BiggerPockets Real Estate Podcast - 661: How to “Start from Zero” in Today’s Multifamily Market w/Andrew Cushman and Matt Faircloth

Starting point is 00:00:00 This is the Bigger Pockus Podcast Podcast Show 661. And also finally understand that fear is going to be a real factor for no matter what in the market is. There's never going to be this no problem market. There's nothing in your way and it's completely clear and there's no competition and the deals are cheap and the money's free and whatnot. That's Utopia Real Estate. Not going to happen. Don't wait for Utopia Real Estate to happen. Just find a way to make deals work today and be conservative enough. that it's it's going to, the deals will work out. And if you hold long enough and you do the correct

Starting point is 00:00:35 business plan, as Andrew said, it will eventually profit if you hold for the long term. What's going on, everyone? This is David Green. You are host of the Bigger Pockets, Real Estate podcast coming to you live from Scottsdale, Arizona, where I am checking out investment property and hanging with a couple of my buddies, having a little getaway for the David Green team and the one brokerage leadership. And we have an amazing episode for you today. I've brought back my good friends, Andrew Cushman and Matt Faircloth to talk some more multifamily masterclass wonderfulness, and they did not disappoint. This is an episode you will listen to more than once because it is so freaking good. Basically, we had them on a previous show and it went so well that everyone said,

Starting point is 00:01:17 hey, if I want to get started in this right now, what do I need to know? So we brought back Andrew and Matt to say, if you were starting right now from zero from scratch with no experience, but knowing what you know now, what would you do? And they did not disappoint. This is a fantastic episode where we cover everything from where to find deals, how to underwrite deals, how to choose your market, how to operate the property, how to build a brand, how to communicate with brokers, how to collect acquisition fees, when not to collect them, everything that you could possibly need to know to get started. We cover in today's episode. You're going to love this. Okay, we're going to shift gears for a minute to cover something important, especially for new landlords.

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Starting point is 00:04:24 That's biggerpockets.com slash dominion. Before we bring in Andrew and Matt, a quick word from bigger pockets of today's quick tip, go back and listen to episode 571. This is when I had these two on last, and they gave such a good performance that we brought them back for a follow-up. So when you get done listening to this, go back and listen to episode 571. Furthermore, if you've got questions that you would like to ask, come to Bigger Pockets conference in October.

Starting point is 00:04:52 It's going to be in San Diego. You should bring all the questions that you can possibly think of and hit us with them. We should be on stage or you could have opportunity to talk to me and the other Bigger Pockets personalities. It's going to be a blast. Make sure you get your tickets and I will see you there. All right. On to today's interview.

Starting point is 00:05:08 Andrew, Matt, welcome back to the Bigger Pockets podcast. It's nice to see you too again. And we have a fun episode planned for the day. How are you each of you doing? Fantastic, David. Thanks for having us again. Yeah, I'm excellent. Family's good. Business is good. I've got my espresso and there's a swell on the way. All right. So in today's show, we are going to be talking about if I had to start from zero. If I was just getting started in multifamily today, what would I do? Which is really cool because we're hitting the point of how would you get started. But it's coming from the perspective of very experienced investors with a whole bunch of knowledge in their brain. It's kind of like that idea where people say, would you rather know what you know now or have to go back to where you were in high school and your life.

Starting point is 00:05:48 Like, I want to know what I know now when I was in high school, right? But that's not ever the option. You can't do both. But in today's episode, it's like you can. So this is going to be like being in high school and having a future person show up at your high school, step out of their spaceship and say, here's everything that you should do to become rich and multifamily. So let's start with you, Matt. Step one, what's the first thing that you would do if you were starting from zero? I'm sorry.

Starting point is 00:06:14 I'm still fantasizing on talking to my younger self in high school, David. But getting beyond that, what I would start with is I think too many people start with doing a deal. And I think those that are just getting started to multifamily or real estate investing in general, they're out there just trying to find a deal. Like, okay, I just want to get going. Let me go and evaluate a duplex. And to be honest, the mat that started investing in real estate 17 years ago did that. I looked at a land deal, that I looked at a single family home, that I looked at whatever would come across my plate. And I think that what I would do, if Matt were to start again today, would be to evaluate my goals, my skills, what I bring to the table?

Starting point is 00:06:55 What am I great at? And how can I manifest those greatnesses through real estate? You know, what unfair advantages that I have do I have over the other person that's starting as well in this business? So I would kind of take personal inventory and also take a realistic goal set. I mean, listen, I get it. We all want to make a billion dollars next week. it. But set realistic achievable goals for what you can, what you can really tackle. And maybe ideal is a good goal for the first year. Ideal, maybe too. But set those goals and take personal

Starting point is 00:07:29 inventory. That's what I recommend. And that's what I would do if I were starting again. I love that. That's something I've noticed, just this pattern in real estate investing in general, that whenever I have something of value today, a lot of equity in a property, really good cash flow in a property, options to do a cash out. refinance or something, it's almost always from a decision I made somewhere between three to five years ago. That's just the way it works. Like whatever thing I'm buying right now will benefit future David in five years tremendously. It's like every time I buy a house, I'm just loving future me. It's not going to do a ton for me right off the bat, but it will later. And I think that's a tough thing to swallow because

Starting point is 00:08:07 who wants to work off of a five year time frame when you're being told, get into real estate investing is going to change your life? And you're like, oh, I want to lose weight right now type of thing. But that's not really how the asset class is designed. What about you, Andrew? Do you agree with that point? And then is that the same thing that you would do if you were starting off? Yeah, I do. And actually, I got a couple things to add that. So, David, what you were saying, I call that current self and future self, right? Like, if I've got something amazing from Cheesecake Factory and, you know, I'm like, hey, I could save half of this for tomorrow.

Starting point is 00:08:37 I'm like, you know, future self is going to be really happy with me if I do that for a number of reasons. So I actually frame a lot of things exactly how you just said. to, you know, current self and future self. And many times it might not feel great for current self, but future self is going to look back and thank you, right? So I do frame things a lot in that way. And then I also would step back and say, okay, if I were starting today, you know,

Starting point is 00:09:01 there's a piece of advice out there that probably 99.873% of bigger pockets listeners know and can recite. And that's Warren Buffett says, buy when everybody else is fearful and sell when everybody else is greedy, right? So guess what? right now people are getting really fearful. But when you, the problem with that advice is everybody can recite it, but very few people can actually do it. Because what we do is we confuse fear with reasons. Oh, well, interest rates might be doing this. And I don't know what prices are going to do,

Starting point is 00:09:34 blah, blah, blah, blah. And those are rational justifications. And those are true things. But that's also what makes it so that no one can actually put that advice into work. And so what you have to do is if I was starting today, and it is a much more scary environment than if I was starting five years ago, there's no denying that, or much more uncertain, I should say, is not say, well, I'm just going to wait a couple of years and see how it shakes out because then you're going to miss everything. But to buy when other people are fearful, you just have to adapt the strategy to the market and pick the right strategies and look towards, all right, our price is going to be down 10% a year from now. maybe none of us really knows but if I'm looking at future self my future benefits looking five seven 10 years down the road if I pick the right asset in the right market I'm going to benefit when I get there probably even in the interim therefore if I focus on that and learn to focus on that with those that mindset then that gives you the ability to buy when others are fearful

Starting point is 00:10:39 And I think that's the first step right now is to tune out the market and the noise, address the fact that, yes, there are some real uncertainties, but factor those things in and move forward. So that's kind of the first thing I do in terms of mindset. And then Matt mentioned goals and deciding who you're going to be. Are you looking, I would decide, okay, am I going to build the stack method and just, am I going to go for a fourplex and then go to a 10 and then go to a 20 and do this with just my own money or build a portfolio that I can manage and live off of? Or am I going to try to build a business?

