BiggerPockets Podcast 474: How this Busy Mom of Three Bought $75M of Real Estate w/ Pili Yarusi

BiggerPockets Podcast 474: How this Busy Mom of Three Bought $75M of Real Estate w/ Pili Yarusi

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Letting go of something successful isn’t easy, but what if you know it’s costing you your dreams? Today we talk to mother, real estate agent, and massive multifamily investor, Pili Yarusi, about doing what it takes to stay focused, engaged, and on top of your life.

Pili moved out to New York from Hawaii with dreams of becoming a star in theater but ended up working as a bartender. Lucky for her, bartending is where she met her husband and future business partner. Together, they started flipping houses, which taught her not only to systematize investments but also to use her creativity in an efficient way. She and her husband later expanded into wholesaling.

Pili knew something was missing and she wanted to focus more on growing a multifamily portfolio. With help from some mentors, she realized that the main thing holding her back was her current (and very successful) flipping and wholesaling business. She closed both businesses, got herself systematized, and went head first into multifamily.

Now this homeschool teacher/mom is sitting on $75,000,000 in real estate, totaling in at 850 units. No small number by ANY means! She gives some incredible advice on what new investors need to do before they can reach their goals of owning big portfolios.

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Listen to the Podcast Here

Read the Transcript Here

Brandon:
This is the BiggerPockets Podcast, show 474.

Pili:
This is where the creativity comes when it comes to the numbers, like what can you do to this building that nobody else can do, that nobody else has found? Our underwriters will underwrite the deal and then Jason and I will go and we’ll dig into the building, dig into the actual, like how the building has been run, where the deficiencies are, how we can bring it up. That’s where the creativity lies.

Speaker 3:
You’re listening to BiggerPockets Radio, simplifying real estate for investors large and small. If you’re here looking to learn about real estate investing, without all the hype, you’re in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com, your home for real estate investing online.

Brandon:
What’s going on everyone? It’s Brandon Turner, host of the BiggerPockets Podcast here with my co host, Mr. David, Lieutenant, leftenant, how do you say it? Leftenant or Lieutenant, Greene. What’s up, man?

David:
I think leftenant was how they said it originally in old England. I know it’s different than the lieutenant.

Brandon:
I think so too. Anyway, what’s up, man? How are you doing? You’re actually more than Lieutenant. You’re like my general. You’re my president. That’s who you are.

David:
Then what does that make you? The leader of the galaxy? If I’m the president, you’re still ahead of me.

Brandon:
Makes me the janitor cleaning up in the back room. You left the birthday cake from the office party there. So I’m just putting it all in the garbage. What’s up, man?

David:
That’s exactly right, man but I’m going to be the best general, or the best janitor, I should say, that I can. It’s going well. I’m getting my Airbnbs up and running. I’m probably going to start looking to buy a couple more and I’m still looking to hire people for both the real estate and the loan team. Looking for leaders.

Brandon:
Yeah, I’m just wrapping up my Airbnb as well. Just getting the rehab done on it. So today’s show, we talk a lot about having the systems and not getting emotionally invested in your rehabs. No, I’m totally getting emotionally invested in this rehab right now. It’s crazy, but I haven’t done one in a long time like this. So my wife and I are going to Lowe’s and picking out the perfect tile and we’re doing all this stuff. It’s actually a lot of fun, because it’s kind of a side project, not really my main business.

David:
I think short term rentals are the lone exception, you can get away with that a little bit more with.

Brandon:
I agree. Because you want it to be unique and special.

David:
If you go crazy like this on a commercial property with 105 residential units, that can really hurt you but if you’re looking to make it unique, and the profit margin’s high, I think that that’s okay.

Brandon:
[inaudible 00:02:23] we’re looking at tile and just tile, it’s like 268 a square foot. Then my wife puts out this other stuff, it’s like 480 and I was like, “That’s really expensive,” and she’s like, “Brandon, this place is going to rent for $400 a night. Who cares if it’s an extra dollar or two a square foot?” At the end of the day, we’re talking multimillion dollar properties and like-

David:
And it’s not a 3,000 square foot place.

Brandon:
Exactly. We’re talking-

David:
It’s going to be like 300 bucks.

Brandon:
Exactly. Exactly. Isn’t that funny, how we do that with things. We’re like, “That Apple is $1.25, I don’t want to spend more than $1 on an apple.” But then it’s like, “That car is 35 grand, we’ll buy that one instead of the 30 grand one.” People are ridiculous, anyway, and myself included in there.

David:
Well, today’s show is really good because we talk about where you can get creative in your business versus where you need to stay disciplinized and systemized. We talk a little bit about this whole general cadet thing that we started off with, you and I hiring with our guest Pili the hiring struggle she’s having. Then we give really good advice to the listeners about how to make yourself someone that people would want to hire and how to grow within a company. Then we also talked a lot about transitioning from one asset class of real estate into another one and how you can use some of the skills in the first way you learn to help you in the next.

Brandon:
So our guest today is Pili Yarusi and she is amazing. They got over 850 units right now, her and her husband, and they have been just killing it on the real estate front but they had to shift their identity to go from the small deals to the big deals. That’s what we’re going to talk about today. This is one of those shows where we just got lost in conversation and I mean that in the best way. We just forgot the microphone was there and David, Pili and I were just having a really good conversation.
It’s like you guys are sitting on my lanai, listen to us talk story, which is how we say it in Hawaii. It’s just like talking and it was so good. Actually Pili is from Hawaii, so I can say talk story and it kind of makes sense. So with that said, we got to get on with today’s show, because you guys are going to love it but first today’s quick tip.
Today’s show, we talk a lot about identity and how you don’t want to have too many of them because it messes with your reticular activating system. You’ll hear all about that later. However, so that’s quick tip for today is I want you to get out a piece of paper, sometime today and write down all the roles that you currently are in your life.
Meaning like hey, I’m a small multifamily investor or I am a house flipper. I’m a wholesaler, I’m a real estate agent. I work this job. Write down that stuff and then ask yourself the question, “What do I need to let go of in order to improve the ones that really matter?” It’s all I’m going to say on that right now, you’ll hear more about that later but what do you have to let go of so you can improve on the ones that really matter?
Our guest today is Pili Yarusi. So she is a mom of three kids. They have over $75 million in real estate. Like I said, 850 units. Been doing it now for I think seven years. Actually got started by in listening to the BiggerPockets Podcast. So in a very similar spot to many of you. So without further ado, I think it’s time to get into today’s show with our guests, Pili Yarusi. Hey, real quick, if you’re watching the show on YouTube, do me a favor, click that little thumbs up button below the video, and make sure you’re subscribing to the YouTube channel here at BiggerPockets. If you like real estate investing or just success entrepreneurship minded content, this is your place for it.
In the comment section, you can ask questions to Pili there, and she’ll be able to jump in and respond. So blow up those comments. Now, let’s get into our interview right now. Hi, Pili, Welcome to the BiggerPockets Podcast. Good to have you here.

Pili:
Aloha. So excited and honored.

Brandon:
Thanks. Aloha. So you are originally from my side of the world right now. Is that correct?

Pili:
Originally from the Big Island, lived in Maui, lived on Oahu. I miss it so much. So, so much.

Brandon:
You left here to went to New York. Is that what I-

Pili:
Yup, I left it there.

Brandon:
That’s quite the adjustment.

Pili:
Jeez. That was August 2001. That was a time. It was a big jump. I had different dreams of doing theater for the rest of my life and I became a bartender.

Brandon:
Same thing. Pretty much. Drama either way. Drama no matter what. Good. So walk us through how you got into real estate. What was your very first deal, or maybe even before the first deal, where did the idea even come from that you wanted to get into real estate?

