BiggerPockets Real Estate Podcast - 135: Raising Money to Buy 1,000 Apartment Units with Brian Adams

Episode Date: August 13, 2015

How does someone shift from buying single family houses to buying hundred+ unit apartment complexes? That’s the topic we’re diving into today on the BiggerPockets Podcast with real estate investor and former CPA Brian Adams. This show is packed to the brim with actionable tips and advice for anyone looking to expand their real estate business, quit their job, raise private capital, and work less while enjoying life more. You’ll be inspired and motivated by interview, so don’t miss a moment of it! In This Episode We Cover: The important perspectives Brain gained from his grandfather and football coach How he bought a rental property with a CPA background The impetus he used to change how things were going with his life How to plan and implement a journey to real estate investing The process of partnering with a group Things Brian would’ve done better if he started all over again How to pick your partner’s brain when making deals Brian’s 98-unit deal — that ended up folding What to do when your investors back out on a deal What you should know about exit strategies How he gets paid with kind of deals he does How he plays matchmaker for investors and buyers The importance of the “ABM” (Always Be Marketing) strategy And SO much more! Links from the Show Listen to BiggerPockets Podcast on Stitcher BiggerPockets Webinar BiggerPockets Forums Marcus & Millichap IRR Costar LoopNet Multifamily and Apartment Investing Forums I quit my CPA Job to buy Large Apartment Buildings (Forum Thread) Books Mentioned in this Show The 7 Habits of Highly Effective People by Stephen Covey 80/20 Sales and Marketing by Perry Marshall Emerging Real Estate Markets by David Lindahl It’s a Whole New Business by Gene Trowbridge Keep It!: Advanced Tax Strategies for IRAs by Joe O Luby III Getting Things Done by David Allen The E-Myth Revisited by Michael E. Gerber Think and Grow Rich by Napoleon Hill No B.S. Marketing to the Affluent by Dan S. Kennedy Never Check E-Mail In the Morning by Julie Morgenstern Tweetable Topics: “Education and the books are fine, but you got to get out there and take some risk.” (Tweet This!) “Let’s follow those who are smart, those who have done this before.” (Tweet This!) “5 percent of a great deal is better than a 100 percent of no deal.” (Tweet This!) Connect with Brian Brian’s BiggerPockets Profile Brian’s Company Website Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast, show 135. And then in 2014, I bought a 209 unit deal for $6 million that appraised at $7.4 million on day of purchase. And when we're recording this in 2015, I'm actively looking for 100 to 400 unit deals up to a $15 million purchase price. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without a little bit of money, the height. You're in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. What's going on, everybody? This is Josh Dorkin host to the Bigger Pockets podcast here with my co-host, Mr. Brandon Turner.

What's going on, sir? Guess where I'm going next week, Josh? I know where you're going next week. Everybody else, guess where I'm going next week. I'm going to Disneyland. Yeah. Yeah, I'm taking a four-day trip to Disneyland. Four days to Disneyland. That's a bit much, I think. Well, I've only spent two days there, and I'll spend two days visiting some friends and such down in the Southern California area.

So I'll be back before this show air, so don't come to my house and break in because I'll be here. Nice. That's just disturbing. That's disturbing, my friend. Well, can we just move forward? Let's go on. Today we have a really bad, bad picture of my mind. But yeah, so we do have a great show today, and I'm super excited about it.

We'll get there in a second. Let me tease it. This guy is amazing. This guy is doing some really cool deals. And the cool part about it is, you know, he's so open about how he actually puts these deals together. And so you definitely want to catch us, again, whether you're a novice or you've been in the game for 10, 20 years, there's great insight here. So let's get to today's quick tip. Today's quick tip is we are currently kind of facing some weird thing on iTunes.

So if you go into iTunes and you want to check out our shows, you could only see the last 20. We've been told this is a bug, but we do not know. So it may happen forever. And so if you want to see shows past the 20 current shows, go to biggerpockets.com slash podcast. that's biggerpockets.com slash podcast and you can find all of our shows. You can see all of our show notes. You can listen.

If you can't see them on iTunes, that's what you want to do. You could also actually listen on SoundCloud or Stitcher. So there's alternatives as well. So definitely go ahead and do that. Do you ever notice how every passive investment somehow turns into a very active lifestyle,

active spreadsheets, active phone calls, active stress? Here's a better question. What if you could buy brand new construction homes, 10% below market value, and the best markets across the country, without making real estate your second job. That's exactly what rent to retirement does. They're a full service, turnkey investment company, handling everything for you. In some cases, investors get 50 to 75% of their down payment back at closing, plus interest rates as low as 3.75%. They've partnered

with Bigger Pockets for over a decade, helping thousands invest smarter. If you want to do the same, visit biggerpockets.com slash retirement to learn more. You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast? Easy. Just use Indeed. When it comes to hiring, Indeed is all you need. That means you can stop struggling to get your job notice on other job sites.

Indeed, sponsored job posts help you stand out and hire the right people quickly. Your job post jumps straight to the top of the page where your ideal candidates are looking. And it works. Sponsored jobs on Indeed. get 45% more applications than non-sponsored post. The best part, no monthly subscriptions or long-term contracts. You only pay for results. And speaking of results, in the minute I've been talking to you,

23 people just got hired through Indeed worldwide. There's no need to wait any longer. Speed up your hiring right now with Indeed. And listeners of the show will get a $75-sponsored job credit to get your jobs more visibility at Indeed.com slash rookie. Just go to Indeed.com. slash rookie right now and support our show by saying you heard about Indeed on this podcast. That's Indeed.com slash rookie. Terms and conditions apply. Hiring Indeed is all you need.

Here's why savvy real estate investors are obsessed with bonus depreciation. It lets you take that rental property or commercial building you own and depreciate most of the cost against your income. Legally, 100% IRS compliant. That's instant cash flow improvement. Cost segregation guys is the number one firm nationwide, specializing in identifying these faster depreciating assets in your property. They've completed tens of thousands of studies across all 50 states from remote cabins to apartment complexes. So if you own investment property, this is a no-brainer. So visit costsegregation guys.com slash BP for your free proposal and find out how much you could save this tax season. Let's get on before we get to the interview with Brian. I want to read today's one review from iTunes,

because I love this. This is from Victorian Junkie, which is an awesome name too. This podcast has been extremely influential in helping our business expand and learn about the pitfalls that can occur without the proper knowledge that bigger pockets gives. I love that. That is from, again, Victoria Junkie five-star review and iTunes. So anyway, thank you very much for that review. You guys rock and anybody else who leaves one a rating review or subscribes to us in iTunes. It definitely helps us out. So we'll thank you guys in advance for that. Excellent. Excellent. Fabulous. Well, let's get to the show. today we've got Brian Adams. And no, it is not the guy who's going to serenade you. Not him, not him.

All right, we got Brian Adams. Brian Adams is a active real estate investor buying hundreds and hundreds of rental property units at a time with these large multifamilies. And he's going to talk to us today about how he does it. How does he raise the money? How does he put the deals together? What does it look like? Who can do this? Can you do it? You know, I, I, investing for three years, five years, can I do deals like this? You're going to learn all that if you listen to the show, lots of tips. And again, there's tips for everybody. So pay attention, tune in and get your pencils out because there's definitely some notes to be taken. With that, let's bring on Mr. Brian Adams. All right, Brian, welcome to the show, man. It's good to have you here. Thank you so much. Really appreciate it. Awesome. Awesome. So you and I started talking back a few

months ago because you emailed me and just asked me kind of what my experience was. I was doing a webinar and so we started talking back and forth with that and I found out you've done a ton of stuff and so I like was, you know, I had to get you on the show because yeah, I mean, you're crushing it with your investing business. So we're going to get into that today. What does that mean? I'm not, you know, you're a little more prepared than I'm brand. Of course I'm more prepared. You're going to find out what it means. You're just a listener, Josh. I'm the host today. You're something. I'm something. All right. So let's let's start at the very beginning.

