The Missing Piece Is Your Network

Full Transcript Below

Intro
Hi. My name is Rod Khelif, 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. Now, this is where we interview people that are just flat-out crushing it in this business, and we give you the inside scoop as to how multifamily investors are creating massive success in their businesses and in their lives. And as always, I’ve got my co-host, who’s the director of my Massive Action Team for our Warrior Mentorship program. Mark Nagy on the call. Mark, what’s up, brother?

Mark
Not much, man. I’m happy to see another friendly face. For those watching on YouTube, we got another guy with the Warrior sword hanging in the background. I’ll let him talk about it, but we’ll get into a lot of that good stuff here on the podcast. So, excited.

Rod
So, yeah, we’ve got a really super nice guy named John Sidoti on the call today. And now, John, let’s see, how many doors are you in now? You’ve purchased 120 as a GP since you become a Warrior. You’re partnered with other Warriors. You joined the program– what, like, November of last year, right?

John
Yes. So ten months ago?

Rod
Yeah. So why don’t you talk a little bit and just give us a little background as to who you are and bring us current, you know, to today with, you know, why real estate, maybe what you did before real estate, just as a high level not– you don’t have to belabor it, but just give us a little background on who you are, my friend.

John
Okay. Absolutely. Thank you, Rod. I’m John Sidoti from Boston, Massachusetts. I come from a background in construction management. I was in construction management for about a little over a decade, working for a big national general contractor, worked all over the country building towers, multifamily properties, warehouses, office spaces, all sorts of commercial assets, and now I’m looking to own and operate the buildings that we once built. I have also been in multifamily real estate since 2013. I acquired my first duplex in 2013, then got into a commercial complex in Panama City, Florida, in 2018, and started significantly scaling up about a little over a year ago.

Rod
So why did you join the Warrior program if you were already doing it?

John
So I was doing it, but I was missing one thing, and that was– I was missing knowledge on how to syndicate and really use other people’s money and the network. You know being with the network, the coach, the mentor, and having all the parts that are really needed to kind of get to that next level.

Rod
To go bigger. And so you’ve done 120 doors since you joined, which is awesome, and you know, your background is also awesome for the business. So, you know, now, were you the project manager? So you coordinated the subs and all that. Is that what you did?

John
Yes. So I was on projects for this general contractor all across the country. I was a project manager, and I was managing a couple of different parts of the construction projects. And we worked on projects from like $5 million up to $2 billion.

Rod
Wow. And, you know, why that interests me, John, is because you know, as you know, this multifamily business is a team sport. And there are lots of different hats a person can wear. But by God, you are perfect for the asset management component. Okay? Which is, you know guys, I mean, if you haven’t heard me talk about this before, of course, you know, there’s a need for an analytical person, you know, to do the underwriting. And you’re probably pretty analytical as well because you know, that’s required to be a project manager. But, you know, so there’s that need. There’s the need for someone to be outgoing and build relationships you know, with brokers and with potential investors and so on and so forth. So there’s that hat. There’s also, you know, the asset management hat, which is a project– you know, project management, construction management. I mean, those are fantastic frameworks for the asset management piece, which is all the work that happens after you close. That’s when the real work starts. So, you know, that’s really awesome. Now, where are these assets that you own now? Where are– these ones you just bought, the 120 doors, where are those located?

John
So the ones that we bought are in Dallas, Texas, Houston, Texas, Shreveport, Louisiana.

Rod
Oh, good God, no. Say this and so.

John
We’ll talk about that later.

Rod
All right. We’ll talk about that offline. I had an experience in Shreveport, which is why I’m bitching and moaning right now. We sold a 403-unit asset there that was my nemesis, but there’s a lot of story behind that. But, no, we love Dallas and Houston. We’ve got assets in every one of the markets you just mentioned. I didn’t know you were in both of those.

John
We have Panama City, Florida.

Rod
Nice.

John
Savannah, Georgia.

