Epic Real Estate Investing - Multifamily Investing with Gino Barbaro | 279

Episode Date: July 3, 2017

Epic Real Estate Investing covers multifamily investing with Gino Barbaro. Learn the difference between price and value, then put these strategies to work in the multifamily investment marketplace. Discover ways you can manage assets and liabilities while employing the wheelbarrow profit strategy. On-going analysis of your investments for risk and return will put yourself in position to manage your portfolio for long-term success. Get the e-book download and more with this very special episode! ______   The free course is new and improved!  To access to the two fastest and easiest strategies to a paycheck in real estate, go to FreeRealEstateInvestingCourse.com or text “FreeCourse” to 55678. What interests you most? • E.ducation • P.roperties • I.ncome • C.oaching Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Broadcasting from Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. Hello and welcome to Epic Real Estate Investing. This is the place where I show people how to escape the rat race using real estate. And if you're just getting started and or you're looking for new and creative ways of making money in real estate, I've put together a free course just for you, including a checklist on how to find motivated sellers. These are property owners that are willing and able to sell you their property to discount.

And to access that free course, go to free real estate investing course.com. Very simple, no crazy spellings, no hyphens, no nothing. Just free real estate investing course.com. That's exactly what it is. All righty, so got a fantastic show for you today, but first, tickets still available for the Epic Intensive in St. Louis. That's August 3rd through the 5th. And to take advantage of early bird pricing, go to Epicintensive.com.

it right now if you're considering going as the price will increase as we reach capacity and we're getting up there so it's uh this theme of this intensive weapons of mass production where we're going to give you the highly potent and powerful tools and methods every real estate investor can use to find more motivated sellers buyers and lenders in as little as 60 seconds even if you think you've heard it all before we're going to deliver our last event we had people leave with qualified leads right there in the event we created them right there for them and i'm going to show you how to do that too So with the weapons of mass production at your disposal, you're going to find more deals, you're going to cash more checks, you're going to finally start calling the shots in your business

and ultimately in your life. So early burger pricing is available right now, but for very limited time, not too much longer. Go to epicintensive.com to reserve your seat, and I will see you in St. Louis. All righty, on the phone today, I thought I was going to have the pizza guy and the drug rep, but I only got one. So, Gino, are you the pizza guy or the drug rep? I am the pizza guy. Would you name like Gino?

Come on. I know. That would have been very presumptuous of me. But what started out as a conversation between these two guys has exploded to a thriving real estate investing business, a coaching business, a podcast, and it continues to grow in size and profitability. They're both experts. Well, Gino is an expert.

That's who we're talking to today in multifamily real estate investing. He's achieved in just a few years, the sort of financial freedom that everyone always wants to achieve, but what they wanted to achieve, but just weren't sure if it was possible or not. But they gave it a shot, and boom, it worked. It's funny how that works. So if a pizza guy can do it, then you can too. That's what he believes, and I'll back him up on that.

So please help me welcome to the show. Mr. Gino Barbaro. Gino, welcome to the show. Matt, thanks. And before I start, I just want to give yourself a pitch. I want everyone out there while they're listening to this, go download that e-book because it's all about motivated sellers. He hit the nail right on the head.

He's got great content. That's the number one game, whether it's multifamily, single-family, wholesaling, lease, whatever you're looking at. That's what you need. So go down and download his e-book. Perfect. Thanks, Gino. We didn't even practice that one. No. I appreciate it. Super. So, Gino, I could make another presumptuous guess about Gino that sells pizza, but what market are you in?

I believe it or not, I lived in New York, and as we speak, I had you on my show a week or two ago. I don't know if I did my first show with you in St. Augustine. I just relocated to Florida. So I'm one of those guys in New York that's disgruntled, that all of a sudden, Mayor Cuomo is calling a state of emergency in the MTA. Matt, the writing's on the wall. New York is falling apart as we speak, and it's just going to precipitate itself because the craziness, the insanity there,

free college, free this. I said to myself, I want to be in sunny Florida. It's 85 degrees. No state income tax. Great real estate market. And I moved down here. So my partner, Jake, lives in Knoxville,

and he manages the properties in Knoxville, and we're looking on other markets right now. Fantastic. So you made the move permanently? I did. I got six kids. Don't ask me how I did it. Don't ask me how I have six kids.

It's just I've got a fantastic wife. We got a fantastic life. And I said to myself a couple years ago, I hate New York. I hate 32 degrees in January. I hate snow. I said, you know what? I really want to change. I'm at that point in my life where I wasn't stuck.

