KGCI: Real Estate on Air - Keep Calm and Get into Multifamily Investing with Ryan Butler

Episode Date: May 22, 2025

Don't follow the herd. Be uncommon. Here are your hosts, multi-millionaire real estate agent and investor, Chris Craddock and Jeff Safright. Hey, everyone's welcome here to another episode of your Uncommon Real Estate Podcast with the host Chris Craddick, myself Jeff Saferight. Today we have on a special guest, Ryan Butler. Ryan works in the multifamily sector. Ryan's about to make all the clouds go away. He's going to bring out the sun. He's going to show us how to jump into this multifamily and do it the way. be done. So Chris, why don't you go ahead and give a further ado here and then let's jump into it. Yeah. So what I'm super pumped about is my buddy, Ryan Butler, has a real estate team, right? Makes money from his real estate team. He's been in real estate as an agent for a long time, but understands that wealth is when your money works harder than you work. And he has worked hard to not only be excellent at what he's doing as an agent, but also learn to transition that

over into the investment space. And so Ryan, I've been in a mass. And actually, this was not planned. I just happened to be wearing a mastermind shirt from one of the masterminds. Wealth building. And yeah, like I, every time I've, I've chatted with Ryan, right? What I love about him is I'm asking him questions, trying to push him harder. And he's asking me questions, trying to push me harder. And yeah, I just love that about my friendship with my bud, Ryan Butler. So with that said, tell us how you started. I know you owned, how many apartment complexes do you guys know now?

Well, first I got to say, that's amazing come over you got right now. That right there? I love that, man. Hey, hey, you're looking like a young spry 20-year-old. That's a baby girl. I'll tell you what. Jeff comments on you. You are now a favorite person.

You were my favorite guess that we've ever had on this on this podcast. I tell them all the time. Homie's trying to keep that 20 year old, something hair going on. Hey, man. Just slide it through, man. Just slide it through. Yeah, I like it. Looking like a model.

So, apartment complexes. So, you know, that number goes up and down. Total amount of complexes, I really don't have that many. It's just that they tend to be a little bit bigger. So total projects that I have right now, That's actually a good question. One, two, three, four, five, six. So I have six.

I just sold a small one at a three unit. I just literally sold that like two weeks ago, but I still have six other, six other properties. Boom. I love it. All right. So six other properties and how many doors is that? And if you're new to real estate, here's the thing. A lot of times people will say units in a multifamily space.

You're talking about doors, right? because it just makes it make sense. How many doors is it that you have right now? Yeah. It's 200 and some change right around. Nice when you're forgetting how many. Somewhere around. I just try to count the dollar amount more than anything.

But yes, I got 100 unit. I have a 68 unit. I have a 22 unit, a 29 unit. and then I have a 15 unit and a 10 unit or a 16 unit and a 10 unit. I converted from a 15 to 16. So, yeah, whatever is one of you really smart math people out there can add that up. You'll get the number. I think the technical number is a lot.

All right. So that's a good number. All right. So with that said, here's my question. And this is the question that I want a lot of folks to think through is, right, you were an agent. doing well, right? You were a successful agent, doing well. But you wanted to think bigger and you also wanted to think legacy and generational wealth and things beyond just how do I spend a couple hours and create my next transaction that I get paid for, time for dollars, and move into wealth, right?

So what was the first step you took to start acquiring wealth rather than just time for dollars? Well, the first step was just a bunch of mistakes when I did a lot of flips when I, I mean, not a lot, but I did a few flips when I was in my early 20s. And I lost a lot of, I mean, I made a lot of money, but I lost some money on them too. And so that was kind of like my first foray into the wealth building sector, if you will. And I learned a lot from that. And what I realized is that those mistakes started pushing me towards what end up being kind of my niche. because I'm like, well, I didn't like this part and this part and this part. So here's what I'm good at.

Here's what I'm bad at. Where can I use my skills that gives me the most return on my time? And then also like an enjoyment of the process. And that's kind of the question mindset I had to have to figure out where I needed to go. And that just let me down an exploration lane. And then I found multifamily that way. It just started making sense. So the first one that you did, Multifamily, well, let me ask this question.