Rod
Savannah is nice, too. Wow.

John
And Leland, North Carolina.

Rod
Wow. Those are all great markets with the exception.

John
Incredible market.

Rod
Those are all great markets with the exception.

John
Don’t [inaudible] Shreveport. I love Shreveport. I think it was [inaudible] city.

Rod
I don’t even want to fly over Shreveport airspace again. If you live there, I’m sorry, call me and I’ll retract. But anyway.

Mark
So, John, I know you mentioned one thing, which was part of the reason you joined, is you needed help with the raising money and scaling up that way. Now, did you take on that role of raising money yourself, or did you just partner with and network with other people and they’ve taken on that hat of raising money?

John
So I have learned how to raise money, which was my goal. I talked to investors all the time. I really enjoy it. I don’t consider it my real forte, so to speak. But, yes, I do know how to raise money. But I did partner with some Warriors that are really good at raising money. And, you know, I’ve met some people that are incredible capital raisers.

Rod
Nice. Nice. Nice. So, you know, everybody thinks that it’s all perfection and no speed bumps and no bloodied noses and things like that. Talk about a setback, or, you know, I call them seminars. But talk about a seminar that you may have had and what you learned and what happened. Pick a doozy for us, will you?

John
So Panama City, Florida.

Rod
Okay.

John
We acquired the asset. One month in the ownership, we get wiped out by hurricane Michael.

Rod
No kidding.

John
Now, this was before I was a Warrior.

Rod
Right. Okay. That’s okay.

John
But definitely a big learning moment. And I had already been in construction management for eight years at that time, and so I got to put my skills to the test.

Rod
Yeah. Oh yeah, for sure.

John
So, basically, overnight, we went from 100% occupancy to 50% occupancy, and we had to do a [inaudible] rehab on all the units.

Rod
Wow. Well, I’m going to one-up you just because you know, when Hurricane Charlie hit Charlotte County, Florida, I had 360 damaged houses, and it took us– I’m not exaggerating, it took us 18 weeks just to assess all the damage. Okay. Let alone– and they were without power for months down there, and it was like, you know, I was actually at a Tony Robbins event in L.A. and my assistant called me and said, hey, you need to come back. We had a hurricane. I’m like, I’m not coming back. It just started. She’s like, no, you really need to come back. It’s why– I came back, and I drove down there, and it was like a freaking bomb went off. Even the telephone poles were broken off, you know, at about 10ft. It was crazy.

John
That’s what Panama City was like. And, I mean, you get there, and, I mean, the first thing you’re thinking about is, I hope everyone’s okay.

Rod
Sure. Of course.

John
But– like–

Rod
I almost got decapitated. I was driving down the road, and there was a wire hanging there, and I almost didn’t see it. I’m not kidding. It probably would have gone over the car, but I’m being a little dramatic, I think, but it was literally hanging right there where my neck was. It probably you know, would have gone up the windshield, hopefully. But, yeah. And then, you know, we had another situation where we had a tornado destroy an asset in Beaver Creek, Ohio. 101 units. All families had to move. That was, you know, an exercise in logistics, as well, but anyway. Yeah, well, that’s a good one, buddy. That’s a good one.

Mark
Were those flood zones that those were in, was that part of why the damage got hit so hard for both of you guys?

Rod
Yeah, anything along the coast is a lot of flood zones, you know.

John
I think we’re just outside the flood zone in Panama City.

Rod
Well, the hurricane, the actual hurricane doesn’t really pay attention to the flood maps, just FYI. But–

Mark
Yeah.

John
I mean, they got 200-mile-an-hour winds during hurricane Michael sustained.

Rod
Yeah.

John
And there were walls. I mean, there was one house in particular that I drove by six months after the hurricane that the whole wall was missing. You could see in the house–

Rod
I’m going to one-up you again. I’m going to one-up you again. I had a tenant call me that was in his house, hiding under his couch, and the entire ceiling, roof, everything blew off. It was just the walls. Daylight. Okay? Yeah, and that’s a true story. And garages blew off, sheds blew off.

