{"id":96789,"date":"2018-02-15T00:02:12","date_gmt":"2018-02-15T07:02:12","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=96789"},"modified":"2023-02-09T19:17:54","modified_gmt":"2023-02-10T02:17:54","slug":"biggerpockets-podcast-266-partnership-buy-900-units-jake-gino","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/biggerpockets-podcast-266-partnership-buy-900-units-jake-gino","title":{"rendered":"How We Used a Partnership to Buy 900 Units with Jake and Gino"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">We\u2019re not going to lie: It was hard to come up with a title for this episode because we covered SO much\u2014productivity strategies, morning routines, growing from zero to 900 units, partnerships, 1031 exchanges. Whether you are a top performing real estate expert or still looking for your first, you\u2019ll leave this interview challenged, encouraged, and fired up to make some big changes in your life! <strong>Jake and Gino<\/strong> are full of energy and even more full of knowledge, so get ready for one awesome show. <\/span><\/p>\n<p><a href=\"https:\/\/itunes.apple.com\/us\/podcast\/biggerpockets-podcast-real\/id594419649\" target=\"_blank\" rel=\"noopener\">Click here<\/a>\u00a0to listen on iTunes.<\/p>\n<h2>Listen to the Podcast Here<\/h2>\n<p><iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC5559487993\" width=\"100%\"><\/iframe><\/p>\n<h2>Read the Transcript Here<\/h2>\n<div style=\"overflow-y: scroll; max-height: 400px; background: #eee; padding: 20px; border: 1px solid #ddd;\">\n<p><strong>Scott: <\/strong>This is the BiggerPockets podcast Show 266.<\/p>\n<p><em>\u201cGino always says this. You always have to have sort of the same goals and the same outlook in mind. Like, he always goes and says, if we wanted to fix and flip but you want to do multifamily, that\u2019s not going to work, right? Because one guy is going to want to sell and one guy is going to want to hold. So I think it\u2019s getting down and saying, what are your goals? What are you trying to achieve? And making sure your goals are aligned\u201d.<\/em><\/p>\n<p><em>You\u2019re listening to BiggerPockets Radio. Simplifying real estate for investors large and small. If you\u2019re here looking to learn about real estate investing without all the hype, you\u2019re in the right place. <\/em><\/p>\n<p><em>Stay tuned and be sure to join the millions of others who have benefited from BiggerPockets.com. Your home for real estate investing online. <\/em><\/p>\n<p><strong>Scott: <\/strong>What\u2019s going on, everybody? This is Scott Trench here with my co-host, Mr. Brandon Turner. Brandon, how are you doing?<\/p>\n<p><strong>Brandon: <\/strong>You totally really screwed that up. It\u2019s <em>host <\/em>of the BiggerPockets podcast, here with my co-host, Mr. Brandon Turner.<\/p>\n<p><strong>Scott: <\/strong>Ah, yeah, yeah, yeah.<\/p>\n<p><strong>Brandon: <\/strong>I\u2019m good. How are you doing?<\/p>\n<p><strong>Scott: <\/strong>I\u2019m doing great. Where are you located right now?<\/p>\n<p><strong>Brandon: <\/strong>I am in a bedroom over and yeah, it\u2019s pretty good. It\u2019s kind of dark in here. Sorry.<\/p>\n<p><strong>Scott: <\/strong>Weather looks terrible.<\/p>\n<p><strong>Brandon: <\/strong>Are you trying to get me to say Hawaii?<\/p>\n<p><strong>Scott: <\/strong>Yeah, I\u2019m trying to get you to say Hawaii.<\/p>\n<p><strong>Brandon: <\/strong>People should know. Yeah, I\u2019m spending some time in Hawaii this winter and maybe I won\u2019t leave. I don\u2019t know. We\u2019ll see. I went surfing yesterday.<\/p>\n<p><strong>Scott: <\/strong>Brandon has semi-moved to Hawaii and since his days\u2014<\/p>\n<p><strong>Brandon: <\/strong>I have not moved to Hawaii because Hawaii has a state income tax so I am visiting for a few months and then I will be back in Washington where there is no state income tax. And maybe someday down the road, I will decide to move to Hawaii.<\/p>\n<p><strong>Scott: <\/strong>And just pay the income tax.<\/p>\n<p><strong>Brandon: <\/strong>Pay the crazy income tax. Crazy Hawaii.<\/p>\n<p><strong>Scott: <\/strong>Hard life.<\/p>\n<p><strong>Brandon: <\/strong>It\u2019s a hard-knock life. So today\u2019s show is really a lot of fun. We have Jake and Gino back on the show, who they\u2019ve been on before. It was an amazing episode last time and I would say it\u2019s even better this time. They\u2019re super fun. We covered both high level and like beginner stuff. Talking about partnerships, talking about 1031 exchanges, talking about multi-family, building ancillary\u2014am I using that word right, Trench?<\/p>\n<p><strong>Scott: <\/strong>Ancillary.<\/p>\n<p><strong>Brandon: <\/strong>Ah, I butchered it. Whatever.<\/p>\n<p><strong>Scott: <\/strong>I did saw ancillary a couple of times on the show though.<\/p>\n<p><strong>Brandon: <\/strong>You know what? We don\u2019t speak English well. But it was a good show though. Listen up. Before we get to the actual show, let\u2019s hear a quick word from today\u2019s show sponsor.<\/p>\n<p>Hey guys, it\u2019s Brandon. I\u2019ve got some exciting news. So SimpliSafe, you know the company that we talk about a lot here on the podcast and that I use, I just released their brand new home security system, the all-new SimpliSafe. It is completely rebuilt and redesigned. They\u2019ve added a ton of new safeguards to protect against power outages, down to Wi-Fi, cut landlines, bats, hammers, and everything else in between.<\/p>\n<p>And the all-new SimpliSafe was redesigned to be practically invisible with sensors so small, you can blanket your home in protection and never notice. You know who will? The intruders. And this is what\u2019s truly remarkable to me. SimpliSafe actually spent years building this system and they\u2019ve added so much but you still get the same fair and honest price, 24\/7 protection for $15 bucks a month. And no contract. It\u2019s smaller, faster, and stronger than anything they\u2019ve built before but supply is very limited so visit SimpliSafePockets.com now to order. Again, that\u2019s SimpliSafePockets.com.<\/p>\n<p>All right, big thanks to our sponsors always and now let\u2019s here from today\u2019s Quick Tip.<\/p>\n<p><strong>Scott: <\/strong>All right, today\u2019s Quick Tip is go and learn about what kind of loans you\u2019re going to need after you\u2019ve used your first few conventional loans in your real estate portfolio. Today\u2019s discussion with Jake and Gino, we talk a lot about what kind of advanced commercial loans that have different terms than what you\u2019re used to hearing about with the 30-year fixed, 15-year term at a low interest rate.<\/p>\n<p>Go out and just kind of study that and kind of understand, hey, what is a balloon payment? What does the amortization period mean? What does term mean? What other kind of other factors that will be influencing your finance decisions as you scale past your first few properties and go down the line?<\/p>\n<p><strong>Brandon: <\/strong>That\u2019d be good. You know, that\u2019d be a really good blog post to come out on Thursday at the same time as the podcast written by Scott Trench. Wouldn\u2019t that be a good post?<\/p>\n<p><strong>Scott: <\/strong>No, see I\u2019m still learning about this stuff so I ask a bunch of questions because I always try to learn about this stuff. I\u2019m not the person to write that but definitely I know enough to converse with Jake and Gino here. But you\u2019re going to want to be able to do that as well as you build your portfolio.<\/p>\n<p><strong>Brandon: <\/strong>Nice. Well, here is a quick second Quick Tip for you. I just had to bait you into forcing you to write an article. It didn\u2019t work. But no, if you guys go to the search bar, if you\u2019re on BiggerPockets, the navigation bar at the top, there\u2019s a little magnifying glass. Click that. Our search has been totally revamped over the past few months and it\u2019s really, really good.<\/p>\n<p>Like, you can find just anything on the site. Just search something like \u201cballoon payment\u201d, right? Type it in there and then it gives you a bunch of categories. You can search all BiggerPockets or just the podcast, just the blog, just the forums, and it\u2019s really, really, really helpful. I use it every single day. So there\u2019s a second Quick Tip.<\/p>\n<p><strong>Scott: <\/strong>Awesome.<\/p>\n<p><strong>Brandon: <\/strong>All right. Well, I think we should probably just get to the show unless you have anything else to cover. Maybe, I will say this because it\u2019s been a while, probably did it like last week\u2014if you have not yet left us a rating or review for the show, please do so. It really, really helps us. And tell your friends. So, with that, let\u2019s bring in Jake and Gino.<\/p>\n<p>Jake and Gino are two real estate investors. They\u2019re partners. They\u2019ve done massively cool stuff. You\u2019ll hear this story later on when they go into the story but anyway, they\u2019ve invested in multi-family. I think they said they had 900 doors, now they have? 900 units. And they\u2019ve only been doing this for like five years. So they\u2019ve really scaled up, built a really awesome business that involves never selling. We get into that conversation later. Make sure you guys stick around for that because it is a fascinating topic. So without further ado, let\u2019s get to the interview.<\/p>\n<p>All right, Mr. Jake and Gino, welcome to the BiggerPockets podcast again. How are you guys doing?<\/p>\n<p><strong>Jake: <\/strong>Good. Doing really, really good man, really happy to be here.<\/p>\n<p><strong>Brandon: <\/strong>Good, good. We\u2019re happy to have you. This is going to be a lot of fun today. Can you guys, for those who didn\u2019t listen to your last episode, can you guys give us just a quick rundown? Who are you each? How did you get into real estate? We\u2019ll keep this a few minutes and then they can go back and listen if they want the full story. But tell us about yourself?<\/p>\n<p><strong>Jake: <\/strong>You want me to get into it? I\u2019ll get into it. So we were just a couple of dudes. I was a pharmaceutical rep. Gino was a restaurant owner. We met through Gino\u2019s brother. I used to hit up Yankees games and hang out with Gino\u2019s brother. I ended up moving to Tennessee for a better cost of living. A lot of guys were saying, dude, you\u2019ve got to get into real estate. Blah blah blah.<\/p>\n<p>So I ended up moving to Tennessee. I was getting a lot of rejection, people telling me I can\u2019t do this. But ya\u2019ll are crazy, basically. So no, some really cool folks. So we bashed our heads against the walls for about 18 months trying to get into a deal. We ended up getting a 25-unit crack den. A 25-unit crack den turned into 850 units which we\u2019re closing on another 50. We\u2019re going up to 900 here in a minute. And yeah. So we blew it up really quick.<\/p>\n<p><strong>Gino: <\/strong>He fast-forwarded to that really fast.<\/p>\n<p><strong>Jake: <\/strong>Well, you said we saw it on the last one. We don\u2019t need to go through it again, right?<\/p>\n<p><strong>Gino: <\/strong>It wasn\u2019t that easy.<\/p>\n<p><strong>Jake: <\/strong>It\u2019s a G-Daddy here. I just clap my finger and go buy a couple of apartments and now we just sit at home and talk to you guys.<\/p>\n<p><strong>Brandon: <\/strong>That\u2019s awesome. We\u2019re a lot alike.<\/p>\n<p><strong>Gino: <\/strong>It\u2019s more challenging than that but I\u2019ll tell you one thing. It\u2019s one of the best five years of my life. I downsized from my restaurant. I had one small restaurant, right? So the paradigm, guys, is this thing. Watch your words. My mom would always say to me, you have to stay small. Small this, small that. And to go buy a 25-unit property, for me, was really huge. The first one was really huge but I knew I wanted to get out of the restaurant ultimately. So it took me about three years to do that. March of 2016 was my D-Day when I decided to hang it up and say goodbye.<\/p>\n<p>We had about 650 units. It took him about two years to do it. And that was our ultimate goal. So anybody listening to it, think with the end in mind. Think when you first start out, why am I doing this? If you want a few extra bucks, if you want to go live in Hawaii\u2014I actually moved to St. Augustine six months ago. That\u2019s what I wanted to do. I moved down to Florida because of the quality of living, the cost of living. I have six children so I wanted to be with them all the time, go to the beach all the time.<\/p>\n<p>I thought the cost of living would be less but when you want to live on the ocean, it\u2019s not. But you know what? Fortunately for me, I kept buying. We refi-ed over $7 million bucks. We\u2019ve got a lot of money but we refi-ed the money, keep putting it, keep buying more property and you just keep seeing the vision. You keep painting the picture. Because we always think in pictures, right?<\/p>\n<p>So think of the picture. I was thinking to myself in the ocean, getting up at 7:00 o\u2019clock in the morning, doing my Miracle Morning, doing my SAVERS out there and that\u2019s what pushed me through it. So have a picture in mind and know what you want to do, focus on it and you can do it whether it\u2019s multi-family or single-family, whatever it is. Just keep focusing on it.<\/p>\n<p>Jacob: Real quick, too. I just want to throw this out there because last time we were on the show, we had a tree fall on one of our properties. We talked about it. We cut it up. We sent you a video. We do have a little bit of an issue today. If you hear a little grinding in the background, we apologize. We\u2019ve got the tree guys out here today. We\u2019ve got about another acre at my house that we\u2019re clearing and stuff. We\u2019re warning you, we\u2019re sorry but it should be okay. We\u2019ll carry on with this.<\/p>\n<p><strong>Brandon: <\/strong>Nice, nice. I don\u2019t mind that. Real quick, before we jump in a little bit more. You mentioned Miracle Morning and SAVERS. For people who haven\u2019t listened to that, we had Hal Elrod on the show a while back but if you haven\u2019t listened to that episode, can you explain what is Miracle Morning and what has that been like for you and kind of walk through that a little bit?<\/p>\n<p><strong>Gino: <\/strong>For me, it was great. I had Cameron Herold on our podcast so I love that whole thing. Basically, it\u2019s called SAVERS. It\u2019s the acronym. Now, I don\u2019t remember what it is. I forget what the acronym is, but what I do, I try to spend about 45 minutes to an hour every morning. And guys, the morning time is the best for me because it\u2019s the time when I get up in the morning for myself, whether it\u2019s 5:00 o\u2019clock, 6:00 o\u2019clock, 7:00 o\u2019clock. There\u2019s nobody up in the morning.