I just said to myself, I need a new challenge. You need to get a little more uncomfortable in life. I need to get some more challenging. I wanted to make new friendships, new experiences. I said, you know what? If I stay in New York, do the same old thing, I'll be bored. And, you know, I don't know if you know the six human needs. I admit the first four needs, basic.

They're just basic fundamental needs. I needed five and six. I need the growth and I need a contribution more than anything. So that's why I said, you know what? New York is my home, but it's time to go. That's what came to me, you know? Wow. There's so many things that I want to comment on.

First one is the state income tax. Yes. Because we sell our turnkey properties and, you know, we're the cap rate or the ROI that I'm cash flowing or the cash on cash. return has dropped quite a bit just over the last, you know, four or five years. Yeah. When we're, you know, we're selling, we're people, properties were flying out of here like pizza that, uh, on a daily basis at 14, 15 percent, cash on cash returns with no debt

in place even. Yep. And, uh, those are down to like eight or nine percent. And those are good deals right now. But, uh, and we're always, we're promoting that. But I live in a state where the income tax is 13. percent. And I'm just like, well, I could get a 13 percent cash on cash return on my entire income just by changing another state. So, well, Matt, you know what happened to me? You know what

really propelled me? When I listened to Tony Robbins and I listen to Grand Cardone and they both said, I mean, hey, they both love California, but they both basically transferred to Florida. And, you know, Grant Cardone said it best. He says, you know what, listen, you need a change in your life every few years. You want a 10 exit. You want to get something different. That's what propelled me. It's not only about taxes. It's not only about what you make. and how much you keep. But I mean, that's a big component of it, don't you think? And I don't know, California is getting a little crazy like New York. So, you know, it's all about you can do it. If you want to do it in life and you really focus on what you want to do at your life, set the plan up.

It's not going to happen overnight. Listen, if it takes three years, it takes three years. It's not the end of the world. Three years comes so quick. But just make sure and focus on what you want, not what you don't want. I always ask people, hey, I'm a life coach. I always ask people, what are you looking together out of life. What do you want in a life? First thing they'll say is, you know, I don't want this, but I didn't ask you what you don't want because if you can't focus on what you want you'll never get it. So I knew what I wanted. I created a plan and lo and behold, finally came through fruition. Yeah. Yeah. No, I just kind of mentioned that one element of it that, you know, we talk about ROI. We're investors. And it's just like, wow, you can get 13% on all the

money you make all year long. Like that's, you know, I like to work big to small. And that's, That's a big one. Huge. It's huge. Totally. I mean, I have a friend that moved to Nevada, another zero percent state. Oh, wow. And, you know, he's doing so well for himself.

That 13 percent savings that he gets pays for a 4,000 square foot house in a gated community. And he breaks even, breaks even. So the house is free now. That's right. It compounds. And that's why, you know, somebody like Tony Robbins doesn't need to do it because he makes tons of money. But I think as you make more money and as you become wealthier, you have to be more responsible because I think it's all about trying to give it back and trying to, you know,

get generational wealth. I've got six kids. So I need to put six kids through college. So that six percent can be college savings on top of my property taxes, which will probably be half. There goes college. And, you know, it's funny. I'm teaching my kids. My 11 year old is like, dad, you pay that much. Yes, I said, but that's not one year. That's every year. So that's basically a car every year that I'm giving to the state. So they have to understand that. And they have to know how to choose their dollars wisely. And if it was a price and value kind of thing, where you say to yourself, well, I'm getting a lot of value for what I'm paying for these taxes. It wouldn't bother you so much, right?

But that's not the case, unfortunately. Mm-hmm. Mm-hmm. Yeah, I've got you're saying so much stuff in your stuff. It sends me off in three different directions. I'm like, okay, which one's next? Sorry about that. That's all right.

You know, I'm ready to go talk about multifamily, but I think, you know, the biggest thing, we've spoken about this a lot is, you know, the reason why. I mean, I love your story. You know, you're broke groceries, down on your life. but you know that you got more. You were making big bucks, and you figure out your reason why. And then all of a sudden, you figure out your reason why you come to your how, and real estate was your how.

