BiggerPockets Real Estate Podcast - 182: 674 Multifamily Units in Three Years with Jake & Gino

Episode Date: July 7, 2016

Whether you own a single property or 1,000 units, systematizing your business is the key to growth. That’s why we’re excited to introduce you to Jake Stenziano and Gino Barbaro, a real estate partnership that’s scaled to 674 units in just the past three years. In this explosive interview, Jake and Gino share their story of building a sizable portfolio using a variety of creative methods. You’ll learn about the “hard lumps” they took on their first deal, the mindset changes they needed to take to transform their business, how they financed a 200+ unit apartment for no cash down, and a lot more. This incredible show will not only change your business — it might just change the way you look at life. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 182. So we've got 30 million in real estate that you talked about. Yeah, 674 units. We got some little areas that we're going to try and build. 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 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 Jorken. Host to the Bigger Pockets podcast here with my co-host, Mr. Brandon Turner. Hello, Brandon. Hello, Josh. In honor of this week's events and the Brexit, we're going to have a really bad interview with a horrible English accents. I'm not of you to try anymore.

I'll butcher it. Yeah, I already did. Hey, man. It's all right. How you doing? I'm doing all right. doing all right. We're still here after.

We are. The world didn't explode. I mean, obviously everybody's a whole lot poorer, except those people who had their money in real estate. Exactly. Yeah, did you see interest rates have dropped pretty dramatically. A buddy of mine just got a 30-year fixed at 3.1%. Crazy.

Crazy. That's awesome. Anyway, so we're like the only people excited about the Brexit thing, I think, except for the old guys. I mean, look, obviously we feel terrible that people are suffering as a result of the decisions made by folks. Maybe it'll be good. I honestly don't know.

Some people think it'll be great. You never know. We're not going to get into the politics and the debate over it. But the markets definitely have been suffering a little bit. Well, it's volatility, right? I mean, at the end of the day, people are nervous, and nobody knows what the future is going to bring. And so that kind of scares people and rattles the markets.

And here we are. But again, which is why we talk about real estate. You know, obviously, if people lose jobs and things like that, you know, real estate is going to suffer in kind with the market. But real estate, obviously, your rent isn't going to fluctuate 15, 20%, like your currency or like your money in the S&P. I just wrote an article on Forbes this morning about how everyone was convinced that the Federal Reserve is going to raise interest rates here in the next month or two.

They're having a bunch of medians. Anyway, now they're guaranteed, or not guaranteeing, but people, pundits are saying there's no possible chance they're going to. So this could be another good year for us to lock in those low rates and jump in the real estate. So what happens. Cool. Well, we got a cool show today, huh? We do it. Super high energy, super fun.

Two guests that are just crushing it. 6774 units in the past three years. Insane. Big multifamily. They're not buying single family houses. 675. But it was less than a dozen deals here. And we talk a lot about chainsaws and lumber sexuals and all sorts of good stuff like that.

Yeah, interesting stuff. Very good stuff. But before we get to it. Before we do, why don't we go to today's quick tip? All right, today's quick tip is you should use. the Bigger Pockets Marketplace. The Bigger Pockets Marketplace is where you can go to buy or sell deals if you've got them or maybe you're looking for a job in the real estate space or maybe you're looking for an assistant or somebody to work in your business. You can advertise your stuff there.

So if you need anything at all in your business or if you have anything that you want to sell or trade or whatever, BiggerPockets.com slash Marketplace. Check it out. Awesome. Particularly deals and opportunities. Those definitely get a lot of visibility. So get out there and post to the marketplace today. There you go. For decades, real estate has been a quarter of. cornerstone of the world's largest portfolios. But it's also historically been sort of complex, time-consuming, and expensive. But imagine if real estate investing was suddenly easy, all the benefits of owning real, tangible assets without the complexity and expense. That's the power of the Fundrise

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helping thousands invest smarter. If you want to do the same, visit biggerpockets.com slash retirement to learn more. Guys, if you're an active listener, you know I ask this all the time. If you have not yet done so, please get out there. Spread the word about the Bigger Pockets podcast.

Take our show notes page and share it on Facebook, share it on LinkedIn, share it on Twitter. And please leave us a rating and review. Those things really, really, really help us. They help new folks who are trying to figure out which podcast to listen to. And of course, we want them listening to the Bigger Pockets podcast.

Help us get to the top 100 of all podcasts by doing that and by spreading the word. That is our goal for this year. We want to be in the top 100. By the way, there are 250,000 podcasts out there now I've heard. And we are right about top 150 of all shows, which is crazy. That is pretty insane. I want to jump in with a quick favor to ask our audience. So Josh doesn't know I'm going to say this.

So today the day this the show comes out is actually my anniversary. So I am, is this nine years? Wow. here's crazy. So here's what I want to do for an anniversary gift. No, listen, anniversary gift from my wife, I need everyone's help. If you've read the book on managing rental properties, which my wife co-wrote with me, she takes a lot of pride in this book because she put a lot of work into it.

She wrote most of it. Leave a review on Amazon. I want to bombard her with good reviews if you read it. And wish you a happy anniversary. Don't do that. You probably could. Don't do that. Yeah, leave a review in Amazon for the book on managing rental properties if you've read it.

All right. All right. Let's get to this thing. Jake and Gino Gino Barbaro and Jake Stenziano I think I didn't butcher it too bad are real estate investors

both from New York area they've got a really really fascinating story it's great to hear how these guys came together found each other and have built this really thriving business. It's pretty inspiring exceptionally high energy and there's just a whole lot of great information in here for you so listen up

and let's bring them on All right Jake and Gino Welcome to the show, guys. Nice to have you. Josh, how you doing? How's it going? Are you doing? Well, realistically, we just, before we got on, we got a call from one of our property managers. Had a flash flood last night. This big pine tree fall across one of the staircases outside.

That's exciting. Not really, because she said, well, you know, everyone had this problem and they want, you know, $700 to $1,000 to get, you know, rid of this thing. And so Gina always picks up because I got the, I'm, my mentality. I'm going to do this. I'm going to do that. I'm going to do everything. And I'm like, dude, it's not a $700 to a thousand dollar job. So we're getting the chainsaw after this. We're going out and cutting the damn thing up. And we're going to haul some of it off. And he's like, and he's like, what are you going to save $100? And I'm like, yeah. I'm here for lunch. I'm

I don't want it there to chainsaw lugging trees. It just, it just, it just, it just pisses me off because it's too much. So we'll see where it goes. We'll send you a picture of the tree for it. It's hard. It's hard to justify, right? You're like, my God, this is such a I can do this money. Yeah, but then you stop and you're like, wait a second, that's like an 80-foot pine tree. I'm going to have to make like 17 cuts. You're going to underestimate the length of time it takes to make each cut. You're going to ruin your good shirt doing it.

And at the end of there, you can go home pissed off the time, I wish I spent $1,000. I'm going flannel if I'm going out there because I want to look the part. Brandon will send you his wardrobe. Well, maybe I can get some of that beard going. You could. You got to get the lumber sexual look on, you know? Lumber sexual? Lumber sexual, yeah.

It's all the rage. That's the anti-sexual. That's a thing, lumber sexual, apparently. I explained to last night what metrosexual was, and he said he didn't get it. I said, dude, it's guys that like nice clothes, pretty much, right? Is that? They prune and primp up a little bit, yeah. See, Josh leans a little more metrosexual, I lead a little more lumber sexual, right?

And when you guys come on to each other, what does that make? I don't know. All right, we're getting back to real estate here. Why don't we start at the beginning of your stories? Let's go way back before the pine tree, before multifamily. Well, we were talking a minute ago. Let's take it to Western New York. Okay.

Western New York. Yeah, we started before the show. We asked where you guys are from. You realize he's telling you how to take the show. I know he is. He's trying to take dominance and control of the interview here. He knows what he's doing. That is no dominant.

I want to take it to Western New York and talk Buffalo Billy, man. It's okay. You're talking like, you know, that's upstate. That's not like real new. When you see these, these like info. graphics, go around Facebook. They say, people say them from New York and it shows picture of the city. And then it shows a picture like the Adirondacks. So that's what we're

talking about. Yeah. So that's where I grew up. It was rural. Yeah. Like all, it was the jobs where they had the central school because all the small towns went to the central school. So people were teachers. I was Wayland, New York. They had a factory called Gunlocks. So people worked there. And my family, there's a lot of cops. So those are my options, right? And on top of it, I was a really bad student. So I remember taking these aptitude tests and they basically said to me and my dad, look, this kid's not going to college. Squeaked into Jucco school, then ended up transferring to a four-year. I got a phys ed degree.