How did you get started with real estate? Like, what? When did that happen? What was your first deal? Sure. Well, I actually started in a very young age. My grandfather had some rental properties. And as a young boy, I would, you know, know, know, his grass. He'd give me a couple bucks and, you know, pick up the trash. And what was really cool for me to see in a very young age is he would take me along to go collect rent. And back then, my grandfather accepted all cash. I don't do that from a policy perspective. But, you know, he was accepting cash. And then he would throw me two, three, four, five dollars. So I got to see this exchange of money.

happening from a rental perspective. But then, let's fast forward a little bit. So when I was a junior in high school, my football coach was also my accounting teacher. And he pulled me aside and said, Brian, you're not the fastest guy on my team or the smartest kid in my classroom. I probably should have taken that as an insult to tell. Yeah. Wow. That's great. Thanks, Teach. But he said, you have this knack for accounting. So my junior year in high school, I knew I wanted to be an accountant. You know, my buddies are thinking there want to be a doctor's, attorneys, Hollywood stars, whatever. But I was very focused when I graduated high school that I wanted to go get my accounting degree in college. And then once I was in college, I wanted to get my CPA license.

So out of college, I graduated. And through this period of time when I was working with this high net worth groups, anywhere between, you know, $5 million to $100 million of people were creating their wealth through real estate. So it all kind of came back to me that I remember the times with my grandfather and I was working with all these clients from a real estate tax perspective to say, how can I help them create more wealth? And I just saw all the pieces kind of being put together for me. So back in 2000, I kind of, you know, was doing the CPA stuff, but also I just bought a rental property, you know, just one that I bought and started renting. And then in 2008, I'll never forget the time period. And again, my background is a CPA working crazy hours during tax season, working on this very successful client. And he was just crushing it.

He was just making all this cash flow, all this passive income. And I said, what the heck is this guy doing right? He's living a lifestyle that I wanted to be living, traveling, golf, and whatever. You know, it was just, I was intrigued. So I started grabbing all his tax returns and realized that he had all these partnerships set up. All these partnerships were single purpose business entities. that were apartment buildings. Then he had a management company, a construction company,

had this whole business model. And imagine the spotlight shining down above and an angel singing like, aha, you know, like, I was like, oh my gosh, if this guy can do it, I know I can do it. So I'm kind of giving a long-winded answer of how I got started. But in 2008, I said, okay, I got to get, I got to make some stuff happen. So I quickly went out, got some education, learned that the multifamily is, is where I wanted to go with my real estate investing career, found a duplex, that duplex had a

vacancy and filled that vacancy. I was like, wow, this works. On a very small scale, I can, you know, create this passive income. So then I went and I know where we're going to get ahead and questions you're going to ask me, but then I went to really scale, scale the business and focusing on larger apartments. That's awesome. Okay. Yeah, I want to step back. Obviously, that's the kind of focus of today's show, but I want to touch on. a couple things. First of all, I thought it was cool the way that you mentioned that your grandpa used to let you come and pick up rent with them, right? So, I mean, I don't have kids yet, but for the people out there listening to have kids, and if you have a rental property or two or three, I think

that's awesome to like, the more you can bring your kids into your business, to let them just see like the real life, you know, fruits of your labor or whatever, you know, like how that actually works, no matter what business, I guess you're in, but especially real estate. I think that's awesome. I think that's just a great tip right there in general. But so what happened between 2000 and 2008. Did you buy others like you bought a single family in 2000? What else happened in that time? Well, really it was just, you know, buying a single here, you know, doing a rehab. There was no focus. There was no clarity. There was no, I knew I had a passion for real estate, but I was a pretty doggone good CPA as well. And that's what was bringing in the income. But, you know, I think we all,

you know, operate from either a level of pain or pleasure. And for me to kind of kickstart my thing, as I mentioned, I have two girls and during taxis I was seeing them 10 minutes in the morning, plus my wife. And I was just operating from a level of pain. And I needed to make massive action and take control of where I wanted to go with my life and things. Nice. Nice. All right. So you're determined. You say 2008, I'm going to change the way I'm doing things. So you go, you buy this duplex. And then, you know, you talk about kind of scaling. Well, how did that go? So, you know, what came after the duplex and what was kind of the process, the thought process that, you know, beyond like, hey, I want to, you know, I want to own a bunch of properties. You had to have mapped out a plan.

So let's talk about the plan and then let's talk about the implementation. Sure thing. So I'll give you the high level. I'm going to come back to some details as well. So 2008, you know, I got this duplex. I was like, okay, I know this can work. I did at a very small scale. 2009, I tried to buy a 132 unit deal in Dallas, Texas.

Just a little jump there. Yeah, just a little. But I knew, you know, I knew my clients could do it. And reading them between the lines, I knew with a lot of focus, massive action, right education. And education's great. The books are fine. But you've got to get out there. You've got to get swings in the cage and you've got to take risk.

And so in 2009, the 132 unit deal did not work out. The seller and I could not agree on terms. So we, you know, that deal unfortunately folded. So, and I was trying to do the deal myself, trying to be the sponsor, trying to be the guy raising all the money. I realize there's multiple ways to get into real estate. There's multiple ways to skin the cat, so to speak. So in 2010, I partnered with a group. They found a 276 unit deal in Tennessee. He was a bank REO. We bought that asset for $4.5 million, and it appraised at $12 million in the day of purchase. What I was able to do was, add value. I was able to bring capital to the deal. It wasn't my deal. They found it. They were the sponsor. But what that has helped me now looking back is, you know, we were able to refinance that asset within a year's period. So I was able to get a nice return for myself, nice return for my investors. It's a great story. It's a good track record. So, and then from 2010, I made some decisions to, you know, buy some bigger properties from thereafter. Hey, Brian, so let's talk about that. 2010, you said You partnered with a group. You said it was 276 units.

That's correct, yes. You guys paid $4.5 million and it raised at 12. All right. So what is the process of partnering with a, quote, group to acquire a $4.5 million property when you've done a duplex and maybe a couple singles and a couple other little things before? How does a guy, no offense, who doesn't know squat, you know, all of a sudden get to together with this quote group to acquire four and a half million dollar property. I know that lots of people are sitting here listening like, oh my God, that's crazy. So please, walk us through

that process. You know, what exactly did you do in this deal? Who were these people? How did you guys come together and how the whole thing, you know, flush out? Sure. And it always comes back, guys, to relationships. It's, um, everyone feels that, uh, you know, they're just going to go out and buy a property or a big property, but it always comes down to relationships and the people that you circle yourselves with. So again, if those people are the negative ones, you're going to unfortunately be that negative guy. So I always realize that always going to be in the circles of those that are taking the necessary action steps, those that are already burning the trail for me. Let's follow those that are smart. Let's follow those that have done this before.

So to answer your question, I was just able to go through my network, go through my database, make outreaches to those that were, you know, 10, 15 steps ahead of me and say, hey, this is what I can do for you. This is, you know, I always want to add value to someone else's life. So if I can bring in my opportunity or my situation, I was able to bring capital. Some guys have, some people in your audience might be awesome, you know, deal finders. They're, they, or others might be good networkers or relationship or someone that's a taskmaster, you know, all about the details.

So it's really looking at your strengths and saying, okay, here. Here's my strengths. This is what I love to do. I like analyzing deals. I'm a CPA. Other people might hate that process. So if someone is able to find the deal or the money, we'll bring that to someone that skill set or their strength is there. And you just play the strengths and weaknesses. Okay. So you said you brought capital. I'm assuming that means, you know, I'm assuming at this point, and maybe I'm wrong that you didn't have the money for the down payment yourself. So bringing the capital means you went out and got the money. Correct? I got a portion of what we call private money or private equity for this opportunity. That is correct. Okay. So can you kind of dig into detail a little bit more? I mean, I don't need the ins and outs of your contract. But, you know, what does that mean? How does somebody go and do what you did? Because I fully, I don't fully understand exactly what you're saying that you did. Sure, sure, no problem. So that the asset we bought for four and a half million dollars, we got a bridge loan. So there was a portion that debt was in place of three. So we had to raise capital of 1.3 million.

Okay. So I was out of that 1.3, I didn't raise the whole amount at that time. I raised a portion of private capital. So I took this investment offering and presented to a group of my investors that we all would partner and share in not only the cash flows, but sharing the upside of the project as well. Okay. And did you bring any of your own money or was it everybody, other people's money on the? In this situation, yes, I brought my own capital as well because I wanted to show my own. investors that I had some skin in the game. Some of my deals, though, I have not needed to bring

capital just because then track record gets established and trust and level of credibility. Okay. So a deal like this, you put a little bit of money in. I'm assuming you raise, you know, the majority of the money. Again, it's an assumption. But what percentage of this whole deal do you end up getting? Let's see. Of the whole deal, I think I was maybe like 5 to 10%. No, I was a 5% owner. So it wasn't, you know, a significant amount. Yeah. But it was enough when you think of, you know, cash flow and back in profit.