<\/p>\n<p>So I like to go to scribing, I like to go take at least a 30 to 45-minute walk on the ocean. That\u2019s my goal, to get on the beach every single day. I didn\u2019t do it this morning because I got up at 3:00 o\u2019clock to come here and see this guy. But you try to do that. You try to clear your mind. You try to really actually start your day, whether it\u2019s meditation. I like to pray a little bit in the morning. I like to give myself a prayer for the day.<\/p>\n<p>Like, really think about what my day is. Really plan my day. Try to show some gratitude throughout the day, just say be thankful when you first get out of bed, say hey listen, let me start the day off right. Let me plan my day. Let me see what\u2019s going on. And it\u2019s like a routine. You try to create those really good habits in your life.<\/p>\n<p>And what I see is in the morning, I like to do a lot of writing in the morning. I like to get stuff that is heavy-lifting in the morning. Because as the day goes on, you start losing that momentum, that motivation. And as the day wears on\u2014it\u2019s happened to me so I like to get my stuff done in the morning.<\/p>\n<p><strong>Scott: <\/strong>But what if you\u2019re not a morning person like me?<\/p>\n<p><strong>Jake: <\/strong>That\u2019s an excuse though.<\/p>\n<p><strong>Gino: <\/strong>But you know what you do though? Define morning person. What time do you normally like to get up at?<\/p>\n<p><strong>Scott: <\/strong>Seven.<\/p>\n<p><strong>Gino: <\/strong>I get up at 7:00 o\u2019clock. Or I get up at 6:45, 7:00. Just try to chunk out 45 minutes in the morning. Try to work out in the morning. Trying to work out in the morning either walking or exercising is probably a great thing because it gets you going. Eat a little something healthy. Take five or ten minutes to scribe throughout the day. Get your thoughts going and try to plan your day in the morning.<\/p>\n<p><strong>Jake: <\/strong>What time do you go to bed?<\/p>\n<p><strong>Scott: <\/strong>10 or 11.<\/p>\n<p><strong>Jake: <\/strong>If you went to bed at like 9:30, would that change your life in a big way? Are you missing out on something?<\/p>\n<p><strong>Scott: <\/strong>No, but I\u2019d just get up\u2014I\u2019d go to bed earlier and get up earlier is the way I kind of think about it.<\/p>\n<p><strong>Jake: <\/strong>No doubt. So you get up, you go to bed a little earlier, you get up a little earlier. And now you\u2019re a half hour, or 45 minutes ahead of all your employees or whoever you\u2019re managing or whoever\u2019s on your team, right? You\u2019re sending stuff out to them. You\u2019re getting your day prepared, cleaned up. You\u2019re ahead. You\u2019re basically starting ahead of everyone else. So then some stuff starts going. If you\u2019re an overachiever, you\u2019ll be able to get further ahead.<\/p>\n<p>For me, I\u2019m up at about 6:00 o\u2019clock, firing off e-mails, making sure all my ducks are in a row, getting the admin out of the way because I hate admin. I get it out of the way first thing in the morning and then I\u2019m out doing things trying to grow the business. So for me, I feel like a competitive advantage and it seems to work.<\/p>\n<p><strong>Brandon: <\/strong>For me, the whole morning thing, like Miracle Morning movement and all that, for me it\u2019s more about proactive living than it is about time, right? It\u2019s about saying I\u2019m going to take a dedicated time in the morning to work on myself and to say, I\u2019m going to define how my day is going to go. I\u2019m not going to live reactively to what comes my way. But also, in addition to that, I\u2019m just so much more productive in the morning. So like morning\u2014an hour of work in the morning for me is like the equivalent of four hours of work at 11:00 o\u2019clock. I don\u2019t know if you guys notice that as well but I\u2019m so much more productive because there\u2019s nobody else up. Nobody\u2019s around. Nobody\u2019s e-mailing me or calling me bugging for my time.<\/p>\n<p><strong>Jake: <\/strong>Plus your brain isn\u2019t totally with it so if there\u2019s something you hate to do, like you\u2019ve got to fill out a Freddie Mac contract or something like that, right? Do it first thing because your brain is, you can plow through that sh*t and that didn\u2019t even happen, right?<\/p>\n<p>The other thing is, I got the TB-12 Method. I stole it a little bit from Tom Brady here. I\u2019m getting the electrolytes in the morning, first off, staying nice and hydrated and then doing the brain games every other day. I go from the Head Space\u2014<\/p>\n<p><strong>Brandon: <\/strong>Brain games? What are brain games? What are you talking about?<\/p>\n<p><strong>Jake: <\/strong>Brain games. Lumosity, man. It\u2019s like 15 minutes but it\u2019s like cognitive training so your brain\u2019s functioning properly. It\u2019s like exercise for your brain. So you go on, it just keeps the brain fresh. I do that one day. The next day I do Head Space, which is like a little meditation on your thing. I\u2019m hitting it, alternate it. I don\u2019t know if it does anything. It makes me feel good and I enjoy it so why not, right?<\/p>\n<p><strong>Brandon: <\/strong>There you go. One last thing about the waking up thing. Just an app that works really well for me, there\u2019s an app called Alarm Me. Have you guys heard that? So Alarm Me is fantastic. It\u2019s an app where it wakes you up like an alarm, right? Except for it makes you do\u2014you can choose what you want it to make you do in the morning. For example, I have \u201cGive me three math problems I have to solve when I wake up\u201d in order for the alarm to turn off.<\/p>\n<p>So I\u2019m like, 19 plus 85 plus 62. And by the time you\u2019re done with three simple math problems, I\u2019m awake. Another one, it\u2019ll make you take a picture of something in your house. You line it up just perfectly, take a picture. So it might be your coffee pot or whatever. Anyway, that I find is like the best alarm I\u2019ve ever had in my life because like you have no option.<\/p>\n<p><strong>Jake: <\/strong>The brain games are similar. It\u2019s got like division and mathematics falling from the sky and you have to hit it before the brain drops and explodes in the water.<\/p>\n<p><strong>Brandon: <\/strong>Yeah, just getting your head working a little bit in the morning. Anyway\u2014<\/p>\n<p><strong>Jake: <\/strong>It sounds like a terrible morning but I\u2019ll have to take up paddle boarding.<\/p>\n<p><strong>Brandon: <\/strong>Try it. It\u2019s good.<\/p>\n<p><strong>Scott: <\/strong>Moving onto real estate and business though, I think what we\u2019d really love to hear about is\u2014<\/p>\n<p><strong>Jake: <\/strong>Dude, it is real estate and business. It all starts up front. 90% is in your head, right?<\/p>\n<p><strong>Scott: <\/strong>All right, we\u2019re moving on. We talked last time about you guys building this real estate portfolio. I think that it\u2019ll be awesome to hear about how you used the process of building this real estate portfolio to create ancillary businesses that were related to real estate and produced kind of additional income streams. Does that sound like\u2014<\/p>\n<p><strong>Jake: <\/strong>Yeah, I\u2019ll go with this then you go. So it all starts up front. You know, you talk about system process. So our framework is buy right, manage right, finance right. And we basically realized that multi-family investing is a three-legged stool. If you buy the thing right, you don\u2019t overpay, you can do well there. The management is really important. We reposition these things and then we look for minimalist 3% rent growth year over year. We hope to get more. We don\u2019t want to really get less.<\/p>\n<p>And then financing right. You know, I think one of the biggest issues is interest rate risk. If we can get out there at 35-year fixed HUD loan, great. Minimal of ten years. We want non-recourse financing. So we want it off our balance sheets. We use community banks. We love community banks. We try to get them\u2014sometimes we go the community bank, we refinance it out, take the money and get it off to non-recourse.<\/p>\n<p>So that\u2019s kind of like a broader framework but what we realized coming into this is I started managing the business for the first 25-unit deal and we realized that it\u2019s a big vehicle. In the middle, you have your holding company and then there\u2019s these spokes that are basically going off the holding company. We have like 14 holding companies right now, 25 employees. But you get that holding company in place, you can start a management company if you want. That\u2019s another stream of revenue there.<\/p>\n<p>You can start a brokerage. We\u2019re actually looking at maybe this year, we start a brokerage company, just simply focused on multi-family assets. We can go, we could pay our brokers 3% for bringing us the deal, and then we have an offer. Hey, Mr. Owner, 3%, we buy it from you. You don\u2019t have to worry about it. If not, we\u2019ll sell it for you. Right? So that\u2019s one option we want. We\u2019re looking at procurement down the road. Can we go get a huge box for our top 20 supplies from China and cut 50-75% from our supply costs?<\/p>\n<p>We\u2019re looking at, we\u2019ve got the education company. One thing we want to do this year is syndicate as well. We bought all our deals with all our own money. We\u2019re closing out, we\u2019re going to be a little over 900 units here in April. We actually read the deal that we\u2019re buying now this morning. You know, we\u2019re going to give it a shot. We don\u2019t know if we like it but we can say why not? Let\u2019s give it a shot. We\u2019ve got a bunch of investors that are on our list right now so let\u2019s see if we can add that and give value that way.<\/p>\n<p>So I think that if you\u2019re a contractor, if you\u2019re some guy that built houses, if you have management experience and you say, I want to get in the game\u2014well look, multiple streams of revenue, right? You can make money over here. You can make money over here or you can make money over here. It\u2019s not at all, go into a multi-family and forget the rest. People need a place to live. We\u2019re all in a multi-family. We don\u2019t do residential. We don\u2019t do commercial stuff. It\u2019s just multi-family homes and I think there\u2019s a lot of ways that you can make money off of that.<\/p>\n<p>It\u2019s also vertical integration. We control the whole process. The more these businesses we control, we\u2019re not paying fees to people that we\u2019re hiring. The main contractors we use is a painting and flooring company. We try to handle all the rest of the construction stuff in-house.<\/p>\n<p><strong>Gino: <\/strong>And I think the important thing about that is a couple of things. I can relate to other businesses but what happens down the road is five years down the road, if you get sick of the HVC company that you created, you can always sell it. You created an asset. It\u2019s got value. You can sell that. Same thing with the property management company. You can see it. You can still maintain the asset.<\/p>\n<p>Let\u2019s relate this\u2014we call it multifaceted multi-family. That\u2019s what we call it but just take any other businesses that anybody\u2019s in right now. I was speaking to the guys at the restaurant that I owned. I tried to do this. Unfortunately, my brother didn\u2019t want to do it. So if you have a brick and mortar store, which is dying right? It\u2019s still a nice, viable option.<\/p>\n<p>People still have to go out and eat. Well, write a cookbook. There\u2019s another stream of revenue. Do some online training educations. There\u2019s another stream of revenue. Why don\u2019t you do some physical products? Maybe you want to sell some knives. There\u2019s another stream of revenues. Hey, how about some tomato sauce? There\u2019s another stream of revenue.<\/p>\n<p>So as entrepreneurs, find out what the market wants, try to supply it, and try to expand that one stream because we\u2019re always locked down to one stream. But if you start thinking outside the box, all of a sudden, you\u2019ve got four or five streams feeding this one thing and Jake likes to call it the snowball effect. All of a sudden, that one little asset is starting to create a lot of multiple streams and that\u2019s how you become wealthy.<\/p>\n<p><strong>Scott: <\/strong>Well, let\u2019s think about this for a second. Let\u2019s say I\u2019m a new investor and I\u2019ve got two or three small residential properties, duplexes, triplexes, quads. Two or three of those types of units. What are some ways that I can start thinking outside the box and begin building the foundations for these ancillary businesses? What would you guys do?<\/p>\n<p><strong>Jake: <\/strong>So number one, you\u2019re in the game. So congratulations. You took the first step. You got in the game. You already got three deals done. So you\u2019re well on your way. And I think most of the time, after people have got that one, two, or three, they can go up to five. They can go up to ten.<\/p>\n<p>So I started, in my own personal experience, I started managing. I was working full-time so I don\u2019t want to hear I don\u2019t have the time. I can\u2019t get up early enough, all that stuff, right? You can. Just work a little harder. You\u2019ve got plenty of time throughout the day. Start managing it. Get a feel for it. If you totally hate it, you can go back and have someone else manage it for you.<\/p>\n<p><strong>Scott: <\/strong>What was your job, by the way, when you were doing that?<\/p>\n<p><strong>Jake: <\/strong>I was selling vaccines at the time.<\/p>\n<p><strong>Gino: <\/strong>So the thing is, you guys have to understand. He talks as if everyone is built like him. He\u2019s a machine. The problem is, we all have to figure out our \u201cwhys\u201d. If you have a strong enough \u201cwhy\u201d, you figure out \u201chow\u201d. It\u2019s just as simple as that.<\/p>\n<p>I had a strong enough \u201cwhy\u201d. I hated my restaurant. It just got to the point where I wanted to do something else. The two types of motivation. I was moving away from pain at the very beginning. I didn\u2019t want to be there anymore. That\u2019s a great motivator. I don\u2019t want you to do that for the rest of your life, but to kick yourself in the butt and do what he did? To work that extra\u2014I would have my mom again come and say to me, why are you working during lunch?