Jeff Gleiberman is President of MG Properties, a leading multifamily syndicator. He oversees investment transactions, operational strategies, and partner relations. With extensive experience in various roles at MG Properties, Jeff has driven significant platform growth while upholding the firm’s core values. He is known for fostering strong industry relationships and cultivating strategic partnerships with investors, wealth managers, and institutional partners. Under Jeff’s leadership, MG Properties has become an NMHC Top 50 Apartment Owner with over 28,000 units.
Here’s some of the topics we covered:
- Jeff’s Epic Journey into Real Estate 00:00
- The Moment Jeff Got Hooked on Multifamily Investing 5:26
- How Big Players Structure Their Multifamily Deals 6:45
- The Hidden Dangers of Investing in California 11:30
- Top Assets You Should Be Focusing On Right Now 14:47
- Why Invest? 23:42
- How to Inspire Others and Maintain Unstoppable Discipline 29:44
- Game-Changing Tax Strategies You Need to Know 34:05
- The Must-Have Traits of a Successful Leader 38:30
To find out more about partnering or investing in a multifamily deal: Text Partner to 72345 or email Partner@RodKhleif.com
Full Transcript Below:
00;00;00;01 – 00;00;23;05
Rod
Welcome to another edition of Lifetime Cash Flow through Real Estate Investing. I’m Rod Cleef and I am thrilled that you’re here. We’ve got a real rock star here today. His name is Jeff Gleiberman, and he’s the president of MSG properties. And they are an eight I’m sorry, 28,000 units in six states on very big metro areas. And we’re going to have a wide ranging and I’m sure incredibly interesting conversation today.
00;00;23;12 – 00;00;24;20
Rod
Welcome to the show, man.
00;00;24;22 – 00;00;25;27
Jeff
Thank you for having me. Great to be.
00;00;25;27 – 00;00;49;28
Rod
Here. Absolutely. well, listen, you started to tell me a little bit about your family history and and really how how this company of yours grew to where it’s at. But I’d like you to do it all over again. So if you can give your. You know why real estate. Why you know how your company became a powerhouse in this business and just kind of give us a little bit of a bio, a much better job than I did.
00;00;49;28 – 00;00;50;10
Rod
Please.
00;00;50;10 – 00;01;13;00
Jeff
Yeah. Happy to do it. And, very blessed to be working in a family business founded by my father in 1992. He was a tax accountant in the 80s, saw lots of tax advantages to real estate, a lot of wealth potential, and felt that people always need a place to live. So he wanted to focus on housing. The first, partnership we purchased was in our hometown in San Diego.
00;01;13;00 – 00;01;36;18
Jeff
It was 38 units in North San Diego. It had both my grandparents in it and two, my dad’s friends did very well, and we started putting together more and more partnerships throughout the 90s in San Diego. And then we expanded to new markets starting in 2000. All over California, up into Oregon, Washington, Arizona, Nevada and Colorado. So today we have just over 29,000 units.
00;01;36;18 – 00;02;02;27
Jeff
It is in six states. And, we have modeled almost every deal, just as they’ve all been the same model. And just looking for well-located, well built properties. We do our own in-house property management, asset management, construction management. Over 900 employees. Now, that keeps us very busy. And, we’re seeing a lot of good opportunities. today.
00;02;02;27 – 00;02;05;05
Jeff
So happy to discuss any details there.
00;02;05;11 – 00;02;15;13
Rod
Well, you answered some of the questions I was going to ask, actually, if you were vertically integrated in all these states. Well, so is it properties, property management then? Is that it? Yep.
00;02;15;13 – 00;02;32;09
Jeff
Anyone that works at our properties works for MJ properties okay. We really feel that that’s been a huge key to our success. Yeah. In, the Great Recession in, in 2007 eight during Covid, being able to pivot, having the right people at the at the right properties and having full control over everything that happens at our properties.
00;02;32;10 – 00;02;48;10
Rod
Yeah, no, that’s that’s absolutely the way to do it. We’re not to that point yet in my portfolio, but, you know that the certainly the more successful operators, the larger operators off vertically integrate and every piece. So you have the old construction component as well. You go in and do your own make ready and do your own CapEx.
00;02;48;17 – 00;03;07;00
Jeff
Correct. Yeah. For construction team. And it’s been that way since day one when my father started the business. He was everything. So it was just out of our house and we did that first deal he was doing leasing, maintenance management. Then, when I was young, I worked at the properties doing leasing and management and maintenance growing up.
00;03;07;02 – 00;03;21;29
Jeff
Same with my other two siblings who are not in the business anymore. But then, worked through, after college, went to CBRE for three years, went back and got my masters, and now I’ve been back at the corporate office for about ten, 11 years.
00;03;22;00 – 00;03;23;10
Rod
Were you in sales at CBRE?
00;03;23;16 – 00;03;25;13
Jeff
I was, I was doing, they had a cold.
00;03;25;13 – 00;03;26;11
Rod
Calling, cold calling.
00;03;26;11 – 00;03;35;20
Jeff
Owners. I was doing investment sales for multifamily in, San Diego and the Inland Empire, which is, San Bernardino, Riverside County in Southern California.
00;03;35;23 – 00;03;57;12
Rod
Yeah. So CBRE, if you don’t know, is a is a huge, real estate brokerage, kind of like Marcus and Millichap Newmark. Robin Ellis. And so you were there, beating the pound in the pound. Wow. You you done it all. Which is fantastic, because that that allows you to to effectively not just manage, but you know, what’s going on, you know, if something’s off because you’ve done it all.
00;03;57;13 – 00;04;03;24
Jeff
You know, I learned a lot working at a big organization like that. I made a lot of connections and really, really happy I took that path.
00;04;03;24 – 00;04;22;10
Rod
Well, that that probably was the greatest experience for for the role you’re in right now. But I’m just talking about all the way, you know, from from doing the maintenance to doing the leasing to doing all these little pieces that, you know, a lot of leadership people haven’t done. So they don’t really fully understand the nuances. And, you know, you’ve you know, you’ve done it.
00;04;22;10 – 00;04;29;09
Rod
So that’s that’s hugely valuable when you’re running a, you know, company and you’ve, you’ve done the different pieces. Yeah. Would you agree.