And sometimes I'll be really clear on this one is I realized, you know, my experience in 2009 where I tried to do it all myself and I struck out. So sometimes that first deal, you got to take a couple steps back, realize, okay, this is the big plan. This is where I want to get to. Sometimes you may, you know, take a lot less, you know, something is better than nothing. So that's what I looked at. I said, okay, I'm just going to take a small piece of this, and then let's see where this goes thereafter. Yeah, it's great. You know, you get a piece of this deal that, you know, I think a lot of people hear like, oh, well, I got 50% of the deal, and you should always go there. And I don't think I've heard on all of our shows and all of our interviews.

I don't think we've talked to a person who's said that they've taken anything less. Now, granted, they're working on different proportions here. They're working on, you know, three units and two units and five units. And so, you know, coming in and doing a $1.3 million raise, you know, for a $4.5 million property, it's a little bit different. So, you know, at the end of the day, that 5% of, you know, when you multiplied out of $12 million project is a pretty good start. Sure. Yes, it is. It builds that track record, like you said. Yes. Yeah. That's like that thing I always say, the quote I always say about, you know, 50% of a great deal is better than 100% of no deal. So the same way, 5% of a great deal is still better than 100% of no deal.

I think that's fantastic. Anybody who's looking to get started, let me just take that to heart right there. I mean, just the idea of just work with somebody else who's doing it, who's being successful. I mean, honestly, even if you work with somebody and made no money on the deal, at least you're developing a track record. I'm not saying you should necessarily work for free, but it's better than nothing if you're just struggling to get started. So I think that's fantastic. Can I ask you about like, before we move on to what happened next in your business? is looking back at the first 10 years or eight years or whatever,

it took 10 years to get up to that kind of point. If you were to go back and do that again, you know, that whole decade again, what would you do differently in your life? That's an excellent question. Because I think, you know, all the learning in those 10 years, you know, I got to learn more from my clients and those are some of those ex-clients turned into my investors. I think if I had to do it differently, I would have done multifamily sooner because I think from a scalability perspective, income perspective, you know, all those things, all the metrics.

I think most people that I run circles with, you know, are in that single family or wholesaling world, and that's a J-O-B. You know, you're constantly looking for that next opportunity versus a multifamily. You're creating that, you know, existing income stream or passive income stream. So to answer your question, I guess, would be, I wish I would have had that aha moment sooner and probably would have my portfolio would hopefully be a lot bigger now. So, but I'm, fortunate for all the experiences that I've, you know, in the pathway that I've traveled, I think it's helped me, you know, to be better educated, dot the eyes and cross the T's and understand this business more. So I think I'm fortunate for the past 10 years to, you know,

from a learning perspective. Yeah. Hey, so really quickly, I want to just jump back to that property and then we'll kind of move forward. Now, you're not managing this property, correct? I'm assuming the property is obviously has in-house management. So, I mean, really at the end of the day, you're just an investor in this deal. You put it together, and now you're kind of part of the portfolio. It's part of the portfolio, right? You're very passive. Yeah, in that particular 276-year-deal, that is correct.

And all my assets, Josh, to be clear, I put that with a third-party management company. And I just want to come back to one thing real quickly is, you know, being part of the deal doesn't mean that you have to be a passive, you know, I brought value, I brought equity. but what I did, I just asked a bunch of questions to those that were running the shell, like, what about this? What about that? I was just picking their brain. And I think anyone that's listening, that's really important is even if you don't get a deal

across the finish line, take that opportunity to ask as many questions as you can because it's going to help you. It's going to, you know, because each deal is unique. Each deal has challenge. Each deal is going to fall apart in some cases. So you want to, you know, you've got to be prepared for, you know, the worst situations. Right on, right on. Okay, 276 units.

Fantastic. Then what? What do we jump in? A 500? A thousand, 10. Come on. I mean, you went from 2 to 276. If we're using that math, you know, we're going to a big one next. Yeah. So what happened next? And this is where all the challenge comes, right? So at the end of, you know, we bought that asset in 2010. We flipped it. So coming now into the end of 2011, you know, I'm still working the CPA gig. And I realize, again, my passion, you know, going back to that junior year in high school, my passion's been accounting. I'm a pretty good CPA, but my passion started shifting. I got to see the real estate stuff start to happen. My clients were making it. I figured what the heck, I can start this. So again, I mapped out a point. This wasn't something

that overnight I said, I'm going to quit my CPA job. But I ended up quitting my CPA job at a top 100 law firm in the world and to pursue my own real estate business. So December 5th, I'm sorry, December 15th, 2011, I went to my boss and said I'm done. And, uh, Fortunately, my wife is very supportive, and again, we mapped out a plan. 2012 was a very challenging year. I did not buy any multifamily. I had a 98-unit deal that folded. So I had some revelations about myself in 2012.

And then in 2013, I bought with partners, 144 unit deal for $10.3 million. And then in 2014, I bought a 209-unit deal for $6 million, that appraised at $7.4 million on day of purchase. And when we're recording this in 2015, I'm actively looking for 100 to 400 unit deals up to a $15 million purchase price. Wow. That's awesome. I love that progression. I want to touch on a couple of things there.

First of all, you mentioned you had a – you and your wife developed a plan to quit a job. Let's talk about that. I mean, what is that – a lot of people listen to our show. You know, I do a webinar every week here on Bigger Pockets, right? And in that webinar, when people sign up for it, they get a link to a survey. And in the survey, I asked just some more information about themselves, about like, you know, what are you interested in, etc. And one of the questions I ask is on a scale of one to five, one being not at all and five being yes, do you want to quit your job? And our average rating is like a four, right on a four.

So 80% of our people generally, or at least like majority of people are very interested in quitting their job. And as a side note, if people want to sign up for a webinar, biggerpockets.com slash webinar. But so how, I mean, how do they do that? How do they develop that plan that you did and get to that point? Sure. Well, I want to point out I'm not unique. I just, what I did was I figured out that instead of going after that shiny object syndrome, I think I do it still myself, you know, we're all over the place.

I really wanted to, I drilled down. You know, I had an unbelievable amount of clarity and focus, and it all comes back to my why. Okay, why do I want to go down this pathway? I could have stayed in my CPA gig, still made the income that I was making. I was pretty good at it. I had, you know, clients that liked me all that good stuff, but the passion, the fire, the whatever else had shifted over to the real estate. So then I mapped out, okay, if I quit, how much money do I need to make on a monthly basis? Okay, I know that amount.

Okay, how many units do I need to buy? Where are those units located? What does that asset look like? Is it in my own backyard or is it in a different state? How am I going to manage it? Where is the money going to come from? So, you know, it was a very methodical. And that's, you know, I'm a CPA.

So I'm black and white. You know, there's not much, you know, gray there. So, you know, there is a system where I process, a checklist, I guess I put together. It's okay. So very methodically, let's go down this pathway and get it figured out. And so your listeners know that, you know, this just wasn't a one-time thing. I've, again, had many swings in the cage, hit some singles, some home runs, you know, and struck out. So, you know, know that to move your business forward, there's got to take, you've got to take risk.

And we can all sit back and just, you know, just, you know, know, think about or do the education and all that good stuff. We actually got to get out there and, you know, take some action. Yeah, I love it. Hey, Brian, so you mentioned, and I think I got the list written down as you were talking, but in 2012 you had the 98 unit that folded. What does that mean? How did that deal just not work out?

Tell us about it. Yeah, sure thing. That was in North Carolina, and that was a deal that I was going to sponsor myself. And just so the listeners know what that means is as a loan sponsor, the banks basically require a couple of different things. One, you have to have the experience to buy a multifamily deal. If you just bought a duplex, they're not going to give you a loan on a 98 unit deal. You have to have some track record. So I was able to, again, use the 2010 experience as, hey, this is what I've done. Also, as a loan sponsor, you need the net worth to cover the loan. You also need liquidity.

Most lenders, when you close, will want some type of liquidity. Usually, it's 10% of the loan balance that you have to have liquidity. In my situation, why the 98 unit deal didn't fold, or why it folded, was I had some private capital that I had lined up, a big investor that was going to fund the whole asset. And he pulled out a couple of weeks before my money was going to go hard. And that really means for due diligence purposes, you put up a deposit. You've got some many days, could be 30 days, 45 days to do due diligence, to, you know, look at the numbers and do physical assessments and things that nature. And then if your money goes, past that date, it goes hard or non-refundable. So my money, I realized that my large investor was pulling out. So I had to terminate the project. So, you know, I got my money back from the down

to down money, but I also lost money. I lost money because I had to pay to get a third-party appraisal. I had to pay money to get that physical inspection. I had a turning cost. So, you know, suggestion to your listeners is before you, you know, get to that far of a process, you really want to make sure you got your house and order the nuts and bolts. How do you avoid somebody pulling out? I was going to ask the same question. Yeah, I mean, because that seems like, yeah, I mean, it seems like it could be pretty risky.