<\/p>\n<p>I\u2019m like, this is not work. I like to do this. This is moving me away from pain and going towards pleasure, which is the second type of motivation, which is why we\u2019re on this podcast, because we love to do this stuff. So if you can get to that second type, you\u2019re going to be the Steve Jobs of the world. You\u2019re going to be the Bill Gates of the world. If you love what you\u2019re doing and money is not the cause, it\u2019s the result. And that\u2019s when you start living a truly passionate life.<\/p>\n<p><strong>Jake: <\/strong>And that\u2019s spot on because people say \u201cdo what you love\u201d. It\u2019s all about finding what you love. You know what\u2019s awesome doing what you really love? It\u2019s being successful. When you get good at something\u2014no, let\u2019s not belittle it. If you put the work in and you start to get good at something, guess what? You\u2019re going to start liking it.<\/p>\n<p>I always go back. I used to be a personal trainer when I got out of college because I thought, I played football and lifting weights was fun, right? These people were so damn unmotivated and they hated it, it made me not want to go to the gym anymore.<\/p>\n<p>So guess what? It wasn\u2019t that I wasn\u2019t passionate about it\u2014so now we have a gym right underneath where we are, in my house. It\u2019s awesome. I love it. I go downstairs and work out when I want to. I don\u2019t have to go and try to push people. So when you start to get good at something, you put the time in, learn the ropes. Start your own management if you want to, and then guess what? I get to work on our employees now.<\/p>\n<p>My employees are our customers. We were talking about before the show a little bit. We\u2019re doing financial education for our employees this week because we know that they need it. We\u2019re bringing in bankers. I flew in the big G-Dad from Florida because he\u2019s like Mr. Life Coach and everything and he\u2019s going to coach these guys on it. We want our folks to be successful so they can reinvest in our business, so they can start to invest in deals, so they can grow a nest egg for retirement and get cash flow in, not only on their job but also outside of it as well.<\/p>\n<p>So now, myself, I\u2019m working on building businesses, not so much in the business. I will though. I will. We hire an attitude and ethics and a blue collar work ethic. So if something needs to be done, I\u2019ll go and clean an office or something. Whatever needs to get done. I don\u2019t mind doing it. But it\u2019s really working on the business and creating additional businesses and allowing people to move up through the business.<\/p>\n<p>My biggest thing that I\u2019m doing that I love is being able to take someone that\u2019s an assistant manager and promote them to a manager or a regional manager or a maintenance manager and move them within the company. Better their lives and people see it. If you\u2019re a rock star in an organization, you don\u2019t stay in your seat for six months because you\u2019re moving up or buying something else.<\/p>\n<p><strong>Scott: <\/strong>No, I love it.<\/p>\n<p><strong>Jake: <\/strong>You\u2019re firing me up today, man.<\/p>\n<p><strong>Scott: <\/strong>It\u2019s fantastic to have that passion and particularly to bring it to other people. That\u2019s what we do all day long at BiggerPockets. My goal in life is to help as many people as possible gain financial freedom so that they can go and live out their purpose or to see a higher goal. Move toward pleasure and instead away from pain as they get further along. Go ahead.<\/p>\n<p><strong>Jake: <\/strong>One other thing about it, it\u2019s like I\u2019m a football fan. So everyone\u2019s talking about Andy Reid\u2019s coaching tree. Everyone knows Andy Reid because he brings up rock stars and he promotes them and they go out there and they coach. So listen, if my job is to bring people up to the system, make their lives better, and now they\u2019re in my tree and they know if they need something, Jake\u2019s there. He\u2019s going to take care of me. I\u2019ve helped folks within the organization outside on personal things. It\u2019s that kind of commitment to your employees. These are your customers, folks. Whoever you\u2019re employing. Help these folks out. Take care of them and it\u2019s going to pay you back tenfold.<\/p>\n<p><strong>Scott: <\/strong>Well, let\u2019s go back to your property management. You talked about how that was the first thing you were serious about constructing as an ancillary business to your real estate portfolio. And you got up and hustled and built it. Can you talk\u2014can you walk us through that process? How did you start that company? How did you scale it? I know it was extra work and that fire was there to help you do it. But what specifically did you do to build that and how\u2019d that business grow?<\/p>\n<p><strong>Jake: <\/strong>So it was really painful. It was tough in the beginning because we had a lot of like employees that were not the right fit. So the hardest thing was getting through the first few employees that were really bad. They\u2019re going to try and screw you. They\u2019re not doing the right thing. Until you start to find there\u2019s good people out there. So the number one thing is you\u2019ve got to be willing to fire. We fire extremely quickly. If it\u2019s not working out, sorry, we move on. We cut ties. Right? Holding onto a bad employee for too long is going to be the worst thing that you can possibly do.<\/p>\n<p>So it\u2019s getting folks in there and then it\u2019s starting to create systems. We have all these different\u2014and guys, I suck at this, right? I suck at HR. I suck at all this. But you know what I did? I actually went and we paid for one of our rock star employees to go through HR training to learn it because they\u2019re really good at it. I said you know what, you love this stuff. Here you go. You own it now, right? Put him through the training, HR certified, all this.<\/p>\n<p>And now that put that person in that role so that when we have policies on this is how we hire, this is how we fire, and different handbooks on how to run the company. I\u2019m not a guy to write a handbook but I can hire the people that are going to be good at it and start to develop the systems within the organization.<\/p>\n<p><strong>Gino: <\/strong>I think \u201cemployees\u201d is the wrong word to use. Sometimes they\u2019re not bad employees. Sometimes they\u2019re a bad hire. They\u2019re in the wrong seat. There are sh*theads out there that don\u2019t belong in the company.<\/p>\n<p><strong>Scott: <\/strong>Let\u2019s start maybe like from this angle. How did you attract those first customers, that you could hire this person? Did you self-fund the business or how did you get into the business of attracting customers that you could hire these employees and begin to train them?<\/p>\n<p><strong>Gino: <\/strong>Real quick, that\u2019s the allure of multi-family. So if you have 25 properties, it\u2019s a single-family home. It doesn\u2019t substantiate it. What you want to do is try to scale as quickly as possible because that\u2019s the allure of multi-family. You can actually create a business. So we bought 25 units in February of 2013. Four months later in July, we had an additional 36 units that we closed on. That\u2019s 60 units within four months and it\u2019s like, talk about the snowball effect because it\u2019s your first deal, right? Get into your first deal no matter what it is, whether it\u2019s a three-unit or a 30-unit.<\/p>\n<p>And I always tell people, it\u2019s easy to hear people say\u2014I\u2019m not going to name the gurus\u2014go big. No, go whatever you feel comfortable with because you want to be able to succeed in that position. You want to feel confident. And let me tell you something. The hardest thing that I\u2019ve figured out was, you have a small problem, right? It might be a problem to you but it might not even phase me in the least. When we have 25 units, mold was the biggest problem for us, right?<\/p>\n<p>Now that you have 900 units, you say, oh another mold problem, you grow into your problems and you outgrow your problems. That\u2019s why I have no problems with starting with smaller properties. Learn the ropes. Make those mistakes. You feel comfortable so when a tenant dies in your property, hey, it\u2019s not the end of the world. It is the end of the world to them but not to us.<\/p>\n<p><strong>Jake: <\/strong>Well, it is the end of the world for that person.<\/p>\n<p><strong>Gino: <\/strong>You know what I\u2019m saying? It\u2019s a big problem but it\u2019s something that you dealt with. It\u2019s something that you can overcome, right? I mean, you have a fire in a unit, he called me last time and it was pretty devastating. The lady passed away in the unit. I mean, it\u2019s happened a couple of times now. It\u2019s part of the business.<\/p>\n<p>You have to have thick skin in the game. And that only happens with experience. So if you\u2019re going to go and buy 150-unit deal and try to take it down when it\u2019s your first deal, it\u2019s going to be a lot harder, I think, then if you start a little smaller. You get your feet wet. We like to do the whole manager thing.<\/p>\n<p><strong>Jake: <\/strong>Start small but scale quickly though. I mean, I think it\u2019s okay because it\u2019s all up here, right? If you can do like a five or ten unit or something, you\u2019re going to realize well, it\u2019s no different. It\u2019s just add zeros onto it and more employees. And that\u2019s why people always say it gets easier the bigger you get. You get more people in because you have more people helping you now and you have people that are becoming experts in these spaces so you want them to help your company grow. And then you want to take care of them in turn like I said before. So I\u2019m sorry, Scott, to go back to your point, 25-unit.<\/p>\n<p><strong>Gino: <\/strong>We had a resident manager on. He wasn\u2019t a great manager. We worked with him.<\/p>\n<p><strong>Jake: <\/strong>Or a human being.<\/p>\n<p><strong>Gino: <\/strong>The 36-unit guy was even worse. He was an even worse guy. But you learn, right? The third deal, we scaled up to 136 units so then all of a sudden, wow, we could get a couple leasing agents going on. We could hire a couple of full-time maintenance guys. So in our first year, we\u2019re able to hire a pretty decent staff and that\u2019s what I think really helped us out to scale.<\/p>\n<p><strong>Scott: <\/strong>And was your plan for this business just to run your own properties or were you planning to take on additional management as part of it?<\/p>\n<p><strong>Gino: <\/strong>No, we just want to do our own properties. I think if it came down to the point that, hey listen, I want to get\u2014that\u2019s a great question. Now that I\u2019m thinking about, I wanted to move to Jacksonville to actually expand the portfolio and start another managing company in Jacksonville. Unfortunately, prices escalated. I didn\u2019t sell my house in time and I didn\u2019t get down here in time.<\/p>\n<p>So we were actually thinking of doing that to expand it, bring it into another market. Just the economy and the scalability, for me to generate more revenue for the property management. And it\u2019s also control. So if you\u2019re controlling the asset, it runs much more efficiently. You\u2019re hands-on and we\u2019re able to grow. So that\u2019s what we wanted to do but it just didn\u2019t work out then.<\/p>\n<p><strong>Jake: <\/strong>And going back, I think you were asking like what was the goal in the beginning? My goal was, I didn\u2019t like the stock market. I didn\u2019t like this up and down, and frankly, I don\u2019t understand it really well. I just was like, this is not for me. This is not the place to be. I want something that I can touch, sell an asset. It sounded like a good idea. I had doctors that I was calling on, coaching me and he\u2019s telling me it was a good idea.<\/p>\n<p>So I said, I just want yield. Give me a nice return. Then all of a sudden we get into it and we\u2019re like, holy sh*t. This like wipes your taxes out, right? The cost aggregation is amazing. Tenants are paying down the mortgage. And all these like ancillary benefits that came out. Oh, I started a property management business, right?<\/p>\n<p>All these little things that start to pop out of it, I\u2019m like, this is amazing. I feel like we are in the best business in the world. Because you can\u2019t go on and buy an apartment right now on Amazon. They can\u2019t ship it to you. It\u2019s your home or whatever. Everyone is going to need a place. This is a basic human need, right? You\u2019re controlling land. You\u2019re controlling where people live.<\/p>\n<p>I love it. I think we are in the best spot. I don\u2019t like fixing and flipping really because it\u2019s a job. You burn out and the thing is done. Poof, it\u2019s gone. I never plan on selling. My recommendation to people is hold onto these things for as long as you can if you want to build generational wealth. That\u2019s what we\u2019re in the process of doing.<\/p>\n<p><strong>Scott: <\/strong>That\u2019s awesome. I love it.<\/p>\n<p><strong>Brandon: <\/strong>So I wanted to bring up one point that you brought up a minute ago about how when you first start, everything that\u2019s a problem, it\u2019s such a problem. Like you said the mold, right? I was thinking the first time I did eviction. It was like, an eviction, right? Like, how many people have stopped investing in real estate, or like never got started, right? Because of some fear. Oh, an eviction. I don\u2019t want to deal with that. Then guys like us are like, oh, another eviction. All right, whatever. Oh, fire? A building burn down? It\u2019s like, okay.<\/p>\n<p>You\u2019re like, so I want to encourage people to listen to this. If there is some fear that\u2019s stopping you right now from saying, I\u2019m not getting into real estate because of whatever. Eviction, mold, fires, whatever. Like, just know that there are just guys that are doing it and they hear about it while like driving down the freeway and then they illegally text to solve the problem and they move on. I\u2019m not saying you should text and drive but like, it\u2019s so passive to them. It\u2019s such not a big deal. These things that other people will go for\u2014lean in, what?