00;04;29;10 – 00;04;51;15
Jeff
Yeah. That definitely one quick story on that side. When I was very young probably 8 or 9 Mark, my father was doing everything and the weekends were for acquisitions because he was running the properties during the weeks. So he would take me to the, to, possible acquisition tours on the weekends. If we purchased a property, I would get a $5 commission plus $0.10 per every unit.
00;04;51;18 – 00;05;10;16
Jeff
And I remember the first commission I got 48 unit deal in Oceanside, North San Diego. I got, $9.80, but I still remember it. And and he, he he he tells me, you know, I would own by the end, I would only want to go to the properties that had the most units. I get to thinking at a young age.
00;05;10;19 – 00;05;28;14
Rod
Oh, that’s funny, that’s awesome. Well, that’s awesome that he involved you that early on and, and built your passion for the business because, you know, obviously, as you know, when you love what you do work is play and and you’re passionate and that passion allows you to influence people because they can see you love what it is. You’re doing so well.
00;05;28;16 – 00;05;47;01
Rod
incredible. So, you know, I, I started to tell you a little bit about some of the debacle that I’m in right now. and, you know, there’s a lot of upset in the market right now. And we see we’re seeing a lot of multifamily operators that got into bridge debt and things like that. How are you aligned in that way?
00;05;47;01 – 00;05;51;16
Rod
Have you have you got much of that or is it all long term conforming.
00;05;51;19 – 00;06;13;01
Jeff
So we’ve really modeled all of our deals the same since day one. We do long term fixed rate financing, usually 7 or 10 year with Freddie and Fannie interest only at around 55% LTV. So the portfolio is very well protected. In some cases we will put on a variable or a bridge loan if we’re doing a big renovation, if cleaning up delinquency.
00;06;13;04 – 00;06;29;23
Jeff
So of the roughly 102 properties we have, two had variable rate loans on them. We’re working to restructure those into fixed rate loans because as everyone knows, the variable is very, very troubled right now. Right.
00;06;29;25 – 00;06;35;14
Rod
But that’s what’s causing the what’s happening in this, I mean, in that in the multifamily sector right now.
00;06;35;15 – 00;06;54;21
Jeff
Yeah, we’re going to see a lot of, a lot of distress coming here soon and, and worse. But yeah. So, very, very well protected. 98 plus percent of our portfolio is fixed rate financing. The average in-place rate on the financing. We have is 3.6%, which is just beautiful. Yeah. Feels very, very good.
00;06;54;21 – 00;07;12;09
Rod
Beautiful. Beautiful. Beautiful. Well, I think the fed just said they anticipate coming back two points I think I just just saw that. So which would bring it back you know in the what is that the four range. Three range. But yeah I mean there’s a lot of a lot of pain right now. we won’t even talk about office.
00;07;12;11 – 00;07;30;21
Rod
I mean, you know, I’d love to get your opinion on on, you know, your crystal ball for, you know, really the country economically as a whole and give you my opinion. But I’d like to hear yours first and, and, and really, our, our asset class multifamily moving forward.
00;07;30;25 – 00;07;31;01
Jeff
Yeah.
00;07;31;01 – 00;07;31;19
Rod
Please.
00;07;31;21 – 00;07;52;23
Jeff
Yeah. Sounds good. And we only purchase existing multifamily. We don’t do any development. Everything’s stabilized. And, we’re pretty excited about some of the purchases that we’re doing today just with the basis and, the price that we’re paying. And then the long term view on the development pipeline in the short term, the development pipeline. No.
00;07;52;23 – 00;08;01;12
Rod
Right. Absolutely. No question. Because because it’s it’s it’s pretty much been cut off. And so that means yeah. Please I’m taking you’re stealing your thunder. Please continue. Yeah.
00;08;01;12 – 00;08;20;13
Jeff
No, no no problem at all. Yeah. So starting after 2026, almost no new development will be delivered. And so since we’re 7 to 10 year holders, we’re trying to pick the right locations, the right properties that are going to outperform over the next 7 to 10 years. And we’re finding some really good deals. Last year we purchased eight properties.
00;08;20;13 – 00;08;38;18
Jeff
It was 850 million in acquisitions this year, off to a really fast start. But we’re finding a lot of good opportunities. We’re going to be in the $1.5 billion range on our acquisitions this year. We’re not selling anything that we do not think it’s the right time to sell, right. We are trying to find any opportunities we can.
00;08;38;20 – 00;09;04;19
Rod
Yeah. No, that’s that’s I and you and I are in the same camp in that regard. I, we just closed on a deal at about a 40% discount, which I call it a unicorn. I assumed some existing debt, at, 4%. And, you know, we’re seeing they’re starting to see the deals. And, you know, it’s funny and I’m sure you’ve seen this as well for, you know, up to about a year ago, you know, you’d see a handful of deals, you’d see some deals.
00;09;04;19 – 00;09;27;09
Rod
But I mean, it’s like every day I’m seeing 5 to 10 deals hit my email. And from what I understand, sales are down about 90% right now. So, you know, the proverbial you know, what I think is, is getting close to hitting the fan here. But, how do you feel about the country economically as it relates to, you know, where we are now and where we’re headed?
00;09;27;09 – 00;09;29;23
Rod
Any thoughts there? I know it’s crystal ball stuff.
00;09;29;23 – 00;09;51;03
Jeff
Yeah. Just curious. There’s there’s definitely a lot of volatility out there and a lot to take in. It’s an election year. And you know the the economy is still running really hot. Unemployment numbers are good right. you know we’re strictly monitoring the multifamily market. So we’re trying to get extra granular and really look at submarkets over market.
00;09;51;04 – 00;10;13;26
Jeff
So we’re in major metros on the West Coast, and we’re targeting certain submarkets that have the least amount of new development, but that have the most amount of access to jobs. Right. And so we’re really trying to pick these these specific submarkets, hold, hold these properties, manage them, run them ourselves. And then over the next 7 to 10 years have outsized returns.
00;10;13;26 – 00;10;17;21
Jeff
And we’d much rather overdeliver than over promise.
00;10;17;21 – 00;10;33;23
Rod
Yeah. Well, that yeah, of course, you know, when you’re talking to investors, the key is to under-promise. so, these submarkets, are they part of these major metros that you told me before we started recording? Yes. Yeah. You’re in Denver, Phenix. I think you said.