And it was very similar to me. I knew why I wanted to do stuff. I just wanted to, like I said, make more money, and I wanted to help more people out. And just real estate came up to me. Now we have two different strategies, but we're both doing the same thing in real estate, both making money and both creating passive income. Right. You know, let's touch on that right there,

because I think this is one of the more valuable lessons or invaluable lessons that anyone aspiring to be a real estate investor, whether they're just getting started or they're, you know, they're still taking their lumps or even if they've been in it for a while, is, for example, real estate is not complicated. It's actually very simple. And it's actually, you know, I was just to say it's not easy, but it's simple. But I actually think it's pretty easy too. I think where, because I mean, I can teach you how to fill out a, you. a purchase agreement in about 15 minutes, and it'll be easy for you to do that too. But why you don't do that every single day is that's between your ears.

And I really think that lies within the why, the reason that you got into real estate investing in the first place. So what made you want to get involved in real estate investing and what keeps you going? Well, when I first started, multifamily was really great to me because I could still buy a threeplex. I could still, you know, buy 25 units with Jake. And I had a full-time job. So I could do that part-time.

I didn't want to do another job of wholesaling, of fixing and flipping because I had a 60-hour, 50-hour-a-week job at the restaurant. And the tax consequences weren't great in that. In multifamily, the tax benefits are so much better. So that's what I went into. So what I did was I immersed myself in coaching. I did a Dave Lindahl program. I did a rich dad, poor dad program.

I went to get certified as a life coach and IPEC. So I threw, I was, I went all in because I'm not a smart dude. I really needed to educate myself. And I said to myself, I didn't want the fear to hold me back. So if I got enough education and I knew what I was doing and I failed, I could either learn how to do it, course, correct. And that's why I just do want to get held back. So I think the education piece is what holds people back. They think they can do it.

And they have to go out and spend money on themselves because you are your biggest asset. You have to invest in yourself. And like you said, it isn't hard. But every time you do something for the first time, whether you're driving a car or, you know, picking up a hobby, you're going to stink at it. right? But the thing is with real estate, it ties in with money. And people have this energy around money that is just incredible. That would just stop them in their tracks. The fear of losing money. The fear of losing money is greater than the joy of making money. So can you imagine that? You know, people would rather not lose money than make money. So it's crazy how that goes. And I think, you know,

people should look into life coaching and really look into that aspect of work on yourself first, work on your limiting beliefs, work on those energy blocks that you have. And then all of a sudden, and figure out what you want to do. And then once that all comes into place, really sit down and spend a couple hours a week on working on yourself, working on your business plan, working on your goals.

And then you start putting the pieces that are puzzles together. Then you start figuring out, wow, I can do this. Yeah, I'm never without at least one coach at some somewhere in my life. I think it's the, I wish they would have taught you that in high school.

They teach you about, you know, you don't want to look at someone else's paper. You don't want to copy. You want to be original. And boy, that is the long, drawn-out way to becoming successful. If you can align yourself with someone that has been there and done that and just do what they did in the manner that they did it, you're likely to get very close to what they got, if not better. So who are you coaching? What kind of what you're using right now?

I have a business coach that actually teaches me how to be a better coach. And, you know, I've had one of these free sessions with him one day. And, you know, I've got a lot of clients, a lot of customers, a lot of very successful. successful ones. And after taking that one session with him, I was like, wow, they were all kind of successful despite myself or in spite of myself. I mean, I certainly just brain dumped everything I'd ever known and they took it and they went and did it. But there is a method, a proper method to delivery to where they can get it quicker. And I've been working with him over a couple years now. And the education side of our business is just as big as the real

estate now. It used to not even be close. But that was my whole goal, is just to create two streams of income off of one knowledge set or knowledge base. And so I've got the passive income and the portfolio going. I've got the fund going and I've got the education going. And that's all based off of one centered knowledge, but creating multiple ways to make income from it. But yeah, that's great. Yeah, he's fantastic. What the best thing about it is, though, is you learn, you do, and you teach. So everyone on this show should say to themselves, let me learn something really well. well and then let me start doing it. And then once you start doing it, don't be afraid to teach it. Because I started teaching about two years ago, we only had about 250 units under our belt.

And I felt a little intimidated. You have these guys that have these thousands of units. But you know what? As I started teaching, I started getting better. I started becoming a better investor. I started looking at things a little bit differently. And I started listening to people. And it's all about listening. And you learn so much from your students, which is amazing. And you make great connections because you're out there helping people. So I think the space is really, it's an awesome space. I mean, if you can make money, monitor, it and help people. There is nothing better on this planet than doing that.

Let me tell you. It gives back in so many other ways than just the income it generates. It's unbelievable. I mean, we've got very large buildings in other areas that I would have never even ventured or thought to go that I would have never found. It was because I had made a connection through, you know, this type of community. And here in the podcast and then our Facebook group and through the education part. And you're so right.