Pili:
So my husband and I met a long time ago in 2003. We worked in a bar together forever, but it wasn’t until around 2012 that we finally actually saw each other. Then in 2013, we decided we were going to start a family and 2000 … The date escapes me but Hurricane Sandy happened and his family is huge into house lifting, house raising. They actually take a house and lift it up and take it to the new base flood elevation, the BFE and set it down on its new in foundation and there you have a nice new house in the flood zone.
So after Sandy-

Brandon:
I could actually use his family right now on one of my properties. Actually two of my properties. Anyway, okay, that’s cool.

Pili:
I totally would come to Hawaii, but it’s not cost effective to bring that business there.

Brandon:
Yeah, totally understandable. Anyway, so he was [inaudible 00:07:30].

Pili:
So that’s the construction company. So 2013 happens, we decided to start our family. 2014, I get pregnant, and I’m like, I’m not going to do the restaurant business anymore. I’d been bartending for a long time, managing restaurants. The next step was to get into real estate. I sit down with my father-in-law and my husband, Jason, and we talk about house flipping and how we can renovate homes and do fun things like that. I’m like, okay, I’m in.
Then I find this thing called BiggerPockets and someone in BiggerPockets says, “Get your real estate license, because then you’ll have access to the MLS.” I’m like, what’s the MLS? So I am in my first trimester, and I take my real estate exam. I pass it with flying colors, got a 98 and that’s how we started. It started out of a necessity for my husband and I, and then growth for my husband’s family’s company.

Brandon:
Let’s dive into a couple things here. First of all, today, you’ve got over 800, and some units and you’ve been in this now for a number of years, but when you’re first getting started, you heard to get your real estate license. Do you still think that’s a good idea for people listening to this show? Should they get their real estate license? When is it beneficial? When is it not beneficial?

Pili:
See, for my husband and I, it was great because we had an astounding partnership because we did work together for years. We butt heads for years, we got through all that like early partnership stages. So we made a really, really good team. So I got my license, he didn’t have it. So when we were flipping and wholesaling, depending on the rules in your state, some states don’t allow you to wholesale as a real estate agent.
So you have to have a partner that you absolutely trust to give them all those deals, or you just don’t get your license. So it really depends state to state. I think it’s great because you get this ingrained sense, at least for me, of having a fiduciary duty toward basically everything. Putting others before yourself and that’s what real estate agents are supposed to do. We’re supposed to put our client’s needs before ourselves.
So becoming an agent really ingrained that into me, and I was able to help a lot of people. So my final answer is that it really just depends on what state you’re in. I actually think it’s a really good idea because it’s a great way to learn and learn the business at a very, very high level

David:
Pili, let’s talk about your very first deal. What was it? How’d you find it? How’d you break into this game?

Pili:
So my very, very first deal, that would be house flipping. So house living, we got our first deal, it was off market. My husband found it actually through a real estate agent. It was a pocket listing, and we took it, and we had our whole plan. This is our first deal, we’re going to make a ton of money. We had all the numbers stacked. So what we didn’t … I’m laughing because I would never ever tell somebody to do this.
So our plan was exactly what we say we’re going to do. We could take these flood ravaged homes, buy it basically at cost, hopefully below, but at cost because of the value we could put into it. So our plan was to take this home, lift it up not once, but twice into the air, and add a new first story and add a garage.
It seemed like a lot of value and we were going to revitalize these towns. We did do a couple of these homes but we didn’t take into account how long it was going to take and it took forever, what we thought was going to take six months actually took us a year to complete and you know with the cost of time, and it ended up being a beautiful house. I’m really, really proud of the first flip we did, but it took so long.
So one of the first things that we learned was you need systems, which we didn’t have, you don’t need to do such a big project for your first one. We since have learned, while we’re flipping and wholesaling, to really dive in and do those easier flips, like get the flip that maybe just needs paint and carpet.
Of course with those, we would always end up putting in a new bathroom or adding some sort of value that wasn’t there but as we learned, and as we grew into the flipping and wholesaling industry, we learned that systematizing, getting mentorship, and really following what others have done before, really, really helped us to go back, systematize that business and then grow into what we do now.

Brandon:
Can you explain what you mean, for those who listen to the show and going “Wait, what does she mean by systematize? Like what are systems? I don’t know anything about this in real estate.” Like what’s an example of that?

Pili:
Basically with flips, you don’t … HGTV is awesome. It’s really, really pretty, but even those amazing people have systems that they follow. Like, for instance, getting a flip under contract. You get a flip under contract, and you know exactly what you’re going to put into each flip. You have the skew numbers, you have exactly the … It doesn’t leave very much for imagination.
Especially when we were flipping, I try not to put too much imagination to our flips, because imagination costs a lot. So everything was systematized. We had exactly what we’re going to put in for each flip. We had our cost down, everything had a date attached to it. So that’s what I mean by systems, like making sure you’re not just flying off the cuff. It’s great to have imagination, maybe put your touch into small things but every single flip should follow the same map. So by systems, I mean having a map for everything that you do.

Brandon:
That’s so good. We watch HGTV and most people … I started this way with flipping. I’m sure you did as well. You watch the flipping shows and every time they go to the title store, and they pick out a brand new tile and every time they go to this store, they pick out a new floor in there. Then when I started talking to real flippers, they don’t do that. They’ve got one thing that they just do over and over and over.

Pili:
Not at all.

Brandon:
It’s not … I don’t know. It’s because it makes it much more systematized and less emotional. You just know what works and you know what product works. Your contractors get used to installing it and it becomes just a machine. It’s like a McDonald’s model, which is exactly what you want.

Pili:
So we got to bring in so much of what we learned from flipping and wholesaling into large multifamily, because that’s all business, that’s all numbers. Everything is the same. We don’t go in and put in fancy, sparkly tile or you do what your budget says to the tee. Everything looks the same and the creative part in multifamily is how you can work the numbers so that your tenants, so that your investors make either their returns or above that.

Brandon:
That’s a really good point and I want to get into that here shortly. This idea of transitioning from the small deals into the larger because again … And you brought up a good point that the larger deals, they are math, they are systems, but the smaller deals of flipping, the wholesaling even like individual rentals, it’s easy to forget that and treat those like a hobby or treat goes just something you do and you kind of wing it.
The people I see really successful right out the gate especially, is they treat their small deals like a big deal in the way that they’ve got those systems and processes. Do you agree?

Pili:
The way you do one thing is how you do everything.

Brandon:
Yeah. How you do anything is how you do everything. That’s what I always say.

Pili:
If you make your bed in the morning, if you get up, if you take on your day, chances are that’s how you’re going to take on everything. If you systematize your flip, you systematize your wholesale, chances are when you get into larger deals, you’re going to be systematized and ready to go in that as well. It’s not to say that you can’t change, but you have to take those baby steps to grow into doing things, I don’t want to say the correct way, but there’s a way to do it that will take you there quicker. By doing everything the right way first, saves you on the back end.

David:
So let me ask you this Pili, in your experience, what causes people to devalue systems and put more value on creativity and imagination?

Pili:
Oh, see, the funny thing is I’m one of those people or was for a very long time. I was very creative, I want to do all the things, put all the pretty things and what makes them value that is, number one HGTV. That’s the only thing that they really see. Really, that’s the only thing. When it comes to real estate, that’s what they see. They see the prettiness they go walk these houses, they’re nice.
They don’t understand that making sure that you have the systems to take that first step and that’s another reason why maybe getting your real estate license or getting some sort of training before you get into flipping or wholesaling, or even into any sort of real estate. Having that training and making sure you’re following the systems that others have set in stone, maybe not in stone, but have set down will help guide you into the creative parts of it.
So I’m not saying that with a large multifamily building, you can’t put some creativity into it. There needs to be some of it, but there stands a chance that every time you put that creativity into that one unit, and then you just do the same thing over and over again. So I think when people put too much emphasis on the creative, maybe real estate’s just not for them. Maybe they need to go into the arts, maybe they need to go into teaching, maybe they need to maybe go paint a mural.
I think with my kids all the time that I get rid of my, or not rid of, but my creative bag is settled.