<\/p>\n<p><strong>Jake: <\/strong>Lean in, man. If you\u2019re scared of it, an eviction? Lean in. If you\u2019re scared of mold, lean in. Figure it out. Because once you understand it\u2014it\u2019s the fear of the unknown. Lean in and figure it out. Understand it. And all of a sudden, wow, this is not that big of a deal. I am 3 in 0 right now as an attorney. This is the thing. I went in. I didn\u2019t know I needed some kind of lawyer\u2019s license or whatever the hell it is they\u2019re called to do evictions because we had an LLC. Whatever the hell that means, right?<\/p>\n<p>So I said, you know in the beginning, I\u2019m going to do this. I\u2019m going to do that. I\u2019m going to do everything. So I\u2019m the guy. I went in, went into court a couple of times. I was 3 in 0. I didn\u2019t have to go to school for this. But then all of a sudden, the judge said, son, are you an attorney? I said no. He said, what are you doing here? I said, evicting this guy. He said, you need to be an attorney if you\u2019re an LLC. I said, oh I\u2019m sorry your honor. But you know what? I still won that one. He let it go through and then I was 3 in 0 when I retired. So I went out on top, all right?<\/p>\n<p><strong>Gino: <\/strong>But Brandon, to your point, if someone wants to get in and they\u2019re afraid, maybe they go work for a property management company. Maybe they do the ropes. Maybe they see how it works and maybe it\u2019s not that daunting. Maybe they work for a brokerage company and do a couple of these tasks and see, hey, wow. It\u2019s really not that hard.<\/p>\n<p><strong>Brandon: <\/strong>It\u2019s the fear of the unknown.<\/p>\n<p><strong>Jake: <\/strong>You know what, there\u2019s this thing out there. It\u2019s called Google. You can go on and type it in. You can literally figure out everything like that. I know I\u2019m being a smartass but seriously, you just lean in and figure it out. The fear is worse than reality, right?<\/p>\n<p>So we were joking a minute ago and I said, it\u2019s all in your head, right? 90% of the game is won up here when you say okay, I\u2019m going to stop being afraid. I\u2019m going to get past my fears. I\u2019m going to lean in and figure this out. It\u2019s not that big of a deal. Oh and guess what, I just built this awesome team around me or I\u2019m working on it and the team will help bare some of this as well. So we\u2019re in this together. We\u2019re trying to win.<\/p>\n<p><strong>Scott: <\/strong>I think it\u2019s fantastic. And what you\u2019re doing is, you\u2019re like, you keep saying it. Lean in. You\u2019re embracing these problems and more than that, where the big problems come, you just can\u2019t like beat it down by solving it one and done. You build a company to solve it for you in perpetuity. Right? Like this management business.<\/p>\n<p><strong>Jake: <\/strong>Here\u2019s the other thing. The minute someone calls you and says hey we have a problem, you have to squash that. Don\u2019t give me the lead-up. Don\u2019t give me, oh my, God. Something\u2019s going on. Hit it right now because I\u2019m telling you, five seconds of the unknown in your head is the worst thing ever. If one of my employees calls me and says, something happened\u2014I literally flip my sh*t. I say, do not ever say that again. Just get right to the point and say, guess what? We had a leak in this apartment or whatever. Okay, great. What did you do? Well, we already fixed it. Fantastic. All right, I gotta go. See ya.<\/p>\n<p>Not really, but you know. You\u2019ve got to just stop with the lead-ups. Anything that\u2019s going to create stress or drama because you\u2019ve got to deflect it, right? That stuff will kill your day. The unknown will create stress. Get to the point. Have a mature adult conversation and tell me how you\u2019re going to fix the problem and then we\u2019re moving onto the next thing.<\/p>\n<p><strong>Brandon: <\/strong>I like that a lot. So let me ask you this question. Going back to the building ancillary businesses, how do you guys see the tradeoff between focus and building additional revenue streams? We tell newbies all the time if you\u2019re brand new, pick something and focus on it. Stop bouncing around to a hundred different ideas. How do you gel that with trying to build other revenue streams?<\/p>\n<p><strong>Jake: <\/strong>It\u2019s like going back to the steel companies back in the day. What does your business need? How can you become more vertically integrated? They needed to buy the iron ore rights so they didn\u2019t have to worry about the guy supplying them. So you want to control everything that\u2019s going in. So right now, we need deal flow, right? So I think, how do I get more deal flow? Well if I had brokers working for me, they\u2019re doing out. I\u2019m compensating them 3%. They don\u2019t gotta worry about getting paid and then if they bring the deal up, they can sell it. That\u2019s basically creating my supplies and everything I need in-house and taking it, right?<\/p>\n<p>So that\u2019s one of the ways that we work. We want to be vertically integrated and control the main asset pieces to our business. They\u2019re actually going to reduce costs and make the business more efficient. So regardless of what business you\u2019re in, if you\u2019re a baseball team, maybe you go out and you start manufacturing your own baseballs or something like that. That\u2019s just a silly example but it\u2019s doing the things that you\u2019re going to control. Keep your costs down. And make your business run more efficiently.<\/p>\n<p><strong>Gino: <\/strong>And I think there\u2019s a strong thing to be said about partnerships. I think partnerships are very, very important. He runs the day-to-day operations of the property management company. I run the day-to-day operations of the education company. And listen, you\u2019re going to bring an HVC company? Maybe bring in a partner on that and split that revenue with that.<\/p>\n<p>So I think partnerships are really powerful. No one\u2014it seems like a lot of people don\u2019t want to split, right? I\u2019d rather have 50% of something great than 100% of nothing, right? And also, the ability for us to talk day-to-day operations and gel. Hey Jake, what should we do with this podcast? Who should we invite on our podcast? Hey Gino, what should we do with this tenant problem?<\/p>\n<p>So we have ideas. And it\u2019s great because when you\u2019re not involved in the day-to-day, you can actually take what\u2019s the word\u2014a less emotional view. Higher emotions means lower intelligence. So I can look at it\u2014I remember the first time we had a problem with one of our employees. This guy wanted to go out and kill a guy.<\/p>\n<p>No! I said listen, I\u2019m going to deal with it. I have no emotions. I said, the guy stole some money from us. I said, if you\u2019re going to go after him, he\u2019s going to come back and throw a rock through our window and there goes that. So let it go. Let this thing pass. If I hadn\u2019t been there to buffer that, I think something might have happened.<\/p>\n<p><strong>Jake: <\/strong>You make me sound like a meathead over here. The first time we had a problem with our employee.<\/p>\n<p><strong>Gino: <\/strong>Am I a meathead? I mean it\u2019s just like I\u2019m glad I was there and I\u2019m glad he was there to actually balance it off and actually get perspective on it, right? Same thing with me. Sometimes I\u2019ll be talking to someone on a day-to-day basis, I ask him a question and all of a sudden, he\u2019ll say something. Well, I didn\u2019t even think of that. I think partners are awesome. I love it. I love partnerships.<\/p>\n<p><strong>Jake: <\/strong>Here\u2019s another example. We just bought 110 units from a guy who\u2019s a developer. And he\u2019s trying to look for his next project. And you know, we haven\u2019t built anything yet because the price per unit has not been attractive. We\u2019ve got about six to eight acres by the lake over here and we\u2019d really like to develop it. I actually took that guy out there the other day and we\u2019re in talks of starting a small development crew, maybe building a hundred units over there. So again, maybe we own 25 or 50% of the development end but why not?<\/p>\n<p>Let\u2019s just control every facet of our business. I know this guy\u2019s not in the syndicating scene. I don\u2019t want to do property management. I don\u2019t want to do this. I\u2019m not saying that\u2019s lazy but there\u2019s more out there if you want it. If you want to sit back, syndicate a few deals and play Xbox, that\u2019s cool, too. It doesn\u2019t matter. Real estate is about creating the life that you want to live. I just enjoy this stuff and I\u2019m into it, man. I like get pumped up talking about it with you. But it\u2019s all what you want and it\u2019s the life that you want to create.<\/p>\n<p><strong>Scott: <\/strong>Let\u2019s hear about some of these partnership ideas that you\u2019re talking about. I mean, that\u2019s something that\u2019s really interesting. How do you structure some of these partnerships? How do you pick a partner and you just talked about using this for a variety of purposes\u2014<\/p>\n<p><strong>Jake: <\/strong>Gino always say this. You have to have sort of the same goals and the same outlook in mind. You know, he always goes and says, if we wanted to fix and flip but you want to do multi-family, that\u2019s not going to work, right? Because one guy is going to want to sell and one guy is going to want to hold. So I think it\u2019s getting down and saying, what are your goals? What are you trying to achieve? And making sure your goals are aligned.<\/p>\n<p>But also not starting a partnership with someone that\u2019s lazy if you\u2019re a high energy guy. Like if he was sitting around playing Xbox all day and I was out here hustling, I\u2019d be like, dude. This sucks. Why are you not contributing? So I think it\u2019s having a little bit of a relationship and a track record with somebody. So you know this guy is either a rock star or he\u2019s a slug. If you\u2019re a slug, partner with a slug. But if you\u2019re a rock star, partner with a rock star.<\/p>\n<p>And then make sure the person\u2019s ethical. You don\u2019t want to be doing business with someone that\u2019s cutting you checks and then all of a sudden, it\u2019s showing up light every month, right? So it\u2019s making sure the attitudes are there, making sure the goals are there, making sure it\u2019s a similar type of work ethic and you know, I think we share some similar kind of traits but maybe there\u2019s things that he\u2019s good at but that I\u2019m not so good at and vice versa. And then that can become a synergistic effect.<\/p>\n<p><strong>Gino: <\/strong>But Scott, more importantly, I think you have to like the person. Because you can do business with people you like and trust. I mean, if you don\u2019t like the guy and you go into business, it\u2019s going to end. I\u2019m telling you, it\u2019s not going to end well because that one little thing that he does is going to piss you off. So I think do as you say and say as you do. When there\u2019s something to get done, I never say to him, I did this. See what I did. He never says I did this. We just have responsibilities and we have goals. And we want to reach our goals.<\/p>\n<p>And if you have a big enough \u201cwhy\u201d between the two of you\u2014we both had a big enough \u201cwhy\u201d. We both wanted to have our own freedom. I wanted to be able to go to Florida. He wanted to get out of his W-2 job. So that big enough \u201cwhy\u201d coupled with similar goals and coupled with liking each other and coupled with wanting to do business and coupled with the fact that I like his family. I\u2019m feeding his family. He\u2019s feeding my family. So that\u2019s important. That\u2019s the important thing about partnership, I think, more than anything else. Start with that. And then once that goes, what do you guys want to accomplish together? Start creating goals for each other.<\/p>\n<p><strong>Scott: <\/strong>I love it. I have a million questions on this topic. So first of all\u2014<\/p>\n<p><strong>Jake: <\/strong>I think it sounds like you have something in mind. Like are you identifying somebody and you\u2019re like, what are you doing, Scott? What business do you want to operate, buddy?<\/p>\n<p><strong>Scott: <\/strong>I\u2019ve just got a lot of ideas, you know. A lot of ideas. Secrets. Trade secrets.<\/p>\n<p><strong>Jake: <\/strong>Come on board. I think he\u2019s coming on board.<\/p>\n<p><strong>Scott: <\/strong>But suppose that I\u2019m a new investor. Should I partner with someone who\u2019s super experienced or should I look for someone of about my level of wealth, career, success, or whatever? How does that work?<\/p>\n<p><strong>Gino: <\/strong>Well the first thing, when you think about being a partner is I think most people don\u2019t consider it from this way. What kind of value are you going to bring? You could be new but if you have a lot of value, and that could be a lot of things. Do you have money? Do you have time to manage the property? Do you have a deal? Do you want to work your butt off? Those are all things of value.<\/p>\n<p>So if you\u2019re going to partner with an attorney who\u2019s working 82 hours a week but just wants to make a 6% pref and you have the time, the ability, and the deal. There\u2019s a lot of value. There\u2019s a tradeoff there. So there\u2019s a marriage there. But if you\u2019re a newbie and you sit around and go hey you know, I\u2019ve got a deal. It\u2019s not going to work. So think about the goal-givers, says it best, right?<\/p>\n<p>You have to give more value than what you\u2019re going to get back in currency. If you can do that in life, if I\u2019m giving you this pen, it\u2019s worth a buck. Are you going to give me\u2014then you\u2019re all golden. That\u2019s not the case. If you\u2019re not thinking about creating value for the other person, then the partnership\u2019s not going to work. I know when I started out with him that I have a lot more value to give him in the very beginning because I have the knowledge, I have the experience, and I coached him, I mentored him.<\/p>\n<p>He in return had a lot of value for me. He lives on the property. He lives right near. He\u2019s doing day-to-day operations. What else? There were so many things he brought to the table also. We work well together. He was in the grind. He\u2019s dealing with the people, so I think that\u2019s one way\u2014that\u2019s why we\u2019re successful, I think.<\/p>\n<p><strong>Scott: <\/strong>Were you friends\u2014oh, go ahead, Brandon.<\/p>\n<p><strong>Brandon: <\/strong>I was thinking that about family. Go ahead and ask yours because yours is related to that.