very critical right now but you know you also need to stress test your insurance and your taxes. For example you know taxes we’ve had more success in the past when we do our tax appeals but we’ve had less success in the last 12 months on our tax appeals. So the counties and those you know taxing entities are becoming a little more savvy in terms of what they’re going to give or not give them when your property appeals. But yeah your break even ratio and really when I buy deals now. I actually raise enough money for work I call it working capital but it’s actually a rainy day fund right you dip you know you don’t have to go back to the investors and do a cash call I mean and you can just disclose to that I’m upfront you know we’re not we may not spend this money but it’s gonna go into a reserve in the event that the market softens just a bit we don’t have to go back so

Rod: Yeah I love it love it Maureen, Oh actually Kenny Kenny was next uh Kenny what about you?

Kenny: You know so I mean I felt a lot of you know Facebook, a lot up and a lot of folks and a lot of investors of ours too are worried about the about interest rates and they keep I just had a phone call yesterday they were talking about how how interest rates are aligning and I was telling them have you seen the 10-year Treasury it’s you know falling off a cliff and I thought I was good to lock in that you know the Wednesday before Christmas because it went down you know 10 bits but now it’s another 20. So yeah you know I tell folks you can’t time the market yes we’re gonna have a recession I don’t think it’s gonna be bad as I wait no knowing well we are stressed testing our deals too and you know we do the same thing as planned do a rainy day fund you know things like that do higher economic vacancy, pat our expenses a little bit more but something else that you know sure he probably does too but I look at what’s our debt per door. So you know if it goes and we’re doing a lot of bridge loans right now too though we’ve got a few deals under contract and all of those are going to be bridge loans and so we’re my phone call yesterday with a lending group was you know how flexible are you if we have to extend beyond you know our extensions? what you know what do that what does that look like? So we’re looking at that the price for the long corridor because so that tells me how easy is it going to be to refinance if the you know who hits the fan yeah

Rod: So both of you guys have bridge debt. I’m just let me ask me Maureen are you doing any bridge right now?

Maureen: We’re doing one with bridge and three traditional

Rod: Three traditional. Do you guys have any any discomfort with you know most bridge debt, are all your bridge debt floating?

Kenny: We can cap it

Glenn: Yeah okay I actually paid a cap mine

Rod: Okay okay okay okay and then what what what terms are you guys doing?

Kenny: Well we’re two to three years on that with, both of them had two year extensions

Rod: Okay and so you know I guess what would be concerning is if the rates really do pop and cap rates pop, then you know it’s being able to refinance out that bridge debt you know and timing that. So I’m assuming you stress test that as well you stress test your refinance exit or sale exit whatever it is your disposition yes right I’m asking yes I’m assuming of course you do that okay all right of course

Glenn: Across the board you know I experienced that our bridge lenders are charging a little more in interest than they have in the past okay. So just kind of be aware of that too I had a little bit of sticker shock when I’m getting some of these quotes while you’re asking other questions I’m gonna actually look up my last bridge loan and I’m gonna look and see why I’m actually paying final so

Rod: Sure sure so you know I was gonna ask you guys how to you know strategies for finding deals in this market. I already know the answer but I think what I want to do and it’s because you guys have been at it a long time, you brokers love you because they know you close and all that but what advice would you give to someone that doesn’t have that track record yet? maybe doesn’t have you know these incredible broker relationships? what would you tell them to do in today’s market to try to find deals? Maureen let’s start with you

Maureen: Yeah I mean if you want to just if I could just go back to that last question just

Rod: okay

Maureen: Some of the things that keep you safe a little order that we’re doing they kind of just keep us safe in this market is a still find the deals would be the rent potential as we buy it n.We’re not buying things the broker is telling us down the street they did an upgrade and got $100 per door and he does story’s a little old at this point but we’re still one of the deals we’re closing on now has about a hundred fifty built in today not even having to touch a unit it’s just it’s just finding those like Glen it’s a needle in a haystack deals and just going after them aggressively when we get them. We try to get first sight of these properties and kind of had the brokerage grant so it’s early and then we’re aggressive with terms so we can wrap things up quick sometimes hard money. I would advise that in the beginning but if we’re sure about the project, the last couple deals I’ve won I’ve put up it wasn’t that much just a little bit of a hard money on there just let them know we’re serious and for me it’s worth that little bit even if I had to lose ten or twenty thousand, it would be worth it to be able to secure that that long or that deal. So I’m just be really careful with your numbers in this market going in and making sure the spread is realistic as of the day you buy it. We always say we don’t create the market we work within the market. So as the markets a little softer we want to make sure that cushion is there and I’m sorry Rod what was your question again?