And there's a saying that it sounds like we come from a very similar background or our journey. has been very similar up to this point. But one of the best ways to learn something is to go teach it as soon as you learned it. And that fits right in here perfectly. That's right. I mean, and before I got into real estate, I was in the kitchen.

And I learned my first venture into online and everything. I wrote a cookbook. And from the cookbook, I did cooking. I did recipes. My real passion was gardening with my children, growing all the stuff in the garden, shooting videos, bringing the food up into the kitchen and shooting the videos with the kids of cooking the vegetables from the garden.

So that was one of my passions. And I learned how to do that. And that really drew me. And you know what? I lost money in that business, but it propelled me into this next venture. So don't be afraid to fail. And I wouldn't call it a failure because I had a great time. I still got the product out there. So I got the videos out there. But it was a learning experience. I don't think I'd be the successful with the podcast and with the videos that Jake and I do if I hadn't done it two and three years ago. So don't look at things as, I guess, as a problem or a mistake. Look at them as an example or, you know, as something that you've done and you've learned from and experience. Mm-hmm.

Mm-hmm. So who was or is your biggest influence for what you're doing today? That's a good question. I mean, everyone points to rich dad, poor dad, right? I mean, that's an easy cop-out. But, I mean, like you say, everyone says, it's all about assets. and liabilities in understanding that. And as I've gotten more into business,

it's all really about profitability and trying to control your income and control your expenses. I love rich dad. Unfortunately, he tells you more why and you've got to pay a lot of money for the how, right? Right, right. He's a great upseller.

But you know what? That's his business. I started playing cash flow with the kids. It's a great game. I would attribute a lot of it earlier on to him. And then, you know, I've just been reading a lot of different guys. like I pointed to Cardone before, I love Tony Robbins for personal development, older guys like Zig Ziglar,

you know, Norman Vincent Peel, all those guys that are really self-help that were old school, you know, Jim Rome, all those guys. They've been a big help in my journey because, you know, out there you turn on the TV, everything's really negative out there right now, and you're going to be bombarded by it. But on the flip side, just always put something positive on the morning. Always listen to these guys because their story resonates. And as you get older in life and you proceed on your journey, you've heard something within the last three years. Every time you listen to something, there's always something different

that you take from it. And I found that to be amazing. I listen to Tony a couple times a week, and I always hear something different, but I've heard the tape 10 times, and I hear something different every time. Yeah, I think we were talking about that on your show that I read the book, Awaken the Giant Within.

Once a year, that's right. Once a year, and it's a different book every single year. That's right. Yeah, it's pretty amazing. Super. So let's talk about some real estate. You're investing expertise, multifamily, right? Yep.

Super. Have you done a lot of single family? Did you start there? Did you start in multifamily? You know, I started about 15 years ago with my brother. We bought a threeplex in New York. Ended up going to buy, I'll tell you my journey real quick. It wasn't all roses in the beginning.

Ended up buying a mobile home park with an investor, which, you know, I've told this story a lot. Didn't do my due diligence. The guy was a creep. And unfortunately, one of my best friends told me, let's invest. and he had experienced the guy for years. I just never got on a plane. I never looked at the numbers. You know, when you're making money and you're loosey-goosey,

you don't really be diligent with your money. Like I said, it was tough. It was a real learning experience for me. And then I got a lawyer involved, and it just all went downhill from there. It wasn't the investment. It wasn't the mobile home park. It was Mr. Gino Barber that screwed up.

The next thing, I bought a commercial building mixed use. The building wasn't the problem. It was the location. It was in a crappy part of New York. No job growth. No. you know, no potential for population growth. What a 10 years ago?

I just sold the property yesterday at a loss. Lost a lot of money on it. But I got a 10 years worth of experience as far as dealing with tenants, dealing with contractors, with vendors, writing leases. So it was a really fantastic experience for me. And it was something saying that I just don't want to get into commercial real estate as far as strip malls and all that. I just see the fallacy and the craziness in that with the internet taking over.

So that was a great experience for me. But then I just, I got in with Jake. And Jake was up in New York. He was actually transitioning and moving to Knoxville for the same reasons we talked about, quality life, no state income tax, beautiful place to live, great place to grow, you know, to raise a family. And he said, you know what? I know nothing about real estate. But let's keep in touch. He was one of my brother's best friends.