You got guys who have cash or like, yeah, I got this. You know, I got your back. And, you know, you move forward on assumptions that they're there. Then what? So what do you need to do to protect yourself? Yeah, what can you do? Sure thing. A couple different angles.

I like to address that. And first, always make sure you have backup investors. That was a lesson learned. that and plus he was he was the only investor so he was bringing the full chunk that's great if you're you know maybe a season guy but uh you know i was just kind of getting started so he was he was 100 he had more control of the deal than i did he was the one that's something more or less calling the shots so you always want to make sure you've got what i call my stable a of investors those that that are you know have worked with me before or they've they've already funded their money it's a

different when someone gives you a commitment and actually fund the money to escrow so that money was not in escrow. So I never, you know, he never came forward. So again, if investors already got their money in escrow and they want it back, but that's a different conversation. That's probably maybe a legal question. I don't want to go there right now. But let's say you've got that investor who has not funded, but have said, hey, I want to invest X amount in your deal. And then all of a sudden they pull out. We want to make sure you've got, you know, Team A and Team B. So when Team A player pulls out, you've got somebody right behind them. So if you're raising 500,000, a million or $2 million dollars, you always want to double.

that. That's my opinion anyway. You just double that amount of commitments. So you've got people backstopping each other. That's a great idea. That is great. How do we go find these people? Obviously, some of it comes to a track record. For you, you're lucky you've got the CPA business. You're going on. But somebody who might have done one or two deals, bought a 30 unit or something and now needs to kind of go ahead and find some money partners, what would you suggest to them to do to go out and find? And I'm not talking, you know, the postman who has 10, 20 grand, obviously, you're talking about big money, accredited investors, stuff like that. So how do people go about finding those people? Sure. And just to address, you don't need to be a CPA to raise money. You know, anyone can do this.

It's, it's, okay, looking at your circle of influence and might be folks on, you know, bigger pockets. And we want to be careful there of advertising and things of that nature. But it's all about the relationships, what value you can add to others and go through what I call the circle of influence. It could be your family, your friends, your CPA, your business associate, your doctor, attorney. And we're not asking those individuals specifically for money. We're just saying, hey, who do you know? This is my business. This is what I'm trying to accomplish.

And those in your, you know, your true circle of influence, those are going to be the ones that really want to try to help you. out. And you say, hey, hey, Josh, Brian, I need, I'm looking for this. I've got a deal. I need to raise money. Who do you know that could be interested in this type of thing? You know, specifically, I'm not asking you guys for money. I'm just saying, hey, who do you know? Who's in your database that might be a good fit? And it always happens is that, you know, you start talking to your family and friends, you tell them about what you're doing, all the great things that you can accomplish. And all of a sudden, they're like, dude, why didn't you ask me about this? You know, this sounds awesome. Let me participate. Let me get in this thing. So then you, again, it's all about using your network, your relationships and, you know, trying to get your business moving forward.

Yeah, I love that. I love that. And just to go back and harp on one point you just said there about, you know, maybe it's on bigger pockets and you have to be careful about advertising. That's, you know, completely right. And the idea that like, okay, so bigger pockets obviously has a lot of newbies on there, right? People that are just learning. And so, you know, they go on to the forums and they ask a question like, how do I buy a rental property? And then everyone, you know, kind of helps them out. So there's obviously a lot of. answers for new people. So a lot of the experience guys look at that and they say, well, I don't know what value. I mean, like, I don't know. I don't have any reason to participate on BP in the forums or by building relationships. You know, I'm not, I'm not in that. I'm not in that I don't need those answers. But I think what a lot of people don't realize is it's that like, just answering those questions, you know, you might help one person or 50 people that are going to read it, but you're in front of thousands of people who potentially have money who see you as an influential person. And so the people that are most active on bigger pockets and that are, out there helping and being productive. And I'll put that not just on BP, but just in general in the world, right? But specifically for BP, they're the ones that everybody's seen as a person that, hey, maybe I could invest with them someday. There's a lot of people in America who have a lot of money and don't know what to do with it. So you got to just be the guy that people want to go to because they see you as a mover and shaker. So anyway, that's just my encouragement to people that

are listening to the show right now that maybe have, you know, not sure why they should jump on BP because they're already experienced. That right there is a pretty good reason. Yeah. It's great. Cool. Hey, Brian, I don't think there was a question in there for him. Was there? No, not really. Just put it on that. No, I love the plug. That's a great plug.

All right. So, let's kind of circle back a tiny bit and hammer down a little bit more on the deals. You've got a $10.3 million deal. You've got the $6 million. You're looking for these others. you know, what kind of person, you know, I just want to dig a little deeper into the investors, you know,

I don't think the question I want to ask is what kind of person gives you money, but, you know, what kind of money are you raising? Are you raising $25,000 at a time, $50,000 at a time, $100,000, quarter million, half million? What are you raising? What kind of chunks are you typically getting for, you know, these raises that you're doing? Yeah, sure. So now that I have a track record, my minimum is $100,000. So that could be a million, a quarter million, up to a million dollars of the investors that I'm able to tap into. Did that happen back in 2010 or even 2009? No. So I think the audience needs to realize that as your business starts to take or move forward to get traction, you know, you can increase your minimum investment. But maybe starting out, I would suggest only start at 50,000 because, you know, to raise a $2 million for a capital raise,

25,000 is a lot of people that you need to, you know, look through your circle of influence. So kind of having that minimum of 50 and you really need a couple big guys, you know, to help that average out. But again, we want to make sure that we're dot in the eyes and crossing the T's. If you're pulling money together, I know there's not an SEC call, but, you know, we want to be careful. We want to do the things the right way and make sure you get good counsel and put in the private placement memorand, the PPNs, all that good stuff. Make sure you get to all that taken care of when you're raising money. People love to call real estate passive income. which is interesting because most of the investors I know are very busy.

Busy finding deals, busy managing teams, busy worrying they picked the wrong market. Rent to retirement flips that model. They help investors buy turnkey new construction homes, often 10% below market value in top rental markets across the country. Their local teams handle the build, the property management, and the details, so you don't have to. In some cases, investors even receive 50 to 75% of their down payment back at closing, and there are interest rates as low as 3.75%. They've been trusted partners with BiggerPockets for over a decade. And if you want to learn more, visit BiggerPockets.com slash retirement.

If you think property management is expensive, try mismanaging a vacancy or an eviction, or a maintenance issue that turns into a five-figure problem because no one caught it early. That's expensive. A good property manager isn't overhead. Their protection against small mistakes turning into big losses. and that matters more than ever in this economy.

That's why I like Mind. Unlike other property managers, Mind manages your property like an investment. They obsessively measure the things that matter for your bottom line. Things like occupancy, delinquency, and net promoter score, and they have the results to prove it. Go to mine.co slash show me to see how mine performs and get your first month free,

which is much cheaper than learning the hard way. Managing properties can feel like a full-on circus. You're juggling very much. vendors, tracking payments, chasing approvals across multiple properties, and maybe a few HOAs, all while trying to keep tenants happy and owners confident. One delay can throw everything off, and suddenly your day is all clean up, no progress. That's why hundreds of property managers rely on bill to streamline their finances. Bill for property management lets you add all your properties, assign permissions, pay bills, and receive payments quickly and efficiently,

without the usual bottlenecks. It syncs with platforms, like QuickBooks, Zero, NetSuite, and Sage intact, so your accounting stays aligned. You can automate bulk payments across properties and HOAs. Choose flexible payment methods like Same Day ACH, international wires, card or check, and set custom roles in approval policies. There's even a dedicated bill inbox for each property

to keep everything organized. Ready to simplify your workflow, book your free demo at bill.com slash bigger pockets, and get a $100 dollar Amazon gift card. That's bill.com slash bigger pockets. Yeah, I love that, love that. All right, so let's move on. I want to talk a little bit about, you know, how you're, I mean, we kind of know how

your business is developed. Now you're looking for the larger apartment buildings. How many have you done total in the units have you bought and sold or invested in? Yeah, bought and sold almost 1,000 apartment units valued over 30 million. I currently control the 144-unit deal in South Carolina, a 209 unit deal in Texas. and there's some reasons why if you want to go, you know, if you want to go, if you want to go, if you want to go, if you want me to go there, if I live in Pennsylvania, why I'm, you know, investing in other states. I would love that. Okay, yeah.