00;10;33;26 – 00;11;09;04
Jeff
Portland, Seattle, Reno, Vegas, California is where we’re from, and we know it. Well, it has its, risks, you know, with, rent control and some political risk. But we still love the market long term. Very, very hard to develop. Right. still very good quality of life, tons of jobs, dynamic jobs. So we’re all over California. but really looking at that specific submarket, as I mentioned, the Inland Empire earlier today, which is the inland areas of, Orange County, San Diego and LA love that market as well.
00;11;09;04 – 00;11;30;04
Jeff
Lots of industrial jobs, very little new development. We’re big owners out there and concerned. We’ll find like a Phenix and find a specific submarket that we’re targeting. we really like Chandler, our Tukey mesa, and then try to find properties at a discount to replacement cost today. And we’re finding some good ones.
00;11;30;04 – 00;11;56;20
Rod
Yeah, yeah. so, you know, I get a lot of listeners that have not pulled the trigger on this business yet, either passively or actively. More actively. Honestly. and, you know, they, they, they’re people that are in a W-2 job that. No, they, they, they want more out of life for themselves and their families. and, you know, I teach this stuff.
00;11;56;20 – 00;12;15;04
Rod
I don’t know if you knew that or not. I do bootcamps regularly, virtual and live bootcamps, and have about 1400 coaching students around the country that own hundreds of thousands of units. And so I attract people that want to do more with their lives. Speak to those people for me, if you would. You know the ones that know they need to do something.
00;12;15;07 – 00;12;26;27
Rod
I mean, obviously you’re at the pinnacle of this, but pretend you’re, you know, at a W-2 job, you’re not thrilled with that job. And, you know, you want to improve your lot in life. Give them some words of encouragement, if you would.
00;12;27;03 – 00;12;47;08
Jeff
Yeah. There’s there’s a lot of opportunity in real estate and creating passive tax efficient income. And you can do it with great sponsors, with general partners. You can do it on your own. I’m doing it on your own. You’re usually starting with smaller properties, which could be good and bad. You know, there’s mom and pop operators. You might find some more upside.
00;12;47;08 – 00;13;13;01
Jeff
There could be some really, really good deals that you find. And then if you find a good operator, they have some economies of scale. They typically get some better insurance, some better loans. So that could be the right path. But with some of the tax advantages to passive income, it has been a life changing part of many, many of our LPs portfolio.
00;13;13;03 – 00;13;37;14
Jeff
our LP group has grown word of mouth from four partners in the first deal to, over 2000 partners. Now. And, I am very blessed to hear a lot of great stories about how it changed their life and how the income is, you know, so valuable to them. And so, it is a big, important part to many of our LPs portfolio.
00;13;37;17 – 00;13;59;12
Rod
No, that’s that’s great. and, you know, I know that, like, like we said, you focus on these major metros, which, you know, in the, in our business, you know, he mentioned jobs, by the way, jobs is the most important factor in the multifamily business. Would you agree? Yes. And, and and I’m assuming you’re primarily in A and B assets.
00;13;59;14 – 00;14;04;27
Jeff
So yeah, we try to stay B to B pluses. Really.
00;14;05;00 – 00;14;21;27
Rod
Yeah. That’s that’s a good sweet spot. Yeah. is I, you know I, I have a couple of C assets that were purchased with my ex partner. And you know I think that demographic is going to be more and more challenged. I mean, you know, I’m recently single, so I’m going to the grocery store and I’m seeing what stuff is cost.
00;14;21;28 – 00;14;37;00
Rod
I’m like, Holy crap, out of people afford this or filling up your car, for example. And I think that that, you know, paycheck to paycheck demographic is is struggling already, let alone, you know, what could be coming. So, would you agree with that or thoughts?
00;14;37;03 – 00;15;02;09
Jeff
I would agree with that. And also add that at different times in the cycle, it’s there’s different opportunities. And we’ve been in the business now for over 33 years and seen many cycles. We’ve never had any losses. Every properties that have had a positive return coming out of recessions or out of downturns, there’s a lot of opportunity in the C space, maybe in the B minus space.
00;15;02;12 – 00;15;26;04
Jeff
So we were buying a lot of C more, B minus coming in 2009, ten, 11, 12. Then as the cycle matures, the C product becomes very similarly priced to the BNA. And we feel that it’s better to buy the newer, nicer, better located. So right now we’re more focused on what we call Core Plus, which is deals that are ten years or newer.
00;15;26;11 – 00;15;52;07
Jeff
But we’ve done many, many deals that are 30, 40 years old, big value add projects as well over our history. 50% of our deals have been kind of value add, deals and then 50% have been core plus newer. But at different times in the cycle there’s different opportunities. And those see opportunities will come back again. It might be a little bit of another year or two, but they’re definitely that’s.
00;15;52;07 – 00;16;01;21
Rod
What I believe. It’ll be there like next year to and the next year. what do you how do you feel about the impact of the election results?
00;16;01;24 – 00;16;38;21
Jeff
Historically, it hasn’t impacted us very much. We looked back and we really haven’t seen that big of an impact. just looking back at the last 30 years of our company. But, it does impact, policies that could impact interest rates, which is obviously a huge topic right now. Right. ten year went down this week with, inflation news close to 4.2 and with spreads and, 150 basis points rate, we’re getting all in ten year loans at under 6%, which really is not that bad.
00;16;38;22 – 00;16;39;00
Jeff
Let me give.
00;16;39;00 – 00;16;58;18
Rod
You some context, okay. When I got in the business in 1978, the rates were 18%. And I remember doing backflips when they hit 7%. I’m sure your father remembers this as well. And and we’re like, Holy crap, it’s 77%. And so just to give some context of those of you listening that are freaking out about it, you know, this, this numbers and I mean, I’m sorry, this business is empirical.
00;16;58;18 – 00;17;21;29
Rod
It’s just numbers. And we we made deals work in 78 and 79. But, you know, it’s just, you know, different purchases, different purchase prices and, and, you know, different deal structure. But, yeah. So but I will tell you, it’s hurting a lot of operators. I, you know, we’ve we’ve looked at deals where the reserve payments, we looked a deal in San Antonio.