<\/p>\n<p><strong>Scott: <\/strong>Were you friends before you began the partnership or was that\u2014<\/p>\n<p><strong>Gino: <\/strong>Not as much. He was more friends with my brother.<\/p>\n<p><strong>Jake: <\/strong>He would stand at the back of the restaurant like this. I\u2019ve got my arms crossed. And he had big brother Gino in the back, banging the meat.<\/p>\n<p><strong>Gino: <\/strong>I didn\u2019t have my arms crossed\u2014I had knives\u2014<\/p>\n<p><strong>Jake: <\/strong>And he\u2019d look around, and I was like, dude, what\u2019s up with your brother, bro? He\u2019s like eh. Marco was in the front dealing with the reps, interacting, smiling. Gino was in the back with the kitchen guys so he\u2019d pop his head out and he always looked like he was pissed off. So it took a little bit to break down that barrier but everyone knows that the G-Daddy is a sweet, sweet man. He\u2019 s nice guy.<\/p>\n<p><strong>Scott: <\/strong>Just a softie first impression. Go ahead.<\/p>\n<p><strong>Jake: <\/strong>He\u2019s so intimidating, really.<\/p>\n<p><strong>Brandon: <\/strong>What do you guys think about partnering with family? Is that a good idea, bad idea, do you recommend it? Especially for newbies.<\/p>\n<p><strong>Gino: <\/strong>I was in a partnership with my brother for 20something years. There\u2019s a trust factor there so I know at the end of the day, money\u2019s there. So I had a trust factor. I had a relationship. I was the older sibling so I took care of a lot of the crap work, a lot of the grunt work, and after a while, it got to me. That was one of the reasons I pushed out. I\u2019m doing $15 an hour work when I should be doing much more work and he\u2019s bouncing around talking to drug reps, going out to barbeques and it became, you know, after a certain while, I thought I had more value to bring. So I had no problem. Just this. Make sure everything is in writing. You create your LLCs. You create your operating agreements. And it\u2019s not about giving money. It\u2019s about offering opportunity. That\u2019s the bottom line. And if you take money from them, you have to have every single thing in writing. I have no problem with partnering with family.<\/p>\n<p><strong>Jake: <\/strong>He texted me last night with the ten checks he got last month from the properties so he\u2019s pretty happy. Because he\u2019s in some of the deals with us. And actually, it was like, thanks, bro!<\/p>\n<p><strong>Gino: <\/strong>So the guilt was, I actually while I was working at the restaurant, transitioned over. So, did I have to bring my brother? No. But it was one of those things where I was in a partnership with him for so many years that I said, I have to do something. So it was the sort of guilt thing where I actually ended up getting out of it. And I wanted to pull him out because it\u2019s a tough business. The restaurant business is a very difficult grinding daily business and if you allow it to be\u2014and my hope for him is to get him to be financially free also.<\/p>\n<p><strong>Scott: <\/strong>Awesome. Now, I\u2019ve got a question for you about the structure of these partnerships. And this is not\u2014don\u2019t give legal advice to the users or anything like that. But how do you guys structure it so that if one of you wants to leave in the future, that person can do so? What\u2019s the agreement there for that?<\/p>\n<p><strong>Jake: <\/strong>Hit the sword, Gino.<\/p>\n<p><strong>Scott: <\/strong>The Lord of the Rings sword?<\/p>\n<p><strong>Jake: <\/strong>Yeah, I mean, at the end of the day, this is tough\u2014and this is going back to the goal thing, right? So we have operating agreements and stuff all lined up. The ultimate goal is if one of us passes this on, it goes to the family. So like, say something happens to Gino, his wife\u2019s just going to get checks every month. You know. On a residual basis. So that\u2019s ultimately where the goal is to pass it down the line. Could we unwind the thing if we wanted to? Sure. You know, we can get a fair market appraisal, buy that person out for whatever their equity is, less the debt, and that\u2019s it. So could we do that? Yeah, I don\u2019t think anyone\u2014I\u2019m not interested. I don\u2019t think your brother is. No, I don\u2019t want to do that.<\/p>\n<p><strong>Gino: <\/strong>I\u2019d say, Scott, what we do in our business, we try to create an LLC and NT for every property we take over. We want to segregate our assets. Easier because it\u2019s great for bookkeeping. It\u2019s easier because if you want to refile the property, you have the numbers there.<\/p>\n<p><strong>Jake: <\/strong>Doing it with an agency is easier.<\/p>\n<p><strong>Gino: <\/strong>Yeah, and every property can have its own operating agreement. So every operating agreement might be different. Jake might own 10% of one. He might own 42% of another. So it\u2019s very easy from that perspective to do that and that\u2019s how you run your thing. You arrive, every operating agreement has their own set of rules. That\u2019s how we do it.<\/p>\n<p><strong>Brandon: <\/strong>So it\u2019s not like a master partnership for everything in a way? Every deal kind of stands alone?<\/p>\n<p><strong>Gino: <\/strong>No. Everything kind of stands alone. Yes.<\/p>\n<p><strong>Brandon: <\/strong>That\u2019s smart. Because yeah, you might get into bed with somebody that you don\u2019t actually find out until after a deal or two that they aren\u2019t pulling their weight. And it\u2019s a whole lot easier. That\u2019s good.<\/p>\n<p><strong>Jake: <\/strong>Well, it\u2019s called an operating agreement. Right?<\/p>\n<p><strong>Brandon: <\/strong>Exactly. Exactly. I know what you\u2019re talking about. No one\u2019s confused here.<\/p>\n<p><strong>Scott: <\/strong>It sounds to me that the philosophy underlying your partnership though is hey, we plan to be in this forever. This is a forever. We\u2019re going to pass it down to our heirs when that day comes. But we also have contingency factors in place in case that doesn\u2019t happen. But you know, it sounds to me like that\u2019s a really smart approach to partnerships in general, is you plan on making it forever or indefinite. And having that option.<\/p>\n<p><strong>Jake: <\/strong>We\u2019re married.<\/p>\n<p><strong>Scott: <\/strong>Yeah, it\u2019s almost like a marriage.<\/p>\n<p><strong>Gino: <\/strong>Well, you know what it is. You always try, when you get into an asset, when you get into an investment, try to think of the end game. What\u2019s the end game in mind? We always get into a deal, right? Into a single-family or a multi-family and why are you getting into the multi-family? We want to hold. We want to buy and hold because we do a refi.<\/p>\n<p>We cost-seg these things so that\u2019s what our strategy is. So we want to do that. So that\u2019s how we structure our partnership. Another guy\u2019s partnership, maybe they\u2019re syndicating a deal. They\u2019re going to get into a partnership with the other guy. Hey, listen, this is a three to five year hold. This is what we\u2019re doing.<\/p>\n<p><strong>Jake: <\/strong>And that\u2019s how they get paid. That\u2019s why they\u2019re doing it, right? They\u2019re syndicating in three to five years. That guy\u2019s getting ready to sell it. We\u2019re just like, well, you\u2019ll get all your depreciation eventually and you\u2019re not going to have anything left. That\u2019s why we keep buying more because as long as we keep buying, the tax party keeps going on. We buy new asset, it\u2019s passed through a W-2. Its taxes get wiped. So let\u2019s just keep buying these things. Let\u2019s keep building. Let\u2019s keep growing and the party goes on. And when we do our first syndication, that first syndication will also have that mindset in place. We\u2019ll be underwriting this thing for ten years.<\/p>\n<p><strong>Gino: <\/strong>We\u2019re not looking to sell so if you want to invest with our company, we\u2019re infinite long-term and that\u2019s how we translate into that business also.<\/p>\n<p><strong>Brandon: <\/strong>Can you explain, because this is probably\u2014I don\u2019t think we\u2019ve ever actually covered\u2014maybe a long time ago\u2014and this is a super advanced strategy, sort of, but you don\u2019t have to be an expert to do it. Cost-segregation. What did you mean by cost-seg? What is that?<\/p>\n<p><strong>Jake: <\/strong>Yeah, basically what we\u2019re doing is, we have this engineer come out here and going back to having great teams, right? And he\u2019s going to segregate all the parts to the property, right? So the window has a certain depreciation life, the flooring, right? He segregates it all out into a schedule and then basically pushes the bulk of the depreciation down from 27.5 years to say, 7 to 10 years. So you\u2019re getting this huge swell of depreciation, it\u2019s basically wiping out your taxes. Then you go buy another one and you do the same thing and you keep it going so that you\u2019re getting these huge swells of depreciation. I have more than I can use right now, which is great. But you know, maybe in five years if I stop buying, it will run out. So it\u2019s just a strategy. It especially works well for us that if we\u2019re holding.<\/p>\n<p><strong>Gino: <\/strong>A simple book to read is Tom Wheelright\u2019s book, <em>Rich Dad, Poor Dad. <\/em>He wrote a great book on accounting and what taxes are. Taxes are written to stimulate growth and to stimulate behavior. And cost-segregation is one of those wonderful things that the government\u2019s done, because they know they can\u2019t provide affordable housing. They\u2019re short every year and they\u2019re going to become shorter into the future.<\/p>\n<p>So what they do is they stimulate the economy. They stimulate real estate investors to get out there with one of these bonuses and it\u2019s a wonderful thing. That\u2019s why attorneys, doctors, they want to get into these deals. People just focus on cash-on-cash returns and they focus on those things in principal paid out but this cost-segregation is a huge component to multi-family investing.<\/p>\n<p><strong>Jake: <\/strong>Yeah. And the other thing is, too, we went back and said we brought investors onto something and we syndicated a deal\u2014our strategy has been refine role. Basically, we get into an apartment building where the rents are under-market. We rehab it a little bit, get the rents up, and we just pull our money out. So it\u2019s not like you got your money tied up forever. You\u2019re getting the initial capital back and then you sustain for some. You\u2019re continuing the cash flow and you\u2019re rolling your money into the next deal. That\u2019s how we funded our 900 units up to this point.<\/p>\n<p><strong>Brandon: <\/strong>You know, we call that around BiggerPockets, the BRRR Strategy where you a buy a property, rehab it, rent it, refinance, pull your money out and repeat. We often hear it with like a single-family or like a duplex but I love to see that you guys are doing this on a larger scale. You\u2019re repositioning of apartment complexes, so you\u2019re BRRRing apartment complexes to grow your wealth, get your money out, and do it again and again and again.<\/p>\n<p><strong>Scott: <\/strong>How long is your holding period on this? Are you holding them for that 7 to 10 years while you, you know\u2014<\/p>\n<p><strong>Jake: <\/strong>That\u2019s what I\u2019m saying. We\u2019re holding them forever because regardless, because what happens is it\u2019s LLC passthrough. So it all ends up and stops with me, right? So say I fully depreciate that property, well since then I bought five more\u2014that\u2019s just wiping out the taxes. That\u2019s why I said the party doesn\u2019t stop as long as you keep buying, because you keep building up a swell of depreciation.<\/p>\n<p><strong>Scott: <\/strong>So I\u2019ve got an advanced math question here that may\u2014I hope everyone can follow here. But supposed you buy this property and it\u2019s not in very good shape. You raise the rents. You increase it, right? What you\u2019ve done is you\u2019ve increased the amount of net operating income, right?<\/p>\n<p>But you\u2019ve also taken a poorly maintained property and turned it into a well-operating one, which should reduce the cap rate that it would sell for in the open market. Is that a fair assessment?<\/p>\n<p><strong>Jake: <\/strong>It depends on what the market\u2019s doing. And for you to look at, now this thing\u2014here\u2019s the thing. A lot of these asset classes, A, B, C, it\u2019s based on a lifespan. Like if it\u2019s like less than 10 years old today ad so on, so on. So you can use, you could say well, I took it for your daughter from B to a C. I hear that a lot.<\/p>\n<p>I\u2019m not some real estate wizard. Maybe that\u2019s true and I don\u2019t want to give some term definition thing because these guys get pissy and complain about it but say, how\u2019d you give it a C plus and now you\u2019re calling it a B minus? Well, the cap rate at a B- may be a little bit lower so therefore, not only did you increase the NOI, but now it\u2019s being valued on a lower cap rate. Therefore, the value is highter. Does that make sense?<\/p>\n<p><strong>Scott: <\/strong>Yes. So what I\u2019m asking is, suppose you do that, would it make more sense to sell, 1031 exchange that, into a higher cap rate property back into a C property and repeat the cycle of turning it into\u2014<\/p>\n<p><strong>Jake: <\/strong>Dude, it\u2019s so hard finding these things to begin with, finding a good deal. Why are you letting that thing go? Refi it, take the money and then go buy the other property. Keep the tax breaks going.<\/p>\n<p><strong>Scott: <\/strong>No, that\u2019s a great answer.<\/p>\n<p><strong>Brandon: <\/strong>Well, I was going to jump in and say, I have a perfect story to back this up. All right, so I sold my 24-unit apartment complex last summer. So I got an offer out of the blue, some guy wanted to buy it so I sold it. But I had done a cost-segregation study on it. Right? Just like we talked about a minute ago. I got this massive tax break like a year and a half ago, two years ago or whatever when I did that cost-segregation study which was fantastic. But all of a sudden, I had to sell my property. Which means, if you sell a property, and you don\u2019t do a 1031 exchange, you now owe all the like back depreciation for everything you had taken. Which means I wasn\u2019t\u2014like I was only going to make a profit of like $200,000 on this apartment. I was going to owe a $130,000 in taxes if I sold.