John
Scary.

Rod
Carports blew off. I mean, crazy stuff. You know what’s interesting, though, you could really see the caliber of the construction because we would have– you know I had a lot of 60s-built houses, you know, older stuff that would be destroyed next to an 80s-built house that had some missing shingles. Okay? That’s the quality of the construction here really ramped in the 80s. And so, it was really interesting to see, you know, the disparity between– but every house was damaged in some fashion. So, yeah, crazy.

Mark
I can’t one-up you guys. The worst I’ve had is a tree falling on one of my properties and putting a little hole in the roof in Florida. So, it wasn’t that bad.

Rod
Yeah. Lame. Okay, lame.

Mark
Yeah, I know, sorry. Let’s go back to– something I know we’re going to be talking about probably for a long time. Everything going on, the recession, interest rates shooting through the roof. Today’s, what, September 23rd. Rates got raised again yesterday. They’re going to get raised two more times before the end of the year. John, what are you doing right now, just personally or business-wise to overcome all that fear that’s just out there in the world in the real estate market right now?

John
So, I mean, really, that is just a fact of life. It’s something we got to deal with right now. And to deal with that, we underwrite– I do a lot of underwriting. I love underwriting. I love Excel spreadsheets, and I love numbers.

Rod
You’re one of those mutants huh? Okay.

John
I grew up my dad is a CPA, so I’ve been around numbers my whole life, and I just love underwriting. And, you know, we factor in, we use higher rates at the entry and you know–

Rod
And, you know, you’re a little more conservative on the exit cap rate. And if you guys don’t know what I’m talking about with the exit cap, you know you’re typically doing a five-year proforma, and, you know, you need to calculate what you think the cap rate is going to be at the time you do your liquidation event. Your liquidation event would be either refinance or a sale. And if you’re aggressive with that, that’s a problem. And I’m going to tell you, if you take a look at a graph with what happened to cap rates in 2008 and ’09 and ’10, they mirrored interest rates, and interest rates are going up. Cap rates are going to go up. So you’ve got to calculate that and not be super aggressive. And, you know, I drill that into you, you guys know that. And same with, obviously, the interest rate projections. I mean, we just got approved at 5.2 on a ten-year fixed loan for our Nashville asset. By the way, if you’re accredited, there are still some slots left in there, and it is a screaming deal. 60% loan to value, ten-year fixed debt. And we’re still got, you know, upwards of 10% projected on cash on cash, 16%, 19% IRR, 20% to 22% on the AAR, and that’s with 60% loan to value debt. So, really awesome deal. If you’re interested in that, text the word “partner” to “72345” and we’ll chat with you about it and you can see the webinar we did on it. But you’ve got to be– and, you know, we’re raising six months of operating reserves, expenses, just in case, you know. And that’s the bare minimum that you should do, you know, to have some money in the bank in case the “you know what hits the you know what”. But anyway, and stress testing as well. And so, I’m kind of expanding on your answer, John, a little bit, and that is, you know, you want to be stress testing these deals. What’s your breakeven point? How vacant can you be economically and still survive and still make it? But let me ask you this. Why do you think people give up on this business, John? What do you think is a common reason that people, you know, go after it, and then they end up giving up?

John
Because there are a lot of unknowns, because there are a lot of moving parts, and it’s not easy. I mean, there are just so many different facets–

Rod
Well, and what I’ll say to that is I think it’s that they try to do it all.

John
Yeah.

Rod
And this business is absolutely a team sport. I mean, my Warriors own upwards of 90,000 doors that we know of, and I’ve only been teaching five years, and most of those were done between Warriors. The deals you’ve done have been done with Warriors. The bulk of the people are Warriors. And so, you know, if you divide and conquer and you don’t try to do it all and you focus on your strength and you, you know, partner for where you’re not as strong, I think that– would you agree that you know, that makes the difference?

