Tim recently retired from his Corporate W2 after 25+ years in Multi-Store Leadership, which within that time frame was responsible for over 200+ different Store locations across 27 States. Over the past 4 years, his journey through Real Estate Investing positioned him to leave the W2 world and for the first time in Life… have Ownership of Time.
Here’s some of the topics we covered:
- Freedom and Time
- Regrets That Lead To Finding A Better Life
- Being Mentally Distracted
- Multifamily Asset Management
- Bridge Debt
- From Vision To Execution
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
Intro
Hi, my name is Rod Khleif, and I’m the host of “The Lifetime Cash Flow Through Real Estate Investing” podcast. And every week, I interview Multifamily Rock Stars, and we talk about how they built incredible wealth for themselves and their families through multifamily properties. So hit the “Like” and “Subscribe” buttons to get notified every Monday when a new episode comes out. Let’s get to it.
Rod
Welcome back to Multifamily Rock Stars. So, as you guys know, this is where we interview people that are flat out crushing it in their business, but also in their lives. And today’s episode is definitely with someone that’s doing that. We show you guys the inside scoop into how multifamily investors are creating massive success in their businesses and like I said, in their lives. And as always, I’ve got my co-host, who is the director of our massive action team for the Warrior Group, Mark Nagy on the call. Mark, what’s up, brother? What’s exciting?
Mark
What’s up, Rod? Well, for the listeners, just as a reminder, you know, Multifamily Rock Stars, these are–most of the time, people starting from no multifamily experience and our students that have gotten to that success. And for the listeners, if you like these episodes, it’s MFRS. When you see MFRS on the podcast, go back, download all the MFRS. If you listen to this and you like it, and so go back and listen to those episodes, and you’ll hear tons of people like our guests that we got today. So I just want to throw that out there.
Rod
Yes. Love it. So today, we’ve got my friend Tim Severson. And Tim just retired from his W-2 job after 25 years, like, six weeks ago, and he’s in over $20 million in assets that they’re managing, and all of it has been acquired since he joined the Warrior program. Now, he was at my Denver boot camp where I was balling behind the curtain because my mom was there back in 2019. And so great to see you here, brother. Welcome to the show.
Tim
Yeah, thank you, Rod. Mark, thank you, too. It’s such a pleasure and honor to be here.
Rod
Yeah, for sure. Well, why don’t you take a minute and tell a little bit of your story? I know you were in retail for a long time, just retired because you want time, freedom of time. Freaking love it. So give us a little bit of your story and kind of bring us, you know, up to today.
Tim
You bet. Yeah. Thank you. So, yeah, six weeks ago, straight out of retirement from the corporate W-2 job, what led me to the vision of getting that freedom of time? I just turned 50 back in September, and so about five years ago, right around 45, 46 years old, I got the message really late in life, by the way, but I really started reflecting just on time itself, and I think it’s a natural course of getting older, and you learn to reflect more often and where I was at in life, where I had been, where I was headed. And two things really came to mind. One thing that really resonated with me is I heard Jim Rohn say that time is our most valuable asset in life. And when you really step back and think about it, that’s pretty deep. And so as I started going down, that mental thought of, wow, time, where have I been? The second thing that popped out for me and Rod is something early on when I started listening to you, I connected with you when you shared your greatest regret, and I share in the same. And my greatest regret was of those 25 years that I was traveling 85, 90 flights a year, I had some years where I clocked over 100 flights and 58 different locations, nine states, so on the road a ton. I had so much regret that I wasn’t at home as often as I wanted to be. And those 25 years blew by and didn’t know where they went. And so at the core, understanding the significance of our time and then really having that deeply rooted regret for not being at home as much as I would have liked to have been with my wife and my girls, that’s what drove me to the core to find a way out of the rat race. I didn’t necessarily know how I was going to do it yet, but I was just so driven to figure it out, and that’s what led me to go figure out real estate investing.