00;17;21;29 – 00;17;39;22
Rod
The reserve payments for this seller went from 8000 a month to 80,000 a month. You know, I mean, you know, that’s, that’s a big hit. and, but, you know, I talked to a lot of operators. Luckily, I’m blessed in my coaching program. We’ve only seen one deal go south so far, and I shouldn’t say so far.
00;17;39;22 – 00;17;53;16
Rod
I just want to go south out of, you know, a couple of hundred thousand plus units. But, Yeah. so you don’t invest in any other asset classes, just multifamily. How long have you been at the head of the company? I’m just curious.
00;17;53;19 – 00;18;22;23
Jeff
When I came back full time about 11 years ago to the corporate office, I did a couple of years in each department doing some property management, some asset management, acquisitions, investments. And then just right before Covid. So my 3 to 4 years ago, I took back over as president, taking a much bigger strategic role, trying to free up mark’s time to do what he likes the most, which is really analyze and look at the deal structures and look at our portfolio.
00;18;22;25 – 00;18;24;08
Rod
So he’s still active as well?
00;18;24;09 – 00;18;35;16
Jeff
Yeah. Yeah, yeah. So yeah, I’m very, very lucky I get to work with my father every day. That’s nice. And, yeah, he’s our CEO and founder, loves the business. And, we really love what we do.
00;18;35;17 – 00;18;55;12
Rod
Yeah. No. That’s awesome. So, you know, everybody thinks it’s a it’s a just a it’s all roses in our business that it always goes perfectly talk about I call them seminars. I by the way I lost $50 million in 2008. I don’t if you knew that or not. Yeah, I got completely destroyed. I call them seminars when that happens.
00;18;55;12 – 00;19;08;10
Rod
It was a big seminar. But, talk about any setbacks you’ve had or seminars that you’ve had, and maybe think of a doozy that you can share and maybe the lessons learned, in an acquisition or a turnaround or whatever.
00;19;08;12 – 00;19;15;28
Jeff
Yeah. That 2008 Great Recession was very significant. Yeah. And especially in, you know, certain markets where.
00;19;15;29 – 00;19;20;26
Rod
The California got creamed, so did Florida. So did Nevada. Arizona. Right? Yeah.
00;19;20;26 – 00;19;53;00
Jeff
For for our markets when we were operating, Arizona was the was the hardest hit for us. Just so many homes were being built. And then overnight those homes turned to rentals which were direct competition. All those homebuilding jobs went away. So we lost lots of jobs and we bought a deal. 2007. It was the lowest performing deal in our history in Tucson, and we had to do a workout with the lender we held through, managed it correctly, focused a lot of time on it.
00;19;53;06 – 00;20;08;18
Jeff
It ended up to be a 4% return per year, which is our lowest returning deal, but for capital recovery and a small return. So very, very big win in the end. But just a tough, tough ride for you know a couple of years there it was. It was a big, big recession.
00;20;08;18 – 00;20;19;15
Rod
Yeah. And it took a lot of your time to deal with it. Right. Yeah. I, how many deals have you gone full cycle on, by the way, guys, full cycle means buy and sell. How many deals have you gone full cycle on?
00;20;19;18 – 00;20;20;03
Jeff
100.
00;20;20;04 – 00;20;20;23
Rod
100? No.
00;20;20;27 – 00;20;35;26
Jeff
Yeah, we’ve done 101 and. Yeah. So we’ve we’ve purchased just over 200 deals in our history right now. We’re holding about 102 of them and right around 100 we’ve sold. so yeah, it’s been the average hold period has been right around seven years.
00;20;35;28 – 00;20;59;08
Rod
Okay. Okay. Yeah. You know, I had to deal with a horrible property in Shreveport, Louisiana, 403 units. ex-partner got me involved in it. got my it got my ex partner involved in it, and, this this guy we knew got us in it, and he had a management company. Ran it into the ground when I took it over eight months in the pools were green.
00;20;59;11 – 00;21;16;12
Rod
It was grossing less than 100,000 a month, 403 doors. I literally had to live there to turn it around and got it up to over 300. And thank God we sold it. And I just found out literally a month ago, they, the city shut the utilities off and everybody moved, had barely had to move. I mean, it it died again.
00;21;16;12 – 00;21;31;01
Rod
So yeah. that that’s my seminar, in the business. But, you know, besides your father, did you have any other mentors? Did you have any, like, outside mentors, or was it all pretty much in house with your family?
00;21;31;03 – 00;21;59;02
Jeff
Mostly in house with my family, but, you know, at CBRE, my my first, boss and mentor really helped me a lot in the business, and I learned a lot there. But my whole life, I just always knew this is what I wanted to do. I found it super interesting and loved the business. We got lucky that we were in a in a great business that, you know, thrived for 35 years, and we still think it’s going to continue to do that for the next 30 years.
00;21;59;05 – 00;22;08;28
Rod
A huge housing shortage in this country. And there’s now there’s a big disparity between, being able to purchase versus rent. So, I mean, we’re pretty much becoming a renter nation. Would you agree?
00;22;09;05 – 00;22;30;00
Jeff
Yeah, yeah, we’re seeing the it’s the biggest difference between buying and renting today. Right. And there’s a different mentality to where renting is is easier for many people. You can pick up and move. You can call and get something fixed. You have all the amenities right there. people are used to it. They’re doing it much longer. couples are having kids later getting married later.
00;22;30;00 – 00;22;40;13
Jeff
So we’re just seeing a lot of trends and demographics that are very, very positive for renting. And, we we believe it’s a, you know, very, very good time to buy.
00;22;40;20 – 00;23;05;15
Rod
Yeah. Agreed, agreed. what I you know, the reason my podcast has been so successful is I spend a lot of time talking about mindset and psychology and how really 80 to 90% of a person’s success in anything is just that their mindset and psychology. Only 10 to 20%, the real estate mechanics or business mechanics or whatever. You know what gets you to jump out of bed in the morning?
00;23;05;15 – 00;23;10;00
Rod
What’s your why? What? What makes you be the driver that you are?
00;23;10;02 – 00;23;34;08
Jeff
I think just being in this business for so long and just having different stakeholders that we benefit so much really drives me. So our biggest stakeholders we’ve talked about today are our investors, which obviously very, very important, but we have many other ones as well. So we’ve got over 900 employees giving all those jobs. We do a big leadership conference every year.