Starting point is 00:11:20 Am I going to try to get to 2,000 units? Am I going to try to hire people? Am I going to syndicate? Figure out what the end goal is there and then start working backwards. And I just add on to that. And I think that that's, we could spend on that further. But you and I took two different paths, Andrew. you've gotten to know each other fairly well. And I was that guy buying a single family home duplex,

Starting point is 00:11:42 whatever, and kind of scaled up through the space, which is certainly one way to get started. Because some would say a four family, a five family, a ten family, whatever, that's still multifamily. It doesn't have to be a hundred units to be multifamily. And you can scale that way. Or as you said, you can go and swing for the fences and maybe join somebody else's team or become a part of a larger conglomerate that's taking down bigger deals. But there's no right. answer. They're both ways to get in and ways to get going. Start small. And with people that are starting small, I'd tell them, listen, a good goal is to double your portfolio every time you do a deal. Just double up, double up, double up, double up, and you'll grow real fast that way. Or go and take down bigger deals and maybe don't get the lion's share in the beginning. But you'll get at least a foot in. And you can say you were part of a transaction that took down 100 unit, 200 unit multifamily and slowly scale and build your own team with the lessons. you learn there. A couple things that came to mind when you were talking there, Andrew, is the first is

Starting point is 00:12:41 the Batman's story, oddly enough. So if you read the comic books of Batman, they're a little different than the movies, but Batman's sort of motivation was he was very afraid when he was young, and bats were his phobia. He got afraid of him. So rather than letting that fear control him, he said, I want to harness this and make my enemies as afraid of me as I was of bats. And that's why he took on this identity of Batman. And in the comic books, he was, was much more known for using like terror kind of tactics. They weren't just he fights better and he has cool gadgets. He would hit you in the darkness. He would make noises that would make you afraid. He wanted the criminals to be afraid. And that kind of speaks to the power of harnessing fear.

Starting point is 00:13:22 As you were talking, I thought, you know, we always ask people what sets apart the successful investors from those that give up fail or never get started. And I think what no one said but is really good is your ability to harness fear. Because opportunities only come when everyone else is scared. at least the best opportunities come in that point, right? And if you can't learn to operate in fear, you're probably never going to make a lot of traction. Like the best deals I've ever bought were when I first got started, 2009, 10, 11, hindsight, everybody says,

Starting point is 00:13:52 I wish I could go back to that point. No, you don't, man. Nobody was buying houses at that point. Everyone is calling me a fool. And I think the other time is right now. I've ramped up and I bought a lot and I'm getting a lot of backlash. You're buying too early. You needed to wait.

Starting point is 00:14:05 We have a huge recession coming. you shouldn't be buying and who knows they may be right but that very well also may be that because I bought now the market's going to run up when interest rates come back down and the economy starts to do better and you look really good but either way you got to be able to operate in that spirit of uncertainty because if you think about when everything is best when the deal is the most ideal if everybody in the market felt good it would be like Black Friday that's when the TV or the PlayStation or whatever is at the very best price it's ever going to be okay but how many people actually get that amazing big screen TV or that PlayStation when they're lined up with

Starting point is 00:14:41 every other psycho on Black Friday, right? Your odds of landing it are so small when you're in the big pool of people that are rushing in. So I think that's such good advice for someone who's getting started is understand you're going to be afraid. It's normal to be afraid and you've got to harness that fear rather than wait for it to be gone because if you wait, you're going to find yourself lined up on Black Friday with a huge mob of people around you and probably getting stepped on. So, you know, the second point is, you know, once I've got my mindset figured out, and once I've decided what my end goal is, you know, am I buying small properties, my buying big properties, is it a business, as in my own portfolio, is picking a market. And, you know, you say, and so the first thing I would do, and I have read this is go read your book, right, long distance, real estate investing. It is geared towards single family, but the same principles apply to multifamily. And so, you know, so, you know, so. I'd read that book and be in in big okay cool I can invest anywhere long distance let's pick a state oh crap there's 50 of them right now what there's a lot to choose from so what I would do is I would

Starting point is 00:15:47 go to the Harvard Joint Center for Housing Studies website and there is a beautiful map on there that shows migration trends by county across the entire United States both net and then and then inbound. And it colored codes it. And you can see all of the counties in the U.S. that have the strongest population growth. They're the darkest blue. I would go select markets that are in that dark blue color because the number one positive fundamental for multifamily, the strongest tailwind, which David, as you've recently clarified, the tailwind is the one that pushes you forward and helps you out, right? The strongest tailwind is population. growth, people moving to an area. That ensures your multifamily success almost more than anything

Starting point is 00:16:38 else. So I would go to that website and pick markets that are blue and start there and then narrow down. Say, well, okay, hey, the Florida Panhandle is dark blue and, you know, I kind of like visiting the beaches there. All right, well, let's check that out, right? Or, you know, it's a very, in, you know, Florida, as everyone knows, no income tax, very business friendly. So you start narrowing it down from there. And I joked about, you know, visiting the beaches. But again, you know, what are your goals? How easy is it to get there? Right. So people ask me all the time, well, Andrew, how do you invest in the southeast and live in California? There are like five direct flights a day to Atlanta from Southern California. It's a four and a half hour nonstop flight. I can, something pops up

Starting point is 00:17:22 urgent. I can literally be there the next day, no problem, even though it's a couple thousand miles away. So that's the next thing I would do is pick that market or multiple markets, right? Because you may, you know, you want to get it down to a short list that you're probably going to eliminate a few from. And then start asking those questions, you know, is it easy to get to? Is one of those markets, a market that you already know really well, right? So, for example, you know, maybe you used to live in Dallas and now you live in, you know, Washington State. and Dallas shows up as one of those high potential markets when you look at that map, well, that's another positive factor for maybe why you should pick Dallas.

Starting point is 00:18:05 You know, you already kind of know the market. Or maybe you've got an aunt or a cousin or family members that still live there, and they can be your initial work for free boots on the ground. So those are the things that I would do to pick a market. And again, that dovetails is what my goals are. If I'm just trying to build up 20 units and I can drive to them once a week and check on them, then, you know, I'm probably going to be in my own backyard. But, you know, if I'm looking to build a larger portfolio and just really go where the returns are,

Starting point is 00:18:32 those are the first few things that I would do. And then once I've narrowed that down to maybe a short list of three or four larger metros, I'd really start diving into what are the economic drivers? Is, you know, are they things that are favored going forward or things that might be on the decline going forward? And also, I would be looking for economic diversity. A very, you know, one kind of newbie trap to watch out for is you'll see towns that have great economic numbers, but then you find out it's because one plant got built there three years ago, and it like doubled the population and doubled the workforce.