And it's a leading question, but I'm going to ask it anyway, because so many people sit around thinking about stuff and never get around to doing anything. Did you feel like you were ready to move on that? Or did you feel like there were a lot of things that you didn't quite have answered when you started making moves? Both. Both because I was ready. I didn't know a lot. I didn't know all of the answers. But I was comfortable moving forward because I had partners.

And I had vetted partners that knew the answers that I didn't know. And so it really worked out. So that made a good partnership where it's like, hey, here are my gaps. But here are my partners and here are their strengths. So like together we made a formidable team. Formidable teams. Yeah, that's great. All right.

So property one, walk us through. Did you have any false starts where you were trying to make offers on something and then got down the road and you're like, yeah, this is kind of a dog? or like how did how did property one come to fruition? Yeah so even before I got going like I'm like okay multifamily said and then I looked and said where can I add fortunately I did my flips before and then I had a real estate I built a real estate company so I knew what I would be looking for when I if I had more experience or more skills like why would I partner with someone less skilled and less experience and it's for a couple

reasons. They're bringing something that makes my life easier. And so I knew that I needed to up my skill set around underwriting, which is basically doing the math. So doing a math, I had to make sure my skills are strong there. And then I leaned on the skills I had already built, which was building relationships with brokers, also understanding the speed and how things needed to move for properties. So I leaned on my skill sets to bring value to my partners. And the main thing I did was like I just underwrite dozens. I underwrote dozens of properties. One that I wasn't even planned on writing on just to build the muscle and the, and the memory around what does the underwriting process look like and when am I looking at a

good deal. So I did a lot of that before I really put in the offer that made sense. But I did another short period. It's probably 30 days. I probably spent 30 days just like pounding out underwriting every day on different deals. And once I did that, man, I felt like comfortable, like recognizing numbers that I, that were interesting to me. Yeah. Okay. So that makes sense. Now, I want to pick up on something that you said.

And Jeff, feel free to jump in any time. I, I just love picking apart, like, how people think about things. So you said, why would you partner with somebody less skilled unless they're bringing something to you, right? So if you're looking to get into this space and you want to find a partner that's more skilled than you. How should somebody think about that? Let's say I've been in the business for a year or two, and I'm like, man, I want Ryan Butler to be my partner because he's good at real estate. And yeah, and I want him to be my friend because I like him. What do I need to do to attract somebody like a Ryan

Butler to partner with me? Yeah, I think it's really simple. And it's my business philosophy across all things, which is, one, be a good human. That's the first thing. That's sound, that I don't want to underscore, I don't want to, like, not put enough emphasis on that. Like, I want to work with good people. And then the second thing is, be skilled, right? Be productive. I think that's the simplest word to use. So the more productive you are in whatever realm you are in, the realm you are in, is easier for me to partner with you because I'm looking for very productive people. So, and that goes to simple things like, do what you say you're going to do. Bring deals. Like, that's the, if you're a flipper and you're trying to transition, the concepts are the same, which is, what does a flipper,

like a flipper wants? They want you to bring deals or they want you to help find the money. You can do those two things. They'll help you with the execution of everything else. It's the same kind of thing in multifamily, too. So if you're bringing, if you're bringing deals and you're bringing money, like, you'll find partners. I promise you that. So you're human. My brother-in-law was the team captain. He played on Messiah College's soccer team. They won the national championship three out of the four years. He was there.

He was the team captain's life. And one of the things, and this has meant a lot to me, one of the things the coach said when Mark was a junior and he was part of the recruiting group, he's, listen, anybody that's coming in is good enough to play here. And he's, I don't care about their talent at all. I don't care if they're the most talented player you've ever seen. if they're a tool and he's and this is how I describe it if they're a tool if you wouldn't want to go camping

with this person for a weekend because you just couldn't stand spending time with him for a weekend he's like I don't care how talented they are I don't want them and so think about yourself like that do people want to be around you and if they don't like do some soul searching yeah yeah for sure for sure you don't got to be a but hold to make money so And it's a lot easier to make money with other people involved than it is to do it by yourself. So yeah. Absolutely. So I think that's number one.

