Tim Little, Founder and Managing Partner, has been a successful real estate investor since 2008. Transitioning from single-family and small multifamily ventures, he now specializes in apartment syndication, aiming to scale profits and deliver impressive returns to investors. With an MBA in International Business and an MA in Global Trade from the University of Denver, Tim, a combat veteran with over 25 years of military service, leverages his leadership skills to efficiently identify and solve challenges in real estate, managing teams with precision and effectiveness.
Here’s some of the topics we covered:
- Tim’s Background In The Military
- Single Family vs. Multifamily Occupancy
- What Came From Attending Rod’s Multifamily Bootcamp
- How To Come Together As a Team
- Multifamily Bridge Debt & Rate Caps
- Forming Partnerships For Better Deals
- When Everything Is Not Going According To Plan
- Interest Rates and The Current Economy
To find out more about partnering or investing in a multifamily deal: Text Partner to 72345 or email Partner@RodKhleif.com
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Full Transcript Below
00:00:19:29 – 00:00:37:22
Rod
Welcome to another edition of Life Time Cash Flow Through Real Estate Investing. I’m Rod Cliff and I am thrilled that you’re here, and I’m really looking forward to this interview today with Tim Little. Now, Tim is the founder and CEO of Zanna Investments, which is named after his daughters and he’s a combat veteran with over 25 years in uniform.
00:00:37:25 – 00:00:52:10
Rod
So definitely. Thank you for your service, brother. And and he’s in the Army Reserves still as a commander of a public affairs, a battalion, and he’s in over 900 doors as a general partner and excited to get into this with him. Welcome, brother.
00:00:52:13 – 00:00:53:17
Tim
Yeah, thanks for having me, Rod.
00:00:53:18 – 00:01:07:13
Rod
Absolutely. So why don’t you give us a little background on your journey? And you know, you’ve been in the military a long time. Why real estate? What what prompted that thought process and kind of bring us current, if you would?
00:01:07:15 – 00:01:31:13
Tim
Sure. So, like you said, was in the military straight out of college? I actually did it right out of high school two months after I graduated high school. I was at basic training, did that for a couple of years, decided it. It wasn’t for me. I did my time in the National Guard because I still had a commitment, but an ROTC recruiter got to me in college and was like, Hey, would you like a guaranteed job?
00:01:31:15 – 00:01:51:26
Tim
And I think you could add a little something since you’ve been enlisted too. So convinced me to go back in through there ROTC program. So I was in from, you know, 23 to 28, did a couple of tours, you know, in Iraq while I was there. And when I got out, I was committed to going back to grad school.
00:01:51:26 – 00:02:12:25
Tim
Right. I wanted to get educated again. I felt like I had been out of the classroom for a while and at first I was focused on more the international side of things. But then I started to get into business. And this is, you know, right after, you know, the financial crisis and even by like 2010, the market what the job market wasn’t looking great, right?
00:02:12:28 – 00:02:19:26
Tim
And so they actually had a dual degree program where I was able to get, you know, international affairs. And I got.
00:02:19:26 – 00:02:20:26
Rod
An MBA and.
00:02:20:27 – 00:02:41:15
Tim
An MBA at the same time. Wow. So it’s kind of a twofer, right, for a three year program. Nice. And I figured that would make me a lot more marketable. So I got out and, you know, got my job with a government contractor in Washington, D.C., and was doing the whole, you know, in my early thirties thing, you know, having fun.
00:02:41:15 – 00:03:05:03
Tim
But I also realized that I needed to start making more money than just my my W-2 income. And so I had read Rich Dad, Poor Dad a while back, but I needed to revisit it and remind myself, you know, some of those key lessons, assets versus liabilities, etc. And real estate is one of those prime means to do that.
00:03:05:06 – 00:03:30:11
Tim
Where I think I differed from a lot of people is that I did not want to do the one house at a time thing. I was convinced that I wanted to do multifamily, even if it was small multifamily, right? So I was like, okay, I’m going to buy a duplex. And I was set on buying a duplex. Looked around Washington, D.C., prohibitively expensive, couldn’t find anything in my backyard.
00:03:30:14 – 00:03:57:19
Tim
So then I went to Richmond, Virginia, hung out there for a weekend, toured probably six different duplexes, and wound up putting an offer in on one for $85,000, if you can believe that. URBAN Yeah, yeah. In a up and coming rougher, you know, neighborhood or gentrifying neighborhood. Sure. Okay. Didn’t didn’t know how long it was going to take to gentrify but it was affordable to me.
00:03:57:22 – 00:04:32:01
Tim
And so I was able to get that, like I said, for what I felt like was a lot of money down at the time. You know, you’re putting 25,000 down, you know, when you’re a young guy that that was a lot of money. But it met my criteria. And I did have criteria which at the time was $100 a month per door, you know, profit at the end of day cash flow that I think what we fail to to recognize sometimes is, you know, even when you keep it that tight, like it only takes one thing going wrong for a year’s worth of profit.
00:04:32:02 – 00:04:33:07
Rod
Well, let’s elaborate on that.