00;23;34;09 – 00;24;01;06
Jeff
We bring in all the managers, the maintenance supervisors. We get about 350 people just kicking off the year with our goals and our mission. And I just love being there and helping lead that. And then also our residents, we’ve got tens and tens of thousands of residents providing safe, affordable homes and amenities. It’s really, really rewarding. And, and it keeps me going nice.
00;24;01;08 – 00;24;11;05
Rod
You know, you say, you know, is who you sound like. I’ve had, Albert McKinney, you know, Albert, I’m not Albert McKinney. I’m sorry. Albert Barras, McKinley Corporation. Do you know Albert Barras?
00;24;11;06 – 00;24;12;05
Jeff
Heard the name, but, yeah.
00;24;12;06 – 00;24;22;16
Rod
I’m too huge at 40,000 doors. And, his company was actually featured in the book traction. I don’t know if you use, iOS or any sort of a system like that business management system to use that.
00;24;22;18 – 00;24;22;26
Jeff
Not.
00;24;22;26 – 00;24;24;17
Rod
That one. You know, we know you with it, though.
00;24;24;18 – 00;24;25;16
Jeff
We use a few different ones.
00;24;25;20 – 00;24;41;27
Rod
Yeah. Okay. Well, anyway, you know, just the way you talk about, you know, your stakeholders, your investors, your employees, and he’s, he’s, you know, along the same lines and, and yeah, I don’t know why I digressed with that, but it just, it just it just triggered that.
00;24;41;29 – 00;24;43;25
Jeff
The employees are so important in.
00;24;43;25 – 00;24;51;11
Rod
Oh, it’s everything. Your business is nothing but systems and people. You get the systems right and you get the right people. Success is inevitable. Would you agree with that?
00;24;51;13 – 00;25;02;23
Jeff
Yeah. And on our executive team, most of them have been with us for over 15 years. We’ve got team members that have been with us for over 20, 25 years. That’s cool. And it is just it’s just so rewarding.
00;25;02;23 – 00;25;04;03
Rod
It’s like family. Yeah.
00;25;04;06 – 00;25;11;15
Jeff
And they they teach us so much and and the dedication that they show to our business and to all our stakeholders is really amazing. Yeah.
00;25;11;15 – 00;25;33;18
Rod
And, and and you know, guys, I hope you’re getting the clues here because because like I said, I mentioned Albert Barrows, who’s been on the show a couple of times, and he speaks exactly the same way. and there’s a reason that these guys are so super successful is because they focus on the people that matter. They treat them well, they take care of them, they validate them, they encourage them and and, and and they listen to them.
00;25;33;24 – 00;25;34;23
Rod
Would you agree with all that?
00;25;35;00 – 00;25;45;02
Jeff
Yep. Yeah. And put them in a position to succeed. Yeah. Yeah. You really got to use people’s strengths, right. And help them improve on places that they they might be able to improve.
00;25;45;07 – 00;26;04;12
Rod
Yeah. You know, I mentioned the book traction, which I don’t get anything for talking about this. We use that in my organizations. and it’s called Entrepreneurs Operating System. Guy named Gino Wickman wrote the book, but it’s just about, you know, some of the things we’re talking about, where you where you, you know, identify who need, what people need to go and what butts in the seats.
00;26;04;12 – 00;26;25;20
Rod
And then, like, for example, instead of an organizational chart, you have an accountability chart. And, and, and I’m sure, like I say in your organization, your size, you’ve got, you know, different methodologies you used to to stay on top of what’s most important in this. In that sense, that organizational system, you do 90 day goals and you have your leadership team do 90 day goals.
00;26;25;20 – 00;26;35;01
Rod
You stay focused, which is really been helpful in my companies. But, in your role, what is the most challenging part of your role for you?
00;26;35;04 – 00;27;01;22
Jeff
A recent challenge that we’ve seen is on the on site hiring. So corporate office, we have 130 people and it’s been very smooth. And we’ve got great systems, policies and, feel very good about it. But just on the on site lot of turnover and just trying to keep people motivated and working towards a common goal has been very difficult.
00;27;01;25 – 00;27;13;07
Rod
Same here. Exact same thing. You know, I told you about the fact that I’m taking over some assets and and that’s been the biggest hurdle for us as well, is finding good people. I wonder why that is. Do you have any idea why that might be?
00;27;13;09 – 00;27;33;02
Jeff
I think it’s just a really strong job market, and people are seeing other opportunities that maybe you’re paying a little bit more and maybe the grass is greener. Trying new things. Obviously, the disruption of Covid changed the whole workplace with the work from home and in the apartment industry, you can’t work from home, right, if you’re working at an apartment.
00;27;33;02 – 00;27;50;04
Jeff
So that loses a lot of people right there. You need to be onsite. for our onsite employees, obviously. Right. So that changed a lot. And just, we’re starting to see a little bit more, improvement the last couple of months. And I think we’re on the right track, but it’s been a difficult few years.
00;27;50;04 – 00;27;55;23
Rod
Any strategies that you’ve implemented as a result of this, of this, issue?
00;27;55;25 – 00;28;19;19
Jeff
really trying to drill in, you know, our family business feel even though we’re kind of in an institutional business now, right, of, you know, more than just a number and really include you in the success of the property, include you in our future goals, in our planning for the property, and just trying to make people feel really a part of the team.
00;28;19;22 – 00;28;41;13
Rod
That’s that’s great advice. You know, one of the things I did for one of my companies was I did this future vision and and it was geared towards new employees, and I haven’t done it in years now, but I it’s probably still on my website, actually dated on my website. But but, you know, people like to be able to see themselves in, in a future that’s compelling and with an organization that cares about them and all that.
00;28;41;13 – 00;29;02;19
Rod
And, you know, that’s really good it. I ask that question for my own edification because we’re dealing with that right now ourselves. but, you know, let me ask you this question. I like to ask sometimes if you could go back and tell 18 year old Jeff something, knowing what you know now about this business, about life in general, you know, take it anywhere you want.
00;29;02;21 – 00;29;12;16
Rod
Is there anything you might do differently or anything that you would maybe double down on or take it anywhere you like? With that.