Starting point is 00:19:09 But guess what? If that plant shuts down or scales back down, then all of a sudden you're going in the other direction. So you want to have a diverse workforce. I would look for counties and cities that have high education, medical facilities, transportation, logistics, tech, all of those things that are growing are favored by the current political environment, like anything green energy, you know, we just got a whole other slew of tax benefits for that kind of stuff. And pick markets that check all those boxes and then move on to the next steps. And Matt, I know you probably have a few other things to add to that,

Starting point is 00:19:44 so I'll pause and hand off to you. You said all the good things already, Andrew. Oh, I did. Well, there you go. No, no, no. Everything I just said, amazing. Underscore a few things that he said that I want to just highlight for our standards when we look at markets. Yes, population, but as Andrew also said, population is why people, that, you know, that's a good leading indicator, but you got to go to why. People move to markets used to be just for jobs, right? Now, some people can work remote.

Starting point is 00:20:15 a lot of blue-collar middle-income folks can't work remote, but there's some folks that can. And so lifestyle becomes a factor, right? So let's say, for example, I'll pick a market. Asheville, North Carolina is a fun place to live. There is hiking, there's all kinds of beer breweries and all kinds of fun. Now, maybe prior you moved to Asheville because there was a job there. But now, well, I can work 50% remote, so I'm going to go and pick a job that allows me to work from home so I can enjoy the lifestyle that a certain city like

Starting point is 00:20:50 Asheville or like, you know, pick any number of cities that have a good lifestyle benefit and also a growing economy may have as well. So that becomes a factor too. For us, job diversity, as you said, certainly not one plant, but we also look at the industries that are driving a city. So if there is a city that you like, but it's, you know, driven by 50% the oil and gas industry. are driven by 50% auto. Well, let's look what happened to Detroit that was driven a ton by the automotive industry. You know, once that industry dries up or starts to move and relocate to other places, that really affects that town. So for my company, for the DeRosa Group, we won't invest in a city if there is more than 20% of that economy driven by a certain industry.

Starting point is 00:21:39 Because if a recession hits, it's not going to hit everything across the board. It's going to hit certain industries more than others. And I don't have a crystal ball, so I can't predict what any recession would look like. I can take a guess. But if I invest in a city that is economically diverse, the recession is certainly not going to affect that every industry the same. It might affect some more than others and even hit that city a little bit more than others. But there's other industries that won't be hit as hard. And if that market's diverse, then it's certainly going to get blended out a little bit better.

Starting point is 00:22:10 All right, Andrew, to follow up to what Matt just said, what is the biggest mistake? people should look out for when they're choosing their market. The biggest mistake to watch out for, and it's really, really common. And candidly, I made this myself when I started out. So everybody listening, please don't make the same mistake I made. Do not pick a market because it's cheap. It is often very cheap for a very good reason. And again, I've said this before.

Starting point is 00:22:39 I should probably get a T-shirt now, but the grass is greenest over the septic tank. And if you, you know, when I look back over the decade of plus of doing this, the best, the best returns and with the least amount of headache were in the mid price range, kind of the C plus to A minus. Not the stuff where, well, I can buy this 1975 property in in Podunk, Iowa for 30,000 a door. Why would I go pay, you know, 130 a door outside of Atlanta for the property in the same age? well because in Atlanta, you've got a huge diverse job market. You've got population growth. You've got much higher rent. There's all kinds of reasons. So don't be seduced by the siren call of cheap markets. I just to back you up there, Andrew, it's so well said because you've got to realize, unless you really are the only buyer for a market. Like if you whisper to a seller's ear, hey, I want to buy your property. Okay, great. Let's work it out. And there's no other competition.

Starting point is 00:23:39 Then yeah, it's kind of you set your price. But if there are multiple buyers for any property or if it's a property on a free market, the market's going to determine the price. And if a property is only selling for $30k a door, that means that's the most, that is the absolute most of that seller could get for that property. And that should be it. Some people view it as an opportunity. And unless you have insider information, like the winds of change are coming through

Starting point is 00:24:02 that market and that property is going to be the next Hoboken, New Jersey, or the next Savannah, Georgia, or the next something amazing, or the next Austin, Texas, right? then you're really gambling, probably with other people's money, and that's not a good thing to do. So I agree with you that there is a reason why cheap properties are cheap. And you can't be enamored by, oh, the price is low. Well, likely the rents are going to be low. The economy is going to be weak. Make the list of the reasons why that property is low priced.

Starting point is 00:24:35 I will just agree with you. And also I'll add one more factor on the biggest mistake people make on on properties. And that is they go and start making offers too soon without like building their backstory of why the market's amazing. Because if you've never heard of, never been to, not sure too much about Albuquerque, New Mexico, but you start bidding on properties there and you get so cursed as to land a deal, then you got to go tell your investors why Albuquerque New Mexico is amazing. And if you don't have that data and you don't have a property manager are lined up and you don't have who your closing attorney is going to be and have the data in

Starting point is 00:25:13 place on how you're going to build a business plan around a deal. You know, going in early and making offers before you've really established your presence and built your foundation is I think yet another. It's up there with buying properties because they're cheap. That's yet another mistake, David. All right. Moving on. Let's say that someone is ready to start looking at properties. And thank you, Matt, for mentioning there that writing offers too early is. a pretty big mistake. I would agree with that. Usually when you first get into a market, or at least when I do, the first several I buy are usually not great. Usually with hindsight, they end up being just kind of like an average. It wasn't usually terrible, but even doing my

Starting point is 00:25:49 best, I end up with a mediocre deal. But then after you learn the market a little bit, that's when the good deal will start to come. So I would say go in light. For the first one that you're going to do, you don't want to spend all your money. You don't want to go in super huge. You don't want to have this huge, big vision. The first deal, just go in knowing like, I'm putting the boat in the water and I'm waiting to see where the leaks come, but they're going to be somewhere, so I'm not going to start with a battleship. What would you say, Andrew, you started last time, so Matt will start with you first on this one. When you're ready to start looking at properties, what would you be doing if you're starting today from zero? I would go and buy myself an airplane ticket and go to that market and actually physically go look at the market.

Starting point is 00:26:27 I cannot tell you, David, how many people I've met that are like, I can't seem to get a deal. And here's the market that I picked. And I'm looking at all these opportunities and nothing just seems to add up. And I said, well, how many times you've physically been to the market? I've never been there, you know? And I mean, I get, it's like, well, well, how do you know what the good neighborhood's bad where you could get in dupe by everybody? I don't even know what the real opportunities are, where the construction's happening,

Starting point is 00:26:50 where development's happening. So go to the market. Brokers are going to take you way more seriously if you look them dead in the eye and, you know, buy them a cup of coffee or whatever, and talk about what your goals are, talk about what your plans are, what your resources are, what you can bring. They're going to remember you as opposed to just somebody that sent him an email saying, hey, send me deals, you know. So I would physically go to the market as my first move.