David:
You’re not trying to take that urge to be creative and apply it to business. You’re recognizing, no, let’s keep it in this box over here where it belongs.

Pili:
Yes. You can be creative in business to a sense, but there comes a point where that creativity is going to start costing you money.

David:
Be creative within your system, instead of in addition to or in exception of the system. Brandon, is this a problem that you have? You’re pretty creative.

Brandon:
Every flip I do, I’m the guy that goes to the tile store every single time and this is why I don’t do a lot of flipping, because it’s a tremendous amount of work. I’ve never systematized it, but when I look like Open Door Capital, it is such a machine and such an engine that I … So the key is I’m not involved in the day to day of Open Door Capital from a like, I’m not deciding exactly what the direct mail letter looks like that was sent out.
I’m not deciding that kind of stuff but I get to use my visionary, creative, whatever juices for the big picture. Here’s where we’re headed down the road and here’s a really cool new strategy we’ve never tried for trying to find deals off market. Let’s try this thing. So I funnel the creative side into that, but I let my team, and I don’t want this to sound bad to my team. So if you’re listening this and you’re my team, you’re awesome.
The analogy would be like McDonald’s. Like a McDonald’s owner, or a franchise owner, they can be creative in the way that they market and maybe the way that they try to grow, but there’s a very simple procedure for flipping a burger that each person on the team learns and they do it the exact way. So that’s why I don’t flip burgers because I just want to be creative. So I had to find other people who are okay following the system.
My team, they have their systems and they follow it to a tee. Now they get creative in their own ways within that, but they’re hired to do the systems and processes that we’ve built and defined. So I guess that’s the long answer to that is I find other people who are willing to be the system makers or system doers, and I just get to be creative in the system.

Pili:
I completely understand-

Brandon:
Does that makes sense-

Pili:
Because you have your people who are so good at underwriting. I can underwrite a deal. Do I like putting all the numbers? Not really. So we have those people that love digging into the numbers and then my husband loves … This is where the creativity comes when it comes to the numbers. What can you do to this building that nobody else can do, that nobody else has found? That’s the creativity part.
So our underwriters will underwrite the deal and then Jason and I will go in. We’ll dig into the building, dig into the actual, how the building has been run, where the deficiencies are, how we can bring it up. That’s where the creativity lies and then my favorite part is the creativity when it comes to providing the opportunity to my investors. I love talking to people, I love talking to investors, and trying to see different ways that this particular opportunity could help them. There’s your creative. It doesn’t need to be in changing a light bulb or a fixture.

Brandon:
Yeah, or which glass tile do you want to use in the shower this time? It’s like, that is a 10, 20, 30, $50 an hour job that you could hire a good person to do but trying to decide like, what program can we get to get our investors to average instead of 100,000 investment to go to 150 or 200,000? That problem is so much more valuable to solve and it requires the same level of excitement and same level of, what’s the word? Creativity. So that’s cool.
So you mentioned a minute ago, how you do anything is how you do everything. Then you mentioned that you make your bed or whatever, in the morning, I read in my notes here, my producer said, “Make sure you ask Pili about her morning routine.” So I want to jump back on that. What is your morning routine? And what’s that about?

Pili:
So the first thing that my husband and I do is four, three, two, one. So we wake up at 4:32, or at least we try to. We have three kids. So 4,3, 2 and we’ve won our day. So that’s the first thing, because anyone that is looking for more time in your day will understand this, because that’s the only way we can find time is if we go to bed early enough that we wake up early enough to really start our day because once the kids get up, I am all about the kids.
We work at home, everything is at home. Our office is at home and we’re home schooling. Seriously homeschooling, pull the kids out. So I need that time to reset my day. So my husband and I put together something called the Aloha mindset. So A is for awakening, which is basically what I just said. You get out of bed. Get out of bed, make your bed, brush your teeth, do whatever you need to do to get out of bed, to stay out of bed.
I’m going to be honest, though, there’s some times I roll out of bed. I know that’s going to happen the night before and I make sure my yoga mat is right next to my bed. So yes, I might be doing some slow movements but I am up, I’m taking on my day and I’m waking up. Then I slowly crawl myself to my coffee machine and I make myself some coffee, but anything you need to do to get out of bed.
The next is love and that’s basically taking the next 5, 10, sometimes 30 minutes for yourself to meditate, to pray, to do whatever it is you need to do to really set your mind, your goals. I know from talking with you Brandon, you have your vision board, you have your goals down. I’m sure you look at that thing ka-billion times in a day. That’s the same thing I do.
I have my vision board. I just stare at it. I just stare at it just to make sure it’s in my head, and I set myself up. Then next is the opportunity. So that O is for opportunity. Again with a vision board and setting myself up to know that there is opportunity out there. It’s like the cash flow game with the opportunity cards. If you think to yourself that life is a bunch of opportunity cards, all I need to do is reach out and grab them. Read them, make sure they’re the right opportunity for me and take action on them.
Next is health. My husband and I are huge on health, especially after everything with COVID and 2020. We really, really dug in and got healthier and made sure that our kids saw that even in this crazy time, mommy and daddy were taking care of themselves. We had actually completed 75 Hard, back in August. It’s a fitness program. You workout twice a day, once outside. I hate the cold.
So when it was winter, that was really, really hard but it’s about doing the hard things. So making sure that you make your health a priority, not only your fitness but eating right, drinking water. We drink a gallon of water a day. So making sure that that is set. The last one A is aspire and that’s all about surrounding yourself with the best people and I’m not even talking in person.
I’m talking social media, making sure that you are following those people that are of or above your mindset, making sure that when you’re scrolling through and consuming all this information that you’re consuming the right information. Surrounding yourself with the best books, talking to the best people. During COVID, I’d started Moms of Multifamily, which was an offshoot of our podcast, and Mothers of Real Estate, which, it was a weekly show that would just go on live and basically mastermind with three amazing other minds, and we would invite mamas to come in, and we would just talk, because during that time, it was just hard to talk to people.
So we would just make sure to get, together talk and mastermind and kind of reset our minds. So that’s how we wake up every day, with Aloha

Brandon:
That’s really good. I love having frameworks, where you’re like, this is what we do … To bring it back a little bit. You systematized your morning. It’s not waking up, reactively going, “Well, what do I got to do now? I’m going to down some coffee.” You turned your wake up into a system.

Pili:
I have to-

Brandon:
Which is-

Pili:
Because I’m not-

Brandon:
That’s great-

Pili:
I’m not a systems person. I really am not, which has forced me to become an extreme systems person. Because if I don’t take those systems, if I don’t do the time blocking, if I don’t do the one thing, if I don’t do these things, my day kind of floats and goes everywhere and sometimes I’ll be working on art with the kids or maybe I’ll go look at some underwriting.
No, I have times, exact times when I’m with the kids, when I’m looking at work, when my one thing is happening. I even have a time where my husband gets to ask me to do something. I’m like, “During this time, you get to ask me to do something,” because we both have lists of things to do. So we let each other know during that time, because he knows, if he asked me to do something, my mind will go directly to that thing and I’ll forget the other thing that I was doing. So hope that helps someone.