Realized that it was a glorified babysitter. I said, this ain't for me. I hate this, right? Senior year, I was working summer job at UPS, 2 a.m. to 6 a.m. in the morning. Nice. No, that was awful. It was terrible. I found out real early what I didn't like to do.

This is the moral of story, okay? Had a relationship, this girl got me a job at Radio Shack. I'm like, woo-hoo, it's great. This is like a life-changing moment for me. This is stupid, but Radio Shack literally changed my life. They're out of business now, aren't they? Yeah, but Jake's in business. They're doing real well because of Radio Shack.

Actually, I don't know if they're out of business. No, there's a few in real areas because I follow. And we were there yesterday. We got a splitter for this. But anyways, nice. 100% commissioned sales job. Within a month, I was number one sales rep for the Rochester district. Road that out until the end of my senior year,

ended up getting a B-to-B sales job, rolled that into a farmer career. I was doing pharmaceutical sales. And this leads into this guy right here. Best restaurant in Westchester, Italian food he owned. So I did all my catering through Gino's. So I'm, you know, I'm starting, I'm getting, like, at the time, I thought I hit the lot of, first of all, because I'm 25. Didn't think I was going to college. Now I got a company car making over 100K a year, getting $30,000 bonuses. And I'm thinking, what is going on? And, you know, just it was a bunch of young guys. We're having a blast on my team. And then I started realize what taxes were. And I realized I'm getting smacked 6% state income in New York. His property taxes in New York are $25,000, right?

Just stupid. New York's insane. Stupid. So I said my would-be-sumby wife, we got to get out of here. So I said, I'm looking for warmer weather. I don't want state income taxes. And I want lower property taxes. I did a little search.

I found Florida, Tennessee, Texas were the best fits for us. She said, I'm not going all the way to Texas because I want to be able to get home to see my family close. And the same thing kind of ruled out. Florida. I was able to take a lateral transfer to Tennessee. And, you know, the last day before I left, I was having lunch with this guy. He's been investing in real estate for 15 years. And I said, look, I want to start getting into this because the pharmaceutical company had a layoff every year. And I said, eventually they're going to call my number and I'm going to be left, you know,

thinking, what the heck am I going to do with myself? So we hook up. We start looking at deals. He's basically mentoring me as we're going. We spent two years looking for multifamily deals in Knoxville area. and basically people are telling us we're nuts. Creative financing doesn't work. Owner financing doesn't work. So we finally gave up. I took my seed money. I saved about $100,000 bucks,

went and bought this really awesome house, $100,000 for down payment goes a long way in Knoxville. And so basically we're out of the game, right? And I keep looking just for the heck of it. Find this little mom and pop. That's pretty much what we buy. We buy mom and pop apartments, pretty much value add apartments.

We're able to get in 10% owner financing, and then from there it was pretty much off the races, and we've been knocking it out ever since then. Hey, quick question. Sure. Does Gino talk? Gino doesn't talk and we start talking Buffalo Bills when we kick it off. Gino, what's going on? Tell him about the family. This guy's got six kids.

30 seconds. I cut to the chase. You've got six kids, you can't fool around. You know, you get to the point. Six kids at a restaurant for 20 years. Loved it. 2008, recession came. Sucked, right? Business went down. I'm with my brother. And let me tell you something, guys. Real estate's hard business. Restaurant business is a lot harder. You've got to be there all the time.

I had a family, my mom and brother, but it's just not fulfilling. Six needs, human needs. Number five and number six is growth and contribution. I wasn't growing anymore. I was just stuck in a rut. That's what a lot of people do. That's why they look to real estate. I just felt like I was dying, to be honest with you.

And I wanted to contribute. I was still contributing as far as, you know, giving money and going to charity and doing a lot of that stuff. I just didn't feel like I was contributing to others. So I hooked up with this guy and I just got the juice. And investing in New York stinks. But once I saw tenant sales, I was like, wow, this is awesome. So fast forward, so we hooked up. Okay, cool, cool, cool.

So let's take it back real quick. So when you guys met, Gino, you had been investing for 15 years. Is that right? Yep. I was. So what had you been investing in over those 15 years? Like what kind of deals had you done? How many deals had you done?

It's funny. I call it investing now, but it really wasn't investing. It was more like, I would say gambling because I had a three family. The restaurant we had was a mixed use building, which my mom was, she owned it. So I was basically renting from her, but we have three apartments upstairs. I had a commercial property. But at the time, it was hodgepodge. I had no strategy, had no niche.

I was just out there throwing darts and whatever looked good I was buying. So I wouldn't call it really investing. I had a couple little properties. Well, some people would call that investing. A lot of people would kill $3 million in investments. You didn't have a strategy. That's right. You own property, which is far beyond what a lot of people would love to have.

But you just feel like you just weren't there, right? You didn't actually. Josh, it's like when somebody puts. money in a mutual fund. Are they really investing? It is investing, but it's not. You have no control. You're letting somebody else do something for you. You don't know what the heck they're buying. And that's how I felt. I felt like I wasn't in control of what I was doing. And my returns weren't as good as they should have been because I didn't know what I was doing. All right. So you guys, you guys know, you guys, you know, looking at this Tennessee situation. And what was the

discussion? Like you guys are talking about multifamilies. Why multifamily? And at the end of the day, why did you guys really come together? I mean, you guys just saw each other as complimentary, or you guys both kind of had the itch? What was it? Well, I was able to provide basically being in an emerging market with lower price per unit values than what Gina was seen. And we had that relationship trust to each other.

So it was basically boots on the ground at that point. I wanted to build wealth. I was working 40 hours a week for the pharmaceutical company. I'm like, I'm bored. I need something more to do. I just am a high energy guy. That's pretty much what I bring to the table. just a go-getter, I make it happen.

So we were just disgusting. I had a doctor that was basically really big in real estate that was friends with when I was in New York, and he was saying, look, go buy a duplex. He's like, that's what I did. I lived in half of it. I rented out the other half, and I just kept buying real estate for the next, you know, 20, 30 years. I was like, that's great. I was sharing that with Gino.

I never took it. I should have. It would have been great. You know, we'd kick it off. But so we just started looking. You know, we were evaluating deals. And I knew that multifamily seemed to be the place to be simply because people need a place to live.

It's maybe a cliche thing to say, but it's true, right? I joke around, I say, you can't live in the internet, because everything else you can basically buy on Amazon. If I was ever to look at maybe some kind of commercial, I'd look at maybe something that had barbershop restaurant, stuff people have to actually go and use. I don't want some kind of retail, like, you know, Circuit City's trying to make a comeback right now, right? And they're posting on Amazon. So who knows what they end up doing? But I just, I don't want to be involved in that type of, I want something a little safer that I'm not gambling so much with. Josh, this was important.

It was important was we were complimentary. We both wanted the same thing. Partnerships have to be complementary. He's a guy that says, do as he does. That's what he does. That's what I do. And we both wanted to buy. We didn't want to fix and flip. We didn't want a master lease. We didn't want to, you know, we wanted to buy and hold and we wanted apartments. And that's what happened. We both got together. And that's the most important thing about a partnership is to have complementary goals. And our skill sets are a little bit different. We do things a little differently, but we both want to achieve the same thing, basically. And what are those skill sets that each of you guys brings? Like, what does Gina do? What does Jake do? I first initially started off. I had already been in coaching, so I already had that, you know, that skill set where I knew how to evaluate a deal. I knew what to look for. When I started looking at $30,000 per unit cost, $550 a month in rent, I said that's a whole run. Because up in New York at the time, it was $100,000, maybe $700 or $800 a month in rent.

So I knew right away the numbers worked. I saw the taxes. So that was my skill set. Being able to just to network with people, talk to people, talk to brokers, learn how to, you know, create those relationships. That's what I knew. I knew the business. And this guy, he was awesome. You know, go to the place, the first place we took over, he'll tell you the story.

Knock on doors, you know, collect rent and that kind of stuff. He didn't know what he was doing. But when you're a W-2 earner and people start giving you cash, it's just a revolutionary. You start lighting up and things just start changing. And that's the way he worked. It all goes back to Radio Shack. And I think everybody, I'm telling you, everyone should have some kind of customer service, be a waiter, have some type of sales job for the first job because you learn how to interact with the public.

And that's nothing, there's nothing more important that. we got 10% owner financing on our first deal. We had a beautiful business plan printed out what the underwriting was, everything that we presented to the bank in order to get in that first deal. We didn't have any credibility, but we were prepared, more prepared than most people, I'm sure, that they walk into that bank. We showed them a business plan. We said, this is why it's going to work. And we were able to get 10% owner finance at a time where people were skittish. So let's talk about that first deal.

I mean, let's kind of dive into that. You guys joined together. You moved to Tennessee. You start looking for deals. What was the very first deal? How many units was it? How did you guys put it together? Tell us the story. Sure. It was 25 units. We like to call these types apartments mom and pop.