So I'm in the Northeast and the opportunity cost to, you know, deploy capital for properties around this area are pretty expensive where I can go to other markets and buy properties that are a lot cheaper. And also, my, my business is built on job growth and economic growth. So where are those markets across the country that, um, those markets are. performing very well. And a very simplistic view here, though, is someone's got a job they can pay your rent. Texas, in my opinion, is a state that's producing a significant amount of jobs, regardless if it's a blue collar, white collar type of job. It's a great business-friendly state. It doesn't have an income tax. It's a very landlord-friendly state. It's a central of the country, so it's great for distribution to product for big employers. So how I also look at the

model is, okay, what are the trends in the marketplace looking at census bureau data, growth, economic growth, you know, other, you know, you can, for example, set up a Google alerts. You know, I do that for all the markets that I target. And daily, weekly, you can get news just coming into your email about what's happening in your marketplace. I'm in, again, I'm in Pennsylvania. I'm buying deals outside my marketplace. So we want to be an expert. And that's what one question the investors are going to ask. Well, you live in Pennsylvania. What the heck are you investing in a different state? Well, what I just told you is what I do, and everyone's investment model is going to be different, but, you know, I target markets that have some type of

upswing. And I believe the markets, you know, other markets across the country, you know, everything's cyclical. So, you know, we talked to a lot of people and especially, you know, for new investors, we always try to tell them, you know, try and invest local, try and stay where you can kind of find opportunity so you can kind of go by, reach out and do it. I'd like to think that it's a little, little bit different when we're talking 100, 200 plus units. I mean, it's, it is, but it isn't, right? I mean, you still want to be able to go and see that, you know, things are being run and managed appropriately. But at the same time, you know, you may not be able to as easily find those opportunities. It's a lot easier to find a duplex within 200 miles than a 200 unit within 200 miles that meets the

criteria you're looking for. So, yeah, I, I love the kind of becoming an expert outside the market, place. You said job growth, you said stable economy. What are the things do people want to look for? Do you have any data sources that you would recommend people use to help better evaluate the markets that they're looking at? Sure. Again, I'm a frugal CPA, so I love free stuff. Marcus and Milochap, which is a broker, has a lot of great free information on what we call MSAs. So the markets like Dallas or L.A., New York, Denver, you know, the big markets, Marcus and Milchap does a great job of analyzing this stuff for us, where construction, job permits, absorption rates,

all this good stuff is kind of all put together for us. There's another report I use. It's called Viewpoint. It's irr.com, I believe. I don't know exactly off top of my head that link, but I'm sure you guys can figure that one out. And then there's CoStar, there's LoopNet, even though that's a free resource as well,

and I've never bought an asset off a loopnet, but there's data. And I'm a data junkie. And I think as you're beginning to go down this pathway of putting a larger multifamily, you've got to be the expert because not only are your investors going to ask you, your loan broker, your management company, everyone's going to be pointing to you to say, okay, how are you going to run the show? And they're going to be looking to you or like the quarterback of the team to navigate and leverage other people's skill sets to get your property across the finish line. Either that's the purchase, rehab, get it, you know, flipped, whatever the exit strategy is. Okay. That's great. All right. So let's talk about that. Exit strategy. Yeah, the first one, it sounds like that, well, that 90, not the 98, but the, what was that, the 276 unit, you said you flipped that. So how quickly were you out of that deal? Well, again, I wasn't the operator. So the operator are the ones, and I knew this kind of going in, that it was going to be a fast-paced deal because there was so much equity in the opportunity. So I knew, and my investors knew, I'm all transparency, and, you know, we've got to be.

because we have other people's money at risk. And what we don't want to do is lead them on and things don't have, any deal can go sideways. So the operators of that deal, you know, put together a refinance strategy. So there was, you know, value that could be extracted by putting new debt on. And myself and my investors that I brought to the deal, we were all refinanced. So we got our principal back plus a healthy return of that particular deal. Okay.

And then what about the other ones? The 144, the 209 unit? Yeah, so the 144, I still have that deal. And that was a HUD deal. And as a disclaimer, well, I don't know if I want to say this on the recording, but I'll say what I was going to say anyway is HUD is very challenging to work with. I'll say the good first, and I'll come back to the back. I don't think they're going to come hunt you down, man. I think it's a government entity. That is kind of a given. Yeah. So we got awesome financing. of that $10.3 million purchase price, we got 90% financing. With that came a 40-year mortgage.

It's amortized over 40 years, an interest rate of 4.15%. And it's assumable to the next guy. The downside. Oh, my God. Yeah, the downside is it's compliance-driven. You know, it seems like every other day, week, we've got people coming in to look at our asset. We can only, on this particular loan structure, we can only distribute out cash flow twice a year. With that, there is a formula that we need to follow, and if we don't hit certain benchmarks, we can't distribute out cash flow.

Secondly, we have to have a significant portion of capital set aside. It's called a CAPX reserve. We have to have a significant portion. For roofs, this asset is built in 2004, it's a class A deal. They want us to have roofs 20 years, 25 years down the road. We have to have money for that. I'm like, are you kidding me? So, again, what I was going to say is would I do another HUD deal? probably not because of just the red tape you have to get through.

From one side, it's attractive terms, but there's the other side, the other world. Interesting. I'd never heard that. Yeah, that's crazy. What kind of cash flow is that property doing? What kind of returns are you getting? Well, we projected out a preff return. That means the investors get a certain yield on their investment first. And then after that, you know, the management where I'm at, we get paid.

So we projected out an 8 to 10% cash on cash return. But as I shared, because we didn't meet the formulas, we haven't distributed out cash flow for this particular year just because we didn't meet those thresholds. So each deal is unique. Each deal has its own exit strategy. That's a long-term hold because I believe, and I think there's a lot of chatter right now when this is being recorded, is interest rates are going to go up. So this rate, we're locked in for 4.15%. there's probably this is an institutional

type of asset for someone else so we're going to hold this deal for another six seven years interest rates most likely they're going to be higher than they are now and hopefully extract additional value out of this property when we sell down the road fair enough so you had talked about and sorry

Brandon I got a lot of questions got a lot of questions you had talked about management getting paid after the investors I had written down earlier, how are you actually getting paid? So I understood on that first property that you guys had refied and you were able to kind of get money out there. But these properties that you're holding on to long term, are you taking cash each month? Obviously on the HUD, you can only distribute cash twice a year.

So that's probably not a monthly cash flow because you quit your job. So, you know, the real question is, how are you living? How does somebody quit their job, buy multifamily properties by raising money, and then actually make a living? I think that's probably a question that's on a lot of people's minds. Sure thing. And just to clarify that just a little bit, so our management company is obviously in the operating expenses. When I meant by managing, I'm the managing member. So just want to make sure that people didn't think we were paying our investors and then the management company gets paid.

They get paid before our investors do. But so how I get paid is when I put these, you know, these deals are long and can be challenging and takes a lot of time. So I put together an acquisition fee structure. So I get paid three points of the actual purchase price of putting these large opportunities together. So, you know, 10.3 million that was 300 plus acquisition fee paid at closing. I had a partner so we split that. So in that particular deal, you know, that was kind of an upfront fee. and then I share in the cash flow, the tax depreciation, and back-end profit.

There are some opportunities, and just to touch on this, some people put what we call an asset management fee in. So usually it's one point that as the quarterback of the team or the managing member, you can take one percentage of gross collected rents and get paid on a monthly basis or an annual basis. For the deals that I've done so far, I haven't baked that in, if you will, into my opportunities because if we get to my 209 unit deal, I'm actually taking 50% of that deal. And I'm not greedy by any means, but this, again, is a lot of work.

So I didn't feel putting in or including an asset management fee on that particular deal. It didn't make sense because I still want to make sure my investors get paid and want to make sure the numbers worked. Sure. And just for people that are listening to this that aren't sure, everything you're talking about is very, very normal with syndication and with putting together big deals. So, like, nothing you're doing is, like, you know, weird. I mean, because when I think about if I were to do a partnership on a duplex, I wouldn't typically get an acquisition fee at the beginning.