Starting point is 00:27:15 Once I feel like I'm qualified to start making offers and I've picked the market and I've done my research and built my backstory, then I would go to the market and do tons of homework, lots of window shopping and maybe tour some apartment buildings, do what they call a secret shop where you just go and show up and maybe pretend like you want to move there. Like, I'd love to look at it. You're a bedroom apartment for me and my wife or whatever. Or maybe don't. Maybe just tell them you're interested in investing there.

Starting point is 00:27:40 They'll probably show you around anyway. So do everything you can to get into that market like the back of your hand. Yeah, I 100% agree with that. There's so many good reasons to do that. And then, you know, I would also add in that, you know, you hear people, oh, you know, how's it going? Oh, I can't find a deal. Well, how many of you looked at?

Starting point is 00:27:59 Three. Okay, so start, you know, go into it with the mindset of looking at deals as like dating. You're going to have lots and lots and lots that don't work out, but those ones that don't work out help you better realize and appreciate the one that really does, right? I don't, you know, all the dating apps came out after I got married, so I can't keep straight. Like if you swipe, if you swipe left or right is good, I think swiping left is bad. but you're going to want to swipe left on probably a thousand deals before you swipe right on one because the majority of them aren't going to work but the more you look at that don't work the better you're going to spot the one that does so go into it with the mindset of i am analyzing

Starting point is 00:28:48 this deal to to educate myself on the market to educate myself on the state of operations to give myself material to have better conversations with brokers. And if I get lucky, I might get a deal out of this. That's the approach to have is you're looking at deals with those other things as your main goals because really you can't directly control whether or not you're going to win a deal, but you can control your approach to it and how many that you look at. And eventually you will get the one that works. So how would I actually go out and find those deals?

Starting point is 00:29:20 I would go look at the MLS for my chosen market. I would go to a website called Krexie, C-R-E-X-I. Everyone's heard of LoopNet. Go there. And really, you're not looking for hot deals on those places. You're looking for listings so you can start figure out who to call to start relationships. Then also, go to the big broker websites and sign up for their email blasts for those markets, right? Burkadia, Cushman and Wakefield, CBRE, Marcus and Milichap, Coaliers.

Starting point is 00:29:51 Go join their mailing list so that you get. everything that they process in that market. Again, it's going to be the listed stuff, but you're doing that to learn the market and figure out who to start relationships with. Another thing I would do is those big brokerage houses I just mentioned are awesome. But in my experience, many of our best deals come from the smaller, local, and regional brokers, right? The ones who only cover one market. Those guys might not have the volume of a Cushman in Wakefield or Marcus and Militap, but they dig up, they do tend to dig up really good deals. And on the flip side, they may not have the volume,

Starting point is 00:30:29 but they're probably also not sending that deal to a mailing list of 50,000 investors. So you can, you build a relationship and track record with a local or regional broker. That can have a lot of benefits. So I highly recommend figuring out who they are. And you're going to do that just by keeping, you know, Matt, you said go to the market, right? You're going to figure you're going to find out, that's how you find out who those people are. You know, you're not going to see them on headlines on biz now or the Atlanta Chronicle or whatever, you're going to kind of have to talk to people and mingle and that's how you find those out. And those are some of the most valuable, you know, sources. And then, you know, like I mentioned, call and talk to those brokers. When you're looking at

Starting point is 00:31:08 those thousand bad deals, don't say, oh, this doesn't work left. This doesn't work left, right? No, call the broker and say, hey, thanks for sending this to me. I took a look at it. It looks like a great asset and a great market, but unfortunately it doesn't work for me because it's in the the flood zone or the crime rate was too high or you know whatever that reason is that shows that you're a legitimate buyer who took the time to look at it and give them feedback the number one way to annoy brokers is to just not not not respond and not call them back right call them and tell them no they appreciate that because now they know they don't have to follow up with you so if i was starting off today i would make a very strong point to always when especially the little things if i say i'm

Starting point is 00:31:50 going to do something, do it. If I say, hey, thanks for sending this deal. I'll get back to you in two days. I'll get back to them in two days. So, you know, and in regards of screening those properties, like, okay, Andrew, great. How do I look at these thousands of deals? What do I do? We cover that in super detail on, I think it was episode 279, where we went through that whole screening process. So I'd go, go listen to that, but you're going to check for parameters like the population growth and crime and flood zones and all of those kind of things. But those are, that's, that's what I would do in terms of finding, you know, looking at properties and finding deals. David, just to underscore something Andrews said, I have a, somebody taught me mantra a while ago

Starting point is 00:32:29 that if you take a broker seriously, they will return the favor, you know. Yeah, although their, their deal may be like double the price on what you can pay for, right? Although it's, it's in the worst part of town with lots of crime and, you know, it's like 10 feet under the floodplain level and everything like that, take it seriously. Give them feedback. You know, don't throw rocks at it or just, oh, it's overpriced. Send me an off-the-market deal. You know, now, because it's their livelihood. And I think that people forget that.

Starting point is 00:33:00 That this broker is feeding their family on that deal. And they hope that somebody will buy it. And they're not trying to just slip somebody a bad deal. They're trying to market a deal that's on their plate that's that they're trying to push. It is what it is. It's their livelihood, too. And if you show them respect, they'll do the same. Well, the brokers in multifamily are usually

Starting point is 00:33:20 representing the sellers. It's not like residential where you have your own agent who represents your interest and the seller has their own. So you have to realize they're being paid from proceeds that come from the seller. They have a relationship with the seller first. It's not necessarily a situation where they're supposed to be advocating for you. And just if they're mismarketing a property, we would call it mismarketing from the buyer side, but from a seller's sides, they would say that they are cleverly marketing a property, right? They're trying to get as much money as they can and actually get it sold. So that's why we tell people you've got to understand due diligence, especially if you're moving into the multifamily space because you don't have that handholder, you don't have that agent

Starting point is 00:34:00 that theoretically is going to be looking out for you nearly as much. They're expecting you to know what you're doing and to be doing your own due diligence. It's a different way of doing real estate. So it's a waste of time to get angry and say, oh, this trailing 12 is crap or, oh, this pro forma's garbage. Like, just expect it's going to be garbage because the seller is the one paying them, not you. it. The seller doesn't think it's garbage. The seller thinks it's amazing. They're like, wow, this is clever accounting. This is why I want you to be selling my house, right? To a buyer, we think it's unethical. Put everything below the line. Yeah, right. That's exactly right. Just rent real estate taxes. Those are all my income and expenses. That's it.

Starting point is 00:34:34 I don't expect much from brokers aside from, but I still treat them with respect, but you still got to run your own numbers and do your own analysis and do you and do diligence. And a lot of brokers can be very kind. They're the gatekeeper. You got to treat them with respect. But a lot of brokers can be kind to you and you can end up getting duped and think that they represent you because they act like they do. But they actually don't. Don't forget, they actually represent, really they represent the deal.