This group had apartments all throughout the, it was a submarket in Knoxville. And it was, I called the crack then because the mail lady did not. She didn't like delivery mail there. She really didn't. After we repositioned the property, she came up to me and said, thank you because I used to be afraid to deliver mail to this place. Now I can actually drive my vehicle through here and I don't feel scared. And so that kind of stuff is pretty cool. That's great. But, yeah, so when we got into this, it was this older mom and pop couple.

They had their books were all mashed together. They had all the apartments in one LLC that were throughout the town. So I'm like, you know, I don't know what they're doing on this place. I can't tell how much cash this thing is really producing. So my uncle's own multifamily in the past, just smaller stuff. He said, just go door knocking. I've never done that, so I didn't know what he was talking about. Yeah, he said, just go door to door with the lady knocking on the door, see if there's a live person in there and ask them what they're paying.

It's at least a start. So we're doing that, you know, knocking door to door. and their whole thing was, well, if we provide free electricity and cable for them, they're not going to leave, and they collected cash. So you can only imagine, like, some kind of the people that I was meeting doing this. This one guy comes to the door. This lady's in her 60s, right? She's such a nice old lady knocking on the door.

Hey, how much you're paying for it? He's got a hole, and for the folks on YouTube, in his boxers, about this big, okay? And it's just out there for the world. Oh, it's in France. I wasn't there. Yeah, yeah. And I said, we're good. We're good.

And we moved on to the next one. And this poor lady, she tried talking to him with a straight face. And I was just like, and they were just so burnout. The husband was sick. They needed to get rid of it. And this was the only deal that we looked at where the numbers actually worked. That was the one thing that separated this one for the other. But guys, there was a lot of problems with this problem.

A lot of problems. They were weekly renters. So I don't know if anybody's dealt with weekly renters. So weekly renters, you get a lot more money. But it's every two weeks, you're turning over an apartment. You're fixing the apartment. So does it worth it? We had bed bugs there because the furniture was there.

It's like a little motel. Calfax here in Denver. Yeah. No, there was a motel there. They called it the Shamrock Motel and the rest of them were duplexes and quads. Yeah. So there was a lot of value that. So what we ended up doing is we ended up getting rid of the cable, save the $7,000.

We ended up actually stabilizing. We had, you know, it took a while. It took about 18 month of period to get everything stabilized, get everybody out. We started doing applications. We started doing credit checks. We just actually put systems in place. We actually had a resident manager living on the property for us. So it took a while, but it was a great learning experience.

And thank God we got. It was listed for 750. It was on for a couple of years. We ended up getting it for $600,000. And we probably could have gotten off a little bit less, but it was our first deal. The terms we got in the bank financing were 20-year amort, which we could have gotten a 25 year. We got an interest rate about five and a half, which we could have probably gotten four and a quarter. And, you know, these are all things that we should have gotten better.

We got into a deal. And I was, my, I was juiced. I didn't have any money left. So I was able to borrow from my 401K, pulled out, you know, 35 or whatever was at the time. And that actually was able to get into the deal because of that. The people were really good, actually. They replaced a roof prior to closing. They painted it up.

They tried to fix it. I mean, stuff they should have been doing all along to help, you know, sell the property. But, yeah, they're really good. Guys, the moral of story is just get into your first deal. Get your first deal done. Get that momentum. The little snowball starts snowballing a little bit more. And then you have a credibility.

Then you have on your business plan, hey, I have a property. I can close. So that just gives you all the momentum and all the credibility in the world to get your next one. Really quickly. Tell us about so 750, you paid 600K. You said it took about 18 months to turn it around. What did that look like? What did that cost you?

What's the property worth? Do you still hold it? What do you guys do? What do you guys do? Got rents on that thing? So we're doing about 160, 165 a year on it, okay? And we've been able to- That's gross.

That's gross, yes. Correct. I wish that we were netting that. And I'd be sweet, but we're not. But we'll take it, though, right? So we're, you know, we're between $600 to $750 a door and rents on it. And we had septic problems with it. We ended up replacing all the roofs.

We painted the outside, painted the inside. We put a lot of ceramic tile in on the floors because a lot of them were just on slabs. We did a lot of this up front with just the cash flow is coming out of it every month. We see, you know, two to three thousand bucks a month in cash flow coming out of this. We put a lot of it back in. We're able to refy the property. And I think we pulled out, was it, $160,000. So we kept about, I think, 35 out from that.

We put all new steel roofs on, which we were doing for, you know, anywhere from $1,000 to $2,000 a roof. And so the place now, it's called courtyard cottages. It's a nice country setting. It's clean. People feel safe. And we've got really good renters. And like I said, we're cashed one about 3,000 a month on it. So we still hold it. We got it down. We got a 10-year term out of a 25-year AM and a 4-and-a-quarter rate that we got with the Refai. And it's with a community bank. So that's the important thing, guys. We bought it right. We were able to buy it at that $600,000 number. And, you know, with the emerging market, with the raising rents, with us be able to control

the expenses, the bank appraised it at a little over $800,000. And it only took about two and a half to three years to get that number. And that's the value of it. You buy it right. That's when you make your money. Because when you go to refite, you pull that money out, and it's all yours tax-free. Nice, cool. So do you recommend other people, I mean, like you mentioned really like a crack den, right?

You call it the crack den. Because, I mean, like, it's a junkie. Do you recommend people do that? Well, this is something that. Well, this is something that I didn't realize coming from New York, I didn't know about pills. You know, I've heard of people abusing pills, but there's a big pill epidemic in Tennessee. And I'm like, I don't know what this is. And I started seeing like, I saw syringes behind this one building.

I'm like, what is this? These people are not rowdy, but they're like, they're zombies. They're like hitting these pills up and they're zombie and out. So we had to, you know, eventually evicted most of the folks. I think there's one person left. I mean, there's two people left from the beginning that were still there. Because in the beginning, I was doing it, going back to the IMA mentality. I was going around door knock and saying, hey, the rent's do.

It was Friday afternoons, Saturday mornings, and Monday afternoons. And that was my routine until we started to scale up. And that's why we joke about this, I'm a thing, because in the beginning it was just, no, I grew up in rural town. It was like, you know, if something needs to be fixed, you fix it. And, you know, I was joking with Gino. We went to this place last night. It's called Lonesome Dove. One of these celebrity chefs on TV or whatever was there.

Tim Love. Tim Love. He came over what was talking to us. I don't know either. But, you know, Gino's a chef. And so they were talking about the food. And I'm like, well, tell me about your systems. Right.

I'm like, The chef, celebrity chef is so much business is. I'm like, dude, I want to know. So how many people come and do this? And five, well, five for this one and he's got out of ten places. So that's what we're really diving into. And that's where my focus is now is scaling everything up. You know, if I can put a system in place doing it.

So that's the main focus now. But here's a little put off, but it's funny. But Brandon, in the beginning, what you were saying is I think I'd like to start smaller because we did make mistakes on it. So there's smaller mistakes you can learn from it. I think you should manage your property in the beginning because you really learn how to manage your property. And you get your feet wet.

You're in the trenches. So then even if you don't do it when you scale up, you know how to tell somebody how to do it. You have that system built and you can transfer it over. So if we decide after our next deal, we don't want to manage our properties, we're trying to build a franchiseable model where we can say to a management company, this is what we want done. This is how it's supposed to be done. You know how to read reports. You have to be in the trenches for the first couple deals.

At least I think to learn, you know, from the very beginning how to do it. And then once you can scale up, you can scale up. And, you know, 25 units to us was big. But that's what was at the market at the time. I wanted to take my lumps. I wanted to learn the business from the ground up if we were going to do it. Yeah. Yeah, so you don't regret buying a junkie property and having a headache.

I love that, man. That's my baby. That allowed me to, you know, get out of corporate America and do my own thing. And, you know, now we're in the middle of day having a call with you, fine guys. Well, the reason I bring that up is because so many people, like, they have this fear of starting because they're afraid of those lumps and they're afraid of making a mistake. Oh, the lumps are good. I agree. I agree.

Well, Brand, you ever heard the quality of your life is, I guess, incumbent upon how uncomfortable you can get? The more uncomfortable you can get, the more uncomfortable you can get, the more quality you're going to have in your life. So if you're used to your comfortable thing, listen, I'm moving to Jacksonville, Florida next month. I've got six kids. I'm packing up. I'm moving the whole family down there. How uncomfortable is that? I'm going to have to put your back into school. I don't know. You've been driving the golf carts down. I think you like it.