You know, that's just weird, right, but with a larger multifamily, that's very, very, very common. And that's just the way it's done. So one of the reasons I want to get to where you are. I mean, it's one of the reasons I want to do on the show today, right? Because I want to be you. Yeah. Well, thank you, Brandon, for that compliment. But yeah, you're exactly right.

And this is like common practice in this particular segment of multifamily. And most important, it's all about disclosure. So, you know, I'm not doing anything that my investors aren't aware of or not included in the private placement memorandum. And, you know, we just need to disclose these things. And it's disclosed to the investor. And those investors are supposedly informed investors and they're making the decision to invest with you. So as long as everyone's on the same page, you know, we're not doing anything that's, you know, secretive for the investor. That's great.

Great. How big is your team? Is it just you? I mean, are you alone? Yeah, you're looking at them right now. And for disclaimer, I've got a virtual assistant that helps me with the administrative and marketing. And again, coming back to that 2010, you know, strategic, it's how can I add value? You know, I do have other people that I work on, you know, work with.

But, you know, I've kind of, I've been doing this all on my own. And to scale this business, I do need to, you know, bring on more people to handle the acquisitions, the due diligence, the raising money. Because right now I'm doing a lot of that myself. And I'm realizing as I move forward that I need to rely on other really smart people. And I've had a fortunate experience on Bigger Pockers, actually. I made a thread. I put a post out there.

And, you know, I've been fortunate that people have outreach to me and say, hey, how can I help? You know, it sounds like this is a pretty cool thing. How can I participate? So, you know, I'm vetting some people right now to see, you know, and I only work with action takers. You know, those that like myself, you know, I had to quit my job and I had a goal. And I'm not wanting to work with those that there's kicking the tires. want somebody that's, you know, passionate and loves this stuff just like I do. Yeah.

Yeah. What kind of marketing are you doing? I mean, you said you've got a VA who's doing marketing. You know, why do you need to market if you're just going to buy big multifamily properties? Yeah. So you guys probably know in sales, it's what ABC? Always be closing. Yeah.

So in my world, I'm ABM, always be marketing because you always need to be marketing for really, and I'll break this down pretty simple for you or in my world, is in the, in the, you, you real estate, it's deals in dollars. People get so concerned and confused that they got to do all these other things, but you need to have the right deals coming in for your investors, and you need the investors to close the deal. So if you can play matchmaker, you understand from a marketing perspective or what your investors are looking for and you market to that category of investors.

They're looking for a property built X and looks like this and cash flow and returns, we'll market to that subset of people. Then take that group of people and go market to the brokers, other investors, do direct mail, do those things. And then your business, you know, it just happens faster because you're not trying to swim upstream in both accounts. It just makes a lot easier. It took a while for me to figure that out. But now with my marketing, my VA is, you know, I've got a website. I've got, you know, I do direct mail. That's how I found and bought my 209 unit deal on a direct mail piece. Really? Yeah, yeah. So it's, you know, And Markin is just not one funnel.

It's multiple funnels. These conversations we're having, it's other investors going to your local RIA. It's just not one size fits all. It's multiple funnels that are open. And you never know when that either deal or investors are going to come from. And you just, you know, you need to be proactive. Yeah. Excellent.

I love it. And I'm encouraged that you talk about direct mail worked for that apartment complex because I don't, not a lot of guys. And I don't even like talking about that on the podcast because like that's what I want to do. Right. and I don't want everybody in their brother, direct mailing apartment owners, right? But like, I'm encouraged the fact that that worked for you and that does work.

So very, very cool. Yes. All right, good deal. Well, let's move over to the fire round. It's time for the fire round. All right, these questions come direct out of the bigger pockets forums, which people can get to at biggerpockets.com slash forums. This is that same thing I mentioned earlier

about people jumping in just being active in that part of the site is a good way to build your reputation. And I know you actually did that. I read through your thread. You have a thread about your kind of your story, and it was fascinating. And you just kind of start building your brand MVP. So anyway, I'm going to throw some questions at you here. Josh will too.

I might throw a few. You might throw a few. Yeah, you know. And yeah, so I guess how would you answer these if you saw these in the forums? Number one. Somebody said, what are some examples of good deals on four unit or six unit apartments? Some just came on the market for 130,000. It's not the best area.

But I think they're in pretty good condition. How would you respond to that person? Well, I guess first disclaimer is that that's too small for me. Sure. I move on because it's from a scalability. You know, I guess it's all, it always comes back to the numbers and making sure that the numbers, you know, kind of match up and that, you know, if there's enough cash flow. Because, you know, I want to just come back to something real quickly is, is if someone's focused on a four to six unit and maybe, again, they live in Pennsylvania and they're looking in another state, North Carolina. And it's producing $600 or $800 a month.

And each month, they have to go travel down there. And there's travel expenses. And at the end of the day, this is a lot of work. So I want to make sure everyone knows that this is not one morning. I just hit the easy button and all these cash flow and acquisition fees came flying out. There's a lot of work. So I think getting very clear again on your why. Does a six or eight unit, yeah, that get you started.

And I'm encouraging anyone that you've got to take action to get started. But does that fit the model? of where that investor is heading in the direction. I hope I'm answering a question for you. Yeah, I actually like that a lot. Because I just get a lot of people, I love your answer there about the numbers. I get a lot of people who email me and say,

Brandon, I found a fourplex for $150,000. Should I buy it? First of all, like, I don't even have time to answer to a lot of those emails. But, I mean, I don't. Whoa, wow. No, I try to answer every email I get. Oh, Brandon, I'm too busy to answer your emails.

That's why I pay you, buddy, boy. I'm just kidding. No, so here, I mean, here's the problem, right? Like, that tells me nothing. There's 150,000 for a fourplex. Does that tell me anything? You need more information. I think that's one of the big problems that a lot of new people have is, and I was going to go there,

is when you post, guys, post some details because that doesn't tell us anything. What are the rents? What are the expenses? You need to, you know, if you want help in getting answers on if something is a decent deal or if other people think something is a decent deal, you need to give some details. And if you're not thinking about those details, then you're not ready to buy that or any other deal. Yeah. And if I can go there real quickly, is, you know, I'm a big fan of Stephen Covey, you know, have the end in mind.

So if someone's asking you those questions, it's, okay, turning around and say, well, why is that a good deal for you? You know, does that fit what you're looking for? Because a lot of people struggle, they want somebody else to answer that question. Why is it a good deal for you? Why is it a good deal for your investors? And if you don't have, you know, answers to those two questions, you shouldn't be. in real estate or you shouldn't be doing that deal or you need to learn a little bit more.

It's just like that the Allison Wonderland, the cat and whatever, the Cheshire cat, right? And Alice says, like, you know, which way do I go? And he says, well, where do you want to go? And she's like, well, I don't really care. And he says, well, it doesn't matter then.

Right? Like, if you don't have that predefined, like, does it fit your goal? Does it fit your plan? I have no idea if a fourplex that's good for you. And so one thing I will say, too, just to encourage people, if you're like somebody who wants to go and email somebody

and ask them about a deal, whether it's me, Josh, you know, Brian here Yeah, well, I was going to say, you put it in the forums instead. I mean, because, yeah, we get certain things. But when you put it in the forums with thousands of people that could see it, you're going to get advice from a lot of different perspectives and get advice from a lot of people that can then jump in and help you in a way that any of us three or anybody that you talk to on one-on-one won't be able to do. So that's my encouragement, yeah.

People jump in there and post your stuff if you have questions. I always tell people to do that, by the way. They'll hit me up. Hey, I've got a question. I want to know this. I would love to help you. posted on the forums. A, so you know, you'll get other answers because mine may not necessarily be the right answer. And B, so that you can get multiple feedback, multiple opinions.

And help other people in the future. And other people can read it and learn as well. So yeah. All right, cool. This, this fire round is really going quite slow burn, Josh. Slow burn. Yeah, there you go. All right. Second question is apartment demand and development is surging in some markets, including Texas. What would be your criteria for developing multifamily? Well, again, I hate to take the sideway here. I don't do development, so I target those assets that are already built. My model is built on value add, those properties that where we can come in and force valuation by either decreasing expenses, increasing rents, doing some type of rehab. So my track record, I don't know how to answer that one from a development perspective, like building the asset out of

ground. And I think your answer was actually really good in that like that's not your niche, right? You're not distracted by the shiny object of development just because it might be hot in one market. You know, you're good at multifamily value at apartment investing. Right. So I love that. You very wise, Brandon. Thank you. I'm a wise guy. That's what they keep saying. All right. Number three, what would be a good job like career to try and work for to learn about buying and selling city apartments? Like basically like how do I get a job in that industry to learn more? I think, you know, being an acquisition manager is a good start if that is your skill set, of course. You know, if you understand the numbers or, you know, being out, being a networker, being a

marketer, because it all comes down to, you know, really finding the deals and finding that investor. And if you can add the most value by bringing someone a kick, you know, kick butt deal or you're able to find money and bring that to someone's deal, you're going to be well sought out, you know. So someone came to me and said, hey, I've got this deal or I've got this money. And well, why wouldn't I want to partner with that someone? So I think the best job would be to, again, either being an acquisition person to understand the numbers and how to put the deal together or being like a master networker. That's great. I love that.