Rod
Love it. Love it. You know, your regret is actually slightly different than mine, but, you know, I talk about the greatest regret in my life, which was I would come home every night, but I was distracted. I wasn’t there mentally. You know, honestly, it’s the same as not being there physically. I mean, even though I’d play with my kids, you know, I missed it all because I wasn’t there mentally. I was so focused on, you know, trying to prove to the world I was good enough and focused on success. But, you know, it parallels what you went through. You weren’t there because you’re so busy. You know, and we all believe we have to achieve to be happy. And, you know, I tell the story about philanthropy, where, you know, if you give back in some fashion, you’re actually happily achieving, but it also relates to giving back to your family, you know. And so, that really resonated with me. So, you know, I know you came to the Denver boot camp. In fact, you were cool. You had a t-shirt or something at the– you went to two boot camps, you came to Denver, and then you came to Baltimore and you had a t-shirt. What was the t-shirt that you threw up? I forgot.
Tim
Well, I brought like 20 t-shirts, and I had printed them up, and they said first it was “Multifamily Bootcamp Denver”, and the other one– and then the second was “Multifamily Bootcamp Baltimore”. And I just gave them to you to give away.
Rod
Love it. Yeah. It’s cool.
Mark
[inaudible] today, too. For those listening, it says, “0% Luck, 100% Mindset”.
Tim
Oh, yeah. Absolutely.
Rod
Love it. Yeah. And guys, I don’t know if you’ve heard me talk about this yet. Opportunity is frickin coming. It is right around the corner. And, you know, if you haven’t signed up for my Denver boot camp, listen, once we’re in the thick of it because the recession is coming, it could be worse than a recession, and it’s coming, and there will be an exponential opportunity because they’re going to be deals at discounted pricing. But if you’re trying to learn this in the thick of it, it’ll be too late. You need to get ahead of this. So whether you come to my boot camp or not, you need to learn it. Now, my boot camp is kind of a no-brainer because the pricing is so good. But anyway, so, you know, let me ask you this. Did you do your deals on your own, or did you do them in a team, you know, with other people?
Tim
They were with other people. The deals that we’ve done are through joint ventures, and I happen to have met both of my partners through the warrior program.
Rod
Oh, fantastic. Okay, fantastic. And did you kind of fall into a particular role? Because we talk about this business being a team sport, and you know, there are different pieces you know that are involved here. There’s underwriting, there’s relationship building, you know with investors and brokers and even sellers, and then there’s, you know, asset management, there are investor relations. So all these different pieces. Are you wearing all those hats, or have you fallen into a particular piece of that?
Tim
Yeah, thankfully, I don’t have to wear all the hats. Real quick, one of the things that have really helped us find clarity is we do implement EOS in our business.
Rod
Nice. So do we. Yeah.
Tim
We have our L10 meetings every week. It’s helped us get clarity on who owns what. But I guess my superpower–
Rod
Hold on. Hold on, hold on, hold on. Just because I don’t want that to pass by. So if you guys don’t know what he’s talking about, there’s a book called “Traction” by a guy named Gino Wickman. And once you have a business, even only three or four people, if you implement that EOS system, it’s called Entrepreneurial Operating System, it really gives you clarity. And I’ve owned–you know, I’ve built 27 businesses. You know, I don’t call them failures. I call them seminars. Several of my business has been worth tens of millions. Most have been spectacular flaming seminars. And had I known about that EOS system, they may not have been, because it’s a spectacular way to stay focused on short-term goals so you don’t get overwhelmed and to have accountability. And so those are the two main pieces, I would say of it. But, okay, so please continue. So you’re superpower– so I just wanted to explain that.
Tim
Yeah. No, that’s great. It would be the asset management side.
Rod
Okay.
Tim
Both of my partners live out of state, and so that was one of the areas of value that I could bring to the table was to be boots on the ground.
Rod
And where are you? Where are you again?
Tim
Arizona.
Rod
Arizona. Got you. Okay.
Tim
I’m in Phoenix. The properties that we own are in Tucson, so it’s a two-hour drive. But the asset management, really, the CapEx and interior renovations, that’s the area that I support for our team.