Starting point is 00:34:58 They want the deal to close. Like their primary objective is to get the deal to closing above all else. And it's also a bit of garbage in, garbage out, right? A lot of times the brokers can't get the straight story from the owner or the seller. And they're doing everything they can to just get an honest listing. and not all sellers are forthright even with their own brokers. Okay, moving on. When it comes to building your team, Andrew will start here with you.

Starting point is 00:35:24 What is something that you would be doing right now starting at year zero? So what I was doing, what I'd be doing right now is the exact same thing I did 10 or 12 years ago is I went through the process that we just described. I picked Atlanta. And I would still pick Atlanta today, by the way. It's just everything is even more true now than it was back then. So, all right, I've picked Atlanta. I'm looking at deals. Well, how am I going to manage these things?

Starting point is 00:35:50 How am I going to get loans on them? So those are the next two pieces of the team, yeah, of the team that I'd be working on or the two pieces of the business that I'll be working on simultaneously with looking deals. And if you do it right, it's very synergistic. So every time I'm looking at a deal, let's say I just picked Atlanta and I'm just I'm going on all those websites. I'm starting to call brokers. But, you know, in the context here is I'm going to use third-party management, right?

Starting point is 00:36:21 So, Matt, you know, if you want to talk more about self-managing, you know, please jump in. That's just a business choice. Again, it goes back to what your goals are. For me, it's third-party management. So I picked Atlanta, and now I'm like, okay, I got to figure out who's going to manage these things. When you're calling the brokers and you're giving them feedback on. the deals that you're looking at. If it's a deal where there's at least some potential,

Starting point is 00:36:49 and you're ending the conversation with, all right, let me go back and do some more underwriting, I'll come back to you. Or maybe you're getting to the point finally, hey, I'm going to put it in an LOI. The question that you want to ask is, if you were broker, if you were going to buy this yourself,

Starting point is 00:37:05 who are the top two or three people you would hire to manage it for you? And you write those companies and those names down. And then at the same time, you say, hey, Mr. Broker, who is your favorite loan officer or lender to work with in this space? Add those people to your list. And over a pretty short period of time, you build a substantive list of recommendations and referrals for management and lenders. Those are going to be your two key, because the money is made in operations, right? So your manager is an absolute key player in the success of your business.

Starting point is 00:37:44 And if you don't have a lender that you can rely on to close, you're never going to get in the business. So those are to me the two most important pieces of the team. And you build that from referrals. So what I did, and again, exactly what I would do again today, I would build that list. And then I would take that list. I would go research on the internet. You know, what is the reputation of these property managers and these lenders? Are there stories of the lender backing out at the last minute?

Starting point is 00:38:08 Do all the properties managed by this property management company have zero star reviews, all those kind of things? Narrow it down. Then do phone interviews with them. And then getting back to Matt, what you started with, when I narrowed that list down to two or three, I go to the market and have lunch or dinner with these people and do an extended casual interview. And then I pick one. And that process is what has led for us.

Starting point is 00:38:36 we found all of our lenders that way, referrals and narrowing it down. And then the property management company that today manages our entire portfolio is the first one we ever picked. And they've worked out phenomenally well because we took the time to go through that rather lengthy process to build the list, narrow it down, in-person interviews, and they've been an amazing partner. So that is exactly what I would do today to figure out who's going to manage for me and who's going to lend for me.

Starting point is 00:39:04 and I would do a similar process, maybe not quite as thorough, but a similar process for your insurance broker, contract attorneys, contractors, all those kind of things and all those people. Yeah, I think property managers are the key to any real estate asset. Property manager can make a mediocre deal really good by running it super efficiently, and they can also make a really good deal mediocre or worse by taking your business plan and disregarding it

Starting point is 00:39:31 and wrapping it around a tree and completely screwing everything up. and I've seen both, right? So I completely agree with you there. A few notes on self-management, right? Anybody listening to this that has a goal set for going out and buying anything north of, say, 30 units should not consider self-managing. If you're going to start really small, like I said before, like, you know, double up every time you do a deal. Well, you could start that equation at four units. And maybe that's a house stack that you live in.

Starting point is 00:39:58 And then you do four, then you do eight, then you do 16, then you scale your team as you grow into larger assets. At the Rosa group, we got up to about 115 units managing ourselves. And then we got out of that. We got out of self-managing because we saw it as we saw where we were growing as a company. They were growing into larger and larger assets. And I knew that self-management was not something that was going to be able to keep up with the growth of our acquisitions. So we let it go. That said, self-managing taught me so much as a landlord as a property manager, as a property.

Starting point is 00:40:34 owner, right? So I learned just the human side of the business. I learned interacting with people, strategies for collecting rent, lease leasing strategies, management strategies, how to handle maintenance, and how to handle preventative maintenance, not just wait for the tenant to call and say, hey, there's a bunch of water coming from the ceiling in my kitchen. You know, like, yeah, how to handle, how to set those kind of preventative maintenance things up, but I still use those lessons in the larger multifamily world that we're in now. So if there is a plan in the listener's goals to start small, I highly recommend self-managing in the beginning so you can learn some of the ropes

Starting point is 00:41:18 as you scale up, but plan to hand those reins over to somebody else eventually, but there's no better classroom than self-management in the beginning on small stuff. Well said, sir. It's almost like you've done this before. I know. It's almost like I've got the battle scars to show you and all the lessons I could teach you, Not you, but you know, just that I've learned that this business has taught me really in self-management. That's why we have you two here to talk about what people need to know if they're starting from zero. You know, I didn't ask you guys this earlier, but I wanted to circle back to it briefly before we move on if you could give me an answer. When it comes to looking for deals, how much time would you put into every individual deal that crosses your plate with analyzing it if you were starting with the knowledge you have now at zero?

Starting point is 00:42:03 17 hours. Not just kidding. 17 hours per deal and no less. It's more, I noticed that new investment. No, no, no, no, no. I don't need it. I'm just, it was, it was an opportunity for a cheesy joke and I walked through it. So the, what we do is we do a phase one and phase two analysis. So there's a quick, you got to determine some go no go points for a deal. And obviously, if it's in the market that I want to be in, if it's in the neighborhood of the city that I want to be in. If it checks all the location boxes and checks the deal size boxes, then we do like a phase one analysis that has to do with crime stats. It has to do with comparison of the

Starting point is 00:42:46 rents collected on site currently versus what we believe or know the market to be. We do a Google Street view drive-by just to make sure that there's not like a methadone clinic right across street. We do just things. You know what it is? At Andrew, sure you'll agree with me on this one. I look for something that can be an absolute no automatically. I know flood zone is a no for you, right, Andrew? So a flood search would be one of Andrews phase ones and that. So you kind of like, you want to poke a hole in the deal, I'll poke a hole in the deal. I want to get the deal to a no. And if I can't get it to a no through any of those things, then I'll, then it goes to phase two, which we spent a lot more time on it.