00;29;12;18 – 00;29;35;14
Jeff
The first thing that comes to mind is to stay disciplined. I feel that we are almost disciplined to a fault. We have only all 200 deals we’ve done, have been almost identical, structured similarly. They look the same. But now looking back, that has been the key to our success. We fully understand what we do. We aren’t taking unnecessary risks.
00;29;35;17 – 00;29;45;06
Jeff
We can manage through anything that the economy or that the cycle is going to give us. And that discipline has been key, key to our success.
00;29;45;08 – 00;29;50;09
Rod
Okay. So nothing different.
00;29;50;11 – 00;30;03;17
Jeff
something that I would do different. Let me think about that for a second. We’ve been talking mostly on the LP side on the private high net net worth syndication model. We also do institutional deals as well.
00;30;03;17 – 00;30;04;11
Rod
Oh yeah. Deal with private.
00;30;04;11 – 00;30;17;17
Jeff
Equity. Yeah, with private equity. And that started about ten years ago. And it was a big, change for the company, just the reporting, the amount of work that goes into each one of those deals.
00;30;17;19 – 00;30;19;29
Rod
And controls that they exert. Sometimes as well.
00;30;19;29 – 00;30;42;01
Jeff
Yes, the controls for sure, they can sell when they want, even if we don’t think it’s a good time. Right. If they don’t approve certain CapEx things that we think need to happen at the property. So I would have been a little bit better prepared for the amount of work that that brought to our business and the amount of change and time that went into that for our business.
00;30;42;04 – 00;30;46;07
Jeff
On the flip side, it helped our business grow significantly. So we.
00;30;46;07 – 00;30;48;21
Rod
Have because you will do larger deals or we.
00;30;48;21 – 00;31;13;08
Jeff
Were able to do larger deals, raise more capital. It opened up new opportunities in relationships with institutions that were selling deals. it is so important today that your reputation of who, you know, to get a final look at a deal, to buy a deal. So we had about 12,000 units when I came back full time 10 to 11 years ago, and now we’re at close to 30,000.
00;31;13;08 – 00;31;18;00
Jeff
So that really helped grow our business. But it changed our business, too.
00;31;18;02 – 00;31;36;25
Rod
got it now that’s that’s very valuable advice. you know, I’m sure you have people come up to you and say, okay, give me the magic pill. How do I do what you’re doing? You know, what what what can I do to get into the business? And, and and they’re more asking on an operational level rather than a passive level.
00;31;36;27 – 00;31;49;13
Rod
Is there a book or anything you give them, or is there, you know, what book would you gift the most or any, any tools or strategies that you share with people that come to you wanting to learn?
00;31;49;15 – 00;31;54;10
Jeff
Yeah, investing in private equity real Estate by Sean Cook.
00;31;54;16 – 00;31;56;16
Rod
Oh yeah. Okay. Okay. Yeah.
00;31;56;18 – 00;32;23;17
Jeff
It is a very, very well written overview. Okay. On on just general real estate investing. he probably someone I know wrote it very well, and I, I usually don’t say this out loud, but, he doesn’t like to know too much, but our CEO, Paul Case Berg, I’ve worked with for over 15 years wrote an amazing book about real estate investment.
00;32;23;24 – 00;32;43;15
Jeff
He didn’t want to have anything to do with our company, so he put it under a different name. Oh, but, you could you could check it out. I think it’s very well-written. Really, really good overview of the business. I like some of the Tony Robbins, kind of just general investment books to money mastery. Just, just, I.
00;32;43;15 – 00;32;53;25
Rod
Just came out with a new one that he’s been pushing. I forgot. Yeah, but but yeah, but I spent 20 years with Tony, by the way. I, I was on his team for eight years, and that’s really where I got all the mindset.
00;32;53;27 – 00;33;04;20
Jeff
Yeah, I think he’s, I think he’s really, just an amazing, super gifted person. And just the concepts that he has are just so helpful to people and just, so those are some of the, some of the great.
00;33;04;23 – 00;33;19;28
Rod
Those, those are, those are good and those are very good. So, you know, in this day and age, we’ve got cost segregation. We’ve got bonus depreciation. In the past we’ve had 1031 exchanges. Give me your insights on on those tax strategies that are just so incredible right now.
00;33;20;01 – 00;33;42;22
Jeff
And this this goes back to the very beginning of our business. So Mark was CPA and tax CPA in the 80s. And he saw these tax benefits and really wanted to build our business around this. So every time we sell a property we do a 1031 exchange. We’ve done hundreds of them. Also we have been doing exchanges from outside parties as well, where they can come in as a tenant in common.
00;33;42;24 – 00;33;46;03
Jeff
And that’s been really valuable. And then on the cost segregation side.
00;33;46;07 – 00;34;06;14
Rod
Before you move on. Yeah. By the way. So guys, what he he blew through that kind of fast. If for some of you that don’t understand the business. So let’s say Jeffery are raising money for a syndication and, somebody comes to us, it has to be enough of a chunk to be worthwhile because a ticket tenants and common deal is complex and there’s more legal involved.
00;34;06;14 – 00;34;32;19
Rod
And there’s some complexities, but, but, you know, someone can take their money, that they. So, that’s, the gain from an asset that they sold and put it into your syndication, and it’s called a tick or a tenants and common deal. and step in to, to one of your raises, basically, when you raise money for these deals, I don’t know if I describe that perfectly accurate, but, if I did if I didn’t, please correct me.
00;34;32;24 – 00;35;01;01
Jeff
Yeah. No, that that sounds good. Yeah. The 1031 exchange, you know, selling real estate. And then there’s a certain amount of time before you can invest in other, like, kind real estate, which means income, real estate. And that’s been the biggest wealth, kind of growth for our investors. It’s just been so, so valuable. And then on that outside 1031 exchange that you mentioned, the the structure that that you create to invest is called the tenant income.
00;35;01;01 – 00;35;12;13
Jeff
And and as you mentioned, you know, it does take a lot of time and a lot of extra work. So where our typical minimum is 100,000 for just a normal new cash investment, we do a 3 million for a 3 million.