00:04:33:07 – 00:04:34:01
Tim
To go out the window.
00:04:34:01 – 00:04:51:02
Rod
To move past that, because a lot of people don’t realize that I get in arguments over people that want to buy single family houses, you know, or even a plex like this. Yeah. 100 K per month per unit. Okay. If you have somebody move out of one of the units, you’re going to spend a few thousand dollars typically to get it back in shipping.
00:04:51:03 – 00:05:08:16
Rod
You’re going to lose a couple months rent. There’s two months. I’m sorry, there’s two years worth of profit on your asset. Okay. So this is why these smaller deals just don’t they don’t literally don’t cash flow. Not and I listen it took me 2000 houses to get that memo, so I feel bad. Okay, So. So don’t feel bad, but.
00:05:08:16 – 00:05:11:29
Rod
But no, it’s. You’re much smarter to go to multifamily. Please continue.
00:05:12:04 – 00:05:31:14
Tim
Yeah. And so, you know, like, like you said, three months. I think it was about 2 to 3 months within getting that property. One of the tenants just stopping. Right. And before I could even take legal action, they just up in the middle of the night moved out. And to your point, it cost me between two and $3,000 just to get their stuff moved out.
00:05:31:14 – 00:05:54:00
Tim
No kidding. Just to get it cleaned out to the point where I could get it rent ready to get a new tenant in there. And so that was one of my first, you know, seminars, as you call them, when when I was getting my first rental property. You know, fast forward a little bit. I was like, I started doing the math that people, you know, tell you to do when you start looking at bigger pockets and stuff like that.
00:05:54:00 – 00:06:17:08
Tim
They’re like, okay, so if I’m going to make this much per month and I need this many units, and I was like, I can’t buy 50 duplexes like, it’s it’s just not realistic. So that’s when I started looking abroad and see what else was out there as, as an option. And that’s when I discovered commercial multifamily through listening to podcasts like yours and reading books.
00:06:17:11 – 00:06:42:24
Tim
And then eventually I wound up going to my first, you know, multiple family convention, right? And so I went to this one in Texas and basically just got fire hosed with information. Most of the concepts I didn’t understand, but I was learning a lot, didn’t like the pitch at the end, but I was like, This is something that I think makes sense, but I want to try it myself.
00:06:42:26 – 00:07:04:05
Tim
So I said, You know what? And I was about to go on another deployment. This is circa 2017. I knew I wouldn’t be able to take advantage of coaching anyways because I’d be deployed, right? So instead of putting that money into coaching at that time, I was like, Let me invest this little capital that I do have and put it towards being a passive investor.
00:07:04:08 – 00:07:25:23
Tim
I wasn’t super confident yet, but I felt like I knew enough to ask some smart and stupid questions and found, you know, a sponsor that I trusted, a property that I thought made sense with the rudimentary underwriting that I was able to do at the time and put 25,000 in as a passive investor. And so and then shipped off to Kuwait.
00:07:25:23 – 00:07:51:09
Tim
Right. And I think it was, you know, what, 90, 90 days later, after that first quarter, whatever, I wound up getting my first distribution check and it was it was small, right? Like $300, $400, whatever it was. But it was a proof of concept for me. And that was really what I call, you know, earning while I learn because I was able to ask all the questions that I wanted to.
00:07:51:11 – 00:08:15:14
Tim
I was able to much better understand the passive investors perspective, which played into once I became a general partner later. And I was I was able to to do well from an investment perspective. So that was my first time being a limited partner on a deal. Again, this is fast forward from that first property that I bought about three years.
00:08:15:16 – 00:08:23:24
Rod
Got it. Got it. And you also mentioned you went to one of my boot camps in Tampa. You live in Tampa now?
00:08:23:28 – 00:08:24:11
Tim
I do.
00:08:24:15 – 00:08:33:21
Rod
And your first correct me if I’m will talk about that, talk about that experience. How’d you like the boot camp, number one? And then and tell me what came about from that boot camp.
00:08:33:23 – 00:08:54:00
Tim
Sure. So like I said, I got into that first passive investment in 2017 was gone for a year. So couldn’t couldn’t do much other than then learn. And then 2018, I dove, you know, even deeper into the syndication side of things. 2019 saw you were going to be in town and I was like, Wow, it’s it’s right in my backyard.
00:08:54:00 – 00:09:12:24
Tim
Like, why? Why would I not go when I can drive there? And that in everyone is different, right? And how they teach this stuff, what I got from you, a lot more mindset stuff. But but also, you know, some of the the fundamentals but also just met a bunch of great people there and comes the.
00:09:12:24 – 00:09:14:11
Rod
Biggest benefit of the event.
00:09:14:16 – 00:09:31:27
Tim
yeah the networking right is huge and coming out of it you know like everyone was hyped up, right? Like everybody’s like, yeah, I’m going to do my first deal. And so some of these folks that I kept in contact with, they they called me up because, you know, over that deployment, I’d saved up a little bit of capital, right.