And then the second thing you said is be productive, right? One of my biggest problems, I love, I love Art Williams. And one of the things Art Williams says is smart people are really tough because they just sit around thinking and they never get around and doing anything. Yeah. And so I look at that and I'm like, if you are, it's so much easier to. educate a doer than it is to motivate a thinker. So if you're out there doing stuff, making things happen, and so I guess to break this down to even be smarter, or not smart, easier on this would be if, Ryan, if somebody came to you and said,

hey, I've been cold calling apartment building owners. I found somebody that wants to sell, well, you look at this with me. Are you going to say, not interested? No, I'm looking, man. In fact, send it over ASAP. No. So, but how about this? What if they sent you something, and it was a decent deal, but it wasn't a great deal, one that you wanted to buy. Would you, what does that do with your relationship with that guy once they send you? I'm just going to tell him why I don't want to buy it to give him feedback so he can sharpen his skills. Because that could be a negotiation problem. It could be a location problem. There's a couple different things that it could be on why I might not want that, want that. Or, might not be my type of deal. He might be bringing like an A class deal or a D class deal and I don't deal with A's or D's, right? I'm in the middle with B's and C's. So he might bring a deal. I'm like, man, you know what, this is probably a good deal. I would take that to somebody else over there. They're probably going to want that deal. So you're saying that even if they don't get paid on that,

like in dollars, that there's an education that they would get from bringing something to you and you kind of telling them why it works or why it doesn't work for you? Yeah, because I'm not getting paid on it either. So if I'm not buying the deal, nobody's getting paid on it, right? So you got to take that deal to somebody that wants to buy it. And that's how it work is buy and sell. And money happens in between that. So if you find somebody wants to buy the deal good for you, maybe your wholesaling or something like that. But if you're looking for a partner and you're trying to learn something for the long term, that's the type of people I want in my life. I love that. I love that. I love that. They're learners. I just, and we'll get back to this one second, but I'm reading this book right now that just blows my mind and I cannot believe I haven't read it sooner. Have either you guys read Port Charlie's Almanac, Charlie Munger, Warren Buffett's partner? I have it. And yes, I've heard that's amazing book. Oh, I've heard about it for so many years and I just never pulled the trigger on it. And I pulled the trigger and there were two things that stuck out. He gave a lit, like he just gives all of these.

lists of ways that he thinks about things. And one of them was how to live a miserable life. And one of them was, don't be reliable, right? And the second one was always try to figure out things on your own. Right? And as soon as he had me, I'm like, man, you've got me on this book. Like, I am all in listening and taking notes. Like, it's so good.

And so right there, you're saying you're going to help people cut corners on learning. Maybe they can figure out how to do the deal themselves, but if they bring you a deal, maybe they're partnering with you, then you are going to help them see what you've spent time, energy, and money learning. And that right there is probably more valuable than a few bucks in your pocket. Yeah. And if you can do the deal on your own, good for you. That's typically hard to do with the bigger deals just because of the price point, quite frankly. So the small deals, yeah, I mean, if you've got a property, like my three unit, most people can take down on. I bought it for 255. I sold it for 450. Right. Like it works. It makes sense. I had to put a

little bit of money in it. But in the end, those are simple numbers. Most people can take that down. But like my 100 unit, that'll be a little bit tougher because that one was 7 million. But if you got 7 million, go for it. But if you don't, you're probably not going to be able to put that deal together. Yeah, absolutely. Absolutely. All right. So, Let's keep going on this piece here. Let me ask a question real quick, Chris, because I think a lot of people that are jumping into this space, they're putting deals together or their underwriting deals

or figuring things out, but then they never go anywhere with them because they don't know where to go. So if I'm looking at, if I have a deal and I know I can't do it myself, how do I go about finding a partner? How do I know how I should partner with somebody, if I should wholesale deals or anything that you guys would suggest? that would help me know what to do with the deal once I got it.