<\/p>\n<p>So I don\u2019t know if you guys remembered, if you ever listen to the podcast, how freaking out I was. I was probably like freaking out over trying to find a deal because I had to find a deal because it would cost me $130,000. What? See, I didn\u2019t realize how hot the market for\u2014I thought I could find another similar\u2014and I did find one, actually. So I got it on day 45, identified it. But like, it was so hard to find. So to back up your point, it\u2019s incredibly hard to find it. So yeah, you could a better deal, and you can get lucky. Like, I got a deal on day 45 but I had no guarantee. I could have lost $130,000 right there and then and get screwed.<\/p>\n<p><strong>Scott: <\/strong>That answers my question, then. The difficulty in executing that strategy is what is kind of the risk there because you guys are like\u2014<\/p>\n<p><strong>Jake: <\/strong>I don\u2019t want to sell anything either.<\/p>\n<p><strong>Brandon: <\/strong>One of the things people tell you about 1031s is you have to identify. You have to close it in six months. If the other side knows that you\u2019re doing a 1031, there goes your negotiation. And I know a lot of people would rather pay more for a property to save a few bucks on taxes. And that\u2019s what people are doing. They\u2019re overpaying and that\u2019s why I sort of\u2014I wouldn\u2019t say bubble in the multi-family, but there\u2019s a lot of 1031 money going on that has to get placed and they made these huge capital gains.<\/p>\n<p>So they\u2019re willing to pay another million bucks for the property to save $300,000 in taxes. That\u2019s what these guys are doing. Unfortunately, a lot of people are doing that right now so you can\u2019t compete with that. So look at strategy, see if it\u2019s beneficial for you to do that. It might be beneficial but there\u2019s a lot of moving parts going on and we had Matt Faircloth on our show a couple of weeks ago talking about how he got ripped off. You have to do it proper. You have to get an intermediary&#8211;<\/p>\n<p><strong>Jake: <\/strong>It was like $300,000 or something, right?<\/p>\n<p><strong>Gino: <\/strong>A lot of steps that you have to do to take it. So just don\u2019t say 1031s are great. They\u2019re great if you can execute them and you can find another deal and the deal gets done so just watch your steps and make sure that\u2019s what you want to do.<\/p>\n<p><strong>Jake: <\/strong>I think 1031s suck. I would do it\u2014I\u2019m just kidding.<\/p>\n<p><strong>Brandon: <\/strong>So the 1031, I think where it comes in really handy is let\u2019s say I found a property right now that was an incredible deal. I go and put it under contract or get close to it, right? Now I go and sell my property to go buy that. There\u2019s no\u2014but having like what I did\u2014<\/p>\n<p><strong>Jake: <\/strong>Why do you sound like a pimp?<\/p>\n<p><strong>Brandon: <\/strong>I sold because I did exactly what Scott said. I brought mine up to the highest level I would ever probably get it. I maxed it out and I wanted to start that process over to build some more equity.<\/p>\n<p><strong>Gino: <\/strong>Let me ask you a question, though. Was your strategy to cash flow? Because if your strategy is to cash flow, you built it out to the maximum and you\u2019re like, hey, I need $4,000 a month to live. Maybe that would have been like hey, I don\u2019t want to touch it. I\u2019ve got the golden goose. That golden goose is laying me eggs so that might have been another strategy to look at it if you didn\u2019t want to exit it out.<\/p>\n<p><strong>Brandon: <\/strong>It really comes down to what do you want? What are your goals? What are you looking for? And at that point, I wasn\u2019t looking. I didn\u2019t get a ton of cash flow or the equity I had. I knew I could get\u2014so I actually took the 24 and I turned it into 70 units. And now, I\u2019m getting real good cash flow off those 70 units, right?<\/p>\n<p><strong>Jake: <\/strong>The other thing, too, is we\u2019re in a situation where we get really good cash flow in our market. We\u2019re in the Southeast. You invest in the SEC. I always say that. If you\u2019re on the Coast, sometimes they\u2019re buying these things in like San Francisco, New York, it\u2019s kind of like a flip game regardless of if it\u2019s a housing or if it\u2019s an apartment game. They\u2019re buying, trying to get the rents up and then flip it. So it\u2019s a little bit more you know, of a different strategy and mindset, I think. So if I was on the Coast, I\u2019d probably be doing the same thing.<\/p>\n<p><strong>Scott: <\/strong>Go \u2018Dores, by the way.<\/p>\n<p><strong>Jake: <\/strong>Doors?<\/p>\n<p><strong>Scott: <\/strong>Vanderbilt. Commodores. SEC.<\/p>\n<p><strong>Jake: <\/strong>Oh, I didn\u2019t even know that was a thing. We\u2019re in Knoxville, all right, my friend? So it\u2019s Jesus and then it\u2019s UT football. So you\u2019ve just got to take it easy.<\/p>\n<p><strong>Scott: <\/strong>Doesn\u2019t the cheer go, \u201cHey yeah, it sucks to be a Tennessee Vol\u201d? Sorry.<\/p>\n<p><strong>Brandon: <\/strong>Okay, moving on. I\u2019ve got one more question before we head into the <em>Fire Round<\/em>. Finding deals. It\u2019s a hard, competitive market today. How are you finding deals today?<\/p>\n<p><strong>Jake: <\/strong>You know, a lot of guys are out there and I think they\u2019re trying to make it rocket science or something that it\u2019s not. We just got a deal. It\u2019s a $4 million dollar deal. We just were there a minute ago and we got it through a broker. It never hit the market. They know we\u2019re closers. They know we\u2019re going to get it done so we get deals brought to us and then we execute and we perform on them. Okay?<\/p>\n<p>A lot of these guys are not willing to kind of go out in the front end, build relationships with the brokers, and if you have to, get a few small deals done. Let them know that you perform, and then the next time it\u2019s a bigger one, maybe they\u2019re going to give you a whack at it because it\u2019s hard right now. A lot of deals that people are doing may never hit the market. You may never find out about them.<\/p>\n<p>You have to have the relationships. You can create a strategy where you\u2019re calling owners up and sending mailers out. We\u2019ve never done it. I\u2019m sure it works fine but five years later, we have over $50 million dollars in multi-family now, not using that strategy. So I think it\u2019s really important\u2014find the brokers in your area that are real multi-family brokers.<\/p>\n<p>We get some of these wannabes sometimes showing us deals and things like that and it\u2019s a five cap and they\u2019re never going to sell this thing. But there\u2019s a few good\u2014probably five guys, maybe ten guys in your market, that are really the guys that are moving the multi-family. And guess what? When you go out to lunch with them, pay for lunch.<\/p>\n<p>Yes, they\u2019re the salesman, but guess what? They are putting me on your plate. You want to buy them a gift. We had a Giftology guy in here the other day on the show. Be a good guy. Take them out. Do something cool for him. Let them know that you\u2019re going to perform when they bring you the deal.<\/p>\n<p><strong>Gino: <\/strong>It\u2019s amazing, John Roller. He had a great, great podcast. I love that whole thing and it\u2019s so simple. Why is everyone giving gifts during Christmas? Give a gift to a guy during March when he least expects it. And really, make it a valuable gift. Make it something that stands out. Make it something\u2014hey, if he\u2019s a Vanderbilt guy and he likes football, get him something from Vanderbilt football.<\/p>\n<p><strong>Scott: <\/strong>I\u2019ve never heard of them before.<\/p>\n<p><strong>Gino: <\/strong>It\u2019s all about building a rapport with somebody. All about building that trust with somebody. Hey, you know what, when they send you a deal that stinks, get over to them and say listen, it\u2019s a five cap. I\u2019m really trying to buy a seven cap. Let them know what your parameters are and get back to them ASAP because they like that. Get back to them like Jake said. Once you\u2019re a closer and they know you\u2019re a closer\u2014<\/p>\n<p><strong>Jake: <\/strong>They get you a deal, analyze it and get back to them. And say hey, I don\u2019t want to waste your time. This is not the one for me. But I\u2019ve looked at it and this is what I think about it. I want to see the next one, though.<\/p>\n<p><strong>Brandon: <\/strong>I love that. Yeah. I love that. That\u2019s such a good tip. And that\u2019s good for anybody. Anybody doing large, multi, or even a single-family house. Your real estate agent sends you a deal? Tell them what you liked and what you didn\u2019t like about it and give them that feedback and then wait for the next one to come.<\/p>\n<p><strong>Jake: <\/strong>Treat them like gold. These people can basically help you build an empire where you can retire in a few years. That is your source to the gold right there. Treat those people like gold.<\/p>\n<p><strong>Scott: <\/strong>So once you have these deals, how have you funded them?<\/p>\n<p><strong>Jake: <\/strong>Cash money, brother. We just say, refi rule. No, I\u2019ll be a little more specific. I\u2019m just kidding. So we\u2019re moving a lot more to the agencies, Freddie Mac. We\u2019re getting agency debt on these things but we\u2019re going in, we\u2019re finding real opportunities. We\u2019re not getting deals that you know, like a five or six cap, right? We\u2019re finding real opportunities. We\u2019re increasing NOI. We\u2019re refi-ing the money out of them. You just said, we refi-ed about $7 million bucks over the last x amount of years out of our deals and we repurpose it into our new acquisitions.<\/p>\n<p><strong>Gino: <\/strong>I\u2019ll give you the case study of our first deal. Our first deal was a 25-year deal. It was $600,000. 80% bank financing, 10% owner financing, we came up with 10%. Me, Jake, and my brother came up with $83,000 at closing. But 18 months later, we got it up and it was valued at $800,000. Now, on the terms, we went to a community bank. We got a 20-year amortization, 5.5% rate which is killing us, and a five-year term.<\/p>\n<p>But we got that because the bank let us do our own financing. 18 months later, we refi-ed out, we pulled out $160,000. The terms went down to 4.5% interest rate, 25-year am, and a 10-year term. So the great thing about it was, our mortgage payment stayed the same because all of a sudden, we got a lower am, a lower interest rate, and we pulled out $160,000. We put in $80,000. We took out $160,000. That $160,000 rolled into our next deal.<\/p>\n<p>So what we did with our first set of refinances is we went from a community bank to another community bank. We rolled them out. We got better terms on our second deal that I had spoken about. It was a 20-year am. We\u2019ve got a three-year term, guys. That stunk but we were so desperate\u2014<\/p>\n<p><strong>Jake: <\/strong>Don\u2019t do that.<\/p>\n<p><strong>Gino: <\/strong>Yeah, we were so desperate and we knew that there was so much meat on the bone, they were doing $10,000 a month in revenue. We got it up to $18,000 within a year so we were about to refi.<\/p>\n<p><strong>Scott: <\/strong>Can I jump in here real quick and say hey, you\u2019re talking about the note is going to come due in three years. That\u2019s when you say a three-year term. Just for future\u2014<\/p>\n<p><strong>Gino: <\/strong>Exactly. It\u2019ll balloon in three years but we knew within 12 months, we were going to be able to bring it to another bank and refinance it out. I think we were just so thrilled to get it, so that\u2019s what it came down to, a 20-year am. So we refi-ed the second property from a community bank to another community bank, which went from 20 year amortization to a 25 year amortization. We got a seven-year term.<\/p>\n<p>Now, the same deal here, six months ago, we brought it to Freddie. Because actually we pulled out another $100something thousand dollars from this property, which was a 30 year amortization from a 25 year. We pulled out the money. Three years of interest only. We got a ten-year term on this and 4.5%.<\/p>\n<p>So the mortgage more or less stayed the same for refi-ing it, refi-ing it, refi-ing. Because the am is going out. Now, there\u2019s three years of interest only. Now, within three years, principle is going to reset on this thing but I think with the 3% rate increases going forward, in three years, our income is going to be back up to where when the principle resets, it\u2019s going to like it.<\/p>\n<p>So that\u2019s what we call a velocitization of money. We\u2019re actually becoming the bank. That\u2019s why banks are wealthy. Because we\u2019re using money. We\u2019re using phantom money that we\u2019ve created, a phantom value that we\u2019ve created to velocitize the next deal. Now listen, don\u2019t go out and don\u2019t spend the money. Don\u2019t party. You have to be diligent. You have to use this money to repurpose it into another deal.<\/p>\n<p><strong>Jake: <\/strong>He\u2019s got a sick Porsche. Don\u2019t listen to him.<\/p>\n<p><strong>Brandon: <\/strong>No, I was just thinking, you got a 30-year mortgage on a multi-family from Freddie Mac? That\u2019s awesome.<\/p>\n<p><strong>Scott: <\/strong>It sounds like the goal here is to get something that you can refinance.<\/p>\n<p><strong>Gino: <\/strong>They\u2019re all 30 year ams, but they\u2019re ten-year terms. They\u2019re locked for ten years. But HUD\u2019s got a program. It\u2019s 35 years fixed that you can go and refi.<\/p>\n<p><strong>Jake: <\/strong>That\u2019s where we want to move a few of our properties over there, simply because I think our biggest risk at this point is interest rate risk in ten years. So if I can move half the debt over to a 35-year fixed loan, there\u2019s some stipulations like they let you draw every six months and some other things that are not cool and they take six months to do it\u2014<\/p>\n<p><strong>Gino: <\/strong>Working with the government.<\/p>\n<p><strong>Jake: <\/strong>Yeah. But that\u2019s why we\u2019re actually getting another assistant on to handle that paperwork. Because if you do it over there, it\u2019s like boxing and now playing defense, right? How do I stay in this in the long-term? Getting something that\u2019s fixed for 35 years when an interest rate is your biggest risk that you have. That\u2019s what we\u2019re trying to do right now.