Just to add on to that because, you know, this is a slow fire around today. So I'm listening to on Audible. I'm listening to the book 80-20 sales and marketing by guy named Perry Marshall. And in that book, there's this long discussion. on the idea that most of what a person does doesn't produce the results, right? 80, 20, which says 20% of what you do produces 80% of your income. It's a Pareto principle, isn't it? Yeah, yeah, yeah.

It's the Pareto summer or the, yeah, that whole like thing. It was in the four-hour work week. It's in Pareto, yeah, all that good stuff. So the idea that, so what he was talking about in there is his argument in the book, which I agree with is whatever you're doing in life, look at what 20% that makes you the most money and then hire someone to do the other 80%. So I'm going to twist that around to that job question or whatever and say if you can find somebody like Brian or like the thousands of other guys that are out there doing what you want to do, do their 80% that they don't want to do that's not making the money. Let them do their 20%. And you will make them way more money because you're taking that load off of them. So if you can find a guy like Brian and do that 80%, like the marketing like you said.

Yeah, Brandon, that's gold right there what you just said. That was. Yeah, it was awesome. That's it. Thanks. I'm a wise guy. Wow, man. You eat your spinach this morning? What's going on here, buddy? Yeah, yeah, yeah. All right. What are your minimum cash flow requirements for buying multifamily and why? Do you have minimum cash flow requirements? I do. So a minimum for me is at least 5K a month and not including the acquisition fee. So I want to make sure my investors will, investors need to get paid first. We have a fiduciary responsibility. But from where I see my business going, I want to scale in the next 10 years. to control $250 million, and I want $100K of passive income coming on a monthly basis. And it's a very strategic, you know, I could go out and tomorrow and probably buy a deal, but it doesn't fit. You know, the deals right now is very competitive. There's a lot of, you know, there are a lot of assets that are trading at ridiculous pricing.

So we really need to be careful, understand our numbers. But so, yeah, I mean, you know, 5K a month on a deal is where I need to be on a minimum basis. Gotcha. And by the way, you are helping tens of thousands of investors get better at this is not going to help this competitiveness. So, yeah. Just so you know. So I better stop while I'm ahead. Oh, sorry, I'm not going to answer that question, Brandon.

Yeah, yeah, yeah, yeah. All right. Next question. Let's see. I think we kind of cover that one. I'll say it anyway. When looking for a multifamily property, what do you look for? So it comes back to, you know, once I understand I've got a pool of investors.

are looking for the deal, and then I go out shopping, basically, for them. So again, I'm a value-ad guy. So I got to be buying a property, and I'll use my 209-unit deal as an example. I bought that through a direct mail, and direct mail didn't happen just on one-letter campaign. I think that's where people get a little bit frustrated. They do one result. They get a zero response rate, and they say, this stinks. I'm done. In my model, it's a very consistent approach, three, five, seven-step letters to that, you know, owner. I'm very targeting on what type of property I'm going after. So for me, I'm looking for something where I can fix up, increase the rents, decrease the expenses. I bought that $209-year deal for $6 million on the day of purchase.

It appraised at $7.4 million. And I've been able, since ownership, I bought that a year ago. So I've been able to increase rents $100 per unit. I've spent my CAPEX budget is $750,000. I've spent $500,000 so far for doing exteriors, you know, painting, interior upgrades, such as, you know, switching out the lighting, the carpet, just adding more of that little curb appeal to force value because we haven't really covered how multifamily is valued, but it's all on the net operating income or the NOI. So we want to be, you know, drastically pushing that NOI. So that's going to help our valuation

when we either sell or refinance. And since you open the door, yeah, let's keep the slow burn going really quickly. What is, what is NOI? How does somebody figure that out? Yeah, so NOI is basically take your gross collected rents and subtract out all your operating expenses. What's not included in NOI is your debt service, what you have to pay your bank, your mortgage, the interest. So that gets you down to NOI. And multifamily properties are based from the value basis. It's not based on sales comps.

It's based on cap rates. And those cap rates are at the local level. So a cap rate here in Pennsylvania where I'm at for a C-class building in a C-class area might be, you know, a five-year. five, six, six and a half cap. I go to Texas and that same asset might be an eight cap or, you know, in a different market. Texas is pretty competitive too, actually. But so each, you know, market is driven by that local level cap rate. And that's what we, that's what determines valuation. Right on, right on. All right. So my last question I'm not going to read because I know you're not actually going to answer it, not because you're a bad guy, but because I know how you answer the questions you want to answer and don't want to answer. It has nothing, yeah, you've done it. So yeah, yeah. I'm not going to deal with it.

So I'll just ask you a quick question. Hypothetically, should I be looking for deals that are on market or off market? Has not been asked. I'm sure it's been asked 100 times on the forms, but that's the final fire round question. Yeah. So is any market really off market? You know, broker may tell you that it's off market. I can tell you for me, my deal in Dallas was off market because I sent a letter directly to the seller.

There's a lot of work to actually get letters to the seller. but that's a different, you know, that's a different topic right now. But so I bought deals that are on market and off market. And I think it all comes down to what do you want to pay for it? Because a broker, a seller is going to tell you, hey, my deal's worth $10 million. And if the numbers only check out at $8 million, that's your offer. Or your strike price should actually be $7 million and then you work up to that $8 million. So I think it really comes back to take the motion out of this.

And if the deal is on market or off market, as long as it fits the investment parameters that you and your investors need to hit, and you can make the thing work, and you have a strategy of once you buy the property, and how are you going to execute the game plan, and then how are you going to execute, you know, getting paid at the end of the day? Because that's what you and your investors are all striving for, either that sale or refinance and, you know, cash flows along the way. So, you know, I'm open to any deal as long as it fits in my investment criteria. That's great. Perfect. Fantastic. All right. Moving on to the world famous.

We ask these questions to every guest, and so we're going to throw them at you right now. Number one, what is your favorite real estate-related book? Can I name more than one, or is it my limited one? Go for it. I'll allow it this time. Okay. I think one, you know, again, I focus on markets across the country, and Dave Lindahl has a book called Emerging Real Estate Markets. And since I also raise money through a syndication, there's a guy named Gene Trowbridge that has a book. it's a whole new business.

And how I raise some of my money, about 30% of my money, comes through self-directed IRAs. So there's a guy, he's not as well known as some of these other ones. Joe Luby has a book. It's Keep It Advanced Tech Strategies for IRAs. So how investors that want to use IRAs to invest in real estate, you know, how you can participate in these types of deals. Fantastic. Yeah.

All right. Cool. Favorite business book? Workbooks. Yeah, I got a couple of those as well. You know, as someone that, you know, is just starting your own business, there's a lot of moving targets. And for me, I need to really focus on getting things done by David Allen was a benefit for myself. The E-Mith revisited by Michael Gerber.

They think can grow rich. I think any entrepreneur or business owner should consider reading Napoleon Hills book. I'm a big, diehard Tony Robbins guy. So when I put this plan back together, and I flew to Fiji, I was with Tony Robbins at his business mastery course. Tony's got a great program throughout, you know, if it's just not business, it's got some other programs. So he's got a business mastery course. I'm a big marketing guy, so Dan Kennedy's got a book because I'm targeting that affluent,

you know, investors that can invest 100K. He's got a book called No BS Marketing to the Fluent. And I'm still bad at this, but there's a lady, Julie Morgan Stern. She's got a book, never check email in the morning because, you know, when you wake up in the morning, there's things that you should be doing, getting those top three priority things done. email can distract you. I love it. I love it. I just added like five books to my list on Amazon. All right, cool. Josh. What about hobbies? What do you do for fun? You got two little girls? What do you guys like to do? Yeah, we like to travel. Actually, next week, we're heading to Arizona.