Rod
Very nice. Very nice.
Mark
So I know you’re at–Rod mentioned $20 million, but that’s 158 units if I’m reading that correctly. All JV deals like you just mentioned, obviously, we have tons of syndicators on this podcast as well that you know, like going that strategy. What do you like and dislike about doing those small, medium JV deals versus a bigger syndication?
Tim
Sure. For me, and I think it’s different for everyone right? As we get clarity on the path that we want to go down. But the joint venture route, I was interested in as I had really worked to build a significant enough capital that allowed me to get into–you know, we had a 30 unit, a 36 unit, a 40 and a 52, but through a joint venture having a larger percentage of ownership in those properties. And so I really wanted to get my capital working for me upfront as I got into the business and learn how things go, but isn’t necessarily that I like that better than or more than syndication. I absolutely believe in syndications, and it’s actually–you know, that would be the next layer for me as I continue to evolve on my path.
Rod
Now, you told us before we started recording that you built that up like you had a duplex, you flipped it, and then you did flipping and so on and so forth, and that’s how you built up that nest egg, which is fantastic. And so, you know, I think that’s a fantastic way to do it. And even wholesaling, you know. One of the things we teach our students is wholesaling. And I did a post, I don’t know if you saw it, Tim, in the Facebook group, guys, probably been eight months ago, nine months ago, I said, who’s wholesale that the deal made over 100 grand? And they were like a dozen, literally a dozen people that had done that. Two of them made over a million and just from wholesale in one deal. So, you know, guys, there are opportunities, you know, not just in single-family, but in multifamily to get some pretty decent checks of flipping and wholesaling as well in our world, and especially with what’s coming. So let me ask you this. You know, it’s not all roses and glory. I like to ask about any pain or any seminars or any failures or setbacks. Talk about, you know, a learning experience from this endeavor, this multifamily endeavor, and maybe what lesson you got from it. If anything comes to mind.
Tim
Yeah, you bet. There are a lot of them along the way.
Rod
Right.
Tim
But one of the very early ones and looking back, and it was so simple, but we were about a week from closing, and the seller had allowed the occupancy to fall below 90%.
Rod
Let me explain why that’s– let me explain why that’s a big deal. Okay, guys, so you are getting non-recourse debt. You were getting Fannie or Freddie?
Tim
It was through a local bank.
Rod
Oh, it was through a bank, but the bank had that requirement as well. Well, guys, what you’ll find is definitely with conform with– I’m sorry, agency debt, Fannie Mae and Freddie Mac, they require the property to be physically occupied at 90% or higher for the last 90 days. And so, if you’re under contract and a deal falls below 90%, you could really be in a world of hurt because you could lose out on your financing. And so that was an issue with this bank as well then. They had let the occupancy drop. All right, please continue. I just want to explain why that’s a big deal.
Tim
Yeah, you bet. Thankfully, you know, we have a good relationship with the bank, and so there was an alternative. They lined us up with some bridge debt. And I know there’s a lot to talk about these days about bridge.
Rod
Right.
Tim
So within, you know, 48 to 72 hours, we had a new loan lined up with bridge debt.
Rod
Oh, good.
Tim
And it actually worked out well for us to have gone that route versus the longer-term fixed debt.
Rod
Yeah, we won’t go down that bridge rabbit hole right now because things are easing a little bit even Fannie and Freddie. You know, it was all bridge for the last several months, and it’s kind of dangerous debt in many cases, but we won’t go down that rabbit hole right now.
Mark
So you mentioned, you know, asset management, boots on the ground, a big part of what you do. I know you got a background, and you mentioned leadership, a bunch of multi-store, I think, is what you called it. How do you think those leadership skills from your past W-2 have helped you in multifamily and translate it over?
Rod
Good question.