David:
Let’s dive into that a little bit more because I think a lot of people get stuck on this exact thing. I’ve noticed when I’ve come across investors that are having a hard time catching traction, when I say, “What do you catch yourself doing every day?” It’s almost always something that I and Brandon would say isn’t very dollar productive. Analyzers like to analyze.
I hired a guy one time to manage my portfolio and he spent four months building me the most impressive and completely useless spreadsheet you’ve ever seen. It was like constructing this amazing car, but we didn’t have any gasoline, there was no need for it but that’s what he likes to do. He likes to analyze things. Networkers like to talk and network, marketers like to make videos that they think are inspirational.
There’s always a component of our personality that bleeds into our business and oftentimes, from what I see, sabotages us. What are the things that you have found Pili in your business, that have led to you guys actually becoming successful? I believe you have, what? 850 units or so right now? That’s a lot, you’re doing something well. What are the things that you really make sure you focus on and do you have advice for people that are having a hard time getting to that same place?

Pili:
So the first things that hopped into my head were the things that we’re not good at. So I’m not good at multitasking. I have to leverage people. So the one thing that Jason I have become really good at is leveraging people. Finding those people, like we talked about before Brandon, and David. We hire those people that can do things either for us or better than us or want to do these things that we just don’t want to do.
Like, for instance, we’re really good … I’m actually really good at spreadsheets. I just don’t like them. I forced to. I will spend my time looking at a spreadsheet creating things. Creating content, creating spreadsheets, creating all these things, is that a good use of my time? No. Creating PDFs, and those little funny content things, that’s not a good use of my time. So what do I do?
I hire other people. I hire people, and I leverage others and the thing is, it’s not that I’m giving them the bad things I don’t want to do. There’s people out there, like you said, David, that want to do these things, that like the networking part, that like to analyze things, that like to do all these things that I might necessarily not like to do. So that’s one key figure that has taken us to the next level.
The second thing was our inability, but now ability to focus. So I’ve told you, people, they’re like, “How did you do all these things?” So we had our construction company, which Jason was the president of. no longer. We had our flipping company, we had our wholesaling company. I was also a real estate agent, and I was helping buyers out because I really liked doing that and not a good use of my time because I would take them to see all the houses.
What else did we do? Oh, I’ve been either pregnant or with a small child since 2014 and my oldest is six, my youngest is two. So we had all these balls in the air. So one day, I sit down with my … Actually, this was at a mastermind and one of my mentors was walking in as I’m giving my … I was doing a hot seat and I was asking … I told him all the things that we were doing, and we were having all these successes, and we had just taken down a couple of other buildings.
I was like, “I need to focus. How do I focus? How do I get more focused?” My mentor said, “Well, Pili, you’ve been asking us this for the last two years. Just do it.” I just about broke down crying because this was a flipping and wholesaling mastermind that had become part of the family and I was like, I need to get rid of flipping and wholesaling.
I know there’s amazing investors out there that know how to take on everything and can do multiple businesses, but I can’t. I couldn’t. So in order for us to be become better versions of ourselves and to level up, we had to get rid of that business, which was making a ton of money, and it was scaling and we were growing, and it was doing really well but we knew that multifamily was the next level that we needed to be at. We were excited about it.
Flipping and wholesaling had become a job. We weren’t excited about anymore. I couldn’t go to the store and pick up tile anymore, because I knew that wasn’t the best thing for me to do. So we got rid of flipping and wholesaling. We were spending like, I don’t know, 15,000 a month on marketing for our wholesaling business. Cut that, took us a year to close shop on that and now we’re full force into multifamily. So that’s been a huge factor in what has gotten us to where we are at is the focus and the now ability to see where when mine or my husband’s focus wavers, that’s when our business starts going down.

Brandon:
That’s a really good stuff. Let me dig in to a couple of things here. First of all, it reminds me back on the podcast a few months ago, I don’t remember who the guest was but somebody asked a question, or they brought up the question, “What do you have to let go of to get to the next level?” I remember that being such a powerful question. What do you have to let go of in your life right now, to get to that next level? Sometimes it hurts, and sometimes it’s a huge part of our identity and who we are.
We’re known as that person but everyone goes through periods of growth and sometimes that new growth doesn’t get there. It also reminds me of the quote, “Good is the enemy of great.” It was good to flip houses. I’m sure you weren’t complaining, like oh, wow, making lots of money. This sucks, but it wasn’t your ideal version of yourself, of your life, where your mentality was going to, where your excitement was at. So letting go of something in order to do something else.
I did the same thing. I had to let go of flipping last year, and maybe I’ll bring it back up someday when I find the right hood and then the right team but it was holding me back from bigger things. So right there with you.

David:
I’ve noticed when it comes to that, your reticular activating system has a hard time being given multiple assignments. So my guess is Pili, you and your husband, we’re looking at everything from the lens of can we wholesale it, or can we flip it? Even though your logic tells you, “Oh, you can do multifamily, too. You have plenty of time in the day,” your mind can’t switch back and forth between the opportunities that it’s looking for. So I’m curious if that played a role in why you think you had to let it go.

Pili:
That played a huge role, because like I said before, I can’t multitask. So I couldn’t do multifamily, obviously, because I couldn’t … The flipping and wholesaling company was kind of like my baby. It’s something that Jason I grew up into. We learned a lot of what we use in multifamily and it was really, really hard to let go because like you said, it had become a part of who I was. I loved talking to sellers.
I love going into buildings that I could go in and I knew exactly, exactly how I was going to fix up this building. I could tell you the numbers, I could tell you the construction costs, I could tell you all these things, because I had studied and I had ingrained myself so much into it. But I knew, I knew letting go of that was the next step to really up leveling into large multifamily and it was hard too, because I felt like I was a little bit behind the eight ball.
Because I stayed behind and made sure that we closed up shop correctly. I made sure that the clients that we had and the sellers that were calling us, they were taken care of. We let go of most of our team in the flipping and wholesaling company because we just didn’t need them. I took all of that and at the same time we were learning multifamily, but I wasn’t able to jump in as much as my husband was.
Again, we’re a team. So when I came into multifamily I was like, let’s let all that go and let’s jump in full force and sometimes you have to let yourself have that growing pain. It took me at least a year, a year and a half, to really, really let go of that mindset of smaller multi families and single families and looking at those numbers, and then transitioning and looking at like the multifamily numbers when we started talking about 50 units, 100 units, maybe 500 years. Seriously, my head almost exploded but it was the next level.

Brandon:
Man, this is so good. This is so good. David brought up a point here, and then you’re just perfectly illustrating it here but I want to explore this for a second because I feel like this needs to be in a book someday that David and I are talking about writing a book together on a similar topic. So the idea of, it’s not about capacity, it’s not about ability, it’s not about even time, about focusing.
We oftentimes think like, I’m so busy, so therefore I need to do fewer things, but many people are like, “Well, I can do multiple things because I got lots of time, but David made that point, it’s not about the amount of time in your day, it’s about the reticular activating system, and even more so, I’d go it’s about your identity. You can only hold on to one identity.
You are a small time investor, you are a large investor, what exactly are you? So shifting that identity is probably more important than anything. It makes me think of like a couple years ago, I got rid of all my tools and I had to do that, because I had to get rid of the identity that I can fix things myself, that I can take care of it.
So just the other day, my brother-in-law was out here in Hawaii, and he’s doing a project for me. He’s like, “Hey, where’s the tile saw?” I’m like, “I threw it away.” He’s like, “You threw your tile saw away?” He’s like, “Why the hell would you do that?” I’m like, “Because if I had a tile saw, then I am clean to the identity that I may use that til saw-

David:
It’s flushing those drugs down the toilet.