I love it. I love the lifestyle. But the thing is you have to step out of your comfort zone. If you want to sit in your two-bedroom house and be happy, that's fine. There's nothing wrong with that. But we're all here to grow in life. We all want to leave a legacy. We want to leave it better. So that's what we're here for. So that's awesome. This is like when Harry, when Harry met Seller, when Jake met Gino, I love this.

It's a love fest, man. We're bringing the pain today. We're making it happen. Come on now. Hey, I want to slide back before we go forward. You guys obviously can finish each other's sentences. Like I said, it is like that. Look, you guys told us to be on one computer.

Like, he's outlawing now. You know, you do what you do. All right. How do people go out and find themselves their own Gino or their own Jake? How do they do that? I mean, you guys did it. Start for the pizza. So make sure you eat a lot.

Okay. No, I'm going to give you guys a plug. You go to bigger pockets. That's one of the first things. I mean, you meet a ton of people on there. Go out there and say to themselves, hey, listen, I'm in Jacksonville, Florida. Anybody out there, let's network. I mean, you go to real estate investment clubs.

I think RIA clubs, even though that I don't go, a lot of people like to start there because that's where a lot of investors get. Try to get networking with people that are, you know, the business that you want to get into. Go on to LoopNet. If you want to see anybody on Loopnet, any kind of brokers. go on and see who's listing properties. This parado's law, the 80-20. Most of the brokers have crappy deals.

You're going to have those 20% that have those 80%. So find out who the players are on your market. Go to any lawyer, try to get any accountant, try to get referrals. And if you're in business, like I was in business, I was lucky. The restaurant business is great because you meet a lot of people. So start networking with people. Start talking to people. Get that elevator pitch going.

What do you do? I'm an investor. Look, I like to buy properties, A-Caps, emerging markets. Tell them, you'd be surprised who you meet that way. Yeah. You've got to have the same goals because Gene always says if he wanted to do fix and flips and I wanted to do buy and hold, that's not going to work. Make sure your goals are aligned from the beginning. Make sure you have someone that has the same level of work ethic as you do.

It took us two years before we actually put, you know, pen to paper, sign an operating agreement. Okay. So we really got to know each other and see the work ethic before we said, okay, we knew each other for a little while. We're going to get into it. We're not getting into a deal together, right? Makes sense. All right. I want to go back to something you just mentioned there.

and that is you said elevator pitch. Can you talk about that for a minute? What do you mean by elevator pitch for those people who don't know what that term means? And how do you craft one? Basically, it's just a 30-second pitch. You want to get in front of somebody. And you're not really pitching them. You're just offering them an opportunity.

When you're asking somebody for something, you don't say, I want money. You say, I want to offer you an opportunity. Words are powerful. So basically, you just want to let somebody know what you do within an elevator ride, within 10, 20, 30 seconds. Listen, I'm an investor. I love investing in multifamily properties. I look for between 10 and 12 percent cash on cash returns.

you know, I just like to buy an emerging markets and where it makes sense. You know, what do you do? And that's all you need to do. And then all of a sudden, you give it to them and you let them ask the next question. You know, our problem is we like to talk. We don't listen. Once you've given your pitch, let it sink in and let them ask questions. Well, what is an emerging market? What's a cash on cash return? And you just give it to them. You let them know. And if they're not interested, great. You only spend 20 seconds. You move on. Yeah, I mean, right. I'm like, I think the elevator pitch is so important to have. And people don't ever, I guess, think of that. So somebody asked them, what do you do?

I don't know. I mean, I did this for years, right? I don't know. I invest in real estate. That's like it, right? Like, how many opportunities did I waste because I didn't have a defined elevator pitch, you know, prepared or at least like I didn't even know what to say? It was almost like I was embarrassed about real estate because I don't want people to think I'm, you know, I don't think I'm too good for everyone else. I'm just like, oh, I don't know. I buy some properties. And we've been conditioned. Tell us more about that, Brandon. I mean, is that, does this stem from. No, I don't. I did get picked down a little. I was a chubby little kid. I got my share picked on. Anyway, moving on. You got a bobblehead now. That's pretty cool.

I do have a bobblehead now. Look at that. Look at that. He's quite handsome on the bobblehead. Would that come from? I don't know. I don't know what you were doing a picture. That was Andrew Cushman sent those, right?

Yeah, I think it was Andrew. Yeah, good guy. I want to move from that first deal. You're obsessed with systems. You're interrupting restaurateurs when they should be talking about the quality of food and talking about the business. So what does that mean? For those people who are listening, like, hey, I went and I bought a property.

Great. You're like talking about systems. I don't understand. What does that mean? I don't understand what a system was until like three months ago. It's a little bit. It's not that bad, but it really didn't make sense to me when you say, like, what's a system? I had no idea.

It just didn't make sense. I couldn't get my head wrapped around it. I think number one, I'm going to plug this book because I love it. Traction. I don't know if you guys have picked it up, but everyone keeps talking about that book lately. Dude, it's for small business guys like us. It is awesome. Dude, I got it on Audible. I got it also. I'm going through it. And they talk about exactly what we do. There's like the property management company they keep referring to in there. So it's just I have my whole EOS model laid out. I have what our beliefs are. We have our rocks, like what the things that are holding us back, how we overcome those. You know, how we handle specific situations, how we answer the phone. You know, when the people are in the office, they're answering the phone, it's okay. The idea is to get them, to get the person to get the person to get. the door. What do you need? Yes, we have it. When can you come in? Right. And so it's creating

these systems for each little piece of it. A great example was something that changed my life. I was the Amma guy. So what I was doing, driving around to each property, picking up checks, taking them to the bank, working with the bookkeeper, or I was doing it myself in the beginning. Now we got a bookkeeper. She's put it in. We have check scanners. We use Yaptstone. For anyone out there that needs a good credit card payment system, yapstone.com, great for rentals. They actually have a whole rental portal if, you know, people want to use it. What's that the app? The Yap or app? It's YAPstone. So it's YAPStone.com. And it's, I think they're, they cut out a section just for rentals. And I think it's called rentpayment.com or something.

It's a payment provider. And it's great because I don't like getting my rent reduced because someone wants to pay for a credit card. So I don't want to pay that 3%. So what they do is that if someone wants the convenience of paying with a credit card, YAP Stone allows that person to pay that 3%. So we're not actually having our gross income reduced. simply because we want to provide a convenience. So it works well for me because I'm cheap. I think one of the, one of the most important books is the EMith book by Gerber. I think you read that book, it's not actionable like Gino, Gino Wickman, Gino. It's not,

it's actual content. You can actually do something. The EMuth is more of like why you should do it and you know, why there's a technician, why contractors aren't business with guys, they're technicians because they go out there, they've got a great craft,

but they don't apply a business mentality to it. That's what's wrong with real estate. A lot of investors, They think of it as like a fun or it's not really a business. You have to treat it as a business and look at the numbers. If the numbers don't work, you can't deal it. You can't do it. And that's why we've actually been able to grow.

We've, in a short period of time, we've accumulated over $30 million in real estate. And it's because we bought from people that don't have systems in place. And they run this mom and pop hodgepodge business where they're not doing background checks. It's a family inherited it. Whatever the case may be, they're focused on their other stuff. And the real estate is this investment, like a mutual fund. but they're not treating it like a business. So let's talk about the mom and pop thing a little bit more because this is something that I've

said for a few years now is that I think one of the greatest opportunities over the next 10 years that we're going to see in real estate is these mom and pop landlords that are all 50, 60, 70 years old right now getting ready to retire. And I think what you guys mentioned earlier slightly and I want to touch on a little more is this idea of maybe there's a, I believe there's a great opportunity for seller financing because of all these mom and pop landlords, maybe don't want to lose all their income. Maybe they don't want to throw it into the stock market because who knows where that's going. they might be open to that.

Can you guys speak to a little bit? What is that? We can speak to this all day. Yeah, let's hear it. Let's step back. First thing, multi-famies. Why multis? Sure.

First of all, millennials are going to rent. Second of all, the baby boomers, every seven seconds, a 60-year-old is in this country. So you know people are downsizing, right-sizing to 2008. The single families are homes are not like an equity investment like they were seven, eight years ago. I'm renting. I'm going to take off the year and I'm going to rent. So there's a big demand for rentals. And I just see that going forward.