00:09:31:28 – 00:09:54:12
Tim
Couldn’t spend the money while I was over there. So they’re like, Hey, Tim, we got this deal. It’s in Tampa, 59 unit portfolio. Do you want to invest? And I was like, Thanks, but no thanks, because I wanted to find my own deal, right? I don’t want to be a passive investor like that. And so they were like, okay, okay.
00:09:54:15 – 00:10:15:23
Tim
And then a couple of months go by again. I’m still staying in contact with these guys. They call me up again and they said, Hey, Tim, we’re running up against the clock here. Do you still have that capital available? I was like, Yes. They’re like, okay, if you’re willing to do some of the work that’s involved with this deal, we’re willing to bring you in as a GP as long as you bring your capital with you.
00:10:15:27 – 00:10:35:07
Tim
And I was like, okay. And so I was able to kind of sneak my way into that deal. But then, as you know, I was also willing to put the work in. I was boots on the ground. So that made things a lot easier. And you know, you talk about like what kind of stuff can you do? Well, there was a lot of stuff that I could do.
00:10:35:07 – 00:11:00:26
Tim
I could go and take take photos of the property because again, I’m so close to it. I was working with the city to combine lots that we had on there because this was a a portfolio deal. So some were as small as duplexes, and the largest building I think was 23 units. So it was messy, right? And we were trying to make it less and less messy for resale by combining some of those those plots.
00:11:00:28 – 00:11:19:27
Tim
So again, really going in there and saying, hey, hey, where do you need me? What can I do to help? I was able to get into that deal and that worked out great. Again, just based on the timing, you know, buying it in 2019 in Tampa, and then just seeing how Tampa has blown up since then. We did very well on that deal.
00:11:20:00 – 00:11:29:20
Tim
And I’ve always obviously done a lot more sense. And some of those folks that I partnered with on that deal I I’ve partnered with on every deal since because they became, you know, part of people you.
00:11:29:20 – 00:11:46:01
Rod
Met at the boot camp. Yeah, that’s fantastic. And yeah, I mean, they leave hyped up from my boot camp because I spend, you know, 80 to 90% of this is mindset. So many people go to something like that, they never do anything with it. Yeah. And so, you know, I spend time on that and, and you know that’s that’s awesome.
00:11:46:03 – 00:12:07:15
Rod
So, so you know, a couple of things I wanted to mention. You know, I love the fact that you’re going, you know, you’re raising capital from senior military. I got the pleasure of speaking at ADP. You know, they are active duty passive income speaking at their event in San Antonio in front of a few hundred active duty people, which is a real treat about a month ago.
00:12:07:18 – 00:12:17:10
Rod
And and so so talking about raising capital and so you’re 900 doors now a lot in Tampa or all.
00:12:17:10 – 00:12:24:29
Tim
Over No more in Tampa ever since we sold that that first deal, it just got a little pricey. Yeah, intelligence went up.
00:12:24:29 – 00:12:27:00
Rod
30% and good gotten one year.
00:12:27:00 – 00:12:40:08
Tim
Right? Yeah. So things got a little frothy here, right? So we looked elsewhere like. Like a lot of sponsors. Right. Texas, we do have a property in Tallahassee and and a lot in Atlanta. So. Atlanta.
00:12:40:08 – 00:13:02:19
Rod
Okay. All right, good. Same, same. Same for me. Yeah. Those are markets that we like as well. So you you met these team members at my boot camp and they’re now you’re in a solid team together doing these deals together. Is it would that be an accurate statement or are you doing one off deals together because some some partnerships come together and do everything together.
00:13:02:23 – 00:13:09:04
Rod
Some do, you know, deal by deal. Is it more of a deal by deal relationship or or every deal.
00:13:09:09 – 00:13:35:20
Tim
So yes And no one one of them I’ve done every deal since has been with him. And we’ve been a little unique in the sense that we’ve like maintained our personal branding, right? Like I have Zon investments and, you know, my buddy has whatever, right. But what we do is we come together as a team in order to code with others because there’s a lot of leverage.
00:13:35:22 – 00:14:00:07
Tim
You know, if, if I’m Tim and I’m coming in and I can say, Hey, Rod, I can raise like 300,000 for this deal, you’re like, That’s great, but not very helpful. Right? But if I come with my my group of partners that I always work with and we form an entity called whatever, then I say, Hey, this group that I work with, we can come and we can raise 1 to $2 million.
00:14:00:09 – 00:14:12:08
Tim
Well, now I might get my foot in the door to be a cog on that deal with you. Now, does that split up the pie more? Yes. But if I’m at a level where I’m not able to raise that much yet. Yeah.
00:14:12:11 – 00:14:35:22
Rod
Then I want I want to throw a big red caution flag out here. Okay. And that is we talked about this a little before we started recording and that you cannot just raise money. And so the the challenges with what you just described or if let’s say you put three or four people together, create an entity and go raise money for a deal, all three or four of those people need to be actively involved in that deal.