Tim
Yeah, really good question. I think the first thing that comes to mind, and we hear it often, is that you know, multifamily truly is a team sport. And, gosh, one of the largest responsibilities that I had was leading my team. And I had a really large team, you know, up to 2000 employees that fell under my umbrella. And so I think just the familiarity of working alongside different people with different personalities, different communication styles, being able to shape vision, and then, more importantly, be able to lead through that vision to execution, I think, is a transferable skill. And so, you know, that helps with forming partnerships and building synergy with my team members. And then as it relates to asset management, there are so many moving pieces between, you know, dialogue with the property manager when a unit becomes vacant, and then from there, it’s lining up the project schedule to be able to turn the unit in the shortest amount of time possible with all of the different vendors that come into play, you know, in the sequence in which–
Rod
Sequencing is a critical piece. Yeah, you don’t want to be putting carpet in before you paint, for example, you know. A sequence is critical. Yes, there are a lot of pieces, but I mean, it’s not something–you know, you’ve got to just lay it out. You plan it out. Now you’ve done project management with your previous role. You know, so that’s kind of your–no, I love the way you describe that, about having that vision and working behind that vision because, you know, that’s what a leader has to have. They’ve got to have that vision. They need to be able to express it and get everyone behind it. Like, you know, with my team, it’s like we’re changing lives and we are and that’s our vision and it’s extraordinary. And you’re creating safe, affordable, you know, housing for people and, you know, that’s the vision you want to get people behind. I’m sure that’s a version of yours, Tim, and that’s what we’re doing. So let me ask you this. You know, there are a lot of people listening to this show that, you know, are thinking about this. What do you think are some questions that they may want to ask themselves about themselves if they’re thinking about getting into this business, Tim?
Tim
Why?
Rod
Why. Oh, good one. Good one.
Tim
And that is just from personal experience. I mean, that hit me like a ton of bricks when I had that personal reflection. Because when you have that why that resonates deeply with you, you have no choice but to take action and figure out how you’re going to be able to move forward from there. So being able to find that deeply rooted why and I don’t know that it’s always easily understood or observed.
Rod
Well, it’s not only just not deeply understood. Sometimes you have to really reflect more than once to get to it. You know, sometimes it takes, you know, some continual reflection. You know, and as you know it, in my boot camps, the first thing we do is try to figure that out. We spend an hour on goal-setting because how the hell do you get anything if you don’t know what it is? You got to have clarity on what it is that you want. And like you said, you got to know why you want it. So that’s huge. You know, so let me ask you this. As you went through this evolution, do you have any epiphanies or any aha, moments where you’re like, holy cow, now I get it, about this business, maybe even not this business, just life in general, if that’s easier for you. But talk about some epiphanies if you’ve had any.
Tim
Well, gosh some epiphanies. I get asked a lot these days, especially the last six weeks, like how’s retirement? And I come to realize, you know, I retired from the corporate world, but I really just obtained freedom of my time. I’m still busy as heck, but the ability to spend my time every morning at home with my girls, with my family, and be home every night, the epiphany for me has been I’m so thankful that I was able to figure out how to be able to put myself in this position. And I don’t take that for granted in any waking moment. That’s one thing. Epiphany in the business, that came early on, you know, along the journey. It was an exhausting effort of getting educated. I mean, I consumed books, and podcasts, and joined two mentorship programs at the same time. Every month was traveling somewhere in the country to a multifamily event, networking, et cetera. But what really turned the light bulb on for me, initially, if you would have asked me early on in January 2018 and went to my first real estate meet-up, and part of what they asked when they opened up the room is, what are your real estate investing goals? And I said I’m going to own ten single-family homes. I’m certainly glad I realized that was not the route for me. But it was the valuation, the difference between how commercial real estate five units and up, multifamily is valued based on its operating income in relationship–
Rod
Net income.
Tim
Yeah. Thank you. For residential real estate is valued, which is based on the comps. And so the light bulb went off around you’re purchasing a business and the ability to force the appreciation, grow the operating–you know, grow the income, reduce the expenses. And that it was so powerful when you take that as a formula to the cap rate, it was clear as day.