Guys who are millennials are not going to want to stay in a name. neighborhood. They're going to want that be able to be a 1099 worker and be able to shift the one city to the next. So that ability to have a rental property is going to be huge. So I think let's look at that first. So the multis, there's a demand for them. Second thing is we love mom and pops because, you know, mom and pops don't run right. They don't have systems in place. They have, you know, they're usually motivated. That's the most important thing about real estate. You need a motivated seller. If you don't have someone who's motivated in a transaction, you're not going to make money. And who's a motivated seller, someone who's getting divorced, someone who's getting laid off, someone who was getting bankruptcy. Someone who's 70 years old to his point, like we bought a lot from. Yeah, someone who's

getting retired. You need that motivated seller. So if you don't have that in owner financing, you're not going to get it. You know, a property that's like non-conforming Fannie Mae that they're going to look at and go, well, how are we going to finance this deal? That's a home run there. And also, owner finance, you need a little equity. You can't go in there with no equity in this property and try to get owner financing. So, and the other thing is you need a broker who who knows how to do it. And you have to educate the seller. So the seller's got a lot of benefits in owner financing. They're going to defer capital gains and what Jake likes to call mailbox money. You're going to get money every month. And it's funny, we did a big deal. Guy had $11 million.

We did an $11 million owner financing deal, put no money in this deal. So the guy, what was he going to do with the money? He was actually going to take the money. Seven years old. There was a family, brothers and sisters. Yeah, and he's going to put the money in the bank at 0.3%, 0.4%, 0.5%. So what we ended up doing is, you know, he held an oath for 4.5%. He loves it because he's not getting the capital gains hit, and he's getting mailbox money every month. And if we default, he takes over the property. So if you're able to, you know, that opportunity and explain to them why it benefits them, I think it's a home run for everybody. I want to back up a little bit. We didn't owner finance the whole thing. We owner finance the down payment. So he put up 20, yeah, he put up 20 percent. The

banks contributed the rest. And we would have been able to get into this if we would not have done if we would not have done this. This was 281 units. I think it was what our fifth deal. Yeah. Okay, it was our fifth deal. So we had a track record. We've documented everything along the way, shown exactly how we've done it. We talked about how we focus on mom and pops because what we do when we go into these places, they all have the same problems. They're under rented. So we go in, we take the vacant units and we market rents. We go and we touch them up. We like to do the little goose neck, you know, faucets. We do a two-tone paint scheme. So the baseboards are white. We do like some vinyl if we have to. But then we're renting these things for six, 700 bucks when they were

before 450 to 500. Then on top of it, the second step is we go on and we implement rubs. I don't know if you guys have talked about rubs on the show, but it's ratio utility billing systems. Not in a while. Yeah, we're basically billing the people back for the water. It works well in our market. So we're probably getting $35 extra a door there. Once this has taken place, we're then raising the remaining rents to market. Okay. So that's basically our repositioning strategy when we go into it. It's a micro-repositioning. I know people like to throw that out there sometimes. So this worked on this. This was a family. I think it was four brothers and sisters. They inherited the property from their dad. They were getting into their 70s. The main shareholder brother

did not want to have his wife battling with the sisters when he passed on. So we're providing a solution. And we were able to pay a little. The numbers still worked great, but we probably paid a little more than we would have if we were putting 20% down on the property. But guys, the important thing is you have to add value. I mean, when you go and do a property like this, you just can't go in and start raising rents. I mean, the customer service sucked in this property. You know, people waited two months to get something fixed. We go in there.

And fortunately for us, you know, the first six months, we lost about 35 to 40% of the renters. So you're talking a huge hit. It was a big turnover because there were people who had to evict that weren't getting paid. You know, John was cutting the grass. He was getting paid $300 a month for rent. And Sue was living in an apartment 135. It was all this kind of mom and pop crap. So you have to deal with that.

But then when you go in there and you show these tenants, listen, I'm going to clean up, I'm going to give you a kick-ass property, I'm going to give you the customer service. You can raise those rents. And you know what? They're going to go on Google and tenants are notorious for one thing. They know exactly what they're supposed to be paying for a two-bedroom, one bath, and 37-805 and zip code. They just know that. So you know when you go to the market value, they have two options, either to go out and, you know, spend the money on a new apartment or stay where they are. And if you give them the service, they're not going to go.

That's just the bottom line. I got a value ad real quick day for the listeners, too. way to check market rents is rentometer.com. You have you guys talked about this. Okay, they have that little gauge on there. You can go on, plug in two bedroom and your zip code. It's going to give you a range of what you should be paying if you're on the high end or loaners. Or just call brokers.

Call brokers in the market or just Google. That's a dicey one. Yeah, but Google your property in your area. And within a mile or two mile, go on apartments. com, see whenever else is charging. You need to know exactly what the rent is. And you got to compare apples to Apple. So if your property doesn't have cool, you have to take that in consideration.

Yeah. I also like using Craigslist for that as well. You can kind of... There you go. So I've got a whole list of things here. So you guys talking about repositioning. You guys are talking about adding solutions for people. I mean, these are all the terms that are...

It's not just jargon, right? A lot of people say, oh, I'm going to be an investor, and I'm going to come in here, and, you know, I'm going to just haphazardly run my business. The first thing that I've noticed about you guys, and, you know, I don't know why it took so long to kind of realize it, but like anytime we see somebody on the show, anytime we interview somebody

or anytime we talk to successful people, one of the things that always comes up is they are very, very well read. These are folks who are reading business books, not just real estate books, but business books. How do I improve? How do I keep going? You know, the folks who aren't doing as well,

they're like, oh, figure it out, it's good, you know, I got this. They never get it, right? So I love the fact that you guys are as well read. And again, I think that's a trend that we tend to see across all successful real estate investors. So if you are somebody who's like, how do I become a successful investor? Start reading.

Listen to the show. Listen to all the book recommendations and start reading them. We recommend so many good books and our audience does. Get reading. It's going to make a huge dent in your business. The next thing, again, you guys talk about add value, finding solutions. That's exactly what you need to be talking about. Because a lot of investors come in and it's the what's in it for me

and how do I do it for me, they're the ones who never make it. It's the ones who say, hey, how do I service? How do I take care of? How do I add value for my clients, my tenants? Then you're going to build a business that can really scale. So I love all this stuff. Well, that's the problem with the restaurant business. I could only serve X amount of people.

Our business, we can serve 600. The more people you serve, the more value you can add, the more money you're going to make. That's just the bottom line in life. And it took me so long to figure that out. Or like, duh, once you figure it out, if you have 30 tenants, you can only service 30 tenants. If you have 3,000 tenants, you can service 3,000 tenants. That's important. And the other thing, with personal development, I became a certified professional coach. Why? Because I was pissed off. I didn't know what was wrong with me. And then when I became the

coach, I said, wow, this is freaking unbelievable. I mean, it just opens up your mind. And to your point, people are doing the same thing. It's considered insanity, right? I was doing the same thing for 35, 30. I said to myself, there's something wrong here. So once I became, you know, once I went to do some coaching with a real estate mentor, it really opened my mind up. And I know a lot of guys in bigger pockets are down on coaching and all that. But look at life coaching. If you're having problems in your life, you know, you can't talk to your wife all the time. You can't talk to your business partner.

You need that space where you can talk to somebody and really work out your problems, write down your goals. It just opens up a whole new dimension to my life. And that's how I met him. And that's how I shattered those limiting beliefs. He can talk about limiting beliefs all day. I want to talk about Chick-fil-A first of all. Because you were talking about customer...

You're making me hungry, dude. Listen, though, you were talking about customer service, right? And serving the tenants. And I don't know if you guys have been Chick-fil-Aves, big in the South. This is the most amazing business that I've ever been into. You go in and it's fast food. It's good fast food. It's quick. It's affordable. And they treat you like gold. I tell them our property managers all the time. And they all know about Chick-fil-A. I said, I want to be the Chick-fil-A of the rental business because, look, we have affordable rentals. I want

to treat these people like gold. I want to provide them with service. That is my goal every day to come in, work hard and get our business up to something like what they've done. I don't know if we'll ever get that far because I just, hands down, I just like bow down Chick-fil-A. But also, here's the thing, if you're looking for apartments and you're in the southeast, try to get close to a Chick-fil-A. Try to get close to a Kroger because that's where people are going. These big companies are doing the work for you, okay? Follow those companies.

And I want to go back even a second further because you sound about reading. You're getting me fired up, man. I love this stuff. Woo! I like fire. I call him Cliff and George Barbaro. This guy has read more books than anywhere I've ever met. So I'm like, we'll be talking to people and he'll throw a book out and he'll just start

like reciting lines from them. Put him and Brandon into a rain man book off. Yeah, man, that'd be sweet. They could do some kind of dance. It'd be great. Audible. I want to read, go audible. There's no excuse now days.

Get your car. Throw a 30-minute CD. I'm an old guy. Throw a CD in the car. Or just listen, right? I mean, there's no excuse. And just start filling your mind with positive stuff because there's so much crap out there. Get rid of the crap and put some...

Yeah, get rid of the news. The news is not doing anything for us. All these people talk about Brexit. What the hell is Brexit? Am I going to get on here and talk like I really know what the hell Brexit is? They don't know what the hell of Brexit is. Britain, the UK, these guys, look, these guys are voting. These kids don't know what the hell they're voting for, okay?