Starting point is 00:43:27 But that phase one analysis can take anywhere between 30 minutes to an hour at the most. We're not too different. So that screening process, that we talked about previously, that's a 15-minute deal. That's checking your parameters, boom, boom, boom, boom, and you're just like Matt said, we're looking for a hard reason to say no. If it passes screening and it goes to that phase one, kind of quick and dirty underwriting, that was episode 571, I think. We went through that in real detail.

Starting point is 00:43:53 That's about 45 minutes. And then, of course, if it passes that, now you're going to dive in deep. And if it doesn't pass that, you're done with it. The one caveat I would say is if you have the luxury of more time and your true goal is just to really learn the market, then you might want to spend more time diving in deeper just for that purpose. But if you're trying to swipe left on that first thousand deals, 15 minutes to screen it, 45 to do a quick underwriting. I love your point with that. Well, let me proof in the pudding. Andrew, how many deals is your company underwrite last year in 2021, off the cuff?

Starting point is 00:44:30 Oh, five or six hundred, I think. Yeah, it's around same with us, right? So if I were to spend really 17 hours on 500, you know, I'd still be underwriting 2021 deals right now, right? So you need, there needs to be a method to get a lot of these deals to nose because not every deal is going to work in that. So there's the two, the two tiered approach, I think is necessary because there's just, there's just certain criteria you have that are just not going to get met.

Starting point is 00:44:56 And so it's an easy way to disqualify it. I love the point that the value in doing. it when you're new is you're learning from doing it. But you hit a point where you are no longer learning by just doing whatever activity it is in your business. If you're a real estate agent, sometimes going on a listing appointment with a not very motivated seller is good because you get practice giving your listing presentation and you get feedback from someone and you learn to read people. But once you've got that, stop going on appointments when the person's not motivated. You're looking for motivation. And so that's a very good point. Like if you were starting from

Starting point is 00:45:25 scratch, analyzing a deal can have some value for you because stuff pops up. You might not have learned or you get better at it. Like everything in life is a skill. The more deals you analyze, the better you become at analyzing and the faster you can do it. But once you've got that skill down, find noes. That was also a great point that you made, Matt. You're looking for a no. That's a hard no and that's where you start. Let's get rid of all of that. I couldn't find anything wrong with it. Okay, I guess I got to dive a little deeper. Let's go into a little more granular detail. Shoot, I still couldn't find anything wrong with it. Now I got to start to get excited about this. Let's go into the third step. So, Andrew, do you remember what episode we did where we actually

Starting point is 00:45:59 walk people through the process that we have when we're evaluating multifamily property, like the three-step or... Yeah, it was, I say the quick analysis, the 15-minute analysis, that was, I think, 279, and then the quick and dirty 45-minute underwriting was 571, and then I don't recall what the episode was where we went deeper into it. So check out those if you want to see exactly like you start with what we call the big rocks and then you kind of scale down. And when you get to the sand, if you still can't find anything wrong with that deal,

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Starting point is 00:49:16 What are some things that you would keep in mind if you were starting over with building your brand? So I'm ancient. I started this before all the social media stuff. So, and Matt is more of the expert on that and literally wrote the book on raising money. But for building a brand, I would say the key things, one of the most important things that a lot of people don't consider when they think about building a brand. Like a lot of people think brands, okay, what's my logo going to be? My colors, I got to match. I got to wear the same shirt on every podcast, you know, all that kind of stuff, right?

Starting point is 00:49:47 No, part of your brand is how you communicate and being consistent with that. If you're going to have investors, are you going to give a month of reports, quarterly reports, how are you know what kind of data are you going to give them how are you going to do that um you want part of your brand is uh are you aggressive are you conservative are you know um how how reliable are you in those little things and in brand is not just instagram and facebook brand is your reputation in the market with the brokers your reputation in the market with the lenders so when if i was starting off and i'm like okay i'm going to build my brand i want part of my brand to be when people think, okay, hey, that Andrew guy, he's new, but man, you know what?

Starting point is 00:50:31 Every time he says he's going to call me, he does, and he gives me great feedback. And, you know, it just seems like a reliable guy. You know, I'm going to show him this deal. So I think of brand in terms of those things. And that's kind of like the base. And then, Matt, you're the expert on how to kind of actually get that out there to the public. Yeah, well, thank you. It's, it's, and again, whether you can use social media or, or, or, I'm.

Starting point is 00:50:54 any of those kinds of ways. You can't say, I'm not going to use social media. I've already got all my investors lined up, so I don't need social media. That doesn't mean you don't need a brand. Because as Andrews said, a brand is really how the market views you. And it's the things the market can expect from you. And that market also means those that you do business with. And so it's important to sit down and think about, like, well, what I want the market to rely on me for?

Starting point is 00:51:17 What are the things that we stand for as a company? And if you choose to use social media, just like you don't have to say, hey, my brand means this and the things I stand for are these things. Just tell them without telling them. Tell them as a part of your story. Continue to talk. One of the things that's the things the Roster Group stands for is transparency. And so we put that out regularly in our YouTube and I'll tell any investor directly what's going on. We put the cameras on inside of apartments that have been completely destroyed by tenants and stuff like that. So we talk about the good, the bad, and the ugly of this business. And that's transparency.

Starting point is 00:51:54 So that is something that you have to define on what it is you want to stand for in building your brand. Then you got to stay consistent. So if you decide I'm going to put this out on Twitter or put Instagram posts out to build my brand or to build the eyeballs that are watching for me, decide what you want to commit to on posts on social or articles you're going to write for third party sites or post you're going to do on bigger pockets, whatever it is, and then stick to it. So pick your message that you're going to stick to, your brand, and then make a commitment on the regular times you're going to release those to whatever mediums that there are.

Starting point is 00:52:32 And do it over and over and over and over and over and over and over again. I committed to myself years ago that I would do two YouTube videos a week. And I haven't stopped doing that for like nine years since we started our YouTube channel. And it's just like religion. We just do it two times a week all the time. And you can add other social media feeds onto that. So that's how you build a brand. By the way, and by the last thing, don't wait to post on social about what you're doing until you have a deal.

Starting point is 00:53:02 It's the biggest mistake I see. You see people post a deal and it's like, man, I haven't heard from you in four months. Now all of a sudden you're posting all over social media now that you have a deal. I think that people see through that. And I think that if you're constantly wanting to be seen in your market as the one that knows a lot about real estate investing, then you should be posting whether you have a deal or not. you know, writing articles, putting out concepts. Don't just wait until you have an opportunity to put it out because people are going to see that they're going to see that that's more just trying to sell and all sizzle no stake.

Starting point is 00:53:34 Matt, when it comes to OPM, what's something that you would definitely keep in mind starting from zero? Finding the OPM before you got the deal, right? Yet again, David, the biggest thing that people make mistake that people make. And that's social media post, but also emailing and making phone calls. as to prospective equity that may want to passively invest in your deal is the mistake they make is putting that deal out there to their base once they've got a deal instead of instead engaging their base well ahead of the time that they have the deal and say hey let's talk about real estate investing let's talk about what capacity you may have and really formulating what what equity

Starting point is 00:54:16 capacity their database of potential investors may have before they go look at the opportunity So many people I see wait until the deal comes in, then they start soliciting equity. So the biggest tip for OPM is have those conversations. As soon as you pick a market, you should be talking to equity on top of that. Yeah, Matt's right. I mean, the minute you decide you're going to go into this business, start telling people about it and start finding out who might be interested in your next deal. Also try to raise money from pessimists because they don't expect it back. That's definitely helped.