00:14:35:28 – 00:15:00:20
Rod
And so it becomes a challenge, depending on how many Koji P’s you’ve got gotten a deal to have a realistic amount of work for each individual person and and it can be challenging. You be real careful with it because I can tell you, especially with what’s happening right now, you know, I’m hearing almost every day about world class operators that are in trouble, people that are losing properties to foreclosure.
00:15:00:20 – 00:15:21:09
Rod
I mean, people I have a lot of respect for and and and the SCC is going to start is going to start shining their spotlight on people and they’re going to make examples of some people. It’s inevitable that it’s coming. And so, you know, I just want to caution you those you listening that you know, as you raise money, you’ve got to be actively involved in the deal.
00:15:21:09 – 00:15:35:12
Rod
And it’s got to make sense. It’s got to be kind of it’s kind of it’s got to make sense. If you’re raising $1,000,000, you better do a significant amount of work on the deal. For example, you know, if you raise, you know, 100, 200, that that that’s less. But but you’ve got to be doing something besides the raising the money.
00:15:35:12 – 00:15:51:00
Rod
And we talked about this I just want to hammer at home because you know, it is it is I hate to say it, but the SEC’s complaint driven and we’re going to see a lot of complaints coming through on these deals going south. And so, you know, now’s the time to be careful, but I won’t scare you. Now’s the time to get frickin excited.
00:15:51:05 – 00:16:09:11
Rod
Like, right now I’ve got a deal That was under contract for 26 million. We’re getting for 20. And it’s a screamer deal a mile away from another asset that we have. So if you hear that and you’re an accredited investor, text the word partner to seven two, three, four, five and we’ll tell you about it. But there are the deals are coming.
00:16:09:11 – 00:16:14:05
Rod
I haven’t bought a deal in a year and I’m starting have you starting to see things open up as well?
00:16:14:07 – 00:16:21:02
Tim
We’re still seeing quite a delta between what we’re underwriting it at and what what.
00:16:21:04 – 00:16:37:02
Rod
We may have just fallen into this one, but we’re starting to see some things open up. And, you know, and I’m hearing about, you know, massive reserve increases in some of these guys that have bridge debt where they have to pay a monthly reserve that’s much, much higher than they anticipated, like a one guy from 8000 to 80000 a month.
00:16:37:04 – 00:17:00:14
Rod
You know, just to just to get ready for their inevitable debt coming due. And now we’re seeing we’re seeing some fire sale stuff on our end. So I’m getting excited. I really excited about this deal we’ve got and what’s coming. But so so back to team for a minute because you’ve done a really good job putting a team together.
00:17:00:16 – 00:17:15:18
Rod
Talk about what you look for in other team members, you know, because you’re a solid guy and you’re you’re in the military so you know all about team and and give me an example. Give me some examples of maybe some of the things you looked for before you decided to to work with some of these people.
00:17:15:20 – 00:17:25:23
Tim
Yeah. And it’s really tough because some people look really good on paper. Right. But until you work with them, right. And see like what kind of person they they really are.
00:17:25:23 – 00:17:29:15
Rod
Their work ethic and how they handle problems and so on and so forth.
00:17:29:15 – 00:17:50:26
Tim
Yes, Right. And even when, you know, we talked about Koji pitching, right. How how they run their properties versus, you know, how they say they’re going to run their property in their business plan. Right. Because you you have a certain amount of vulnerability if you’re Koji being with someone, right, because you’re your partner and anytime you partner there’s risks a.
00:17:50:26 – 00:17:52:03
Rod
Reflection on you as well.
00:17:52:08 – 00:18:12:15
Tim
Exactly right. And so we’ve had good partnerships and we’ve had bad partnerships. The bad ones are where the values aren’t aligned right, where you go in and say, Hey, but this was the business plan. We were going to put this money into this. And they’re like, Yeah, but we want to cut back and we want to, you know, preserve as much cash as possible.
00:18:12:15 – 00:18:29:27
Tim
And and we don’t need to do that in order to get the rent. You know what I mean? Not not doing what you say you were going to do, which I think it’s just fundamental. Like do what you say you were going to do. Yeah. Because then you slowly start to diverge on, you know, what you think is important because tenants are important.
00:18:30:03 – 00:18:43:28
Tim
Yeah, right. And it’s not just a money thing. Like, you know, people need to be proud of the place that they live at, otherwise they’re not going to stay. If you want to bring it right down to the money. Right. It’s a lot cheaper to keep a tenant than it is.
00:18:43:28 – 00:19:02:07
Rod
The most expense. Biggest expense you have is tenant turnover. Beyond that, that’s the largest expense that you control, right. That that you have and and know that’s that’s very solid. And so it starts with core values really and integrity. And would you say work ethic is another one? I mentioned that previously.
00:19:02:14 – 00:19:19:07
Tim
Right. Because you find you find some people kind of trail off. You know, maybe they they talk big at the beginning. Then all of a sudden they’re not showing up to meetings. You can’t find them. Right. You know, I expect people to show up when they’re expected to be there on time. Like again, fundamental is.
00:19:19:09 – 00:19:26:11
Rod
How about communication? That’s another one. The lack of lack thereof, you know, where they’re not responding to your emails or your texts or whatever. You find that as well.