Brandon:
That’s what it is. I had to flush it. So anyway, I’m just mentally processing this concept of like, sometimes you have to make that shift and you have to burn those boats sometimes, to use that analogy or metaphor of like, you’re on the beach, you’ve got to burn stuff sometimes to adopt a new mentality and that is hard, but you did so Pili. So I want to get into what came next. Once you did that, you said I’m buying multifamily. What was your first big multifamily?

Pili:
So we learned. Multifamily, you can’t just jump into it like we did with flipping and wholesaling. Yes, I became a real estate agent, but then we jumped into large multifamily and it was at least, it was six months of just like learning. We jumped in with a mentor and we learned all the terms. We started talking to people. We started talking to brokers, we started figuring out what market we wanted to go to. We had pulled together a couple of markets.
Finally we were digging, we were digging into San Antonio, and the Carolinas, but somebody mentioned to us Kentucky, which made a lot of sense to us, because my sister-in-law lives there and one of Jason’s best friends lives there. So we dig into this property, and we ended up putting in an offer for 2.3 on a 3.2 building.

Brandon:
2.3 on a 3.2.

Pili:
They came back with I think, 3.15 or something. So we were like, “Oh, no, thank you,” and the thing is with multifamily, you don’t want to try and make things work. So we leave that one alone, and we keep on looking at other deals. Finally, I don’t know three or four months passed, and it’s still on market and we noticed they dropped it a couple thousand dollars, hundreds of thousand dollars.
So we go back, and we offer I think it was like 2.4 and they come back to us with like 2.6 or something. Then now we know we have something there but I want to pinpoint a couple of things with this property. Number one, like a good wholesaler and a good flipper, we kept on with our sellers. So that’s something we learned from flipping and wholesaling.
We checked in with our sellers, we made sure our hands were always on the market, we kept on talking to the brokers. So we talked to this broker, and I think we ended up at like 2.65 and that was our first deal. That was after, I think we were in large multifamily for about eight months at the time, learning, really diving in, but because of some of the things that we had already learned, like following up and negotiating and making sure we came to an agreement that not only worked for us but worked for the sellers as well.
They really just did not want to be in the property and we had been really nice about them not taking our offer. We found out later that other people had came in with low numbers and weren’t so nice and that was our first property. That was a 94 unit in Louisville, Kentucky. We have since exited the property, but we learned so much from just that one property. The thing is that first one came in, I said eight months after we had gotten into large multifamily.
Our next one didn’t come until a year later. So there was quite a bit of time because it wasn’t like we were not looking because we were but large multifamily for Jason and I is the long play. It’s not like flipping and wholesaling where you need to have … It’s like next hit. You need to have one going on, one on the deck and a few like … Just you have all these balls going up in the air.
For large multifamily, it’s like if the numbers weren’t great, you want to keep on underwriting, you want to keep on looking at deals, and at this point was just myself, my husband and one of our partners, and you want to keep that machine going. But if a deal doesn’t hit, it doesn’t mean that you have to get worried because you need to make sure those numbers work because that’s what commercial real estate’s all about.
So residential real estate, you get all these emotions and these thoughts and feelings. Commercial real estate, it’s yeah, you still have thoughts, but you keep your feelings to the side and you make sure those numbers work.

David:
Well, if your feelings are attached and numbers working, you’re good. That’s the secret. I’ve often heard people say, “I don’t get emotional about real estate. It’s all just logical.” I say, “No, you get emotion about the logic. When the numbers work, you get super excited. You’re like, let’s take it down.” Everybody makes decisions off of emotions. It’s just where do those emotions come from. Pili, I want to ask you something maybe no one else has. What lessons do you think you took from flipping and wholesaling that you applied to multifamily that allowed you to be successful where people who just started in multifamily, maybe didn’t have your same level of success?

Pili:
The ability to take rejection. So actually I’ve learned that from a long time because I wanted to get into Shakespeare. Obviously I am not doing Shakespeare right now and I am not an actress, but I’ve been hit with many rejections. Getting into real estate in general, just as an agent, you get rejected by people all the time. Like why don’t people want me to represent them? Why doesn’t this seller want to sell it to me? Why, why, why, why, why?
So you have to understand that these reductions are not you. It has nothing to do with you. A lot of times, rejection has more to do with the person. A lot of times with the rejections that you get, maybe they just don’t want to sell to you. Maybe they don’t need to sell now.
Maybe they want to go with their cousin down the street. Who knows? Whatever it is just me knowing that rejection has nothing to do with me, especially, and this is the caveat though, especially if I did everything I could to get that sale, to get that, whatever it is, that number, that whatever it needs to be, if I’m rejected for that and I know in my heart of hearts that I put my all into that, then I know it has nothing to do with me. So that’s one of the big things was the ability to take rejection. I’m not saying it doesn’t hurt sometimes…

David:
But your ability to take the pain. There’s something to be said for that. Successful people can take more. What were you not doing in your first year of multifamily that you are doing now that has made you more successful now than when you got started?

Pili:
Oh, we talked about this. It’s a very good question, but it’s leveraging people which we’ve had to learn from failure after failure. By not leveraging people, we don’t grow. By leveraging people and by leveraging other people’s talents, we were able to grow into the machine, into the business that we are today. It’s probably one of the biggest.

David:
Brandon, would you say that’s where you’re at too?

Brandon:
Yeah. I mean a couple of things. What am I doing today? If I think Open Door Capital, like large deals, I could go small as well but if I think the large business that I do, today, we set a number of offers we’re going to make every single week. So that’s one thing that we do that we didn’t do at the beginning. At the beginning, it was just kind of like, oh, when something lands on our plate.
We set a number of brokers we’re going to reach out to every single week and we actually have a system for following up. Every four weeks we follow up with a broker, every six weeks and we have a random, like off the cuff conversation that was very deliberately planned on a certain day. So we take what feels … It feels super organic and natural to the other end, but it’s all systematized.
So we didn’t do that in the beginning. We didn’t do … We’re tracking number of phone calls, leads, broker discussions, number of direct mail letters we send out. All of that, we weren’t doing in the beginning. So David, what about you? What are you doing from your real estate investment side today that you weren’t doing earlier and then maybe from the agent side as well? What are you doing today that you weren’t doing your first couple of years in?

David:
Shocker. It’s the same thing you guys are saying. I’m trying to hire somebody right now to manage my portfolio because I recognized that I wasn’t buying properties simply because the energy that it took me to manage something I already bought was just killing me and it’s costing a lot of money in the future that I’m not acquiring them like I were. So in order to keep buying, I needed to find someone that could manage it for me.
So I’m working with Holly right now. Holly, if you’re listening, you’re doing a great job. Keep it up. Trying to get her and her husband to move out to California, to take over managing that. What I’ve noticed is that everything I want to do, I can if I submit to the fact I have to hire and train someone to do it.
If I do it through other people, I don’t have to choose flipping or multifamily or wholesaling or whatever but if I try to do it myself, I’m very limited to what I can do. So I think what I’m trying to do differently now is I’m trying to develop people that can run these components to the ecosystem that I’m building instead of running them myself and it’s taking me, what I feel like is a long time to build that skill.
Like I learned how to invest in real estate. I learned how to analyze deals. I don’t know how to learn how to manage people to do that. That’s a completely different thing. So I’m guessing Pili, it’s probably a similar situation for you.

Pili:
Yeah. Actually the question that just popped into my head is that how do you get over the fact that you think you’re the best person for the job? Because you know you do. I know there’s a lot of things that I shouldn’t be doing that I’m like, “Well, if I just take this time and just do it myself, I could just get it done right now.” Instead of showing somebody how to catch that fish so they can keep on catching that fish for you.