Like, no, anyways, I'm sorry. It's actually the old people who voted to Brexit, but you know. No, but the kid, no, the guy who does read the news and knows a lot of what's going. But the old people voted to Brexit and the kids wanted to stay, no? It's guys like Gino who are voting to get the hell out. The old dodging, you said. I don't want this. Oh, you killed.

And what are we right now? What is going on right now? I want to touch on what you just said, though, though, about the news, right? Like, people spend so much time. This is a big point of four-hour work week, Tim Ferriss's book. He talks about that. People spend hours and hours and hours and hours watching the news, reading the news, articles, whatever.

They just get consumed by it. I think the one thing, the book, the one thing talked about this as well. But like, the news is ridiculous. Especially local news. Local news is ridiculous. Hold on. Hold on, Gino. Tell us about the one thing.

Gary Keller. I mean, I love that book, don't you? Yeah. Hey, what's on page 26, Gino? I don't know. Yeah, 26. It's a moment. I think so.

It's a great. It's a great book. That's my favorite business book I've read. He wants me to read it. You should read. It's my favorite business book I've read ever. It's a good book. Well, Gary Kell's a big systems guy, right?

I mean, he's an amazing dude, right? I mean, what he did in that space to be able to systematize that, I mean, that's a dream. Jake doesn't know about that. I got to teach Jake about that one. I'll read it. He's amazing. Come on, yeah, he booms. Let's go.

Oh, by the way, I got a dish on Geno's menu. I like to plug that every once in a while. What's the restaurant? What's the dish? Jake's chicken? Jake's chicken. Oh, you still have the restaurant? My brother, my brother does.

My brother does. What's the name of the restaurant? Gino's Tretaria. Where is it? In May itpack, New York. Westchester County. Do you guys ship out food across the country? We got a trucker.

I wish it was good, bro. I would love to be there for you. He's got a good red sauce. Sounds for sauce. Next time there. For decades, real estate has been a cornerstone of the world's largest portfolios. But it's also historically been sort of complex, time-consuming, and expensive. But imagine if real estate investing was suddenly easy, all the benefits of owning real,

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maybe even some cash toward your next trip. Plus, you get to share your place with someone traveling to your area while you're off making memories somewhere else. Your home might be worth more than you think. Find out how much at Airbnb.com slash host. Yeah, we got, we got to slowly start moving on or quickly start moving on. Let's talk about real estate. Let's talk about real estate. All right. All right. That's why we're here. Okay, I want to talk about your overall picture of your business right now. So when did you guys, when did all this begin, like together? they're buying multifamilies. How long ago was that? And how many units are you up to now within the last that time? Yeah, we started, we started, like I said, our partnership basically looking in 2011,

got our first deal knocked out. Was it beginning of 2013? February 2013, we got the crack then. From the crack then we went to 36 units. From there, we went to 136 units. From there, we went back down to 16. Then we went up to the 281, the owner finance deal we were just talking about. And then we just knocked out a real sweet 156 unit property in Knoxville. That's the one with a tree fell just recently. And we're going to get the chainsaw in a little bit for that. So we've got 30 million in real estate that you talked about. Yeah, 674 units. We got some little areas that we're going to try and build where, you know, there's like one of the places had a fire that we bought. So there's like there's foundations. We're going to build up on that. So we'll probably be close 700 before,

you know, real close 700 before the years up. I love how you have 700 units and you're, you're going to go take a freaking chainsaw to cut down a tree. That's all talk to me flexing right here, bro. Like, what are you? I'm a doing. You got a dump. This is bad because we're going to take the Ranger over over and I got to worry about getting changed that well inside the back and it, but we'll be all right.

But John, sometimes that's setting the tone. You know what I mean? It's good for our employees to see that too. Yeah, I mean, like I had the restaurant business. That was a problem with me. I couldn't get out of the kitchen because I felt like I had to set the tone and I had to work harder than anybody else and I was just the owner and, you know, they take the queue for me.

So if I'm slacking off, I don't want my employees to say, hey, he's not doing the work. So it's a. Catch 22 kind of thing. It's really hard because I'd be there with them right now. I just got to jump on a plane for us. I ain't getting dirty. You're going, bro. We're doing it.

And it's a good point because, you know, with me with bigger pockets. That was my issue was like I was in the kitchen. I was cooking. I was always in the kitchen, always cooking because I had to be there. But guess what? When you're always in the kitchen, nobody's planning where the business is going to go. There's nobody making those decisions. There's nobody strategizing.

So you've got to actually get out of the kitchen, what you guys know. Get out of the kitchen. You can go in there once in a while. But you got to start and strategize. You've got to plan. You've got to think you can't get in there and be doing, you know, as long as it took me to read the four-hour work week. And everybody who's listened to our show knows that it took me like, you know, 56 episodes to go from start to finish on that thing. You got there.

But yeah, I mean, it's really important. Well, I knew before I read the book, it was important. But, you know, getting out of the kitchen is really key. And for anyone who's stuck in their business, you got to think about that. You grew. You grow as a person, right? So if you start in your business when you're small, so people don't want to grow. So if you're a level five person and you have a level three problem, you can handle it.

But if you're a level five person and you have a level eight problem, it's a big problem. But if you're level 10 person and you have a level eight, it's not even a problem. So you've got to grow. And what does that mean? It means start reading and start getting out of your comfort zone and start growing. Once you can grow, you start realizing that. And that's what you did? You realize it.

And what book are the level one through 10 people? That is T. Harbecker. You ever read Harbecker. Harve Eckery, he's awesome. Because he talks about financial intelligence. Because someone who's programmed to make a thousand bucks a month is going to make that. Trump is a billionaire. He's programmed for billions.

So, I mean, that was your financial blueprint. And for me, that opened my world because I couldn't think of 675 units three years ago because I wasn't big enough person. I think I could achieve that. But if you think big and you know you can do it, I know you can do it. I know you can do. I know anybody listen to this can do that. That's the problem because we're conditioned to think small.

If you say to yourself at the end of the week, all I want to do is pay the bills, unfortunately, guess what? You're just going to pay the bills. And that's what was happening to me with the restaurant. I had that at one place and you know what, I paid the bills. But then when I got met with this guy, this guy's running around. There's a snowball effect, though, that comes in because I was always like, I just got to get to $30,000 a month. I just got to make $30,000 a month.

But then what happens when you get into these big deals, guess what? The cost segregation kicks in, right? Oh, my goodness. $30,000 is real $30,000 because it's wiping my taxes out. Then we start refying these things. So now we're pulling out. On one deal, we pulled out $1,000,000 on a refi, and we rolled that into future properties. So it's crazy when you get in.

We're grinding in the beginning, not making a ton of money, but we're grinding and stabilizing the properties. Now that we're getting them really stabilized, the cash flow is increasing. We're refining them. We're locking them up on 10-year terms, 25, 30-year AMs, getting their rates pushed down, secure in the business. We bought them right. We're managing them well, and we're trying to get all our financing in place,

so we're very secure because it's real estate investing, especially multi-family is a three-legged stool. You buy, right, manage, right, and finance right. You get the buy right taken care of. you get the manage right is always ongoing and you secure your finance and you just focus on running the business managing and getting the thing juiced up as you can with your N-OI. Hey, really quickly, you threw out cost aggregation. What does that mean? Man, I wish I knew. I hire consultants for this stuff. All right? I don't get it. You can't use it. You can't use it. I use it. I max that baby. You're on the bigger pocket spot.

No, I got a guy too who goes through. He's a great. I got a guy. Okay. Now he's nice like, no, I do that. But our guy, his name's Chris Weatherall. He goes. all throughout the country. If you guys need to get a hold of us on social media, whatever, we'll hook you up with Chris. He's great. He's super affordable. It's really detailed work. Yeah, and it's, there's a, he'll tell you there's different kinds of cost segregation studies. Basically, you're going to push down your depreciation from, say, it's 27 and a half years on multifamily. He's going to get that down to five to seven years on most of it. So you're going to get this swell of depreciation going and wipe out a lot of your federal taxes.

You're basically accelerating the depreciation of the property. You're taking your fixed assets and pulling them out. So anything like a roof, a hot water heater, let's say, driveways. that's going to be accelerated a lot quicker. Unfortunately, when you sell it, you recapture it. But you don't worry about what happens in the future. Hold on and keep buying. Maybe you can do a 1031 or maybe you can defer taxes. But the bottom line for anybody who wants to be wealthy, listen to this, guys, it's not what you make.