<\/p>\n<p><strong>Gino: <\/strong>So Scott, to pull it back, from the very beginning, we talked about that one little 25-unit property. What it actually did was, we were able to refinance that out. We were able to make our mistakes, take our loss. Hey listen, we looked back, 20 year am, 5 point and above. We made a lot of those mistakes. That\u2019s why\u2014<\/p>\n<p><strong>Jake: <\/strong>The deal was a mistake. But it was the best mistake. I mean, it had sceptic fields on it. It had drug dealers. It had naked dudes showing their thing. It was a disaster. But if we wouldn\u2019t have done that, nothing else happens. That\u2019s why I\u2019m saying you guys gotta lean in. Get in. Figure it out. Google what you\u2019re afraid of. Google will say it\u2019s okay and you\u2019ll get past it and you can do it. I don\u2019t want to sound like a motivational crazy person but I really do believe that.<\/p>\n<p><strong>Scott: <\/strong>I love it. I have always thought that the next problem for me with my business is going to be moving into these commercial properties and having these unfavorable loan terms. Because right now I use conventional loans from Fannie Mae and you know, they\u2019re 30 years, super low.<\/p>\n<p><strong>Jake: <\/strong>When they give you a 20 year term, say no. I want a 25 year. When they give you a three-year am. Say no, I want ten. It\u2019s all negotiable. Shop with three to five different banks but don\u2019t do the guys that are established. Get the community banks in your area that are hungry, looking to grow. You\u2019re going to be able to work with them and then just pit them against each other. Say, this guy is doing that. He\u2019s doing this. And then they start to fight each other. We don\u2019t do that though. But I\u2019m saying you could do it. It\u2019ll probably work, right?<\/p>\n<p><strong>Gino: <\/strong>Scott, just think of money as a commodity, right? Once something becomes a commodity, it trades and spreads and becomes really thin. And that\u2019s all money is. You can get money anywhere. Money is cheap right now. Money is not the problem. I think the deal is the problem right now. For you to go and everything is negotiable. Every single thing. You start out with the highest rate at 10 years or a 15 year term, and then you can work your way back down.<\/p>\n<p><strong>Jake: <\/strong>He was teaching me about this block chain, bitcoin, and the black side of the internet today and I\u2019m like, dude, I don\u2019t even get it. I mean, things are going on there, right? So dude, it\u2019s happening.<\/p>\n<p><strong>Brandon: <\/strong>That\u2019s awesome.<\/p>\n<p><strong>Scott: <\/strong>Brandon, how do you feel about bitcoin?<\/p>\n<p><strong>Gino: <\/strong>It\u2019s an amazing technology. I mean, it is the essentialization. It is what\u2019s going to be happening, bro. Give it about ten years. Every thinks of it as a currency. It\u2019s not the currency. It\u2019s actually the technology. It\u2019s going to be awesome. I can\u2019t wait. I can\u2019t wait until banks have no control anymore. I just can\u2019t wait. I can\u2019t wait until everything\u2019s open source. I can\u2019t wait. I wish\u2014I hope I\u2019ll be around for that.<\/p>\n<p><strong>Jake: <\/strong>Gino\u2019s going to be here for a while.<\/p>\n<p><strong>Brandon: <\/strong>All right.<\/p>\n<p><strong>Scott: <\/strong>We\u2019re going to have a video called \u201cBitcoin is a Stupid, Horrible, Terrible Thing to Invest In\u201d.<\/p>\n<p><strong>Gino: <\/strong>It starts out that way. Everything we have starts out that way. And then in 15 years later, we\u2019re like, wow.<\/p>\n<p><strong>Jake: <\/strong>I have no idea what it is so I have no comment.<\/p>\n<p><strong>Brandon: <\/strong>So that was my point. It\u2019s like nobody knows what it is and yet people are like, I\u2019m out of real estate. I\u2019m going to go throw my money into bitcoin when it was like at the peak.<\/p>\n<p><strong>Scott: <\/strong>You just don\u2019t understand.<\/p>\n<p><strong>Brandon: <\/strong>That\u2019s block chain, Brandon. And I\u2019m like, no, it\u2019s called\u2014yeah, anyway.<\/p>\n<p><strong>Jake: <\/strong>It actually sounds like some kind of candy or something to eat. I have no idea what it is.<\/p>\n<p><strong>Brandon: <\/strong>All right. We\u2019re moving on.<\/p>\n<p><strong>Scott: <\/strong>Onto the <em>Fire Round<\/em> here.<\/p>\n<p><em>It\u2019s time for the Fire Round.<\/em><\/p>\n<p><strong>Brandon: <\/strong>Now, let\u2019s get to today\u2019s <em>Fire Round<\/em>. Of course, you can get to\u2014these questions are from the BiggerPockets forums which you can get to at BiggerPockets.com\/forums. We\u2019re going to fire them at Jake and Gino here, so what you\u2019ve got to say.<\/p>\n<p>Number one. Let\u2019s see, scrolling down here. All right, number one. Do you have any good hacks as a landlord? Anything that you just find is kind of a hack as a landlord, that works really well?<\/p>\n<p><strong>Jake: <\/strong>I mean, I think there\u2019s a lot of things. I think you want to find ways to create additional revenue streams within your business, whether you\u2019re doing rubs, whether you\u2019re doing a trash valet, whether you\u2019re making money on your applications. There\u2019s so many ways to make money that\u2019s not just on the rent. And this is not like fee-ing people to death. He gave me like this book, <em>The Fee Bible<\/em> or something. It\u2019s not about that but it\u2019s when you\u2019re providing services.<\/p>\n<p>Knoxville is a huge town for animals. We have our multi-family units in Knoxville. We are super pet-friendly but look, pets gotta pay, too. Doggie\u2019s got to pay the rent. And we make some money on doggie, okay? So I think it\u2019s finding additional revenue streams within your business and then building additional revenue streams outside your business to support your business.<\/p>\n<p><strong>Gino: <\/strong>So Brandon, the other thing I did was I wrote a tenant guide. I wrote a Move-In Guide. So if you go to our website, Rand Property Management, our property management website, you can go on there. Tenants can download that. So I wrote it for them. So it\u2019s always about creating value for tenants. I mean, was it a pain in the ass? Yeah.<\/p>\n<p>The reason why I wrote the Move-In Guide is I actually moved. So I went to move six months ago and I was like, I don\u2019t know where to start. So I actually started building it out. So it\u2019s just a way to alleviate, to help the tenant out. Always thinking about it as creating problems, creating solutions for their problems. I had a big pain point, didn\u2019t know how to move and ended up doing that.<\/p>\n<p><strong>Brandon: <\/strong>You should create a little ancillary business and sell that thing to other landlords for $9 bucks on your website. This is a great idea.<\/p>\n<p><strong>Jake: <\/strong>And you can pay your rent on the website so folks out there listening, don\u2019t forget to pay your rent on the website. That\u2019s as techy as I get right there, okay. I don\u2019t know the block chain but I know we can pay online.<\/p>\n<p><strong>Brandon: <\/strong>There you go. I really like that a lot. That\u2019s cool.<\/p>\n<p><strong>Scott: <\/strong>What is the best flooring? What\u2019s your go-to flooring for your rentals?<\/p>\n<p><strong>Jake: <\/strong>We love the vinyl. We go vinyl everywhere. On the second floor, we still go carpet because of the pad, blah blah blah. If there\u2019s Spandex, the concrete stuff, we will go with vinyl but as I said before, the only thing we sub out, we\u2019ve got a company that does all of our flooring. They do all of our paint. They do it for a very affordable price. So we have like, there\u2019s a tony oak and some grey stuff, and the ladies that work for us are really great at design and putting nice things together so I let them run with it. They\u2019re good at it. I\u2019m not. When we put it together. We keep it simple. We got a good price for vinyl flooring.<\/p>\n<p><strong>Gino: <\/strong>We use Seacrest Properties, so that\u2019s what we use in our properties.<\/p>\n<p><strong>Jake: <\/strong>But we fancy, though.<\/p>\n<p><strong>Brandon: <\/strong>We fancy. All right, good. Number three. I\u2019m young, self-employed, and I have huge cash reserves. And I live in Southern California. What would you do if you were in my position?<\/p>\n<p><strong>Jake: <\/strong>Get the hell out. Get the hell out. What are you doing there? Someone told me it\u2019s like 10-15% state income tax. Get out of there, man. You\u2019re nuts. No, but seriously, get out. Because you\u2019d just get raped. You\u2019d get stiffed with tables and it hurts. So get out, number one. If you want to get into multi-family, which you should, get out of there. Go someplace nice. Like live next to me boy, G-Daddy. Go buy a 150 unit complex, put a great team in place. Make it happen. And there\u2019s still a nice beach in Jax or you could go to Tampa, too. That would be cool.<\/p>\n<p><strong>Gino: <\/strong>Well, you know what? What are your goals? So you\u2019re self-employed. Do you want to stay self-employed or do you want to have real estate become your full-time business? That\u2019s the first thing I think you should end up doing. The second thing is, educate, educate, educate. A man with money meets a man with experience. The man with the experience gets the money and the man with the money gets the experience. Always remember that, guys.<\/p>\n<p>Come educated. Educate yourself. It\u2019s all about responsibility. So know what you want to do with that money. <em>The Richest Man in Babylon<\/em>. Best book I ever read. Easiest book you could ever read. 10% of your income. Don\u2019t go into business with dirtbags, basically. Only trust people\u2014you\u2019re not going to get a shield guide to go do glass beads and make diamonds and jewelry. Get somebody who is a multi-family syndicator.<\/p>\n<p>Learn the ropes from him if that\u2019s what you want to get into. If you want to go into the single-family space, rock it with J. Scott. Whoever it is. Learn it from someone who\u2019s doing it. You don\u2019t have to reinvent the wheel. Go copy somebody who\u2019s doing it. Or learn from somebody who\u2019s doing it. That\u2019s what you want to do.<\/p>\n<p><strong>Jake: <\/strong>And if you can work for us, you get hour-long sessions of this during our financial training.<\/p>\n<p><strong>Brandon: <\/strong>I love it.<\/p>\n<p><strong>Scott: <\/strong>Very serious and difficult final question here which is tenants are complaining of paranormal activity. How should I handle it?<\/p>\n<p><strong>Jake: <\/strong>Block chain. I mean, it\u2019s all about having a customer focus attitude. We want to become the Chik-Fila of apartments, right? Chik-Fila, they go in and they say thank you. They really appreciate you. It just depends how busy the office is that day, right? But if we could, hey, tell us about that. What\u2019s going on with the paranormal activity? We\u2019re here for you, right? Customer first. We believe that renting is person and our residents are our number one priority. Okay?<\/p>\n<p>That\u2019s us. We\u2019re those guys. If we can go, we\u2019ll look for those aliens with you. We\u2019ll make you feel good about it. Maybe we\u2019ll put a camera up or something so we can catch the alien and shoot it. I don\u2019t know, but we\u2019re going to try to be there for you and make sure that you\u2019re feeling like you\u2019re being taken care of, number one.<\/p>\n<p><strong>Gino: <\/strong>On a more serious note\u2014<\/p>\n<p><strong>Jake: <\/strong>Dude! I\u2019m going to blast it.<\/p>\n<p><strong>Gino: <\/strong>Maybe it\u2019s not the alien. Maybe they just wanted to complain about something else. Objections and complaints are really good because then you know what the real problem is. So you always want to find the problem. You always want to listen to people\u2019s objections and complaints. Because if they\u2019re objecting about something, whether you\u2019re selling them something, that\u2019s good. Because they\u2019re interested in it. So they\u2019re interested in your property. Go figure out what they\u2019re really talking about and try to solve that problem.<\/p>\n<p><strong>Jake: <\/strong>Oh, so it\u2019s at a deeper level. Life coach, folks.<\/p>\n<p><strong>Scott: <\/strong>Well, are you ethically required to disclose a haunting, do you think?<\/p>\n<p><strong>Brandon: <\/strong>I don\u2019t think so.<\/p>\n<p><strong>Jake: <\/strong>I can ask HR. We\u2019ve got HR in the house.<\/p>\n<p><strong>Scott: <\/strong>This is actually my question.<\/p>\n<p><strong>Jake: <\/strong>Oh, you\u2019re talking like IT, like a clown that\u2019s killing people, right?<\/p>\n<p><strong>Scott: <\/strong>It could be either.<\/p>\n<p><strong>Brandon: <\/strong>Blair Witch Hunting? It could happen. All right, we\u2019re moving on. All right, let\u2019s head into the last segment of the show which we call our <em>Famous Four<\/em>.<\/p>\n<p>All right, it\u2019s time for the <em>Famous Four<\/em>. These are the same four questions we ask every guest every week. We\u2019ve asked you guys this before when you were on the show last time but we\u2019ll ask it again now in case it has changed. Number one, each of you, do you have a favorite real estate specifically, real estate related book? That\u2019s not your own. Because I know you wrote one, right?<\/p>\n<p><strong>Gino: <\/strong>No. It\u2019s Ken McElroy.<\/p>\n<p><strong>Brandon: <\/strong>Oh, okay.<\/p>\n<p><strong>Gino: <\/strong>I love Ken McElroy\u2019s books. <em>The ABCs of Real Estate Investing. <\/em>It had a tip guide in property management. Breaks it down really simple and he\u2019s done it. We\u2019ve had him on the show. He\u2019s had 10,000 units. He\u2019s syndicated. He makes it really easy for guys. I love the books. I think they\u2019re awesome.<\/p>\n<p><strong>Jake: <\/strong>Gotta go with my boy, Fixer J. It\u2019s the one and only thing I\u2019ve read, my boy Fixer J. I\u2019m sure I said the same thing last time.<\/p>\n<p><strong>Brandon: <\/strong>He\u2019s got some good books. I also read some. I do like Fixer J. All right. Scott.<\/p>\n<p><strong>Scott: <\/strong>What is your favorite business related book? That doesn\u2019t have to be real estate?<\/p>\n<p><strong>Jake: <\/strong>I always go back to <em>Atlas Shrug <\/em>was the most impactful book that I\u2019ve ever read. I think it\u2019s business related. I said it before. it\u2019s all up here in your head. So it gets your mind right. Be objective. And give me some Ayn Rand all day.<\/p>\n<p><strong>Gino: <\/strong>I don\u2019t know if it\u2019s business related. I just like Napoleon Hill, <em>Think and Grow Rich<\/em>. I mean, it\u2019s basically, every guru\u2019s stolen from Napoleon. He\u2019s gone out for 25 years and he was actually talking to all the guys who were rich. He was rich himself and he was educating himself and knows about the rich and all those steps. I love the book. I think it\u2019s awesome.