Starting point is 00:54:47 No. I jest, but the truth of it is, is under promise and over-deliver. You may not get a few people who invest in your deal if you say, hey, mine's a 14% return, and they're like, well, all these other emails I got, say 20% return. If you think it's going to be 16%, give yourself a high probability of exceeding expectations and say, you know what, we think this is a super solid 14 and know that, you know, got an 80% chance of beating that. So under promise, over deliver.

Starting point is 00:55:22 Matt, you touched on this earlier, no matter what, be transparent. If a deal is going bad, tell your investors about what's going bad and what your plan is to address it and how it might affect them. Do not hide anything. Be fully transparent. And then, you know, the third thing is, is whatever you do, never go silent. If you go silent, everybody will assume often correctly that there's not a good reason for that. So even if it's, man, I'm just so busy, I've got all these great deals.

Starting point is 00:55:57 They're all crushing it. All my investors are making way more than we told them. I'm just too busy to write the report this quarter. Absolutely not. Never ever miss your community. Like Matt, you said you've done your YouTube twice a week for nine years straight. That's how if I was getting started, I would approach my investor communications. You want your investors to be like, oh, it's the 26th of the month.

Starting point is 00:56:19 I'll be getting my updates today, right? Because I have for the last seven years straight. So those are the things I would do. I would make sure that I under promise so that I have a high probability of over delivering. And I'd be absolutely transparent and then be consistent and reliable and never, ever, ever go dark or go quiet. Awesome. Okay. What about long-term planning?

Starting point is 00:56:42 If you guys were starting over from scratch, what we're. would you keep in mind and Andrew will start with you on this one. Matt kind of touched on it earlier and that's look beyond the first deal. You're not looking to get rich or, you know, retire on one deal. Your first deal is the start of the business. And, you know, and even if you're just looking at, hey, do a few deals on your own, build your own portfolio, one deal is not going to be it. That first deal is just the start. So begin with that end in mind and look at the first deal and the second deal as in the third deal as stepping stones or even, you know, building blocks in doing that. And then, you know, we don't have a lot of time to get into this.

Starting point is 00:57:26 But, you know, if I was starting out net right now, a key thing is I would go educate myself big time on the debt markets, how they function. Commercial debt is very different than residential debt. And I would go out and educate myself on how that works, what kind of loan options are available for the types of properties I'm looking at. And how do you educate yourself? Podcasts, but talk to lenders. Say, hey, I'm looking at this deal. Here's my business plan for. What kind of debt options are there? They will educate you. And so I would do that and then make sure that the debt that I choose fits my business plan for that property. Yeah, I just to go

Starting point is 00:58:07 further on, and by the way, there's newsletters you can subscribe to you. Don't have to become as smart as Andrew is. No, it's not possible. Um, uh, with regards to finance and debt and everything like that. There are newsletters you can read. So for neophytes like myself, I read newsletters, uh, so I can be, I can use words as smart as Andrew does that he knows automatically about these things. All joking aside, um, Andrew and I probably read a lot of the same publications on these things and that. So you don't have to become an expert on it. You just have to be plugged into the streams of data, uh, that are out there on finance. Ask any mortgage broker, uh, if, if they can give you access to some of the newsletters and the reports that they get because a lot of times are public.

Starting point is 00:58:46 And ask a good mortgage broker will spend some time educating you on how debt for multifamily works because it's very different than debt for single family or small multi. Debt for multi gets a lot more complex and it's worth taking the time to get educated on. Next, the money in multifamily, yeah, you get like a reasonable acquisition fee. And I think that may be why some people are enamored with multifamily. because you can, if you design the deal properly, get a little shot in the arm when you close. But let's be clear. We're not doing the deal for the acquisition fee. We're doing the deal to create long-term wealth for our investors and for ourselves by joining them in the long game

Starting point is 00:59:24 of this multifamily project, which is manifested through asset management, which is bringing about the business plan that you've designed when you bought the property. Multifamily is not about the acquisition. It's not. It is about the long road. And if you play the multifamily game right, the check you'll get when the property sells or when you do a disposition years down the road will be multiples larger for you. If you do right by your investors, that check will be multiples larger than any acquisition fee you could ever take in buying a deal. So do the deal for the back end and for doing right by your investors and sticking your dismount and nailing that business plan exactly, which is achieved through the part of multifamily ownership, nobody wants

Starting point is 01:00:06 to talk about, everybody else to talk about finding deals and funding deals, but really the money is an asset management. Well said. And then that's another big difference from single family is in multifamily, the money is absolutely an asset management. And going back to Matt, what you said about the long term, I don't know if you remember, but you and I, five or six years ago, maybe even longer, we were sitting in the hallway at a go-bundance event in some mountain town in January. And, you know, it, you know, There was some challenging acquisitions, and part of the conversation was like, man, when does this like really pay off? Because this is a lot of hard work.

Starting point is 01:00:44 And, you know, where we land is, well, we really pays off five to seven years down the road when all the acquisition and the asset management pays off. So, again, have that mindset going into it. And you were right about that deal. You were right. And I remember, it was like, you know, Andrew said that it will pay off eventually with your right buyer investors and do asset management properly. and run a good business plan, and it'll pay off in the long run. I had faith that you were right about that, and you were. And you do write by deals and run a good management strategy, and it's going to hit.

Starting point is 01:01:17 Right. And so, like, the acquisition fees and the management fees, you're not going to get wealthy off of that. That pays your bills until you've built a successful personal portfolio or successful multifamily business, and then five plus years down the road. That's when it starts to really, really pay off. You know, another thing I would say is, and I've fallen prey to this, probably, you know, probably maybe, I don't know, maybe Matt you have or not, but don't compare yourselves to others, right? I mean, I know, I have a perfect example.

Starting point is 01:01:51 I have a friend in Texas who I had just bought a deal and he was in the loan broker, loan business. And he sat down, I was like, hey, how are you doing this? And I kind of explained the whole syndication process and all of that, right? And then the next thing I know, he quits. And, you know, as of today, I think he's literally done six times as many units as I have. And it's hard for me to not be like, man, why haven't I done what he did? You know, like, what the heck? And don't get me right.

Starting point is 01:02:18 And he's a brilliant guy. And, I mean, that's part of it. I mean, the guy, he just knew, like, he just needed a little nudge and, like, bam, he put the pieces together and knocked out of the water. And so it's good to look at people like that who are ahead of you as inspiration and say, okay, maybe I want to get there. But whatever you do, don't compare and say, oh, why can't I do that? Because there's always someone who's bigger, better, smarter, faster, prettier, handsome. Well, especially handsome for talking about me.