He was actually the drug rep, pharmaceutical rep, taking food out of my restaurant, catering. And this one thing, we partnered. I knew nothing about him, but I knew how he worked. He was a diligent worker. He was the only pharmaceutical rep that had all his lunch. is planned out for the month. So he would say to me, June 15th, I need a lunch, June 18th. The only guy that would do that, I said, this is a guy I want to work with. This is a guy who gets it done and makes it happen. I said, and you know, when you get a partner like that, you want

to have his back. He wants to have your back. It's great to work with somebody like that. So, you know, we ended up partnering. We got together in, I guess, around 2012, about 18 months took together our first deal. He got a little discouraged, there nothing out there we could find. We didn't have the credibility. He goes on and buys a house because his wife wants him to, so he blows some of his seed money. A couple months later after that, about 18 months after, we end up buying a 25-unit property, $600,000. And I know you like this. We got 10% owner financing on our first deal. And the only way that would happen is because the seller was motivated. The sellers were older. They wanted to retire. The property was not the Taj Mahal,

that's for sure. It was, we like to call it a little crack then. But you know what? It cash flowed really well. They're weekly renters, tons of value, tons of value ads, not something that you would call it today a light value. It had a lot of heavy lifting. But there was a lot of stuff we did this property that we added value to. The more problems you can solve, the more money you can make. And we solved a lot of problems on this property. Got it. That brings me naturally to the next question I was going to ask is, let me put it this way. People frequently ask me that want to go into multifamily. Say, how do you find multifamily deals? How did you find all of yours. And I'm always, the answer is, well, I just market single families and some of those single

family investors had some multifamily that they wanted a dump. And that's how I've gotten all of my multi-units in my portfolio. This being your primary strategy, multifamily, what is the ways that you go about finding deals right now? It's funny. The market has drastically changed over the last five years. You know cap rates are compressing. Like you said, you were getting 14% cash on cash. We were eight and nine caps. couple years ago. But it always comes back to, and I think this is important for your listeners, it comes back to relationships, and it comes back to building rapport with people, doing business with people you like and you trust. And I'm always like that. I don't mind leaving a little

money on the table as long as I know there's a partnership to be had there and we can grow a relationship. So the thing with multifamily is you really need to know who the multifamily broker's out there. And I'm not talking about the guys we're selling duplexes and tries. There's always in every market four or five really you know parado's principal the 80-20 rule right there's always guys out there that are doing the majority of the deals you got to go on loop net you got to go on your you know MLS and see who's listing these properties once you you know you see them you call them up we have a credibility book where we put it basically our business plan out there with you know what properties we own and we let them know hey this is what we're looking for we're the mom

pop kings we're looking for you know 100 units plus bc properties in an emerging market we like to look for you know job growth in a 2% range let these brokers know exactly what you're looking for. Let them know that you're serious. Even if you don't have any properties, if you can speak to lingo and you can look credible, all the real estate broker wants to do is get you on his list and sell properties to you. That's basically all they want to do. Now, unfortunately, they've got the upper hand now because there's not as many deals out there as there are buyers chasing it. So we've got to be really careful in this market because, you know, the buying criteria. We call it the three-legged stool where you have to buy right, manage right,

and finance right. If you're not buying the property, that's the first thing. You're going to suffer like I did, 10 years of pain. So I always tell people, figure out what you're trying to buy, figure out your exit strategy. What are you doing with this property? Are you a syndicator? You're going to hold it for three years and then flip it? Or are you going to cash flow like Jake and I do? Hold it for 10 years, do cost segregation, get those nice tax benefits. It all depends what you're trying to do, but you always have to figure on it's not what you buy, it's what you pay. So you really have to focus on, you know, the buy right first. Right. Of course. So you find most of your deals through broker? Is that accurate?

We do, actually. We don't really do that much direct mailing because once you get into the into the higher areas, it's very difficult to send out letters. You know, like you said, every night again, you might hit it. So what Jake and I are going to start doing is we're going to start hiring a VA, a virtual assistant to go out there and start getting on those lists and trying to find out who owns these properties and just start sending out letters to these people and start giving these people phone calls. Because like I said, we've had a couple of deals in the hopper, but deals are hard. get harder, harder to come by.

So you've got to do whatever you can to get out there and get those deals. Right. Totally. I mean, that's the name of the game. That's why I think it's probably the most valuable skill that a real estate investor has is being able to find that deal at a discount. Yeah, so a lot of our deals come to us through brokers as well. But that's from years and years of building relationships.