Nice. To do some family time at the end of August. We're heading to the outer banks. We enjoy our time traveling. And the type of business I'm in, I basically, because my properties across the country, I can work basically remotely or virtually. I like to golf, even though I'm not as good as I like to be, but I do enjoy getting out, swinging, and working out and just enjoying this business. To me, I think when I was a CPA and that grind, that was work to me. Now I'm in my passion state. So this is fun.

I love putting deals together, talking with people. These conversations we're having. I get, you know, that thrill. So that's kind of my, I guess, kind of hobby. because I love the business. Outstanding. Yeah, I love that. Cool.

All right, my final question of the day, what do you believe sets apart successful real estate investors from those who give up, fail, or never get started? I think it's a simple answer of the why, you know, understanding what you want in your life, what you want to happen, how much money you need to make, and taking action towards those. And those actions, you know, if, like I said,

I need a minimum of 5K a month. Well, some people are like, wow, that's a lot. or that maybe that's not enough. But anyway, what would be three action steps, you know, to get towards that goal? And then maybe they're the baby steps. I mean, think of our Social Security number. It's three parts. Think of our name, first, middle, last name.

It's three parts. Chunk this thing down into small parts. And then each day, each week, each month, take actionable steps to that big goal. And then, you know, at the end of the day, we can all read as many books as we want. But as I said before, you've got to get in the cage. You've got to take swings. You've got to take risk. Surround yourself with the people that you want to be,

that's doing those things that you're doing. Just surround yourself and getting that same circle of influence as them. Brian, you and I should go golfing someday. I need to surround myself with... I want to bring a video camera to that. I'm such a terrible golf. I can't wait to see it. I can't wait to see it.

All, Brian, before we let you go, is there... Where can people find you? Obviously, you're on bigger pockets. You have a website as, you know... Yeah. You know, share away. Sure thing. So my website is Adams, A.D.A.MS Investor Group.com. And, you know, this community that you guys have formed, you know, I put this thread out. And there's some really good nuggis, on my opinion, you know, on the thread about me quitting my CPA. I forget how it's worded, but go to the multifamily forum. And I tried to address as many questions, if not all the questions that people have, you know, asked. So I want to, you know, give back as much as much as I can because,

This pathway was not easy, but through this, I've learned so much. And if I can help some others, you know, get that massive action, get those goals, financial goals, you know, go away. Do you want me to give my personal email or phone number? That would be a bad idea. Okay. All right. Only because you'll get inundated. Okay.

Thank you for that. Then I will hold it right there. Cool. Cool. And I'll also link to, in the show notes, we'll link to that thread of yours in the forum. So people can check that out at BiggerPockets.com slash show 135. Brian, thanks so much for coming on, man. We really appreciate it.

And thanks for being part of our world. Thank you so much. Appreciate the opportunity. All right, thank you, Brian. Thanks. Take care. All right, guys, that was Brian Adams. Big, big thanks to Brian for sharing just everything.

That was outstanding, man. I mean, I think newbies and, you know, others who've been in the game a little bit are going to just be blown away that they can probably do this stuff too. Yeah. I love his technique. of this idea of, you know, having a plan, basically lining up the dominoes as the one thing talks about. And he's just knocking that out, like, because it's his plan. You know, like, he didn't get distracted by this stuff. He's very, he's very single-minded and straightforward in what

he's doing. And I just love that. So, yeah, I mean, in the fire round, we were, we were asking him questions from, from people. And he couldn't answer them, not because he didn't want to, but because, you know, he doesn't get distracted. He does what he does. He's focused and he's on it. And I think that's a great way to go ahead, you know, the one thing, right? So to go ahead and build out your business. So that's awesome. That's awesome. Well, great. Fantastic show. Yeah, that was a lot of fun. And I'm excited to go by a few, you know, multi-hundred unit buildings. Yeah, me too. Me too. Hey, you know, we've never really done before in the show. And we should, I'm going to ask you first say this. If you guys are listening for the interview, you can go at this point. You're,

you know, we're done with the show. We're done with the show. But I want to ask you a question, Josh. I heard this on another podcast recently. What movies have been watching lately? We're just going to take this away from real estate. It gets fun here for a minute. What movies have you been enjoying lately? What have I been enjoying lately? Wow.

And or TV shows? Yeah, that TV show is probably a better idea. You know, and there's nothing on TV during the summer. Absolutely nothing. We just caught Ricky Blue yesterday, which is pretty, you know, it's one of these shows that we've liked for a long time. I, this summer loved Silicon Valley. I haven't watched it. Oh, you got to see it, man, because it's us.

It is literally this show about these just nerdy guys who have built this outstanding company. But it's, you know what? I think this summer, all the shows have this kind of painful attribute. It's like they have these lead characters that you really like and you really want to see succeed, yet they have these weird quirks and they keep screwing things up. And so it's kind of painful. and you're cheering, it's like the last man on Earth, which was another show that we watched

end of the fall, end of the spring. I don't know. That's kind of what I've been watching. What about you? I just, I have like 30 minutes left of Daredevil on Netflix. Is that with, that's not Ben Affleck. No, this is the TV show Daredevil that Netflix released. So it was rated the highest show on all of Netflix.

It was like, it beat out House of Cards and ratings. Is it good? I expected it to blow my mind. No, I don't think it's very good at all. I mean, it's fine. It's fine, right? It's an okay show. There goes Netflix as a sponsor.

I know. No, I mean, I think it's fine. I think anybody who says it's better than a house of cards is insane. That's hard to be. It's hard. I mean, like, it's a fine show. It reminds me of something that you'd maybe see on like ABC family. Like, it's a drama or is it like a cartoon.

It's very cartoony action hero. You know, like it's a comic book show. Okay. Like, and they do a good job for a TV show. it's great. It reminds me of a movie. But like, I don't know. There's so many like cheesy things. Maybe I just, because I'm not into the comic book thing.

I don't know. But it's fine. It's a good show. But I just personally, I'm like, this is nowhere near what I expected it to be. Yeah. Yeah, well, you know, you can't win them all. Whatever. No, no.

Yeah. But otherwise, I don't know. I'm not, you know, we're not doing too much of that at night. We've been playing some backgammon, you know, getting a little gaming happening, which is, which is fun. Do you play backgammon? I don't even know what backgammon. that you get the board when you get like a chess set, usually they flip it over and like, there's a backgammon board.

When I was a kid, I got that. Yes, that's what it is. It's one of those prizes that every kid doesn't want to get. Yeah, I guess. Yeah, I don't, I never played it. It's fun. It's a gambling game. Actually, there's like a dice.

Teaching kids to gamble. Good job. There you go. There you go. Come on. What kids did not gamble with their grandparents growing up? You played cards. You played war for a quarter.

Yeah. That's a terrible game, by the way. War? The never ending. Yeah, you're flipping cards. ever. Yeah, we played a lot of that. And then I shifted to Egyptian rat race. Ever played that game? I have not heard of that one. Best card game of all time. You and I, like, the BP group should play it sometime when I'm in Denver next. Like, it's absurdly fun. Nice. Yeah. Outstanding. Awesome, man. Well, cool. I'm excited for you to leave. I mean, I wish you luck when you go on your journey to, where are you going, Disneyland?

You're going to the Florida one, the California one, yeah. And I'm hoping to have dinner at the Pirates of the Caribbean ride. That is my ultimate goal for this trip. That's the only thing I really care about this trip is dinner. Pirates of the Caribbean. Nice. I will tell you that when we have gone over the past couple years, my girls are a little bit afraid of the, there's a big drop. I'm going to blow it for everybody who's never been on that ride, but there's a big drop in that ride. And my little kids did not like the big drop. Let's just put it that way. I'm sorry. I'm sorry, you know. I have lots of Disney stories, but I can't share them with the world. There are some fascinating Dorkan adventure Disney stories. I look forward to hearing them off air.

Yes, yes. All right, guys. Let's get out of here. Well, thanks for listening. Show 135 of the Bigger Pockets podcast. Check it out. Well, you've already checked it out if you're in us now. So get out of here.

Follow us on Facebook. Jump on Bigger Pockets. You experience guys, jump in help the newbies and everybody get in there and make it happen. And then get out there and actually make it happen in the real world. So thanks for listening. I'm Josh Dorkin. Signing off.

You're listening. to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. Have I told you that I...

That his song. Brian Adams? Yeah. Yeah. Okay. Yeah. All right. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform.

Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K, copywriting is by Calicoke content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.w.w.w.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk.

So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. Bigger Pocket's LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.