<\/p>\n<p><strong>Brandon: <\/strong>All right. Number three. Trench?<\/p>\n<p><strong>Scott: <\/strong>What are your favorite hobbies? What do you guys do for fun?<\/p>\n<p><strong>Jake: <\/strong>We build businesses, man. We really enjoy it. No, like he came down with the family this year. There\u2019s a flood in Florida. We went out in the lake. We were doing paddleboarding. I don\u2019t know. We just like to kick back. Spend time with the fam. And you know, pretty easy. Keep it simple. Hold on, there\u2019s something I\u2019m working on right now. I said before, you may here the grinding in the background but I\u2019ve bought this really awesome, somewhat distressed three-acre house on the lake last year and we got all these trees around it. So we\u2019re clearing up all these trees, doing beautiful landscaping and I\u2019m really, really enjoying that right now. So I got a rehab going on that I don\u2019t plan on selling.<\/p>\n<p><strong>Scott: <\/strong>Awesome.<\/p>\n<p><strong>Brandon: <\/strong>Nice, nice. All right. Last question. What do you guys believe sets apart successful real estate investors from all those who give up, fail, or never get started?<\/p>\n<p><strong>Gino: <\/strong>Real easy. It\u2019s giving up. It\u2019s giving up and it\u2019s actually highlighting why you want to get into it and also your goals and strategies and techniques. Learn them. If you want to get into multi-family, please just focus on multi-family. Don\u2019t be jumping around to fix or flip. Now I understand in the very beginning, you might need to do wholesaling and fixing or flipping to build up the cash reserve, but ultimately, that\u2019s the drug. I mean, transactions are not going to create wealth. Equity is going to create wealth. And then you get caught up in that transaction grind where you\u2019re just doing one to the next and the next and the next. Focus on what you really want to try to accomplish.<\/p>\n<p><strong>Jake: <\/strong>Going back to it, you\u2019ve gotta work your ass off, lean in, and make it happen. I know it\u2019s like way oversimplified but don\u2019t quit. Work your butt off and you can figure this stuff out. It\u2019s not rocket science. You know, we talked about the buy right manage rate, finance earlier. There\u2019s frameworks out there. There\u2019s a lot of education out there so if you\u2019re willing to put the work in, if you\u2019re willing to work past your 9 to 5 if you need to, you\u2019re going to figure it out. It took us about a year and a half and then things really took off for us so we\u2019re not like the smartest two guys by any means. We just have serious blue collar ethic and we\u2019re willing to do it. So if you\u2019re willing to do it, lean into it, and I think you\u2019re going to be successful. I shouldn\u2019t even have graduated high school, I think they just pushed me into it. I can\u2019t read. I can barely write. You know.<\/p>\n<p><strong>Scott: <\/strong>Do you have a website or anything like that where people can find out more about you?<\/p>\n<p><strong>Jake: <\/strong>Yeah, we\u2019ve got a few websites. We\u2019ve got JakeandGino.com which is really, really awesome. We\u2019ve got RandPropertyManagement.com. We\u2019ve got RandPartnersLLC.com. We\u2019re trying to contain everything into those three sites right there. Oh yeah, and our podcast is freaking awesome, man. Can I say that?<\/p>\n<p><strong>Brandon: <\/strong>Yeah. I\u2019ve been on it. It\u2019s good. All right guys, thank you so much. This has been awesome and we\u2019ll see you around.<\/p>\n<p><strong>Scott: <\/strong>Bye, guys. Thanks.<\/p>\n<p><strong>Brandon: <\/strong>All right, that was the interview with Jake and Gino. That was awesome. Because those guys are where I want to be. I want to move towards what they\u2019re doing more and more and I love picking people\u2019s brain like that.<\/p>\n<p><strong>Scott: <\/strong>Yeah, I think it was fantastic. They have a ton of great perspective on there. They\u2019ve clearly fought through their strategy from a very high level and they\u2019re like, hey, we\u2019re going to do all these different things to increase our odds of success with all these ancillary\u2014<\/p>\n<p><strong>Brandon: <\/strong>Ancillary.<\/p>\n<p><strong>Scott: <\/strong>Ancillary.<\/p>\n<p><strong>Brandon: <\/strong>Ancillary. I don\u2019t know. Somebody hit up Scott on Twitter @ScottatBP. Is that your Twitter?<\/p>\n<p><strong>Scott: <\/strong>It\u2019s @ScottTrenchBP, yeah.<\/p>\n<p><strong>Brandon: <\/strong>Okay, well, whatever it is. Hit him up on Twitter and let him know how to pronounce it. I don\u2019t know how you do that over Twitter but we\u2019re going to do it.<\/p>\n<p><strong>Scott: <\/strong>Yeah, tell me how you pronounce ancillary. Is it ancillary?<\/p>\n<p><strong>Brandon: <\/strong>Ancillary. Anyway, solid show. Solid guys. Solid dudes. Check out their podcast. It\u2019s good. And yeah, you guys want to learn more about multi-family investing, we\u2019ve got a lot of information all over BiggerPockets all about it. You\u2019ve got a search bar. It\u2019s in the Quick Tip. Type in \u201cmulti-family apartment complex\u201d. Or whatever. You\u2019re going to find more information than you\u2019ll ever read in a lifetime.<\/p>\n<p>So, anyway. Scott. Didn\u2019t you get hurt the other day or was that an old picture that I saw, that you sent me and Josh?<\/p>\n<p><strong>Scott: <\/strong>No, no. Josh likes to every once in a while circle around the picture of my fresh eye wound from rugby.<\/p>\n<p><strong>Brandon: <\/strong>Okay, because I was going to say I\u2019m looking at you right now and you look fine. I was like, wait a second, I just saw a picture of you\u2014<\/p>\n<p><strong>Scott: <\/strong>I\u2019ve got the scars. But no fresh wounds.<\/p>\n<p><strong>Brandon: <\/strong>Thick, thick scars.<\/p>\n<p><strong>Scott: <\/strong>Yeah.<\/p>\n<p><strong>Brandon: <\/strong>Let\u2019s get out of here. You want to take us out?<\/p>\n<p><strong>Scott: <\/strong>All right.<\/p>\n<p><strong>Brandon: <\/strong>How do I take us out? I don\u2019t know what I\u2019m doing.<\/p>\n<p><strong>Scott: <\/strong>Hold on. I haven\u2019t done this in a while.<\/p>\n<p><strong>Brandon: <\/strong>Well, I think Dave should leave us hanging. This is great. You\u2019re going to say\u2014<\/p>\n<p><strong>Scott: <\/strong>For the BiggerPockets podcast, this is Scott Trench, signing off.<\/p>\n<p><strong>Brandon: <\/strong>That was the best ending ever.<\/p>\n<p><em>Y<\/em><em>ou\u2019re listening to BiggerPockets Radio, simplifying real estate for investors, large and small. If you\u2019re here looking to learn about real estate investing without all the hype, you\u2019re in the right place. <\/em><\/p>\n<p><em>Be sure to join the millions of others who have benefited from BiggerPockets.com, your home for real estate investing online.<\/em><\/p>\n<\/div>\n<h2>Watch the Podcast Here<\/h2>\n<p><iframe loading=\"lazy\" title=\"How We Used a Partnership to Buy 900 Units with Jake and Gino | BP Podcast 266\" width=\"640\" height=\"360\" src=\"https:\/\/www.youtube.com\/embed\/eIubdvtHVR4?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<h2>Help Us Out!<\/h2>\n<p>Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found <a href=\"https:\/\/www.biggerpockets.com\/forums\/25\/topics\/161423-do-you-listen-to-the-bp-podcast\" target=\"_blank\" rel=\"noopener noreferrer\">here<\/a>. Thanks! We really appreciate it!<\/p>\n<h2>This Show Sponsored By<\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-77567 alignright\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2016\/03\/simplisafe.png\" alt=\"simplisafe\" width=\"271\" height=\"58\" title=\"\">Check out <strong>SimpliSafe<\/strong> Security&#8217;s DIY home security systems; an affordable, wireless, cellular, and customizable system that doesn&#8217;t require a contract!<\/p>\n<p>Try it today with a discount:\u00a0<a href=\"http:\/\/simplisafepockets.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">simplisafepockets.com<\/a><\/p>\n<h2>In This Episode We Cover:<\/h2>\n<ul>\n<li>Who <strong>Jake and Gino<\/strong> are<\/li>\n<li>The importance of having a <strong>picture in mind<\/strong><\/li>\n<li>Tips for having good <strong>morning habits<\/strong><\/li>\n<li>How they built <strong>ancillary businesses<\/strong> to support their real estate investing<\/li>\n<li>Advice for finding the right <strong>employees<\/strong><\/li>\n<li>How to get into the<strong> first deal<\/strong><\/li>\n<li>How to <strong>balance<\/strong> being focused and building another revenue streams<\/li>\n<li>Why <strong>partnerships<\/strong> are vitally important<\/li>\n<li>What to <strong>seek<\/strong> in a partner<\/li>\n<li>What <strong>their partnership<\/strong> looks like<\/li>\n<li>Thoughts on using an <strong>LLC<\/strong> for each deal<\/li>\n<li>What exactly <strong>cost segregation<\/strong> is<\/li>\n<li>A discussion on <strong>holding properties<\/strong> forever<\/li>\n<li>Their thoughts about <strong>1031 exchanges<\/strong><\/li>\n<li>How they <strong>find deals<\/strong><\/li>\n<li><strong>And SO much more!<\/strong><\/li>\n<\/ul>\n<h2>Links from the Show<\/h2>\n<ul>\n<li><a href=\"https:\/\/www.biggerpockets.com\/forums\" target=\"_blank\" rel=\"noopener noreferrer\">BiggerPockets Forums<\/a><\/li>\n<li><a href=\"\/renewsblog\/2016\/07\/07\/bp-podcast-182674-multifamily-units-years-jake-gino-corrected\/\" target=\"_blank\" rel=\"noopener noreferrer\">BiggerPockets Podcast 182: 674 Multifamily Units in Three Years with Jake &amp; Gino<\/a><\/li>\n<li><a href=\"\/renewsblog\/2016\/01\/14\/bp-podcast-157-simple-morning-ritual-help-dominate-every-area-life-with-hal-elrod\/\" target=\"_blank\" rel=\"noopener noreferrer\">BiggerPockets Podcast 157: A Simple Morning Ritual to Help You Dominate Every Area of Your Life with Hal Elrod<\/a><\/li>\n<li><a href=\"https:\/\/www.lumosity.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Luminosity<\/a><\/li>\n<li><a href=\"https:\/\/www.headspace.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Headspace<\/a><\/li>\n<li><a href=\"https:\/\/alar.my\/\" target=\"_blank\" rel=\"noopener noreferrer\">Alar.my<\/a><\/li>\n<li><a href=\"https:\/\/twitter.com\/strenchbp\" target=\"_blank\" rel=\"noopener noreferrer\">Scott&#8217;s Twitter Profile<\/a><\/li>\n<\/ul>\n<h2>Books Mentioned in this Show<\/h2>\n<ul>\n<li><a href=\"http:\/\/amzn.to\/29RWOmi\" target=\"_blank\" rel=\"noopener noreferrer\"><em>Rich Dad Poor Dad<\/em><\/a> by Robert Kiyosaki<\/li>\n<li><a href=\"http:\/\/amzn.to\/2Ck1bS9\" target=\"_blank\" rel=\"noopener noreferrer\"><i>The Miracle Morning <\/i><\/a>by Hal Elrod<\/li>\n<li><a href=\"http:\/\/amzn.to\/2EsrYBN\" target=\"_blank\" rel=\"noopener noreferrer\"><em>The Richest Man in Babylon<\/em><\/a> by George S. Clason<\/li>\n<li><a href=\"http:\/\/amzn.to\/2Hf2up5\" target=\"_blank\" rel=\"noopener noreferrer\"><em>The ABCs of Real Estate Investing<\/em><\/a> by Ken McElroy<\/li>\n<li><a href=\"http:\/\/amzn.to\/2a4U6KU\" target=\"_blank\" rel=\"noopener noreferrer\"><em>Investing in Fixer-Uppers<\/em><\/a> by\u00a0Jay DeCima<\/li>\n<li><a href=\"http:\/\/amzn.to\/2EtsCi6\" target=\"_blank\" rel=\"noopener noreferrer\"><em>Think and Grow Rich<\/em><\/a> by Napoleon Hill<\/li>\n<li><a href=\"http:\/\/amzn.to\/29RXbgK\" target=\"_blank\" rel=\"noopener noreferrer\"><em>Atlas Shrugged<\/em><\/a> by Ayn Rand<\/li>\n<\/ul>\n<h2>Tweetable Topics:<\/h2>\n<ul>\n<li>&#8220;Have a picture in mind and just keep focusing on it.&#8221; (<a href=\"https:\/\/twitter.com\/home?status=%22Have%20a%20picture%20in%20mind%20and%20just%20keep%20focusing%20on%20it.%22%20BP%20Podcast%20266%20biggerpockets.com\/show266%20%40biggerpockets\" target=\"_blank\">Tweet This!<\/a>)<\/li>\n<li>&#8220;You grow into your problems, and you outgrow your problems.&#8221; (<a href=\"https:\/\/twitter.com\/home?status=%22You%20grow%20into%20your%20problems,%20and%20you%20outgrow%20your%20problems.%22%20BP%20Podcast%20266%20biggerpockets.com\/show266%20%40biggerpockets\" target=\"_blank\">Tweet This!<\/a>)<\/li>\n<li>&#8220;The fear is worst than the reality.&#8221; (<a href=\"https:\/\/twitter.com\/home?status=%22The%20fear%20is%20worst%20than%20the%20reality.%22%20BP%20Podcast%20266%20biggerpockets.com\/show266%20%40biggerpockets\" target=\"_blank\">Tweet This!<\/a>)<\/li>\n<li>&#8220;If you&#8217;re not thinking of creating value for the other person, then the partnership is not going to work.&#8221; (<a href=\"https:\/\/twitter.com\/home?status=%22If%20you&#039;re%20not%20thinking%20of%20creating%20value%20for%20the%20other%20person,%20then%20the%20partnership%20is%20not%20going%20to%20work.%22%20BP%20Podcast%20266%20biggerpockets.com\/show266%20%40biggerpockets\" target=\"_blank\">Tweet This!<\/a>)<\/li>\n<li>&#8220;Transactions are not going to create wealth; equity is going to create wealth.&#8221; (<a href=\"https:\/\/twitter.com\/home?status=%22Transactions%20are%20not%20going%20to%20create%20wealth;%20equity%20is%20going%20to%20create%20wealth.%22%20BP%20Podcast%20266%20biggerpockets.com\/show266%20%40biggerpockets\" target=\"_blank\">Tweet This!<\/a>)<\/li>\n<\/ul>\n<h2>Connect with Jake and Gino<\/h2>\n<ul>\n<li><a href=\"https:\/\/jakeandgino.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Jake and Gino&#8217;s Company Website<\/a><\/li>\n<li><a href=\"http:\/\/randpropertymanagement.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Rand Property Management<\/a><\/li>\n<li><a href=\"http:\/\/www.randpartnersllc.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Rand Partners LLC<\/a><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>It was hard to come up with a title for this episode because we covered SO much\u2014productivity strategies, growing from 0 to 900 units, partnerships &#038; more!<\/p>\n","protected":false},"author":17340,"featured_media":117925,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4565],"tags":[],"class_list":["post-96789","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-biggerpockets-podcast"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/96789","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/17340"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=96789"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/96789\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/117925"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=96789"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=96789"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=96789"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}