00:19:26:14 – 00:19:56:22
Tim
Yes. And and part of that transparency is one of our like key values. Like especially, again, when you’re when you’re Koji Ping, Right. Like you you want information to flow directly from them down to you so that you can communicate with your investors. And you know, to your point earlier about, you know, some folks who are just raising money and then kind of sitting back for the rest of the time, they put themselves in a very precarious position because they may not even know what’s going on.
00:19:56:22 – 00:20:08:10
Tim
If they’re not going to those asset management meetings, if they’re not, you know, meeting with property management or reading all the updates that are coming out. Right. They can’t talk to their investors. They have no say.
00:20:08:12 – 00:20:24:28
Rod
What’s bad about that is it puts the whole deal in jeopardy. Okay. Because if they have a problem, everybody has a problem. And that’s the way this works. And and again, I’m not trying to scare you. I just want to my job actually is to scare you. But, you know, there are resources available that can help you select the best team members.
00:20:24:28 – 00:20:42:02
Rod
I’ve got one that’s fantastic, which is a book called Questions to Ask When Forming a Partnership. And if you go to Rod’s links dot com, it’s one of the free books there because you know, you get excited, you get emotional about a deal and you and you forget to ask all the hard questions. You know, how are we going to divide the properties of profits?
00:20:42:02 – 00:20:57:18
Rod
What happens if we don’t live up to our responsibilities? How will we dissolve this thing? You know, how are we going to handle a big disagreement and so on and so forth. So you need to ask these hard questions upfront before you get into bed with somebody, because the partnership’s like a marriage. Easy to get into and very hard to get out of.
00:20:57:18 – 00:21:05:12
Rod
Right? So you got it. You’ve got to do that. And I would also say, would you agree with this? Trust your gut.
00:21:05:15 – 00:21:33:04
Tim
Sure, definitely. And, you know, I think like you said, you know, especially in the beginning, you’re very eager to get into deals right. And that’s when your judgment can lapse because the eagerness kind of overrides your your gut and some of the red flags that that might be waving in front of you. So kind of you need to consciously dial it back a little bit and say, okay, have I asked these questions?
00:21:33:06 – 00:21:52:23
Tim
You know, have I looked at their performance in the past? Have I talked to some of the people that they’ve partnered with and said, hey, how was this this guy a girl? Because this is a relatively small community. It is. So they will tell you, right? Like they will say, hey, you know, awesome, awesome guy. A girl would totally work with them again or I would never work with them again.
00:21:52:23 – 00:21:53:29
Tim
And those are the kind of things where.
00:21:53:29 – 00:21:56:23
Rod
You might hear, I would be careful and that would mean don’t work with.
00:21:56:23 – 00:21:58:27
Tim
Them. Right? Right. They’re trying to be polite.
00:21:58:28 – 00:22:18:18
Rod
Right, right, right. So be careful with that. No, but this is a very small world. We work in. I mean, people think there’s, you know, tens of thousands. It’s it’s a small world and everybody knows everybody and everybody knows what’s going on. Everybody knows who’s hurting. And having challenges and so on and so forth. And that’s coming out more and more now.
00:22:18:20 – 00:22:40:16
Rod
But, you know, so so you’ve got to operate with integrity as well. I mean, there’s there’s no question that’s got to be your number one core value. It’s ours, and I’m sure it’s yours as well based on your military background. Absolutely right. Yeah. And so so we talked about team. I don’t want to talk about that first deal because that’s kind of a one off When you do a portfolio like that.
00:22:40:19 – 00:22:50:26
Rod
Talk about your first deal that was just one one property. If you if you recall, and how big it was and where it was and just listlessly in one of your deals.
00:22:50:29 – 00:22:54:26
Tim
Yeah. So that probably be the the, the Tallahassee property.
00:22:55:01 – 00:22:56:13
Rod
How many doors.
00:22:56:15 – 00:22:57:22
Tim
136.
00:22:57:22 – 00:22:59:08
Rod
Okay. Good size deal. Okay.
00:22:59:09 – 00:23:29:04
Tim
Right. And this one was a little unique because it was you know, I’m in Tallahassee, Florida State. Obviously, you would assume right off the bat that it was a student. It was a student, but they were transitioned it to market. Gotcha. And so the intent was, hey, it was a couple of years old. We’re going to wait till all the students move out and then start to renovate the whole thing because, you know, it needed a facelift and needed to be modernized.
00:23:29:06 – 00:23:49:23
Tim
And the challenge with that is you’re going from zero occupancy, right? And that is I didn’t appreciate at the time how challenging and you know, how risky that could be. I’m just like, just lease it up. Like how how hard could that be? But the challenge becomes like, you know, anything that can go wrong will go wrong, right?
00:23:49:24 – 00:24:04:13
Tim
Like, there’s always going to be something that doesn’t go according to plan. It’s just the natural way of things. And so for us, it was, you know, say like a delay in re piping, right? All it takes is, you know, the city took a month instead of a week to come out. He had to.