Rod: No actually let me let me ask Glenn what he found and we’ll come back to you Maureen for that and we ask the question

Glenn: Yeah so on this one it’s in a tertiary market. I got 75% of the initial cost and 75% of the appraised as is value. They also lent 75% of my renovation. The interest rate on that is a 3.75 over LIBOR. But I also paid for a cap on that. It has built in one 12-month extension, excuse me two 12-month extensions so it was a 36 month with to two extensions. That’s kind of the you know the interest in the terms on a 156 unit on the tertiary markets so

Rod: Okay nice nice nice. So the question was, Maureen, for people that don’t have the benefit of you threes you know incredible broker relationships that you’ve built over the over the years you know again the brokers all your brokers know you’re gonna close if you if you do a deal and you say you’re gonna close you’re gonna close and at Glen I remember and the mastermind you talking about eating I think it was a hundred and fifty grand on a deal just to keep the broker relationship if I recall

Glenn: yeah

Rod: So you know, you guys know how important the broker relationships are but what would you tell someone who hasn’t got you know hundreds of units, maybe they’ve got some you know they just want to get started, on you know what would you do if you were in their shoes today to find deals I’ll start with you Maureen

Maureen: Well one of the things we’ve done recently because you know Atlanta is where we based are some other markets just for some kind of chasing yield you can say I was looking in some markets like what I said there may be under the radar a little bit. So we we actually did I did about a three-week road trip with my acquisitions guy, William, and it was you know my daughter tunes and this thing it’s kind of cool so anyway it’s a three of us the word being newly introduced into these markets. So I didn’t know that the brokers at the time. We still was one had he set up appointments ahead of time you know we had a schedule or his visiting but a broker told me a long time ago and I was just trying to get into it is you know seeing a face going out and meeting them is like number one knowing that you’re serious person they said eighty percent of the people that they deal they’re you know the tire kickers as they’re called are you know phone calls and they never will really show up. So just by showing up you’re increasing your chances of getting them to know you and then also the type of do you go after. So even you know we have a good reputation I can of course give referrals to different brokers and owners we’ve closed with but I know even in this market like we’ve been trying hard to get into the Nashville market um we’re having a hard time getting our normal like two to three hundred unit property. So in these new markets you know what I’m looking at 125 units, a hundred units because you just you got to get in you almost left I just pay the price a little bitter but but just to get something in the market is key and then you could grow from there. So my advice would be to show up, take the brokers out to lunch, get to know them, you go to different types of networking event so that you do have when you’re ready to put them in an LOI you’re not scared because you do have potential sponsors that are in your core already that can help and assist moving forward. But then also go after that maybe you know if you’re targeting 100-plus maybe you’re doing a 75 to 125. Most of the institutional people and the people that are really ingrained in the market and have the reputations. They’re not after that size unit they’re going bigger. So um you know maybe sometimes you’d pay for something that’s maybe it’s not quite the area you want to go into little dirtier there’s a little bit more renovation than you know you maybe ideally want to do but you just got to get into get your teeth into something

Rod: I love it love it and I don’t know who said the quote, “sometimes half the success is just showing up” Love it and that’s awesome advice. Kenny, what about you? what would you tell somebody I you know that was in this situation I just described?

Kenny: So if you’re new to multi-family I would say and I promised Rod didn’t pay me to say this but I mean how do we get a mentor that’s what we did. I mean I got a mentor because your doomed as an extra zero between behind these real estate transactions you’ve done with other people’s money. You cannot reverse, you cannot be bad. I mean it’s not

Rod: or to be your last do

Kenny: ya I’d say first hand will be your last. So to me coaching was a big deal because I didn’t have a real estate background when I got into it. I was coming from oil and gas. It’s still numbers but it was real estate so that that helped pave the way because the mentor you know already knew the management company is to choose from, the lenders. I mean he you know it really shortened my learning curve because that was a big deal and also – yeah just like Maureen, we found the same thing where we go to a new market like when we went to Columbus, Ohio for the first time I had to buy 120 unit deal and I didn’t want to, it was too small but it was a way to get us in and once we you know bought the deal then they understood that you know this guy is crazy being in Texas and buying in Ohio you know and he is serious. He’s actually going to buy and they led us to a two hundred sixteen unit there but yeah when you’re go to a new market you kind of have to buy whatever you can buy that is a good deal and whatever size it is

Rod: That’s great advice great advice and guys I don’t care if you come to my live event or buy my stuff but get help for sure. Great advice Kenny. Glenn, what about you buddy, anything to add?