It's what you keep. So it's really important to really work with somebody who does taxes because we're all, you know, your W-2 employee, you're making $100,000 a year. You're not keeping that $100,000. But if you're a real estate investor, you're making $100,000 a year. And you're a real estate professional, you're going to build a right off all your taxes, you have this cost segregation, that's really important. That's one thing that's so overlooked in real estate, the power and the ability. And that's why when you go out for partners, hey, lawyers and

doctors make great partners because they're always looking to shelter income and to find ways. And, you know, it's not illegal. It's not bad. It's your duty to do that. Yeah, I love it. Just a quick plug here. If people are interested in learning more about tax strategies, we actually have a book at Bigger Pockets we sell called The Book on Tax Strategies for the Savvy Real Estate Investor. You can get it at BiggerPest.com. slash tax book. You should pick it up. I'm going to pick that up so I can talk about it. So you can not read it? Yeah, sure. Okay. I'll make Gina read it. I want to support you guys. I want to support you guys. I'm the cross that guy. Don't worry. I can explain it. I got it.

No, you got this. All right. Well, good deal. So last question I have before we go to the fire round. I'm curious. I ask a lot of people this question. How many hours a week do you guys work? I mean, is this a full-time gig for you? Are you guys doing this part-time? Is this? What's your week look like? Did I work my ass off? From 7 a.m. I work hard. I work hard. Gina works. I get up about 7 a I'm doing social media stuff, you know, for the properties, making sure everything's in line. I'm keeping everybody, you know, in order. You know, we're self-managers, right? I probably, it just depends. And an easy day for me, I'm getting done maybe like 6 o'clock on a longer day. This guy might have me on some kind of Skype call at 9 o'clock.

So it just depends. I work Saturdays. I go on vacation and I work a little bit. It's not that I'm doing stuff that I don't like to do. I like what I'm doing. So if I'm answering a few emails on vacation or whatever, it's constant. So it's, and I enjoy it. I enjoy what I do.

I'm highly motivated. I want to make it happen. And so it just depends. You know, 50 hours would be probably a fairly slow week and I'd enjoy it. And for me, I had the restaurant, so I just retired and left in March. So I was doing the restaurant five days a week. And then I was doing this during lunch, during dinner. So you have to plug it in.

So, I mean, one thing about the restaurant, it makes it, you become a hard worker. So hard work is good. Tell him what you were doing, too. His brother was in the front of the house. He was in the back, you know, making sure, doing the real, you know, that's work. But the whole thing is, I was working hard. I wasn't working smart. another thing when you grow as a person. You find a difference. I was working, you know, dad had me

working hard. 30 years ago that worked great. You could do great, but now it's not the model. You can't make money working hard. And it takes a little time to figure that out and I figured it out. And I'm still working hard. I don't mind, but you work a little bit smarter now. Awesome. I'm ready to go cut the tree down. You guys are going to be fired up. I'm ready to get a video. I want a video. I want to see it. I want to see it. I want to see it. Yes, that'll be awesome. That'll be awesome. All right. So before before we move on, what's next for you guys? You guys have acquired a nice portfolio. What does the next three to five years look like? Well, we're looking to buy more deals. But like you guys know, everyone on bigger pockets is complaining about compression cap rates. The low hanging fruit is gone.

And you know what? For the most part it is. So that's why you've got to work harder and really dig deep and really look for those deals. It's hard to find. But we still want to buy. I mean, we're looking at 400 units in Tennessee and someone else's bit up above us. We're going to get it though. We have to stay diligent. We're not going to go above the number. guys listen this is important if you have a buy criteria you got to stick with it you can't overpay because if you over pay in the long run it's going to be hard to make money in the deal and you know what everyone says you know what over time but over how long i've had a property for 10 years it's got a cash flow now 10% yeah so you got to buy right so we're still looking we're still looking

we're still looking at we haven't syndicated yet this is all our money so this deal we can pull another deal off without syndicating or as you would say raising private money the next deal after this one after a thousand units we're probably not to start syndicating i don't necessarily want to because I don't we have enough to deal with with the business if we have to bring investors and we'll see where it goes. I'm not I'm not totally shut down to it but if we don't have to, I just want to be very disciplined. I want to be the biggest owner of multifamily in eastern Tennessee. That's the first step. I want to, you know, I want to get there. We probably got, you know, we have to get to about 4,000 units. So we got a waste of go. But I think we can get there. And it's just

being very disciplined, not overpaying, making sure we're hitting our metrics going in and then, you know, following the game plan throughout. We like building out frameworks. So sounds good. I love it. I love it. All right. Cool. Well, hey, let's shift to gears. a little bit and go over to the world famous fire round. It's time for the fire round. All right, the fire round. These questions come direct from the Bigger Pockets forums. We ask us these questions every week, different questions, of course.

So we're going to fire them at you. Number one, wasn't starting out, who is the best type of person to create a relationship with? A banker, another investor, a lender. I mean, who's the best person to build a relationship with at the beginning? Broker than banker. Broker. Broker, okay. Broker than banker.

Cool. There you go. Do I know why or we just want to answer? No, fire around. You got this. All right. If somebody doesn't know what type of deal they would like to attempt to focus on, would you push people to invest more in multi-units?

So if they're like, I don't know what I want to do, should they do multi or should they start with singles, condos, you know, duplexes? Okay. Only because you can do it part-time. Jake was made me, I had the restaurant. He was doing his gig, 25 units. We had about 200 units and we were still in the quote-unquote part-time. Why can you do it part-time?

Because you can get, when you scale up to multifamily, you can have teams. You can have resident manager, you can have maintenance guys, and that's the key to creating wealth. You're already creating a system and you don't even know it. You can manage the business and you're going to be making money in your sleep. Landlords make money in their sleep. Every time that tenant makes a paycheck that's paying down that mortgage, so you're going to, it's wealth building forced. Okay, you're forcing the wealth building. That's what we love it.

It's funny. I feel like in my own investing, in my own investing, like the more units I get, the less work I do. It's like a complete inverse relationship. Like the amount of hours I spend on it goes down. You got to work. You got to work. That's not right. I'm just done.

A couple more units. I'm just going to sit on a beach thing, right? What are you going to do? It's just kidding. You'd be so bored. Don't do that. I would be so bored. Yeah, I might start by some.

Chop wood for you. Yeah. We can chop wood and we got a ton of guns. We can go out of the shoe. It'll be great. Fire around. Just kidding. I don't know.

I can't. That sounds very eastern Tennessee. All right. No, number three. What is the best? Shop wood. What is the best way to find large multi-family properties? How are you guys finding?

You got to have relationships. You got to go out there in what Gina was saying before. There's five brokers in this town that do most of the deals. You got to know them. You got to take them out to lunch. They all have our business plan. We share our business plan with each one of them. They know we want mom and pop.

So they call us. We're like, oh, we got one. It's just for you. It's a guy that owns 100 units over here. Yeah, but he wants six million bucks and it's worth four. And that's the conversation we just had with a guy that was a couple weeks ago. So we hang in there. I'm going to ran about the deal we just did.

So if you want me to, if not, keep going. Go ahead. Go ahead. Rant-ag. Okay. So the 156 units we just bought, we started working on that deal. Come on now, man. This is sweet.

I'm telling you. I'm going to love this. We started the deal last summer. We just closed in March because we were competing against two REITs, real estate investment trust for those who are not familiar with that. These are the big boys. Jake and Gina compete with these guys. We said, look, we know we can make money at this number.

We stuck to that number. We came in third place. They basically had a call to offers. Guess what? The REAP came in, said, we want to retrate a million bucks. And that's what these guys. are known for. They knew that going into it. So after they retrated, the

seller said, no, I don't want to do business. So then we came back, we're like, guys, we're going to get this thing closed. We're going to do it. We kept pounding that drum. What was it, New Year's? I was at Gino's house. They came back and said the deal fell apart. You guys still there. We said, yes, we're still there. We're at the same price. We ended up getting it done by March. We closed within 60 days. We found doors, man. We're doing it.

That's awesome. Jake and Gino. You rock. You guys. You guys need your bobblehead doll. I want a bobblehead, man. Robin Choulders, Jake and Gino. Mine's going to have a Buffalo Bills jersey, though. I tell you, he's going to be Don B.Bee, because he's the man. All right. Okay.

All right. Number four. Oh, this is me. Do you feel that purchasing lower income properties is actually a better deal in the long run? Do you get better deals by purchasing the low-income properties? You can pay less, but what's the definition of a better deal? I mean, I'm just asking the question. Oh, no, I'm just saying I like a C-plus, personally, B-minus range.

Maybe a C, because eventually what we're going to do is we're going to, if we do get something like a C-1-6, like the crap. then you're going to, it's going to be harder. You're going to have to, maybe you make more money on it. It just depends how much work you want to put into it. I'm fine with it if we can get it up to snuff. I stay out of these. I don't want to be in a war zone and it's hard because that you can fix the property up, but you can't take it out of that thing.