Yeah, I mean, I think just getting some validation on your numbers first, are you actually underwriting the deals properly? But let's assume that you got good at underwriting, right? And you're good at underwriting, and either you have money or you don't have money. So if you have money, you can say, hey, look, I got this deal, underwrote the deal, then you got to do things like,

how do you protect yourself? You got the deal, you make an offer. Do you get it? Do you get it? Do you actually get the contract sign? If you get the contract sign, you make an offer, then if someone wants to work on that particular deal, they have to come through you. So you're almost forcing a partnership on that, right? If you don't have money and you're working with someone with like integrity, if you're underwriting deals and you find a deal and it makes sense and you're able to put an offer in and help negotiate it. But that person is still going to cut you in. It might not have. be as much as you want or much as you think you deserve, but any person with integrity is going to cut you in some, and then you'll be able to start seeing what happens behind the curtain. Because all of the main work happens after the property is closed. That's the main difference

between a standard rental or single-family rental and multifamily is that the execution of the business plan, these are terms that are used in multifamily. The execution of the business plan is the most important thing. And because that's going to the, determine what the value of the property is once you finish doing what you're doing. Absolutely. And again, just to land this part of it, think of it as education, right? So as you're doing your first deal or two or whatnot, right, and your JVN, though, it's like, this is more an education for you as you're learning the process. So it's not sure you want to, you want to make the money that you can make. And at the same time, you want to get the

education that you can get, especially the education without the headache, because how many people fail on their first deals and they fail miserably and it's an ongoing headache for months and years afterwards right so yeah i think that's the most people get into this because they're their high energy they're entrepreneurial they want to make money and they're i would say a lot of people are oftentimes fiercely independent but you know all the money that people spend on training and education everything else this is on the job training where you're actually making a little bit of money, not just giving money away, right? So, I mean, look, in most in most worlds, if you take out the entrepreneurial side,

most people are a princess. You become an apprentice, but before you come a master. And you're basically an intern in a lot of ways. And so you got to get over yourself and just understand you're going to be an intern. You're not going to make a little, you're not going to make that much money at first. And that's okay, because if you're playing a long game, then it makes sense. because now I got the skill sets, now I got the relation. I got all the things that I've built over this time,

putting myself in the middle of progress. I got all these things that are going to allow me to be successful. Right. Absolutely. So Jeff popped me a message offline. We should probably talk through how you underwrite a deal. Would you mind giving us a clips note? What are the five things you're looking for, three things or whatever it is, the things that you're looking to say, okay, is this something

worth pursuing or is it a dog? And obviously, there's so much more once you get into the weeds. Yeah, I think the simplest way, and I know this is, this is going to sound so simple, but the simplest way is to ask your partner. And your partner, for most people, it's going to be the bank. So if you have a bank, the bank is not going to give you money if it doesn't make sense for them. So when you give them like, hey, here's the, here's the information. What kind of loan can you give me? Well, they're always going to give you a loan, right? But the question is, is it 20% down or is it 60% down?

Well, if they're saying 60% loan down, you probably don't have a good deal. If they're saying that, hey, they really like this deal and it's 20% or 30% down, it's probably a good deal. So that's literally my, that's like a really simple test that you can do. And most lenders, they have a little small calculator that you can use this, you know, underwriting for dummies almost. Like it's a one page calculator. You stick in a couple numbers and something pops out, boom, right?

And you can see, oh, okay, I'm cool with that or I'm not cool with that. Like, I would literally start there. I didn't learn that till later. And then I'm like, hey, man, this guy just wrote this underwrote the deal for me. Like, I should have, I should have him do more of these things. obviously the underwriting has to make sense for me too. And quite frankly, underwriting becomes really important when you have other partners with their money in. When you are underwriting deals for yourself, the numbers are way more simplistic.

They're way more simplistic. It's, okay, I underwrite this deal. Here's my profit. Here's how much money I put in. Do I like this ratio? Right? Do I like this ratio? If I don't like this, right?