Rod
Let me give you guys an example of this. On our Sedona asset, 296 unit asset in San Antonio, we put in numbered parking places so the tenants could literally pay $25 a month to have their own parking spot closest to their unit. We had 100–I think 100–I may have the numbers wrong, but just trust me when I give you the final number, it’s like 110 or 115 people– that maybe it was 125, actually, 125 that wanted to do it. That 125 x 25 equated to an $800,000 instant increase in value. This is why we love this business, my friends. Okay, so because the value is based on a multiple of the net income, and I give you numerous other examples of that, but that’s why, you know, you can’t do that with smaller multifamily or single-family, because it’s based on comps like you said. So you can force appreciation in our world.
Mark
Well, Tim, how do you think the Warrior group, the mentorship, has helped you get to where you’re at right now, to where you could even leave your job?
Rod
Yeah, good question.
Tim
Wow. So many ways. Relationships come to mind. Even prior to that. It’s the culture of the people that Rod is able to attract into the Warrior program. It’s really special. There’s a mindset of abundance. There’s a lot of love amongst the Warrior team. And the relationships that I’ve been able to build through the Warrior program were instrumental. Again, that’s what led me to introductions to my partners here today.
Rod
Nice.
Tim
It starts there.
Rod
Nice. Nice. By the way, guys, if you have an interest in the Warrior program, to apply, text the word “crush” to “72345” and we look you over, you look us over and we’ll see if it’s a fit. But again, just text the word “crush” so we can absolutely help you freaking crush it in this business and in your life to “72345”. Let me ask you this. You know, what are some–either roadblocks, answer this any way you like. What are some roadblocks that people can expect? Or why do you think people give up on real estate? You know, if you have any thoughts around that. Yeah.
Tim
Yeah, for me, I guess I look at it as a roadblock, but I overcame the roadblock through time, and it was just getting clarity of focus around what was the strategy that I was going to execute that was going to allow me to actually obtain the goal that I had, which was the freedom of my time.
Rod
Right.
Tim
And I would tell you early on, like, I had no idea I was going to be able to accomplish it this quickly. I was thinking maybe over the next ten years by the time I’m 55, and, you know, it was from start to finish four years later. And so I think roadblocks can be having clarity, for one. Another roadblock is simply just once you have the information, taking action. And, you know, I know, Rod, you talk about, like, massive freaking action, and it’s so true, but yet that massive freaking action is a series of individual steps along the way that one at a time leads to the outcome.
Rod
Sure.
Tim
And so it’s, you know, having a long-term vision, working backward to build a strategy, and then knocking each bullet out of the way as you go and continuously moving forward.
Rod
Yeah. Love it.
Mark
Could you give us some specifics on that? I know Rod also talks about, like, hey, do the things that other people aren’t willing to do. Right? What are some of those things you think that you’ve done that the average person hasn’t?
Rod
Well, he already said it. I mean, he was consuming all sorts of crap. He joined other programs. I mean, he just did an overwhelming number of stuff. I mean–but, I’m sorry I’m answering your question. Yeah.
Tim
To give you an example, it started, you know, of hey, ten single-family homes and then YouTube video to a guy named Mark Ferguson. And he’s like, hey, here’s how you turn one single-family into two.
Rod
Oh, Mr. Lambo.
Tim
Yeah, that’s right. And then somewhere in his book, I had never heard of it before but was called “BiggerPockets”. And so then I did what any normal human being would do. I Googled “BiggerPockets” and I found the podcast, and I consume things. So I started scrolling all the way down. I started with episode number one, and I listened to all 300 plus podcasts at the time.
Rod
Wow.
Tim
And what’s great about BP, “BiggerPockets” was that it’s like this general overarching platform that you learn about all facets of leverage you can pull. Like you mentioned, Rod, wholesaling, fixing and flipping, buy and hold, single, small multi, multi. And then that led me to clarity that okay, I want multifamily. So again, I Googled multifamily podcast, and pops up, sounded really great. Lifetime cash flow.
Rod
Yeah, baby. Okay. I like [inaudible] .
Tim
Scroll it down to the bottom. Started with episode number one and listen to all 300 plus of them.