Starting point is 01:02:45 But to compare yourself and feel bad about. But rather look and say, okay, I want to be there and I'll get there someday, as long as I stick with it. And then, of course, always listen to bigger pockets and don't make snow angels in dog parks. I don't know who's metaphors I love more Davids or Andrews honestly I mean maybe you can put it to a vote

Starting point is 01:03:06 but I but I both your metaphors actually your crack me up man Andrew's got like a book of jokes that I think that he reads before he comes on these podcasts because they're always like just like

Starting point is 01:03:16 one liner dad joke that just hits and he never uses the same one twice like it's like 500 dad jokes for life or something and before Andrew goes on any podcast or he goes to go on and TILA himself with five good ones that's how I feel like like it works.

Starting point is 01:03:32 My analogies are always like I've heard a few of them before. I've heard the grass is gritted over the septic tank before. So Andrew does recycle. He does recycle. Going back to comparing yourself to others, man. Somebody gave me a good piece of wisdom, which is comparison is the thief of all joy.

Starting point is 01:03:48 And it's also the thief of a lot of education because if you look at that person that you were talking about, the mortgage broker that's now done like 8X more deals or whatever, maybe it's brought a phone call. Instead of like throwing shade out, and being like, man, how'd you do it? They must be doing something wrong or whatever. Come up. Hey, tell me. Let's collaborate it, whatever. And I'm sure you did that because I know that's

Starting point is 01:04:09 something that you would call them up and ask the question. But to the listener, if you see somebody growing like crazy that you know personally and throwing lots of stuff on Facebook or whatever about how all these acquisitions they're doing, have the courage to give them a call and say, hey, help me, show me how you're doing that. And most generous people in the world and most successful people are extremely generous, are going to give you at least a couple of tips. And take those and glean them and then go and pass them. Go do more deals than they're doing. I'll joke and aside, just go and walk your own journey and don't worry about what the guy

Starting point is 01:04:45 next to you or gal next to is walking. All right, let's sum up what you guys would be keeping in mind if you were getting started over right now. Number one, begin with the end in mind, both with your business as a whole and on each deal. Number two, understand debt and how big of an impact it has on your success or failure. And like Andrew mentioned, remember that commercial debt and residential debt are not the same. Under promise and over-deliver, always a good key to live life by. In multifamily, especially, the money is truly made in operation.

Starting point is 01:05:16 So don't just focus on acquisitions at the expense of operational excellence. The real payoff is five to 10 years down the road. So delay gratification. Don't compare yourself with others, especially. on social media. Like Matt said, comparison is the thief of joy. And I will add on that, it can also be the source of joy if you are comparing yourself to people who are not doing as good as you to feel good about yourself. That is just as bad because if you start to depend on, oh, I'm doing better than that person, then you're going to feel like crap when someone

Starting point is 01:05:45 comes along is doing better than you. So leave both of them alone and just stay in your lane. Never do a deal just to get the acquisition fee. Do great deals and the fees and profits will follow. And I will follow up with that and say, be careful of who you're doing. doing your syndication with because there are other people out there that make their living off those acquisition fees and can be very tempted to stretch that deal past where the buttons on the pants are actually comfortable holding to get that money, especially if they're on tight times. And then finally, stay tuned to bigger pockets where we teach you all this stuff for freaking free can't be any better. Guys, this has been an awesome interview. I'll give each of you a chance

Starting point is 01:06:24 to get a last comment in before I let you go. Matt, let's start with you. So, David, everything you just said, amazing, and one thing that I wanted to get out there earlier that I'd get a chance to say is that people that are listening may be listening to this and say, well, right now it's not the right time. And I'm going to wait for the right time to invest in real estate. Here's the deal. I shot a video on my YouTube channel in 2016 about the potential multifamily real estate crash. Okay.

Starting point is 01:06:51 We are always trying to predict a future in the world. But guess what? Everybody's crystal ball is broken. Nobody knows what the future is going to hold. Nobody knows if there's going to be a recession, if there's going to be this, there's going to be that. There's always the right time. Find the right deal and find something that works in today's economy and give yourself a little bit, a little conservatisms in a couple of outs and understand that there's always some, there's going to be a way for you to make it work in today's market. And also finally understand that fear is going to be a real factor for no matter what in the market is.

Starting point is 01:07:20 There's never going to be this no problem market. That there's never going to, there's nothing in your way. and it's completely clear and there's no competition and the deals are cheap and the money's free and whatnot. That's Utopia Real Estate. Not going to happen. Don't wait for Utopia Real Estate to happen. Just find a way to make deals work today and be conservative enough that the deals will work out. And if you hold long enough and you do the correct business plan, as Andrew said, it will eventually profit if you hold for the long term. Well said. Yeah, what I would add to that is, you know, and we talked about this of, you know, taking the fear and turning it to your

Starting point is 01:07:59 advantage. And then also, it will and should never completely go away. You never want to get to the point where you're just like, oh, I'm going to buy these deals and you don't give it any second thought, right? It's a good to once in a while, second guess yourself and wake up at three in the morning and go, you know, I'm going to check those rent comps one more time. So especially if you're raising other, you know, using other people's money. And again, that fear doesn't drive you.

Starting point is 01:08:22 You're using it to make yourself a better business. person. And then also keep in mind, more so in my experience than any other type of real estate, getting started in multifamily is the hardest part. It gets easier, the more you do it, and the bigger you get. But the toughest part is the part that we just talked about, finding your market, getting over that fear, getting to know the market, making those phone calls, what kind of property are you going to look at? How do I analyze them? And actually just doing all of that unknown stuff, that once you get the first deal, and then the second and the third, you have those relationships, you have those skills, you have that team, you have the funds,

Starting point is 01:09:04 it gets easier and easier and easier. So, you know, if I was starting today, I would just approach it with the mindset of knowing, okay, this first part is just going to be grueling, but after that, it's going to get easier and easier. All right, Andrew Matt, I really appreciate it. This was a fantastic show, just like every single time that we guys have you on. It is a literal masterclass in multifamily investing. So thank you very much for sharing your knowledge.

Starting point is 01:09:28 I also want to say, I would say, you know, my opinion multifamily investing probably is at the flavor of the month right now. I think short-term rentals are kind of dominating in that space. But real estate is cyclical. It will have its day. Now is the time to be learning stuff. Arm yourself with knowledge because you're going to be seeing, especially in my opinion, the next three to four years,

Starting point is 01:09:45 I think a lot more opportunity in multifamily than what we've had in the last maybe 10 or so. So mark this. Mark this episode, listen to it, arm yourself with this information, and be ready because opportunities will come. Thank you guys very much. This is David Green for Matt, Captain America Faircloth and Andrew Hawkeye Cushman, signing off. 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.

Starting point is 01:10:35 I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. writing is by Calicoe 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.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.

Starting point is 01:11:04 Bigger Pocket's LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.

BiggerPockets Real Estate Podcast - 661: How to “Start from Zero” in Today’s Multifamily Market w/Andrew Cushman and Matt Faircloth

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