00:24:04:13 – 00:24:05:20
Rod
Re plumb the whole thing.
00:24:05:22 – 00:24:10:03
Tim
We did because of the that the type type of pipes.
00:24:10:06 – 00:24:19:12
Rod
Some bad polyurethane type stuff in there. Not now was it built a student housing where there were lots of big common area more bedrooms in normal or was it an unusual layout.
00:24:19:12 – 00:24:26:06
Tim
Or it wasn’t okay it just it had yeah. The the poly pipes and.
00:24:26:06 – 00:24:27:20
Rod
Probably butyl so I can never.
00:24:27:24 – 00:24:29:07
Tim
Write poly butane. Right.
00:24:29:10 – 00:24:31:25
Rod
That’s it. Right. Right. She had to re pipe the whole thing.
00:24:31:28 – 00:24:57:08
Tim
Right. It wasn’t something we planned for. But again once you get equity partners then yeah, they make certain demands and their logic was when we go to sell, it’ll be much more attractive to institutional buyers because it’ll be updated and they won’t have to worry about that as a risk or put the money into it themselves. You could argue yes, no.
00:24:57:10 – 00:25:29:22
Tim
And so boom, you already have an overage in terms of budget, Right? Okay. But then you have your timeline gets thrown a little bit. And then again, you’re working with the city who you have absolutely no control over. When it comes to when they come to inspect. So all of a sudden the original timeline gets pushed. Now all of a sudden we were getting completed, you know, like, say, the first building was getting completed in November versus peak leaf leasing season.
00:25:29:25 – 00:25:49:23
Tim
And that just throws everything off. The dominoes start to fall. Right? And so it takes that much longer to lease up. And just these these challenges kind of compound. Now, you know, we’re we’re at like 90% right now. But the the time that it took us to get there was much more than expected, which, you know, causes cash flow issues.
00:25:49:23 – 00:25:52:15
Rod
But your rents are higher than you projected, though.
00:25:52:17 – 00:25:53:06
Tim
Yes.
00:25:53:06 – 00:25:53:29
Rod
Yeah.
00:25:54:02 – 00:25:56:05
Tim
Florida, right? Yeah. Can you think of more.
00:25:56:05 – 00:25:58:25
Rod
People away right now? Okay.
00:25:58:28 – 00:26:10:22
Tim
And so, you know, just some challenges there. But overall, I wouldn’t say I regret the project or anything, you know, and and we still have it, but just it was.
00:26:10:28 – 00:26:12:03
Rod
It was a lot of stress.
00:26:12:10 – 00:26:17:25
Tim
It was a lot of stress. And, you know, at the Times. Right. You know, bridge debt.
00:26:17:28 – 00:26:18:26
Rod
You got bridge debt on it.
00:26:18:26 – 00:26:35:19
Tim
We had to. Yeah. Yeah. And luckily we were required to get a rate cap, which was unusual at that time. thank God. But we got a recap for it was like $100,000 at the time, you know, And then, you know, fast forward one year, people are paying like, when are you.
00:26:35:19 – 00:26:37:07
Rod
Refinancing, refinancing the thing.
00:26:37:10 – 00:26:46:19
Tim
So that’s that’s coming up. Right? So like so many others, you know, it’s you have those options. Are you going to do rate cap extension you’re going to refinance side.
00:26:46:19 – 00:26:55:14
Rod
Because the rates are so stupid right now. Are you going to go with long term conforming debt if you’re in 90% other if you stay that way for 90 days, you can get Freddie or Fannie, right?
00:26:55:14 – 00:26:57:09
Tim
Right. Exactly. And that to make that.
00:26:57:15 – 00:27:15:15
Rod
But here just to show you guys the dilemma right now is rates are supposed to go down. And so if your timing is you need to refinance right now, that’s not the greatest thing because rates are supposed to I mean, the Democrats don’t lower their rates. I don’t you know, it’s going to be a shit show in November, which we won’t go.
00:27:15:18 – 00:27:35:17
Rod
I’m sorry I even brought that up. Never mind. But I anticipate that the current administration is going to lower rents to position themselves better. They do that every time there’s an election if if this comes up. And so so you’ve got to decide, do you do another bridge loan with a care or do you do long term conforming debt when you’ve got prepayment penalties and you’re locked into that debt.
00:27:35:17 – 00:27:38:14
Rod
So it’s you kind of that is kind of a quandary.
00:27:38:16 – 00:27:40:16
Tim
Or do you just sell.
00:27:40:18 – 00:27:42:03
Rod
Or do you sell or do you sell if.
00:27:42:03 – 00:27:55:14
Tim
You can? And we’re looking to see which one makes the most sense. Yeah, but but certainly preparing for for those eventualities because you certainly have to get that money aside, like you said, you have to get that three months of stabilized, which is 90% occupied. Right.
00:27:55:14 – 00:27:56:17
Rod
94. 90.
00:27:56:19 – 00:27:59:19
Tim
Right. Because otherwise you’re not going to be just.