John
100%.

Rod
Yeah.

John
And the relationshipsare just, you know, they’re so beneficial. It’s great for everyone and you know we’ve–

Rod
Yes. You’ve had a good experience in the Warrior program so far?

John
Oh, the Warrior program has been unbelievable. I’ve met great people, you know, great knowledge shared, and I’ve really gotten build on everything.

Rod
Yeah. Well, I know you come to the events and that’s such a big piece of this because you know, you’re networking and your network is your net worth, honestly, especially in this business. By the way, guys, if you are interested in checking out our Warrior program, text the word “crush” to “72345” and we’ll set up a call to, you know, apply. That’s what you do. You text the word “crush” to “72345” and we’ll see if you’re a good fit for us. And we’ll see if you’re– well, you can see if we’re a good fit for you. Tongue twister. So, just text “crush” to “72345” and we’ll set up that call and you will leave that call better than when you signed on. I’m just going to tell you when you joined because whether you work with us or not because we will help you get really clear on some things, but awesome. So, you know, what’s your driver, brother? What inspires you? You’re always such a happy face. You’re always smiling and happy, you know. I love that about you. You know, where does that come from? And what are some foundational drivers or whys that bring that out?

John
So I have been– the first thing, I was in a really bad car accident in 2007, and I am very fortunate to be here today.

Rod
Wow.

John
Because of my family, my friends, and everyone around me, growing up. You know, that is the motivation for me just–

Rod
Every day is a blessing.

John
I mean, I’m on borrowed time. I am very lucky. I’m fortunate, but it’s a lot of hard work, and then I just love seeing others smile. I love, you know, it’s good to be, you know, motivated by others’ happiness.

Rod
Yeah.

John
And to do well in the world.

Rod
Yeah.

John
And work with others and provide value to others.

Rod
That’s beautiful, brother. That’s beautiful. I did not know that. I mean, I know that you know, your speech is a little halting, and you have to think through what you say, but you know, you have no problem communicating but I didn’t– so it’s the accident is the reason for that, then, yes?

John
Yeah.

Rod
You’re killing it. I mean, look at you. You’re a freaking success, and you’ve pushed through. And I didn’t know any of that. I didn’t want to ask. I didn’t, you know, I appreciate you being vulnerable and sharing that, but wow.

John
It’s a [inaudible] story.

Rod
Yeah, wow.

John
I was very fortunate. You know, I could be 6ft under, and I’m up here.

Rod
Wow. That’s awesome, buddy. I mean, I’m just curious because, like I said, you’re always smiling, you’re always happy. You’re always making other people happy. And now I get it. I mean, when you face death, it’s like every day is a gift, so wow. Okay.

John
It’s a blessing.

Rod
Yeah. It looks like Mark is locked up. Yeah, we lost Mark. Well, listen, I actually think that’s actually probably a good place to end only because that’s such a beautiful ending. But, you know, I have a lot of aspiring investors that listen to this show, and you know, they want this so bad, and they haven’t taken action yet. And I truly believe the greatest transfer of wealth in history is upon us. I really do. I think there’s going to be an incredible opportunity if people get up to speed quickly enough, you know. But those people that are on the sidelines, what might you say to them, John?

John
Definitely get the knowledge, get the experience, find a team, find partners that really, you know, help you to accelerate, you know. Build out your circle of influence and get on a team. Get into the real estate investing, and you’ll be glad you did it.

Rod
Thanks. That’s awesome. That’s awesome. Well, listen, I appreciate you coming on, my friend. It’s great to see your face and be around your great energy. And, you know, we’re working on scheduling a live event sometime next year. We don’t know when or where. We’re having a hell of a time with hotels, but we’ve got, you know, a virtual event coming up. But anyway, I hope to see you soon, my friend.

John
Awesome. Absolutely.

Rod
All right, thanks. Take care.

John
See you soon. Thanks.

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 non-stop 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 the word “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”.