And, you know, but for me to point someone in the right direction to go start making an impact and getting some results quickly, quicker than building relationships over a few years. You know, we've got, I don't know, a dozen different strategies that can make those deals happen a lot quicker. Do you have anything equivalent to that in the multifamily world? You know, the multifamily world, like I said, you got to go to REI meetings. You got to get your name out there. And I don't think you really need to take a couple of years. I think you really need to learn.

The first thing you really need to do before you start going out there and spending any capitals, you really need to learn the space really well. You need to learn what a cap rate is. you need to earn what a cash on cash return is. I mean, you really need to learn how to manage these properties because it's different than the single family space. It's not like you buy a single family. And that's it, you know, managing these properties are a little bit different.

So what we really basically do is we try to really get out there and just try to network with these brokers, try to go to these REI meetings. We go to the Chamber of Commerce. And we just try to get our name out there and just see if these guys have anything. And once you get on the list, just keep calling them back, making sure that, you know, They know you're there that you've got deals. And that's what we've done for the last four years. We've been really successful doing it.

Yeah, it's just good old-fashioned grit and hustle, right? Yep. Totally, totally. Great. So let me ask you, what do you, we talked to, we've kind of been hinting around this whole subject the whole time we've been talking about a changing market. What are you noticing in the market? And how is it changing the way you do business?

Well, for us, I just don't want to start chasing deals. We've got a deal right now. we're looking at, it's at the high end of the market right now. So you've just got to be really careful with your numbers. You've seen what's happened with rents in the last five years. Stuff's becoming unaffordable to rent right now. So is rent growth going to be there anymore? I don't know. It's really weird, Matt, because I've been talking to this with a couple of investors. I can't figure it out because we're becoming a rent your nation, correct? So I'm at this point where I can see why multifamily properties are really going up because

there's more people renting. There's more demand for rents. But there's more supply coming on board. The only problem is that supply is in the upper end echelon of apartments, the A space. And the A space is having a little bit of a glut right now because there aren't that many guys out there that can afford $2,000, $3,000 a month in rent. So we're in the more like the B minus C space, which is still a little insulated. There's a lot of demand there because I heard a stat that about 50% of this country lives on $48,000 a year or less. So, you know, the majority of people renting apartments really are, you know, that's why mobile homes are great because they're affordable. affordable units. So there's a dirt or a scarcity of affordable housing out there. So we like our space. So I don't see what's what's going to happen long term. Money's chasing it still.

I see that, you know, you have investors coming in from foreign lands. They're plowing in money. They don't really want high cap rates. They just want to keep their money safe. There's more of a preservation of capital kind of thing. Interest rates are still low. If interest rates start ticking up, maybe that'll push cap rates back up a little bit. But right now, the brokers have the upper hand right now. So still bullish, still looking, but I just not going to overpay right now. Right, right. Does that make sense?

It does, totally. And it just inspires the next question, which feels very natural that, and I think about this a lot myself, that, you know, if you look at history, that you've got these seven, eight years, that you've got these seven, eight years where they have these little pauses or recessions or maybe flat out bubbles every seven or eight years. and here we are in our ninth year, quickly approaching our 10th year in this upward cycle. What are some of the things you're doing to prepare for the downturn? Or do you think there's even going to be a downturn?

I think there's got to be a downturn. It's just the fact that I think this cycle is longer only because 08, 09, and 2010, were probably so prolonged and the pain was so long, and nobody was doing anything back then. You know, basically what we're trying to do is we're trying to get long-term debt.

We're trying to get 10-year terms on all our stuff. If we go to Fannie, we're trying to lock in our interest rates low. That's what we're trying to do. What we've been really fortunate, I mean, it's a blessing in the skies. You know how I'm sure you must be chomping at the bit when you don't get a deal done, right? So we haven't bought anything. It's been like 10 months since we closed on our last deal.

We closed on 156 units and we just haven't been able to close anything. But what has been able to do for us to do is it's been allowed us to work, really work on our management systems. You know, bring in companies like lease lock, really put our, you know, our software we got on to portfolio right now. So we're really honing in on our management systems. And that's really been a great lesson for us. It's been able for us to really focus on our income and just really nip our expenses in the butt. And that's what happens. I mean, you have to use your time wisely. So if we're not buying anything right now, let's manage what we have. Let's try to be as efficient as possible. Let's go out there. Let's really work on those vendor relations. And it's been, it's been really

good for us this last year. Super. Congratulations. Thank you. And that's really the essence of the business once your portfolio starts growing, is managing the portfolio. Yep. You know, that's management will make or break. You're a rat race escape. And yeah, so running efficiently, especially when you're talking about large buildings like that,

management is really everything. And you know what? People think of management as, let's say, they're thinking about, you know, running themselves and changing, you know, clogging, unclogging toilets and dealing with, you know, with employees and I'm sorry, dealing with tenants. And that's part of it.