Unless you know the property is going to go into an emerging market and the city is getting pushed out and is gentrifying it. And that's rolling dice. Yeah, you don't know that. You don't know that. You have to buy an actuals. That's the thing. So we start, we like season B's. That's what we like.

You guys are just fun to talk to you. man, we bring the pain I'm telling him, we do it. You guys are great. You guys are great. All right, well, all great things have to come to an end. So let's end this thing with our world famous. Famous Four.

All right, the Famous Four, these questions are the same four questions we ask every guest every week. So I'm sure you guys have heard them, but we'll ask them to you. Number one, what's your favorite real estate related book? You can each answer this. What's your favorite real estate related book? Believe it or not, I like Rich Dad, Poor Dad. I don't know why.

I don't know if it's real estate related, but it's just a total mind shift. If everyone reads that book, it's just powerful. I've actually only read two real estate books. One was Fixer J. DeSema, and I think the other one was Rich Dad. So I'm going with Fixir, investing in Fixer Upper, Fixer J. DeSema. He talks about notes. He talks about creative financing, owner of financing.

I read that one started and I haven't really looked back. I really liked that book a lot too. Fixer J. He read that? He's a funny guy. He's an old dude too from like somewhere in the south, right? No, he's from California. He's got the white hat on.

and all that. Yeah, it's funny. All right, good stuff. Cool. All right, business book. Atlas Shrugged without a doubt. That book is amazing. I've read it like three times. I totally got my head screwed on straight. If that's possible, that's probably not true. But I love Atlas Shrugged.

You're going to have like half of our audience just hate you now. And the other half are going to love you. I don't know. People just either love or hate. I don't know. I'm going to say right now. We are on Skype right now. I barely can turn a computer on.

We're doing this call. How is this even possible? If you cannot celebrate man's achievement and the great things that go into work and working hard, you're nuts, okay? People get too tied up in politics. I'm not saying you are. I'm not saying you are. I'm saying people are.

People hear that and they are like, oh my God, it's one. Don't let the left and right divide you. No one's good. Do the right thing. Yeah, there you go. And growing in your life.

Dave, I'm telling you in the next couple decades, like that nonsense is going to change. Like, people are so sick and tired of the PS. I mean, no, what's going on. Get rid of the pundance. They're taking up too much space in your head, man. Exactly.

All right. Gino. Gary Keller. I like the one. I'm reading it right now. And his other two books about real estate agents and multifanities is great. Perfect. All right.

What do you guys do for fun besides chopping wood? I got a great fitness center in the basement. I love working out. I ride the bike. I started riding the bike. I first had my first baby this year, right? Hey, congratulations. But I started getting like daddy fat or whatever they call it.

So I'm like, dude, I've gone nuts. I dropped like 15 pounds. I got audible going on. I'm riding the bike, hulking out. and I love the bills. Big season coming up, man. Rex, I don't know. I didn't even know the bills were still a team.

That's how little I know of the bills. Dude, I'm going to come through. He says, what's like fans get like a restaurant? Oronkers. Yeah, yeah. All right, Gino, you got six kids, man. What do you do besides take care of them? We homeschool the kids.

So I love to spend my morning. He just took it up a notch. It's about 45 minutes to an hour. Yeah, in the morning, I like to read with them. I actually trying to get the kids read business books. It's a little hard, but I don't want to show. shove it down to the throat, but they got to get prepared. Love gardening. I love cooking.

And just spend time with them. That's where we're coming down to Florida. Quality of life, driving around a golf cart. You know, that kind of thing. It's great. He's obsessed with a golf cart, guys. Can you imagine New York, New York and a golf cart? There's no tires on. I got my 14-year-old driving in the road in a golf cart. No seatbelts. Everyone's hanging off.

In New York, they'd arrest your ass in front of it. It's awesome. It's awesome. I love it. I love it. All right. Number four. Last question. What do you guys believe sets apart? successful real estate investors from those who give up, fail, or just never get started. Let me answer. This is powerful.

A should needs to become a must. If it's not a must like me, I had to get out. I needed to provide for my family. I needed to make money. I needed to grow. I was stuck. If it's not a must, you know, you're going to go back to your old ways. You get on a diet.

You got to lose 30 pounds. You lose them, but then you go back into your old ways. It has to become a must. It has to become a habit. After two months, it needs to become a habit and it needs to be ingrained in you. And if it's not, you're going to be. to fall back. And that's what happened to me in the first 10 or 12 years floundering around. I didn't really need it. It was a hobby. It's not a hobby. Treat it as you, it's your life

destiny, as if your goal. And if it's not, don't get into real estate because it's too hard, it's too risky, and it's too much work. I like the, you know, a little cliche, but I always talk about willpower and discipline. And I like to chunk everything down. So every time we get engaged in the deal, it's, for me, it's being patient, persistent, but willing to walk away. That last deal that we refer to as a great example. We were very disciplined. We were patient. It took us, I don't know how many months to get it done, but we were persistent.

Gino and I kept peppering the broker. We stayed in contact with him. In the beginning, we initially walked away. We said, this is the price. We walked away. We hung in there. Deal eventually came back to us. We knocked it out.

And, you know, we got the thing. It was doing about 100 a month when we closed on in gross. We got up to 112 already. The thing is a beast. We're crushing it, and I love this property. That's awesome. All right, guys, before we let you go, where can people find out more about you? The Jake and Gino Show.

Dude, we got a laundry list. And it starts at jacogyno.com. And then my newest favorite right now, I'm Snapchat. Snapchat. I'm also getting more and more on Snapchat. So it's like naked pictures for you. What do you do with that? It's horrible.

I don't understand. You got to watch out. He likes to get it on. He likes to get on Skype and he forget to put his shirt on sometimes. I'm like, dude, what are you doing to me? And that's for the show. But anyway, we got Insta. The handles Jake and Juno.

We got Instagram, Facebook, Twitter, on and on and on. I don't really know how to use these, but I try. And we're doing our best. Love it. Awesome. Awesome. Awesome. Awesome, guys.

And you guys have a podcast as well, right? Because I was on your podcast. Yes, you are. So people should listen to it. You're a beast. I'm telling you right now. I am a beast. Awesome, guys.

Well, thank you so much for coming on. We really appreciate it. A lot, a lot, a lot of fun. And obviously, you know, listen to these guys. They've got lots of pearls of wisdom, everybody. So thank you for coming on. We definitely appreciate it. Thanks, John.

Thanks, Brandon. Thanks, thank you. Thank you. Thanks. We get the piece. All right, everybody, that was Jake and Gino. Big thanks again to the two of them. Awesome, awesome, awesome show.

It was. It was a great show. And I love their passion, and enthusiasm and their focus on systems. You know that, Jay. Like, if you want to scale, you've got to have systems. You can't just go out there and cut down chainsaws. You know, trees with chainsaws.

Well, maybe you can. We may find out when we see the show notes. Yeah, they actually told us that. They said if they go out and do that, if Jake goes out and cuts it down, he's going to get a video or picture, and we're going to put on the show notes at bigger pockets. dot com slash show 182.

Excellent. Excellent. Cool. All right, guys. Well, like we talked about during the show, books, books matter. Books are really, really important. Everything we talk about, we definitely talk about real estate. And we've been talking a lot more over the last, you know, 50, 60 episodes about systems

and things like that. But, you know, you can't just get it from us. You know, get out there, get some books and start reading, start learning to how to scale your business, how to, how to, you know, you can't. you know, improve your life. And it's just, it's so important. Yeah, Brandon sits around, pretty much tries to make us all look bad and reading all day. I don't read as much as I used to. And I mostly listen to Audible, but, you know, good stuff. Awesome. Yeah, it's great. Cool. All right, everybody, thank you so much for listening.

This is Show 182 of the Bigger Pockets podcast. You can check out the show notes like Brandon said at at BiggerPockets.com slash show 182. And I'm going to ask you to do one thing, which is get out there and get active on the Bigger Pockets It's forums. The forums are amazing. It's where people come together. A lot of people think, well, if I'm just answering questions, how does that help me? Well, you answer questions. People realize that you know what you're talking about. People realize that you're savvy. People realize that your experience. Oh, yeah. And then what? Then they want to work with you. So get out there. Show people that you know what you're talking about. Become the expert in whatever it is that you're the expert in. Be the expert. And you're going to start to build your network.

You're going to start to build the opportunities for yourself. Make it happen. And that's biggerpockets.com slash forums. With that said, I'm trying to figure out why Brandon, oh, he's got Charlie. Yeah, for those people on YouTube watching right now, my buddy Charlie came in to say hello at the end of the podcast today. Yeah, Charlie. All right. This is Josh Dorkin. And Charlie.

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