David:
It’s the general mentality, I think is if you see yourself as the general, you will resist the identity to pick up the rifle and get down there in the trenches. If you see yourself as a soldier, every time you get into the general’s box, your guilt will bug you and you’re like, “I got to get down there in the trenches with the guys again.”

Pili:
That guilt, gets me every time.

Brandon:
This is why my performance coach that I talk with every other week, we use that language of a general versus cadet all the time. All he has to do is ask the question, “Brandon, are you being a general or cadet?” It instantly changes my mindset and I go, “Oh, you’re right. I’m being a cadet.” Lay down your gun, pick up a map, stand over the map and tell us where we’re going.
No matter how many times he tells me that, every week there’s something I’m going to cadet on and I have to be reminded, which is why I love performance coaching so much because it reminds me that I have a different identity than what may be my default happens to go to.

David:
So let’s shift this to, for Pili’s situation, what we’re talking about is we need more cadets and most people listening to this are in the cadet phase of their investing career, looking for a general to serve under that can maybe take them to the next level. Pili, in your experience, what would you say makes a good cadet? What advice would you have for people that are trying to break into this industry that needs to make themselves more valuable to a general?

Pili:
What makes a great cadet? So this amazing, amazing, amazing woman that we just hired. Alessandra. So Alessandra, I know you’re going to be listening to this. You’re amazing. She loves underwriting, loves it. Just learned how to do it and she’s like, “Pili, I could just do this all day every day.” So I think for a really good cadet, it’s finding that one thing that you are extremely good at and letting those generals know what you do and how well you do it.
I think that’s number one, but you have to open your mouth and you have to say something. I happened to meet Alessandra in Clubhouse of all places and she came into a bunch of the rooms that I was hosting or being part of the mod squad or whatever you want to call it and she kept on asking amazing questions and really, I could see her start to follow into the rooms I was going to and really, really ingesting the information.
So one day I reached out to her and I was like, “Let’s talk.” So she told me where she was in her journey, that she was learning underwriting through a couple of other people. I was like, “Okay, why don’t we hop on another call?” Then she was like, “By the way, pili, I’m moving to Tennessee, I’m moving to Nashville.” I was like, “Great. When are you moving? Great, let’s have a meeting.”
Just so happens that somebody that we had hired to be in that assistant place, that cadet place left because it wasn’t the right place for her. In comes Alessandra and she was the perfect fit because she wanted to do those things that Jason and I did not have the time to do. That we could spend more time with the creativity part, like looking at the numbers that she had inputted and looking at those things that we could bring to it.
For me, it was like, how could this benefit my investors? How could we go in and add value to this multi-family building? So again, one of the hugest things that a cadet can do is to pinpoint that which they are good at. So that’s one way to break into this business. The other way is to simply get educated on how it goes. Then again, I’m going to come back to that, finding that thing that you are really good at and pinpointing and focusing, really focusing in on that, because then you can spread out later.
But if you really focus in on that, and then you partner up with those that maybe somebody has the money that you don’t have, maybe somebody has the connections that you don’t have, partnering up with those people and showing them your work ethic and the type of person you are will take you to the next level and I think having that focus will also help you when you work your way up to becoming a general.

Brandon:
That’s really good. Hey, one more note on that while we’re talking in this metaphor of the general and cadet, there’s a level in between there, I like to call lieutenant. When I started at BiggerPockets back when Josh and I started the podcast nine years ago, almost, I was very much cadet. Josh hired me as a W2 job to edit blog posts. I was a cadet, but very quickly, over a couple of years, I moved into this kind of lieutenant role where it was more like now I was managing some people and you know what? That thrilled Josh Dorkin.
Then later I moved into kind of a general role at BiggerPockets. Today, I feel like I’m more like a, I don’t know what you’d call me. Like a consultant role, but I moved to this thing and the reason I bring that up is in Open Door Capital, my own company.
So Walker was hired originally as a cadet. He came in as an intern and then Walker ended becoming … Now, today he’s much more of a lieutenant and this is the point I want to make here. Nothing thrills a general more than to promote somebody from cadet to lieutenant and lieutenant to eventually general because when Walker can be general, that means I get to move up to be, I don’t know what, commander, president, whatever that thing is.
We love to see that growth in people and that is our job as entrepreneurs is to foster these cadets and to bring them in, to train them and to teach them leadership skills, to be able to take on more and more because that’s how you win a war. That’s how you win a country is by building that system there. So if you’re somebody listening and you’re a cadet right now, just there’s a lieutenant or a general in your life, work with them so that you can get to that next level as well.

Pili:
I love how you put it that way, because I, and Alessandra will probably hear this on this podcast. I want to promote her to lieutenant so badly and she’s right there and she will get it, but then I’m going to have to hire another cadet. Maybe I’ll have Alessandra to help you with that.

Brandon:
I’ve gone through, I think five assistants in the past two years, because one of my assistants has moved from that cadet to a lieutenant phase of their business. David, I want to ask you, you have a ton of experience with hiring people and training people and bringing people in. What do you think is the key, what have you found successful for getting people from cadet to lieutenant or moving them up in your organization so they can take on more and more responsibility? What’s worked for you, what hasn’t worked for you? Then I’ll fire that to you as well, Pili.

David:
It has not worked when I’ve given them more responsibility, just because they wanted it when they hadn’t made the emotional commitment to take that on. So what I’ve found with my companies is not everyone, but the majority of people come in and say, “All right, I’m willing to do this,” they’ll say for a long time, but what they mean is a couple months. Then I want to be making good money. I want to be a top agent. I want to be crutching and I want to have a nice car. I want my name on David’s Instagram. I want to be the man.
They’ve closed 10 deals and for an agent that’s pretty good. But for a top producing agent, that’s nothing. It’s not even a blip on the radar and their expectation is okay, now I know how to close the deal and they want a lot more responsibility than what they can actually handle. The few times I’ve given it to them, the weight of it crushed them, their whole career. They lost it. They lost their confidence. They lost my confidence. They lost the client’s confidence and they quit. So there’s a balance of keeping somebody fed, which is, they have to eat
They have to make money. They need repetitions without shoving food down their throat to where they’re going to starve, which can happen sometimes and trying to get them to recognize they control their own destiny. I think a lot of people in the cadet world think the general’s holding me back or the general promotes me, but that’s really not accurate.
The general is looking at their cadets and saying, “Who’s ready for the next step?” I’m still trying to learn how to maybe manage that well. I think a lot of people come in here and they say, “I’m on the David Greene team. I made it.” We’re like, “You made the team, we have no idea if you’re actually going to contribute to the team’s position and what we’re trying to accomplish.” So that’s what I can see and I’m just trying to learn how to get better at conveying it and leading.

Brandon:
No, that’s exactly what happened with our old assistant and with some of the other teams that I’ve tried and failed managing. So I try to build … Like you David, I tried to build a team. I just wasn’t good at it. I was also pregnant at the time. So there’s that.

David:
You were building two teams.