When you have a small portfolio, you when you have 25 units or 36 units, but what multifamily allows you to do is if you want to run a business and not be a landlord, but be an asset manager, you always have to obviously start somewhere. But with that thought in mind of like I keep saying, that end strategy, the exit game, Jake and I knew we wanted to create a business out of this. So that's why we went into multifamily. We really scaled up. It allowed us. After 60 units, we did our first two deals. One was in February, one was in July. The following February, we bought another 136 units. So we're off to the races. We were able to hire leasing agents.

We were able to hire full-time maintenance, guys. So it was a real business. So you can take some of that time off of you where you can focus on working on the business, not just in it. You're working on your business. And that's what multifamily allowed us to do. Unfortunately, I think somebody's just going to single family, unless you're doing turnkey, but if they're a contractor, they're doing a couple single family homes, they're running around collecting the rents.

They're going around managing the properties because they can't afford to hire management because it's not big enough. There's not enough income there. So that's one of the reasons why we really love the multifamily spaces. The scalability, the economy is the scale that come with having 25 units on one spot where you're just going and collecting that rent. You're taking care of a couple of driveways, a couple of roofs, not scattered all over the place. And that will allow you to grow because you'll be able to focus on those couple of assets instead of running around the city and dealing with 25 or 30 single family homes. Right.

So how many units do you have right now? We have 675 right now. We've got an LOI out for 110. I'm praying. I'm praying that we get these because it's time. We want to buy something. But like I said, I'm just not overpaying right now. So we're a little bit off.

We'll see. It's all about how motivated these guys are to sell. If they're motivated, we'll get it. What's your barometer right now to determine why they're not you're overpaying? You know, it's funny. We still, in our market, every market's different. I mean, you go to New York, there are four caps. You go to California out where you are, the three, four caps.

In Tennessee, you can still find seven to eight caps for C properties. And that's what we want to buy because, you know, I always tell this to people, listen, this is a risk premium. You know, the risk premium back in 07, 06, risk premium is basically the difference between, you know, what interest rates are in a 10-year T bond. I'm going to sorry, what cap rates are at a 10-year T-bond. So, let's say your cap rates of five, which it was back in 07, and your 10-year T-bond is a 3, you got a 2% risk premium. That's really not, that's a really small premium. Savvy investors saw that back in 07. They said, I am out of here.

I'm not taking that. They dumped their stuff. They sold and they were really wise. Guys like me, I was still buying because I saw the market was inflating. Everyone was greedy. When you're greedy, everyone's buying, smart guys are getting out. And it's sort of what's happening now. You know, the 10-year T-bond, I think it's around 2% right now.

But cap rates in some markets are five, five and a half so that that risk premium is shrunk again. So, I mean, until those cap rates go back up, that risk premium is small. still small for a lot of guys out there. That's why we're trying to shoot for seven between seven and eight caps because we want that. And, you know, the whole thing is the cash on cash return. We'd love to get a 10% cash on cash. I mean, three or four years ago, guys in the apartment space were getting 15%, but it's just not happening. And guys who syndicate out there right now, they need to get a 12% cash on cash return

because they've got to give someone to their investors. And they're finding it very hard to find deals at that rate. So, you know, we look for 10%. And, you know, debt coverage ratio, we're looking for $1.3 on a debt coverage ratio. So when you're looking at all those numbers, are you looking at what's existing or are you looking at the potential? You know, that's another great question. I want to buy in the actuals. It just drives me nuts when I see these pro forma.

And you know what, guys, here's a tip. When you look at these deals and you're unsure of what the expenses are in the market, what it looks like, call a mortgage broker. I've got a couple of fanny brokers that I call and I let my students call. And I say them, listen, ask me what the expenses are per unit because you see on these pro formas, these rosy, income numbers and these expenses that, you know, what is this? I'm like, who's managing the property? The guy I say, well, I'm self-managing it. Well, where's your, he goes, oh, I'm paying myself.

He goes, okay, and I always say, are you going to manage the property free for me? Because if you aren't, then I have to charge, I have to pay somebody. So go out there and find out what the expenses per unit are so you can underwrite the deal properly. Have a mortgage broker do that for you. You know, you want to buy any actuals. And that's what people aren't doing. They're buying these performers.