But if it's okay, do I? I like this ratio, but now I got to split this, this, and this person has to get 10% return, and this person's going to get 3% right now and 10% on the back. Like, when you start adding all these partner complications, that's when it really gets tricky. But if you were to do a really simple underwriting exercise and just assume that you were buying it without any partners, I would start there. That's great. Now, I know I'd heard this phrase thrown around, but I never really understood how important it was when I was mainly in the residential world. Can you just give us a 30 second overview?

What is a cap rate? What is kind of acceptable cap rate in this market and what makes it go up or down? Yeah, so a cap rate is your net operating income over your expenses. Expenses usually means your purchase price. But if you're renovating a property, that counts too. So you buy a property for $500,000, you have to put $600,000 into it, where your cap rate wouldn't be the number used. It's not $500,000 and $600,000. And so it's a ratio of how much profit you make before mortgage.

So that's taxes, that's insurance, that's property management. Yeah, those are your big three for real, insurance, property management, and taxes. So whatever profit you get after that before you pay the mortgage, like that's the number you use on the top. you put the little line right there for division and then you put the purchase price on the bottom and that's how you that's how you check your cap rate a good cap rate it really depends on the on the asset class most people are looking for at least a 5% cap rate if you got a bunch of money and you just want a safe return if you got 5% on your money some people say hey that's that looks pretty good for me or aggressive people are looking for 9 9 plus cap rate so 9% on their money

or better. What I would look for more than anything would be cash on cash return because your cap rate is one number. But right now, the interest rate is higher than the cap rates. So you're making negative money. The interest rate needs to be lower than the cap rate. If the interest rate is lower than the cap rate, you can make some money. If the interest rate is higher than the cap rate, you will not make that much money. And remember, there's some other pieces to throw in as well, which are important to just understand, right? Is there principal paydown in the loan that's going to happen if you're including the loan or when you start looking at that?

What are the tax advantages, all the other pieces? And so that's why some people will accept a cap rate that's lower than inflation because there's other pieces there. But I mean, just a simple. Yeah, I'm simple, man. I try not to get into two complications of it. man, like in the grand scheme of things, I look for deals that I can add value to, that I buy for one price, and then when I sell it, that's a different price, and then I'm making cash flow

along the way. Like, I try to keep it really simple. There's enough complications and doing these already, so I try to make my math simple. Yeah. And you know what? Simple usually is better. Yeah. That's what I learned over there. Life lessons right there, man. one of my best buds he literally was in men's up right the group of the smartest people in the world and he does these deals that are so complicated and most of the time they go really well half the time they go really well and half the time they end up being a train wreck because they're just too many moving parts so moving parts with that said Ryan's obviously a killer on a lot different fronts as far as the agent business, as far as wealth building. Just even asked, like,

when we've talked about building something bigger on that, if somebody has a deal or just wants to reach out or anything to learn from a man, Ryan Butler, Ryan, how do people get in touch with you? How would they come into your world? Yeah, man, I would say you can email me for sure. It's Ryan at coalition p.g.com. I'll put it in the chat. But honestly, you probably come out better messaging me on IG. And that's Ryan Butler, Hoyer. I check that more. I get, I get flooded with emails. So sometimes, like, if I don't respond to email, blame it on my head and not my heart. I'm trying to get to all the emails. But sometimes it's just, I just get flooded with email. So yeah, that's going to be one of the better ways to reach me. All right, Jeff.

Awesome, friends. This concludes another episode of your Uncommon Real Estate podcast with your host, Chris Craddick, myself, Jeff. Ryan, we appreciate having you on here for everybody else. you're listening to the podcast, you know where you are, go there, give us a rating, give us a comment, let us know what you think, let us know what you want, let us know how we can help you level up because that's what we're here for. We'll be back on next week, same time, same place. For those that want to join us live, until then, continue crushing it and have a great weekend. Bye. Welcome to Uncommon Real Estate, where it's all about finding creative solutions for real estate agents and investors. In exclusive mastermind conversations, with some of the

brightest minds in real estate, you'll learn how to earn an extra six figures. a year. Don't follow the herd. Be uncommon. Here are your hosts, multi-millionaire real estate agent and investor Chris Craddock and Jeff Safright.