00:27:59:20 – 00:28:19:07
Rod
Just you know, you have to be physically occupied at 90% for 90 days to be able to get Freddie Mac or Fannie Mae debt. And you so so so you’ve got that if you’re going to do another bridge loan to anticipate rents dropping, then you’ve got to come up with a rate cap, which your stupid money right now.
00:28:19:07 – 00:28:40:05
Rod
Right. So that’s that’s, you know, something you have and you’ve got to raise that money and start planning for that. So, yeah, it’s it’s a crazy time we’re in right now with, with interest rates the way they are and the, you know, the market the way it is, you know, and you mentioned something else. You mentioned, you know, that you had, you know, you’re starting to bring units online in November.
00:28:40:05 – 00:28:55:04
Rod
It couldn’t be a worse time, obviously. And we’re there. Right. You know, we’re in December right now. Terrible leasing time. And so when you have an asset, one of the things you do and we do, we do that is this at our assets is we try to have most of them staggered out over the prime leasing time. They’re expirations, okay?
00:28:55:05 – 00:29:14:21
Rod
So that if people do move, you know, it’s the best time. So if you’ve got stuff, you know, when you take over an asset, if you see a lot of leases that are expiring in November, December, you want to redo those at 13, 14, 15, 16 month leases so that you position yourself to have those come due at the best, you know, optimal leasing time.
00:29:14:21 – 00:29:27:11
Rod
So that’s just a strategy. So the lesson in that one was, you know, you didn’t know what you were going to you’re going to run into. You had to deal with that plumbing. Was that the biggest delay issue or did you have other CapEx issues on that deal as well?
00:29:27:14 – 00:29:30:05
Tim
That was that was the biggest one. Yeah.
00:29:30:07 – 00:29:31:03
Rod
Big one. Yeah.
00:29:31:03 – 00:29:50:06
Tim
Yeah. I mean, and again, I think maybe there was like another inspection that took longer than expected and stuff like that. But it just goes to show like each one of these deals you do, you’re going to run into something different. And I just try to tell myself that it’ll make me better equipped to to to deal with future future issues.
00:29:50:07 – 00:29:53:02
Rod
No, quite even that first duplex you got, I promise you learned a lot from.
00:29:53:03 – 00:29:54:04
Tim
Absolutely.
00:29:54:07 – 00:30:14:16
Rod
You know, so, you know, don’t don’t get frustrated by this. They are seminars and that’s okay. But, you know, I have a lot of listeners that that want to do this business. They haven’t taken action yet. They know you know, they hear me tell them if there was ever a freaking time, it’s right now to get going on this because I really believe opportunities coming.
00:30:14:16 – 00:30:20:13
Rod
And so you know, what would you say to those people that haven’t made a move?
00:30:20:15 – 00:30:47:06
Tim
I mean it sounds cliche to say there’s no time like the present. Yeah, but the only thing you’re going to regret is not doing it sooner. Yeah, Not starting sooner. Yeah, right. Because this, this business, it’s not a get rich quick business, Right. What people need to understand is it’s about planting those seeds. And so even with syndication, you know, if you’re doing this as a general partner, you’re getting, you know, a small chunk at the beginning with that that acquisition fee.
00:30:47:13 – 00:31:07:18
Tim
But your biggest chunk is going to be at the end after you’ve added all that value to that property. But there may be a five or even a seven year gap in between. So you have to keep that in mind and start getting one property, then get another one, keep filling that pipeline. And it’s kind of that delayed gratification for sure.
00:31:07:18 – 00:31:29:04
Tim
But like any investment, but seven years down the road, you’re going to see these deals, you know, start to come to fruition when when you exit and it’s boom, boom, assuming that everything has gone well. Right. But the longer you wait, the longer you’re going to delay that, you know, that that big chunk on the other side. Yeah.
00:31:29:04 – 00:31:43:13
Rod
So or even the upfront chunk because, you know, when you do these deals, you make money upfront, you get an acquisition fee and and very often it’s not insignificant, you know. Well, let me ask you a question. When you think about the word successful, what does that mean to you?
00:31:43:16 – 00:32:06:28
Tim
Yeah. And so, I mean, success for me is it’s multifaceted. There’s obviously the financial aspect, right? So I view this more as a retirement plan. I want to be comfortable in retirement. I don’t want to be like, how how little can I, you know, do on retirement and I want to be able to do whatever I want on retirement.
00:32:07:01 – 00:32:33:10
Tim
Part of that is my military retirement. I will get a, you know, a military pension, but that’ll be enough for, you know, beer, money, whatever. But the other part is setting an example for my daughters. And that’s that’s why I named it after them, Zara and Lorna Zana Investments. I want them to see that that entrepreneurial example that, you know, I didn’t really see.
00:32:33:17 – 00:33:08:04
Tim
You know, my dad, bless his heart, you know, he tried to do a lot of things, just didn’t find necessarily success in those things. But that’s why, you know, I took my daughters out to like the triplex that I owned in Saint Pete, you know, have them, you know, change outlets or something. You know, while while I was working on it, I talked to them about what I’m doing when they see me on Tik-Tok or, you know, on YouTube and ask me if I’m famous and I say no, but this is what I do and this is how I try to to help people, you know, really just show them that the possibility is there.