00;35;12;13 – 00;35;31;11
Rod
Yeah. Mine’s a million for a tick. But you’re doing a much larger deals. And we are exactly. Okay. yeah. And what you just described, when you sell an asset and your investors, rolling into another asset, you know, obviously, you know, they, they, they kick the gain down the curb. do you do any cost seg or bonus depreciation?
00;35;31;11 – 00;35;32;08
Rod
You do all that as well or.
00;35;32;08 – 00;35;45;13
Jeff
No we do. Yeah. Yeah. So yeah every deal try to get as much upfront depreciation as possible. Right. That helps you know make all the income passive income tax deferred. Right. And just it’s really, really valuable.
00;35;45;13 – 00;35;51;15
Rod
It’s incredibly powerful. Did they approve the 100% again or is it I think it’s still in litigate are still in legislation.
00;35;51;15 – 00;35;52;18
Jeff
Yeah. They’re still figuring it out.
00;35;52;20 – 00;36;16;13
Rod
Yeah I mean they’ve said they’re going to do it. But you know, we know how long it takes to, to get anything done in this country. So, you know, shifting gears just a little bit, I’m not super thrilled. Where with our education system in this country. And I was just curious what your opinion was. If you could teach schoolchildren one thing on a weekly basis, what might you incorporate?
00;36;16;15 – 00;36;20;08
Rod
knowing what you know about business and life and everything else.
00;36;20;10 – 00;36;31;00
Jeff
I don’t know if I’ve had the exact same experience that you’ve had. I’ve got three young kids, three under eight. Wow. And I’ve been happy with their education. Have you? Yeah. So.
00;36;31;02 – 00;36;32;14
Rod
Okay, so we disagree on that one.
00;36;32;14 – 00;36;39;28
Jeff
Yeah. That’s, Yeah, I have enough and, and I and I’m sure there’s some things that they go to public school. they go private, private.
00;36;39;28 – 00;36;41;06
Rod
Okay, okay.
00;36;41;08 – 00;36;41;18
Jeff
I don’t know if.
00;36;41;18 – 00;36;42;05
Rod
They maybe that’s.
00;36;42;06 – 00;36;44;02
Jeff
I went to public and I loved, I loved it.
00;36;44;02 – 00;37;09;21
Rod
Well, I loved, I loved the extracurricular part of public. I didn’t love the education piece at all. You know, I felt like I really didn’t get any, you know, I, I, I look at, you know, some of the things in my view and just give me my opinion that are lacking is like emotional management, entrepreneurship, to, to the level that I think it could be done financial, you know, understanding finance and, and, and, investing and so on and so forth.
00;37;09;21 – 00;37;20;19
Rod
So I think that stuff now, maybe that’s improved since I went to school. I’m 64. It’s very likely it has. But, I wasn’t impressed with it when I did my and so that’s my, my $0.02.
00;37;20;19 – 00;37;27;24
Jeff
I think it’s slightly improved, but those three topics that you just mentioned are super valuable and would be amazing if the kids are being taught that.
00;37;28;01 – 00;37;44;25
Rod
Yeah, yeah. So you lead a very large organization, as the president, 900 employees is big. And you talked about your, you know, you pull everybody in 350 people in for a leadership conference. What do you think are some of the most important traits that a leader should have.
00;37;44;28 – 00;38;10;09
Jeff
Dedication to the business? Well, I that that kind of brings me back to our company values. So we sat down ten years ago really wanted to think about our company values for all of our employees, for all, and for myself as a leader. And we came up with drive, which is dedication and respect, integrity, value and empathy. And these are things that we want to live every day.
00;38;10;11 – 00;38;32;25
Jeff
And if we do that, that’s going to help motivate our team members and our employees and keeping people in the know. We want to have as many communications with the whole team so they know company visions. We do twice a year strategy meetings, set goals for a one year, five year and ten year plan and really be able to involve everyone in the company.
00;38;32;27 – 00;38;38;00
Rod
And you hammer those those core values home when you hire someone and at all your meetings. Correct?
00;38;38;00 – 00;38;46;23
Jeff
Yep. It’s all it’s all around the corporate office. It’s at the big corporate, leadership meeting that I mentioned. And it’s something that we talk about and that we live every day.
00;38;46;25 – 00;39;03;20
Rod
Nice. Nice. Our our acronym is family. And and of course, integrity was number one, but we had to kind of put it in the down the, down the chain a little bit just to make it work with the acronym. But, yeah. And love it, love it, love it, love it. So, so, those are your core values.
00;39;03;23 – 00;39;08;04
Rod
how would you describe your leadership style?
00;39;08;07 – 00;39;28;01
Jeff
transparent and direct. So we have certain goals. As I mentioned, we’re kind of disciplined to a fault. So we do we do a very similar thing every year, but we want to be very specific about our plan and about our goals. So this year we won’t be selling any assets. We just do not think it’s the right time.
00;39;28;03 – 00;39;29;02
Jeff
We like.
00;39;29;03 – 00;39;30;14
Rod
We know definitely not the right.
00;39;30;14 – 00;39;53;23
Jeff
Time. So we told the the company that’s the plan. But to keep your ears and eyes open for any opportunities and this even starts on the on site. We want to let them know too, because if they see people touring properties, if they hear about properties that might come for sale, properties that might be having some distress, that might get us the head start to get the opportunity to purchase something, that’s a really great opportunity.
00;39;53;23 – 00;40;10;09
Jeff
So even starting from onsite employees, letting them know the long term plans we do a profit share program where everyone gets a bonus if we hit certain metrics, if we hit our controllable NOI, if we hit our acquisition bonuses, if we hit.
00;40;10;13 – 00;40;11;21
Rod
Just corporate or the entire.
00;40;11;21 – 00;40;12;23
Jeff
Company can tie our company.
00;40;12;24 – 00;40;13;05
Rod
Oh that’s.
00;40;13;05 – 00;40;18;01
Jeff
Awesome. Yeah. So really trying to keep everyone involved and have the vision all together.
00;40;18;07 – 00;40;37;22
Rod
Oh that’s fantastic. what do you think is, you know, we I’m sure you agree with this, that that what we do is, is a team sport. It’s not something you go do by yourself. I mean, there are lots several different hats that can be worn here. I mean, I know your dad started it by yourself, but I’m talking when you’re buying 100 unit plus complexes.