Glenn: Yeah I would say that stepping stones are always great right because when I was buying my very first deal was a 44 unit deal apartment complex in a small town called Puyallup, Washington and I and I did okay on that deal and but it was years later. Then I bought a 56 unit and a 64 unit and then 157 unit and then a 327 unit and then at 650 unit right so these deals were all stepping stones and then I had enough credibility after the stepping stones to say I’m gonna go buy this one portfolio from a friend of mine named Ed who was retiring hit 8 apartment complex this 1,500 units and he agreed to sell to me. So but at that point I had already closed on some of the smaller transactions and built a reputation and it had worked out the bugs on the systems and the transactions really say I was a perfect expert at it but I had already learned from my own mistakes. I’d rather learn all my mistakes on a 56 unit deal then a 650 unit deal right. So stepping stones

Rod: less zeros yeah no I love love it great advice. You guys a similar theme that actually has not come up on the show before. So that’s awesome now you know by the way guys what Maureen and Kenny said about networking as well yeah you know I have people to come to my live events consistently one after another because they meet other people, they find potential sponsors hell I’ve got probably almost a dozen potential sponsors in might in my coaching program but you know you just got to get out there make the connections and you know and that’s how you know that’s what’s so beautiful about this business is you know you align with someone and then you go you can approach brokers and sellers and say, we, use the “we” word and say we own this you know we you know you whoever you’ve got on your team as a sponsor and you utilize their portfolio to lend credibility to your situation. But let me ask this question Glenn and I’ll follow up with you and then we’ll go to the others you know what would you suggest people do to build these relationships just some words of advice you know – because the relation it’s all about relationships even you know with the brokers with you know with investors with all the different people in this business any, I mean it’s gonna be common sense but I still want to hear, I want them to hear you guys say it. What did you do to build relationships to get you to where you are now?

Glenn: Well I’ll tell you that this it’s not emails and it’s not a phone call. You take time, you sit down with somebody in person, you get to know him, you talk about your work ethic, their work ethic, and you get to know each other on a personal level and you just spend time. You know that guy ed that I bought eight apartment complexes from he waited till he was 80 years old to retire and I had just maintained a relationship. I wouldn’t rode my bicycle with this guy and we had a relationship by the way he was 80 and I was much younger and he kicked my butt just you know I’m a wheelie at bicycles and but when it came time, I was the guy he called this is hey Glenn do you want to buy my apartment complexes from me? So somehow to all the newbies that are listening you know find a way to figure out who’s gonna help you get from A to B is that a broker than spin a relationship with a broker but if you can network with other owners like I go to these events now and I’m developing relationships with people that now want to buy my apartment complexes and I’m spending time but I’ll tell you when I get ready to sell an apartment complex and I’ll just you know throwing out Eagle Point right now has the broker gave me a list of you know the top 10 offers and we narrowed it down to the top 3 offers and here are the things that I asked the buyers, how many units have you closed in the last 12 months? has your equity already committed to this deal? and then I asked a broker have you transacted with this particular potential buyer yes or no? So if that buyer said no I haven’t transacted in the last 12 months they’re off the list right and if they say if the broker says no I’ve never transacted with this one. I then say okay broker what do you know about him? and if he sells me and says look I’ve spent the last you know 2 or 3 months with this guy or gal individually and we spent lunches together and we know each other Glenn I recommend they’re gonna close. Then I will say ok broker if you know them and you know them well and you spend time with them you think they’re gonna close then they’re up to bat

Rod: Ok let me know if there’s noise from the the guys they did to my yard guys just showed up perfect timing but Maureen what would you add to the relationship building?

Maureen: You always want to I think in the beginning some of the ways that I’ve gotten deals from brokers it’s just uh you know I’m pretty friendly and easy to work with but I see some people kind of struggling sometimes to get their first deal or they don’t understand why the brokers aren’t giving them better stuff but you know brokers don’t like to be challenged necessarily. So if you find a way you know brokers are there to tell a story they’re there to sell the property. So what I found sometimes is you I kind of call it broker talk you have to kind of take it with a grain of salt but if you’re defensive with them and you say hey that doesn’t make sense or why are you you know BS in me honest like you just you got to be easy to work with they’re not gonna want to work with you if you’re constantly like butting heads with them. So okay you definitely want to be on their side sort of so it’s more of a weed thing then you versus them and then also just try to find commonality. I’ve done really well with what a certain broker firm and the first time they call I was calling Georgia and they said oh you know we call you from the north right and they’re like I’m like no and they’re like a Yankee and I’m like huh like you know what do I call you guys from the south and they’re like you know. So we just kind of had that going back and forth you gotta be have fun and you know just be able to play with them and you know they were a family-oriented business. So when I went down there my daughter and my son went with me. So you just you try to just kind of find commonality and you know I click the well with the family orientated brokers because I have you know my family involved too. So that was an easy connection all right I’m a female I’m a little different so whatever makes you a little unique maybe or what you can bring or knowledge but easy to work with is number one. Doing what you’re saying then I do if you say you’re gonna get back to them tomorrow and you don’t call them back for a week you know you’re probably not going to be top on their list and really showing up is just showing up even if you don’t get anything from that deal it’s gonna build momentum for another deal

Rod: Love it love it. Kenny anything to add buddy?