Pili:
I was actually building two different teams. I had just started with eXp Realty and I started building this. I wanted to build this mega team. I had these ideas that I could do the team and I was still doing the wholesaling. I was still doing the flipping and I had all the things and I failed. The one thing is because I wasn’t focused enough, bring it back to the focus. So as the general, I wasn’t, and this is the one thing that we failed at, or I failed at was I didn’t keep to the map.
I didn’t put down that rifle. I didn’t lead them correctly and we had so many things going on that I wasn’t able to focus in. I remember when I let everyone go and I dismantled the team, I was like, “I apologize. I hope you can take everything that I’ve taught you and take yourself to the next level, because you’re right there but I am not the right leader for you at this time.”
So I’ve learned through my failures that I can’t grow before I’m ready also, as the general as the leader and I was growing too fast for me to handle that. So the reason why we had to let … Well, she wasn’t let go. She left on her own was because she wasn’t the right fit for our team. She just wasn’t the right fit.
We needed somebody that was excited about what we’re doing that could come in and totally put her mind to something just like Jason and I do, just like my husband and I do, but that she could do something that I couldn’t, which was “Alessandra, can you put this on our calendar? Can you also do this? Can you do this, this and this other thing?” Great, and then she’ll go back to exactly what she was doing before, which is something that I cannot do. Jason can do somewhat. So it’s learning those things that you’re not good at and making sure that the people that you hire can come in and fill those gaps that you can’t. It’s taken us a while to learn that.

David:
I was just talking to Aaron Amuchastegui, the Real Estate Rockstars podcast host about hiring trouble in our industry and what I realized in the middle of talking is this is so hard because there’s no college degree for working on a real estate team or analyzing multifamily or running a wholesaling business. We need people. We’re trying to hire people, and they like real estate, but there’s no way that you go get trained in how to do this
It’s not like being a bookkeeper where you learned bookkeeping principles, and then you get plugged into a company and you have a small adjustment you make with how they do it. That makes it so hard for people in our position, but it also creates such ridiculously big opportunity for the people like the Alessandras that are up to the challenge that say, “Hey, there’s not a lot of structure.
There’s not a lot of direction. I’m going to have to figure a lot of this out. All systems go. I’m in.” She’s in a couple of years going to fly to the top of a company and if she’s effective in making you guys more money, buying more properties, she’s just created her own promotion. She can have whatever she wants and that’s what I really want to encourage everyone.
This path does not look the same as a traditional, go to school, learn a task, go get into the workforce and do said tasks. That throws you into this pot with millions of other people that do the same thing. It’s very hard to get ahead in this world if you’re just 50% better than your competition, which isn’t as hard because they don’t really know what they’re doing either. You can get ahead so fast.

Pili:
Well, it’s also the other thing with real estate is that you’re also, and I don’t like using this word, but I can’t think of any other word. You’re also training what could be your competition. So I don’t believe in competition. I don’t think it really exists. At least not in that sense. I love competition, but not in that sense. So we have a training program for people who want to get into multifamily.
So we gave Alessandra all of that. We were like, “Take a look at it, all, ask us questions and let’s get you up to speed with what we’re doing.” So having your people look at that stuff, anybody who’s in real estate, anybody that’s in the general spot should have that map. We all have that booklet of how we run our businesses and if you don’t, you should.
Have that booklet of how you run your business so you can give the Alessandras of the world exactly what you need them to do. So we obviously have the same, but it’s just on PDFs, structured for her. So she goes through it and she has all these questions and I told her one day we sat down and I was like, “Alessandra, you know at one point, with all the knowledge I’ve given you, you could go out on your own.”
I’ve had these conversations with her because I know what’s going to happen and she’s like, “Oh no, Pili. I want to be a part of your team.” and I’m like, “I’m really, really happy to hear that, but I also want you to grow.” So that’s another thing. For people who are just getting into this industry, be with others who want you to grow, because there’s those that only want to hire you to be their cadet and keep you in that position and have you be the soldier.
Have you take up that rifle every single day, all day, without the thought that you’re going to up-level. I want to be positive and say that you’re going to up-level no matter what, and you are, but make sure you surround yourself. Again, it comes back to surrounding yourself with the best people. So surround yourself with those that want to take yourself to the next level. That’s why … Like Jason and I both grew up listening to the BiggerPockets Podcast because it was part of our system.
It was part of those people that were taking us to the next level, using the analyzers. Surrounding yourself with other people, other people in like large multifamily, if you want to get into large multi-families, surround yourself with those people. Not only those people that you consider mentors and friends and generals, but also people on the day-to-day basis. Like listen to people, listen to podcasts and this is what I tell Alessandra to do all the time.
Because I know at some point, like you said, she’s going to get so good. She’s going to get so good and I’m hoping that one day we’ll create a partner.

David:
Well, if you make your world big enough, then that’s exactly what will happen. If you stop growing, her opportunity stops growing. She will outgrow you. She will leave. So that puts responsibility on the general to keep building bigger and bigger opportunity and I would say the flip side of that is that cadet has to come in with some loyalty as well. If the general gets the sense you’re just coming to learn how to be a soldier and then you’re going to be a mercenary, you’re going to go work somewhere else, they’re not going to commit special forces training to making you great.
Nobody invests their own money into a rental property. If I don’t own it, if I’m just renting it, I’m not putting in new flooring and upgrading this thing. When I own a property, I will into that property and you got to look at people the same way. If you want the general to invest in you, your loyalty is an asset that is even more important than your intelligence and your technical skills.
It’s got to be a win-win for both parties. It literally doesn’t work if either side, if the general limits opportunity or if the cadet limits loyalty. So you’ve got to get that secret sauce just right.

Pili:
So if you look at one of my bio’s I say, I live with Aloha. The next thing I usually say is I invest in people and that’s what we all do. When it comes down to it, we invest in these large buildings or whatever we invest in, but we invest in people. We invest in those investors that come in with us, our partners, our tenants, we’re investing in our tenants. We’re investing in those that come and work on our buildings. That’s one of the biggest things I love about large multifamily is that I get to help more people. I get to invest in more people and I get to keep on growing like you said, David.

David:
This is good stuff.

Brandon:
It’s so good. Well, I know we’ve got to get out of here pretty soon, but let’s get a quick summary of where you’re at today. So you bought a bunch of multifamily. Is that correct? Where’d you buy them at? How did you fund them? What’s that side of your business look like today?

Pili:
So we have, most of our holdings are in Kentucky, Louisville, Kentucky. We have one building in Tennessee in Murfreesboro, which is actually where we live and we’re about to actually jump into the Arkansas, Little Rock market. We have one more building in Murfreesboro that we’re about to take down. So it’s about 850 units, upwards of $75 million. That’s basically our portfolio.

Brandon:
How do you fund all that? Are you doing syndication?

Pili:
Yeah, we do. We’re doing syndications mostly 506(b) as in buddy, which means we source funds from mostly friends and family, but our last deal in Murfreesboro, we actually did our first 506(c) which was a lot of fun because now I got to talk to more people.

Brandon:
Can you explain the difference just for those who want to know the difference because we do C. We do 506(c) at ours, but what’s the difference?

Pili:
The easiest way, again … So I’m not an SEC attorney. I’m not any of those things. Please, please do your due diligence and talk to an SEC attorney or your accountant. So a 506(c) and a 506(b) is basically ways that you can syndicate funds. So the 506(b) as in buddy means that you can only fund your deals by those people that you know, and I guess the rule of thumb is three touches.
So we used to have a spreadsheet. Now we use a program called InvestNext.

Brandon:
Oh, we use that too.

Pili:
Oh, it’s awesome. I love Brad. This is not mentor plug, but really that CRM, that’s so much better than what we were using before and we did extensive research in other CRMs. It’s another thing that has taken our business to the next level. It’s allowed us to grow, but before that we had a simple Google spreadsheet and on this Google spreadsheet, I would actually have … I listed everyone I knew and I put down how I knew them and if I just met them, the three touches that I had with them.
Just in case the SEC, decided to knock on my front door. I had that all down. So that’s for a 506(b). A 506(c) means that you can widely … I can come on here and tell people about my next deal. I could go onto Facebook. I can actually put it out into the world, but with a 506(c) I can only accept accredited investors.