00;40;37;22 – 00;40;47;22
Rod
It’s. It’s a team sport. What do you think is your superpower as it relates to this business? Where do you think you fit in the best?
00;40;47;25 – 00;41;06;12
Jeff
One of the biggest things I’ve added to the business is, is relationships and the importance of relationships. Always doing what we say, only committing to deals that we’re going to get done. If we go into a deal, we know we’re going to get the debt, we know we’re going to get the equity, we’re going to do things on time.
00;41;06;14 – 00;41;10;15
Jeff
We’re going to work in good faith to work through issues and.
00;41;10;15 – 00;41;13;10
Rod
Purchase and sale agreement. The contract is okay. Yep.
00;41;13;12 – 00;41;20;14
Jeff
Exactly. And many, many of our deals have been from repeat sellers and repeat buyers. And we want to grow.
00;41;20;14 – 00;41;22;11
Rod
And repeat brokers. Sure as well. Yes.
00;41;22;11 – 00;41;33;28
Jeff
Yeah. And so we can always get the heads up. And really the relationship part of the business has been something that I’ve wanted to add and has been very, very valuable.
00;41;34;00 – 00;41;42;05
Rod
if you could get give one of your most valuable pieces of advice that you’ve either heard or you believe, to my listeners, what might it be?
00;41;42;08 – 00;42;06;14
Jeff
We’ve focused on it a little bit today. Okay. But that discipline has been so important to our business, and I think it can really help many listeners out there. a lot of the trouble that we’ve seen throughout the last couple cycles is people venturing into things they don’t really know, and there’s plenty of good opportunities out there.
00;42;06;14 – 00;42;27;03
Jeff
So it’s you can definitely have more than one focus, but if you spend the time to really analyze, understand what you’re doing, and also having interest in each deal. So having that co-invest or that skin in the game.
00;42;27;03 – 00;42;35;14
Rod
Yeah, we talked about that. How, you know, there are a lot of GP’s that have done deals over the last few years and they really don’t have any of their own money in, speak to that.
00;42;35;16 – 00;42;51;13
Jeff
Yeah, that that really changes the mentality on what kind of deals you’re going to buy and do. So at a minimum, we would like to see a 5% co-invest in any deal that that we’re looking at. Just so people really are understanding the deal. Have some where.
00;42;51;13 – 00;42;59;05
Rod
You’re where you’re putting 5% in the deals. What you’re saying. Yeah, we we we do 10% ideally whenever we do one. But yeah, in smaller numbers. And you.
00;42;59;11 – 00;43;02;15
Jeff
Know, we our internal company policy is 10%, ten.
00;43;02;15 – 00;43;03;02
Rod
Percent as well.
00;43;03;03 – 00;43;26;17
Jeff
Yeah. Just for other companies if it’s lower than five, it just seems like the interest could be misaligned. So that is that is something that is really important. If you’re starting your own business, putting your own skin in the game, analyzing it that way, if you’re investing with other companies, looking for the co-invest, making sure that it’s, you know, from the main GP or the main principle.
00;43;26;19 – 00;43;47;18
Rod
Yep. Agreed. Jeff, when you’re when you talked about looking and I’m circling back here, Brian, you may cut this in, you may not cut it in, but when you’re looking at a market like you, you’re looking at some of these submarkets. What do your analysts or you or your or Mark look for as the fundamentals in that market?
00;43;47;18 – 00;43;54;06
Rod
And what sort of things do you need to be seeing when you’re looking at a market that maybe you haven’t invested in before?
00;43;54;08 – 00;44;19;05
Jeff
Yeah. So obviously we’re in six states, which we didn’t start in six states. Right. So as time has gone on and we’ve seen more and more good opportunities in the space, we wanted to grow our markets for a few reasons. The main reason is diversification. You know, with diversification you never know which markets are going to do the best, you know, Nevada or Arizona, a little more business friendly, right?
00;44;19;08 – 00;44;42;21
Jeff
California, Oregon or Washington a little bit harder on the businesses. So we want to have diversification, but on the investments team, we’ve got ten full time professionals, and they each have a market that they analyze and they have analysts. And we want to look at a market for usually 4 to 5 years before we enter into that market.
00;44;42;23 – 00;45;05;07
Jeff
Understanding all the job patterns where the best school districts are, everything about the market down to that submarket level that I spoke about earlier. So we are looking at new markets for the future and we want to continue to grow our business. We have been looking at Atlanta for a few years, which is far away from San Diego, but we like some of the metrics there.
00;45;05;07 – 00;45;27;10
Jeff
If the pricing gets to the levels that we like, we like Dallas as well, right? So those are two markets that we we’ve been looking at for the last close to four years. I do think we’ll be in them at some point in some cycle. I don’t know when that’s going to be the pricing, the returns have to be right, but we want to make sure that we understand everything about the market before we get in.
00;45;27;12 – 00;45;44;08
Rod
Good for you. Yeah, I’ve got quite a few assets in Dallas and some in Atlanta can tell you a couple of assets that I’m helping with in Atlanta that I don’t have an ownership interest in are very challenged. They’ve had some real problems there. evictions taking a year to go through. Yeah. Be very careful in that one.
00;45;44;08 – 00;45;44;26
Rod
I’ll tell you.
00;45;45;01 – 00;45;56;11
Jeff
And that’s that might lead to the opportunity for us to get in. Yeah. The other thing is that, we want to get to about at least 1800 units in a market. So we want to come in big because.
00;45;56;11 – 00;46;00;26
Rod
So you can be vertically integrated. You can’t have a management infrastructure if you don’t have at least that many.
00;46;00;26 – 00;46;19;01
Jeff
Right. Exactly. Yeah. Yeah. The economies of scale of getting to 1800 right is really important. So we want to make sure that we can get in with a good scale. And we would manage the properties from day one wherever we go. But we just want to make sure we can get to that scale and have that, you know, good efficiencies.
00;46;19;02 – 00;46;33;13
Rod
You know, that that makes perfect sense. Jeff, I really appreciate you coming down here, man. It’s been a pleasure to meet you. Super impressive. what you’ve what you’ve created you and your father, Mark and and, what a what a treat this interview has been. Thank you for being here.
00;46;33;15 – 00;46;36;13
Jeff
Thank you for having me. It was great spending time together. Likewise.