Kenny: Yeah I guess I whenever we’re going to a new city or even if I was starting out now, I would find a management company you know now we’ve had our own in-house but when I was started out I’d found a third-party management company first because they would keep the brokers honest because you’re looking at those om and the brokers have these you know it says if God himself for running the property you know they’re perform. So you need to have that information from the management companies that are on the ground that have units around it or in that same city they can kind of help shape you to make you’re not overpaying and making a big rookie mistake

Maureen: The younger brokers with the group and not just young age wise but new are into the group. So will there be a Marcus Miller chap pushing wake up so those kind of guys they’re hungry they don’t have their buyers lists really built up yet. So that’s a good person to connect you as well because they’re a little bit more easier to work with somebody that’s also new and they don’t have their you know list that they just go to all the time already so yeah

Rod: Awesome awesome okay so so um last question and that is and I asked this a lot but it’s great to have the three of you here if you were gonna tell your 20 year old self something based on what you know now, what might you do differently? you know is there anything that you do differently? Glenn let’s start with you buddy

Glenn: So I remember when I was younger one of the things that was important to me were things, possessions, property, boats, houses, cars, stuff of that nature. Looking back on in all that did is added stress to my life. If I were to tell myself 20 years ago I my advice would be this, stay out of debt you know you don’t have to have everything flashy when you’re young because that doesn’t determine or define who you are. You know those things will come in time. If they’re of value to you but the young me thought that that’s defined that defined who I was and it really didn’t and looking back on it I really regret that about my life. And I would have stayed out of debt

Rod: Okay no that’s thank you and I feel and I’m feel exactly the same way and I’ve got I’m the poster child for excess with the Lamborghini in the Maserati and all the stupid shit that I that I did as well. Thank you that’s not what I that’s not what I expected to hear from you brother I expected you yeah what about would have gone bigger I would have gone faster but but you know thank you for that because that’s that was very honest. Maureen, how about you?

Maureen: Me I’d say just um you know now kind of look later in life. I’m learning that the time you spend the people you spend time with are just what an impact they have so you know positive people that are out to do the right thing just don’t waste your time with you know people that make you feel like you need to take a nap after you deal with them because they kind of suck the energy out of the room or just negative people that you’re constantly trying to defend yourself with or explaining yourself know you know this is why we need to do this and you know you’re right so um and then anybody that you’re gonna get in a business with I’m just very careful. If I don’t trust somebody a hundred percent I don’t do business with them because there’s so much energy wasted kind of watching your back or wondering what they’re gonna do that it’s just a waste. So I just I life is more exciting and fulfilling and happier just just being really aware of the people around you. Somebody told me don’t have a person in your life that’s not your fan so if they’re not a fan of yours get them out of your life whether it be a parent, a sibling, whatever a coolest friend, just don’t do just get them on your life and that’s been huge

Rod: You know that’s that’s awesome and that’s that’s so dead-on. And guys you know as you’re building relationships in this business as well pay attention to that you know how much you like the person you’re doing business with because you know you could be doing business with them for decades that goes for investors that goes for frankly even brokers and property managers of course. I mean you’ve got to enjoy the relationship. Kenny, anything to add? what would you tell your 20 year old self?

Kenny: Well so I was 28 years old when I got going in multifamily. So eight years earlier I would have I mean I would have skipped going through oil and gas and be jumped in the real estate. I mean I learned a lot by doing that and um being a CFO at a young age but I mean all they did learn a lot but I wish I would have got into the real estate investing earlier on is what I would have done

Rod: Nice nice yeah same here. Well guys I’m so grateful for you guys taking your extremely valuable time to be on the show. Glenn, I will see you in Tampa here in a couple of weeks.

Glenn: Yes sir. I’m very excited

Rod: Maureen and Kenny I saw you recently in my last event. You guys I do a panel by the way you know in the Saturday nights and I have hitters like these guys on stage you know this is usually a billion at least they’re at the event or more and you know we have a lot of fun but anyway guys. Happy New Year! It’s great to see all your faces. I’m gonna see you all again in San Diego in March and Kenny you sooner and guys thanks again. And we’ll talk to you all very soon

Kenny: Looking forward to it

Glenn: Thanks for having us Rod.

Kenny: Thank you


Thank you for listening to the Lifetime Cash Flow Through Real Estate Investing Podcast.

If you’ve enjoyed the show, please take a minute to visit iTunes and leave your comments. For more resources or to connect with us further, please visit our website at rodkhleif.com. Tune in next week for our next show.