00:33:08:04 – 00:33:21:21
Tim
They don’t just have to go to a 9 to 5 job. If they find a job they love, that’s great. But I want them to know that there are other possibilities out there and there are different ways to to make money and to do what they want to do.
00:33:21:28 – 00:33:33:06
Rod
How did you manage the work life balance with your girls and your your your bride and your military career and doing this on the side? How did you maintain any did you maintain.
00:33:33:08 – 00:33:54:17
Tim
Right. It wasn’t it wasn’t always a balance, right? Because for a lot of that time, I was I was on active duty orders. I hopped on orders again. So, you know, that was like my 9 to 5. And then I was still going to like asset management meetings for the properties that I was on. And for that that triplex in Saint Pete.
00:33:54:19 – 00:34:23:22
Tim
That’s what I got after I sold my duplex. I did a 1031 exchange into a triplex in Saint Pete and decided that I was going to self-manage and save myself that 10%, which, which is another regret that I have because that 10% wasn’t worth it in terms of the amount of time that it took away from me. Because when you’re the guy they’re calling, when you know, the toilets clogged or they have bees in their bedroom, real story, then your time disappears quite quickly.
00:34:23:22 – 00:34:43:00
Tim
I’ve since sold that property and put it into multiple, you know, syndications. But it was I tried, I guess, to save as much time on the weekends as I could with my kids, you know, and my wife. But I don’t I don’t know if it was necessarily always a good.
00:34:43:00 – 00:34:43:21
Rod
Balance.
00:34:43:24 – 00:34:44:17
Tim
At the time.
00:34:44:20 – 00:34:58:10
Rod
That’s honest. That’s honest. You know, So you’re good at raising money and you’ve gotten quite a bit of hands on experience by the duplex in the triplex and, you know, these other experiences you’ve had. What are you not great at?
00:34:58:13 – 00:35:29:18
Tim
what am I not great at? What I, I still think that I need to get better at the raising money piece because I’ve never been good at, you know, showcasing myself, you know, the personal brand aspect. Because if people don’t know who you are and what you do, they can’t know, like, and trust you, Right? And so I’m not that guy who necessarily just goes up and starts talking to strangers at a party, you know, not extroverted in that way.
00:35:29:20 – 00:35:35:28
Tim
I have no problem talking to people generally, but I don’t go out of my way to, hey, this is what I do.
00:35:35:28 – 00:35:36:26
Rod
Social butterfly.
00:35:36:27 – 00:35:55:29
Tim
Right? Yeah. I’m not I’m not the butterfly. So that idea of having to tell every person you meet what it is you do and you know, I get it. It’s so that I’m not selfish and I can help them find the opportunities. But it’s still hard to get over that mentally if you’re not used to doing it.
00:35:55:29 – 00:36:18:28
Rod
Got it. By the way, guys, if you go to Rod’s links dot com, I do a raising capital workshop that I teach to my students. It’s about 4 hours. It’s very comprehensive. It’s at the bottom of it is at the bottom of Rod’s links right. Yeah I’m doing another one here in a couple of weeks. I don’t know if it’ll be the old one or the new one here, but I do a raising capital workshop, and if you’re driving, text the word links.
00:36:18:28 – 00:36:33:09
Rod
272, three, four, five, and it’s at the bottom and it’ll give you a really good understanding on on raising capital, different mechanisms you use to create reach, you know, and just how you go about it. What are you proudest of?
00:36:33:12 – 00:36:51:27
Tim
I think going back to, like you said, you know, what would you tell someone who hasn’t started yet? Yeah, I think I’m proudest that I just started because that gets the momentum going. Yeah. And there was a time when I was, you know, reading all the books, listening to all the podcasts and.
00:36:52:00 – 00:36:53:16
Rod
Caught in an analysis paralysis.
00:36:53:17 – 00:37:13:17
Tim
Right? And just like and that’s when I was just like, screw it, I have to do something. And that’s when I like, just bought the duplex, right? Was that a huge deal? No, but it was a first step and it led to the next one, which was, you know, passively investing. Then it led to syndication as a general partner and all these things kind of compounded.
00:37:13:17 – 00:37:24:26
Tim
But, you know, may have never happened at all if I never took that first step. And I know so many people who get stuck there. And so, you know, I think it’s fair for me to be proud of myself for.
00:37:24:26 – 00:37:25:17
Rod
Demonstrate.
00:37:25:17 – 00:37:26:12
Tim
For taking that step.
00:37:26:12 – 00:37:44:03
Rod
Damn straight. Well, listen, I really appreciate you coming down here, brother, and it’s great to meet you. And I told him I recognize you and his because he was at my boot camp. I remember faces. I don’t remember names, but, Tim, wonderful that you were here. And I. And it’s great to meet you. And I’m sure that I’m going to see amazing things in the future for you and your company.
00:37:44:05 – 00:37:45:21
Tim
All right. Thanks for having me, Rod. It’s been great.