Rod
Oh my God. Holy shit.
Mark
Now here you are, right on.
Rod
There’s the answer to your question, Mark.
Mark
Yeah.
Rod
You know, there’s massive freaking action. Good God. And they were so bad early on, too. And I used to say early on, I’ll never sell you anything. And I didn’t plan to. I mean, you know, you want to make God laugh? Tell them your plans. Wow, okay. What’s that?
Mark
Now we’re over 700 episodes, by the way.
Rod
Oh, yeah. We just hit 700 episodes and 13 million downloads. But anyway, what were you going to say, Tim?
Tim
Yeah, well, early on, because I started episode number one, you know, early on, you were giving the free coaching sessions. So I said oh my God, how am I going to get one of these coaching sessions? I sat down on the couch next to my wife one time, and I had to listen to when I was like, babe, I’m going to meet this man in person someday. But then as I kept listening to the podcast, then all of a sudden, you weren’t given the free coaching sessions anymore. But I started hearing about the boot camps, et cetera.
Rod
Oh, no kidding. Yeah. So those of you that don’t know, I used to take free phone calls from my listeners. I had nothing to sell. I had nothing to get. I just wanted to add value. That’s truly, that’s the truth of it. I did hundreds of them. And finally, I’m like, okay, I can’t do this anymore. But I literally would do, you know, a bunch a week and just add value. And I used to send people to another program, actually someone else that was selling stuff. Because–and then finally, people are like, please create something. And that actually was the springboard for me to write my book. And, you know, I gave away that thing for free. I gave away 20,000 copies of the book. I still give it away for free. You just pay for the shipping. You can have it.
Mark
[inaudible] Yeah.
Rod
Yeah. It was the number one best seller in several categories and real proud of it. People– in fact, I just got a text today. Your book is awesome, literally today. But the point is, you know, again, you want to make God laugh, tell me your plans. I guess that’s the point. Well, listen, brother, it is great to see your face and, you know, great to hear about your retirement and from W-2. And I can’t wait to see where you are a year from now, man. We’ll have to have you back on here just to see where you are because I know it’s going to be exponential. And guys, again, opportunity, literally the greatest wealth transfer in history could be coming. Seriously, it’s definitely going to be an exponential opportunity. So learn this business.
Mark
Today is the 13th of June. I don’t know when it was going to be released. We were just talking about it. Bitcoin is down another 25%, 30%, just this morning down to 23 grand. It’s going to keep going. Everything.
Rod
It’s going to keep going. Amazon’s stock is depressed, and now, I mean, Amazon is a no-brainer. You know that’s, you know.
Mark
That’s everything down.
Rod
Everything’s going down, and so will real estate. So, again, exponential opportunity. All right, Tim, great to see you, brother. And hopefully, I’ll see you in Denver. Mark, good to see you.
Mark
Same to you.
Rod
All right, take care, guys. Thank you.
Tim
Thank you, guys.
Outro
Rod, I know a lot of our listeners are wanting to take their multifamily investing business to the next level. Now, I know you’ve been hard at work helping our Warrior students do just that using our “ACT” methodology, which is Awareness, Close, and Transform. Can you explain to the listeners how they can get our help?
Rod
You bet. Guys, we’ve been going nonstop for three years building an amazing community of like-minded people. And our coaching students which we call our warriors have had extraordinary results. They’ve purchased thousands and thousands of units, and last year, we did over 1000 units with our students. And we’re looking to grow this group and take it to the next level. We’re looking for people who want to follow a proven framework that’s really step by step and then leverage our systems and network to raise equity, to find and close deals, and to build partnerships nationwide. Now, our Warrior community is finding success in any market cycle. So if you’re interested in finding out more about how you can become more of our incredible network and take advantage of the incredible opportunities that are coming very soon, apply to work with us at “MentorWithRod.com” or text “CRUSH” to “72345” and we’ll set up a call so you can check us out and we can check you out. Again, to apply, text “CRUSH” to “72345”.