They're buying with the, you know, thought that, hey, rents are going to keep going up for the next three years or 3%. So let me underwrite it like that. You can't do that. You're going to get burned. And the other thing is you go to a bank and try to get that loan done at the bank. The bank's going to want to see actual numbers. They don't care what the pro forma is, what's going to happen three years from now.

They want to know, are they going to get their money back? And one of the things that's been going on in this market for the last couple of years, guys have been buying these deals on interest only first two years. So, hey, it works well with interest only. But when that deal resets, they're in big trouble because they got principal thrown on there. They thought they were going to raise rents. They thought they were going to cut expenses and it didn't come to fruition. So, you know, you just got to be careful.

Right. So what about the future of your business has you most excited? You sound pretty enthused right now. You're trying to buy another deal. What about it has you keep going? You know what? Get on the phone with guys like you. I love speaking the guys who are entrepreneurs.

I love to hear other guys who are really successful. I love to hear kids, you know, students, I call them kids, but, you know, students and Jake and Gino members, I love creating content for them and just putting stuff out and just having people get into that Facebook group and just converse and try to get, you know, other ideas for other people. I just want to continue to grow the Jake and Gino brand and just, you know, continue to add to the portfolio. Those are my goals for the next six months. Great. So if someone wanted to plug into your world in the world of multifamily, what would be the best way for them to do that? Where should they begin? Oh, I think the first thing is just go to jake and gino.com. I've got, I mean, over 100

articles that I've written on there. We've got a podcast. There's so many, there's so many free resources we have on that website. I guess the second thing is just go to Will Bar Profits. We have the number one multifamily podcast on iTunes. Great content. I think your show is going to air. I think your show aired last week. So we've got the top guys in real estate on there. I mean, and we like to focus. It's, you know, we like to put actionable content out there like you. I mean, we have shows with guys who are vendors. We have a laundry guy on there. We'll have our lawyer on there. We'll have an accountant on there. We want to focus on the space. We don't want to just talk about motivation and talk about, yeah, this is great, rah, rah, rah.

But we want to have some meat and potatoes there. So I think the podcast is just a great place to, you know, to get connected. And I think all your listeners should be out there listening to three, four podcasts a week. Because it's always great to listen to different guys and listen to different spaces. Yeah, I couldn't agree more. What's the story behind wheelbarrow profits? Where's the name come from? Oh, well, Jake was out one day cutting the grass.

And he's like, wow, I saw a wheelbarrow. So the wheelbarrow is the three-legged framework. The by-right is the back leg of the wheelbarrow. You have to do that. It's fixed. The other leg is finance, right? Once you get your financing right, that's fixed. The managed portion is the wheel.

It's always in constant motion, right? So if one of those three legs is off alignment, it's out of balance, your wheelbarrow is going to tip over, you're going to lose out, your investment's going to crap out. So I'm like, that is freaking genius because you always want people to really grasp how to do this investing. And you want to try to build frameworks and you try to make it simple to people. So you want to teach people how to buy right, how to manage right, and how to finance right.

Those are the three things you need to focus on. Like you said, it is pretty easy. Once you start doing it, it is pretty simple. But just that initial start, just to build that framework for the students, really helps them out. That's great. All righty. So I want to learn more about Gino and his partner, Jake, in the world of multifamily, go to jake and gino. If you're listening to my voice right now, then you obviously know how to find a podcast.

You can go to Wheelbarrow Profits and subscribe to their show. Is that a weekly show there, Gino? We do it weekly, yes. And you know what I'm going to do? I'll send you a link over. If anyone wants to get our book, just sign up and send out a free copy of our book, Will of Our Profits to you, all your listeners.

Oh, perfect. And he means that, by the way, because I have a copy of it sitting right here, and I forgot to. Shame on me for it. I forgot to thank you for it. So thank you very much for that, Gino. Oh, you're welcome.

That's great. Super. All righty. So it's been an absolute pleasure. We'll do this again, okay? Sounds great, Matt. You have a great day. Same to you, bud.

Thanks. So that's it for today. I'll see you next week on another episode of Epic Real Estate Investing. God bless and to your success. I'm Matt Terrio, living the dream. You've been listening to Epic Real Estate Investing, the world's foremost authority on separating the facts from the BS in real estate investing education. If you enjoyed this show, please take a minute to visit iTunes and share your thoughts.

Thanks for listening. We'll see you next time here at Epic Real Estate Investing with Matt Terrio. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.