Brandon:
We’re the same way. The reason I chose mine, and David, whenever you do a fund or a syndication, you’ll probably do the same is if you have an audience, it’s like, I want to be able to talk about my deals and I couldn’t do that if I were a 506(b). So just a little bit details there. Hey, I’m wondering, so you’ve got the $75 million of real estate. You’ve got 850 units, which is awesome. Where are you headed? Are you trying to get some number that’s there?

Pili:
Like you, we make sure we do a certain number of offers per week and we talk to a certain amount of brokers per week and we make sure we touch back with those brokers certain number of times per month. So we have the system going in place and especially with Alessandra here to help us it’s really going. So our biggest goal right now is to … Again, I still have to figure out what we have to let go to get this because our goal at the beginning of 2020 was to take down a larger property upwards of $20 million.
That hasn’t happened yet. We have taken down … Our threshold was, or has been 10 million. We haven’t done more than a $10 million property and the largest raise that we’ve done is 3 million. Is that correct? Doing the math. 2 million. 2 million.
So we want to get into those higher numbers, into more institutional deals, into just thinking bigger because we took the jump from single-family flips and wholesales into large multi-family anywhere from, I think the smallest deal we’ve taken down is 23 unit and our largest has been 94. We combined two of our buildings to make 108 unit, but I don’t know if that counts. So, perfect,

Brandon:
We’re going to count it. We’ll count it.

Pili:
Brandon Turner says that’s … He declares it.

Brandon:
I declare it. I declare it.

Pili:
So we want to take that next step and the only way we’re going to see if that’s the right way to go is if it happens and we take that next step. So we’re still in process because it hasn’t happened yet of figuring out those things that we might have to let go of and figuring out those things that we’re going to grow into. So I highly am optimistic that by leveraging other people like Alessandra, like other people that we’re going to be bringing on to our team will be able to reach that of just climbing higher in the numbers.

Brandon:
We should definitely talk off microphone, but maybe we’ll do a deal together because I feel like you got the expertise and you got the systems down and I got the ability to raise funds.

Pili:
Let’s do it.

Brandon:
I don’t know, maybe we’ll do something together and you’ll be back on the podcast in a year from now talking about our 300 unit that we just took down together. Who knows. This is how networking is done people, live on the podcast. Right here. No, but the truth is like, there are things like, as you’re out there talking to people, what can they do? What can you do? Have an idea of what you’re good at, what your specialty is and then every meetup you go to, every conversation you have with people, they’re going to say what they’re good at and what they’re … Getting that information is how you build partnerships and JVs and you start working together because you realize, oh, you’re really good at that.
I met a guy the other day who was amazing at land acquisition and the zoning and legal side of that. That sounds awful to me. He’s like, “No, that’s what we do. We do it well. We’re amazing at it. We’re one of the best in the world at it.” I’m like, “Okay, well, you know what I’m really good at is mobile home parks. What if we worked together? You find land, we develop a mobile home park. That’s what we’re good at,” and all of a sudden together, we can do 10 times what we could do individually because that’s how synergy works. That’s how a good partnership work is that both sides can do way more together than they could do separately. So anyway. There’s a lesson for today-

Pili:
Yes, and it’s all about really listening to people though, because if you don’t really listen, you’re not going to hear those things. So if I have time, I have one more story. One of the deals that we’re raising for, I was like, you know what? I’m going to put it out to this one investor first. So he got to see it about a day before I started putting it out to my other investors and knew this was going to happen. He texts Jason and I back and he’s like, “I have an idea? Can we talk?”
I was like, “Perfect.” I guess he was really excited. So he writes us an entire email and he’s talking about JVing on the entire deal and that’s bringing in a nice bunch of cash, but he had said this multiple times before and had told us no on some deals that I thought would be perfect for him for this very reason, because he was looking for a deal that he could take down as part of the GP, general partnership on a small team that he trusted.
Because I knew that, I put it out to him thinking that, okay, I’m going to put it out there. Sometimes you have to put the bait out before, I don’t know before the hook. But it’s really, really listening to people and finding out those things, because obviously you’re not talking about me, Brendan, because I don’t know zoning. So hopefully, hopefully you don’t need anybody on your zoning team.

Brandon:
I don’t know anything about zoning either, but there are people who love that and they just like, that’s their thing. They’re so good at it. So this has been so good. Everything we’ve talked about today. I’ve wrote down a ton of notes here, everything from the imagination costing a lot, the four, three, two, one principle, how you use Clubhouse to find a key employee, the identity shifting that goes into shifting from single family to multifamily and building a team, all this stuff. Going into the large multi, what’s working, what’s not. Amazing episode. So I think we’re going to have her at our famous four next. So anything David, you want to ask before we get there?

David:
No, let’s get there.

Brandon:
All right. Time for our-

Speaker 5:
Famous four.

Brandon:
Famous for is the part of the show where we ask the same four questions every week to every guest. So we’re going to throw them at you right now, Pili. So question number one. Do you have a current or all-time favorite real estate investing book?

Pili:
It’s my Bible. So it is by Joe Fairless, the best ever syndication book. I’m saying it wrong actually. I usually have it right behind me. I swear, even though I don’t really need it, I still go through it like yearly.

David:
It’s a really solid, solid book. What about a favorite business book?

Pili:
Favorite business book? That would be The ONE Thing by Gary Keller. That’s more mindset. Without that, I wouldn’t have a good business. So it would be The ONE Thing, because I have to focus on one thing each day.

David:
That’s really good. What about some hobbies?

Pili:
Some hobbies of mine. So I have my kids. So could that be considered a hobby? I actually-

Brandon:
Definitely-

Pili:
Through homeschooling-

Brandon:
How many kids do you have?

Pili:
Three. So through homeschooling actually, I’ve learned that I’ve loved painting all my life, but I stopped doing it. So I started painting again. So that’s one of my hobbies. I love to paint.

Brandon:
All right. Last question from me then. What do you think separates successful real estate investors from those who give up, fail or never get started?

Pili:
Knowing that with every failure you can get up, knowing that you have to sometimes let yourself fail in order to take that next step. So maybe with that failure, you don’t go back into real estate. That’s okay. Just don’t. Acknowledge that, don’t live in that, take the next step into that, that you’re supposed to be doing. So if you’re listening to this podcast and you’re like, “I really don’t want to do that,” that’s fine.
Go figure out what you want to do but if real, estate’s really what you truly love doing, that you want to get into and this is how you want to help more people, then get into it. Find that avenue that you need to take, the avenue that you need, that path that’s right there in front of you.
You just have to dust it off and see it and take that path and you’re going to trip, you’re going to fall, but dust yourself up, get back up or look up and you’ll see that there’s someone there putting their hand out, wanting to lift you up and put your hand out. Accept that. Sometimes it just takes you accepting the help.

David:
Last question of the show. Where can people find out more about you?

Pili:
The easiest way is just to go to our website, www.yarusiholdings.com and find everything on there.

Brandon:
Thank you Pili. This has been fantastic, amazing, and just super thought provoking. So we appreciate you.

Pili:
Appreciate you too. Next time we’ll talk more about Hawaii.

Brandon:
That sounds good. Come out and visit again. We miss you on the islands.

Pili:
I miss Hawaii.

Brandon:
All right.

David:
All right. Well thank you Pili. This is David Greene for Brandon, the dollar general, Turner. Signing off.

Speaker 3:
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In This Episode We Cover:

  • Limiting your creativity (in a good way) when doing flips and rehabs
  • The 4-3-2-1 principle and waking up with A.L.O.H.A
  • Identifying as the person you want to become, and letting go of less useful identities
  • The right (and the wrong) way to train employees and build a team
  • 506b vs 506c syndications, plus what to know if you want to start one
  • And SO much more!

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