Scott: This is the BiggerPockets podcast Show 266.
“Gino 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’s 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’s getting down and saying, what are your goals? What are you trying to achieve? And making sure your goals are aligned”.
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Scott: What’s going on, everybody? This is Scott Trench here with my co-host, Mr. Brandon Turner. Brandon, how are you doing?
Brandon: You totally really screwed that up. It’s host of the BiggerPockets podcast, here with my co-host, Mr. Brandon Turner.
Scott: Ah, yeah, yeah, yeah.
Brandon: I’m good. How are you doing?
Scott: I’m doing great. Where are you located right now?
Brandon: I am in a bedroom over and yeah, it’s pretty good. It’s kind of dark in here. Sorry.
Scott: Weather looks terrible.
Brandon: Are you trying to get me to say Hawaii?
Scott: Yeah, I’m trying to get you to say Hawaii.
Brandon: People should know. Yeah, I’m spending some time in Hawaii this winter and maybe I won’t leave. I don’t know. We’ll see. I went surfing yesterday.
Scott: Brandon has semi-moved to Hawaii and since his days—
Brandon: 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.
Scott: And just pay the income tax.
Brandon: Pay the crazy income tax. Crazy Hawaii.
Scott: Hard life.
Brandon: It’s a hard-knock life. So today’s show is really a lot of fun. We have Jake and Gino back on the show, who they’ve been on before. It was an amazing episode last time and I would say it’s even better this time. They’re super fun. We covered both high level and like beginner stuff. Talking about partnerships, talking about 1031 exchanges, talking about multi-family, building ancillary—am I using that word right, Trench?
Brandon: Ah, I butchered it. Whatever.
Scott: I did saw ancillary a couple of times on the show though.
Brandon: You know what? We don’t speak English well. But it was a good show though. Listen up. Before we get to the actual show, let’s hear a quick word from today’s show sponsor.
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All right, big thanks to our sponsors always and now let’s here from today’s Quick Tip.
Scott: All right, today’s Quick Tip is go and learn about what kind of loans you’re going to need after you’ve used your first few conventional loans in your real estate portfolio. Today’s discussion with Jake and Gino, we talk a lot about what kind of advanced commercial loans that have different terms than what you’re used to hearing about with the 30-year fixed, 15-year term at a low interest rate.
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?
Brandon: That’d be good. You know, that’d be a really good blog post to come out on Thursday at the same time as the podcast written by Scott Trench. Wouldn’t that be a good post?
Scott: No, see I’m still learning about this stuff so I ask a bunch of questions because I always try to learn about this stuff. I’m not the person to write that but definitely I know enough to converse with Jake and Gino here. But you’re going to want to be able to do that as well as you build your portfolio.
Brandon: 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’t work. But no, if you guys go to the search bar, if you’re on BiggerPockets, the navigation bar at the top, there’s a little magnifying glass. Click that. Our search has been totally revamped over the past few months and it’s really, really good.
Like, you can find just anything on the site. Just search something like “balloon payment”, 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’s really, really, really helpful. I use it every single day. So there’s a second Quick Tip.
Brandon: 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’s been a while, probably did it like last week—if 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’s bring in Jake and Gino.
Jake and Gino are two real estate investors. They’re partners. They’ve done massively cool stuff. You’ll hear this story later on when they go into the story but anyway, they’ve invested in multi-family. I think they said they had 900 doors, now they have? 900 units. And they’ve only been doing this for like five years. So they’ve 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’s get to the interview.
All right, Mr. Jake and Gino, welcome to the BiggerPockets podcast again. How are you guys doing?
Jake: Good. Doing really, really good man, really happy to be here.
Brandon: Good, good. We’re happy to have you. This is going to be a lot of fun today. Can you guys, for those who didn’t 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’ll keep this a few minutes and then they can go back and listen if they want the full story. But tell us about yourself?
Jake: You want me to get into it? I’ll 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’s brother. I used to hit up Yankees games and hang out with Gino’s brother. I ended up moving to Tennessee for a better cost of living. A lot of guys were saying, dude, you’ve got to get into real estate. Blah blah blah.
So I ended up moving to Tennessee. I was getting a lot of rejection, people telling me I can’t do this. But ya’ll 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’re closing on another 50. We’re going up to 900 here in a minute. And yeah. So we blew it up really quick.
Gino: He fast-forwarded to that really fast.
Jake: Well, you said we saw it on the last one. We don’t need to go through it again, right?
Gino: It wasn’t that easy.
Jake: It’s 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.
Brandon: That’s awesome. We’re a lot alike.
Gino: It’s more challenging than that but I’ll tell you one thing. It’s 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.
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—I actually moved to St. Augustine six months ago. That’s 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.
I thought the cost of living would be less but when you want to live on the ocean, it’s not. But you know what? Fortunately for me, I kept buying. We refi-ed over $7 million bucks. We’ve 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?
So think of the picture. I was thinking to myself in the ocean, getting up at 7:00 o’clock in the morning, doing my Miracle Morning, doing my SAVERS out there and that’s 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’s multi-family or single-family, whatever it is. Just keep focusing on it.
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’ve got the tree guys out here today. We’ve got about another acre at my house that we’re clearing and stuff. We’re warning you, we’re sorry but it should be okay. We’ll carry on with this.
Brandon: Nice, nice. I don’t mind that. Real quick, before we jump in a little bit more. You mentioned Miracle Morning and SAVERS. For people who haven’t listened to that, we had Hal Elrod on the show a while back but if you haven’t 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?
Gino: For me, it was great. I had Cameron Herold on our podcast so I love that whole thing. Basically, it’s called SAVERS. It’s the acronym. Now, I don’t 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’s the time when I get up in the morning for myself, whether it’s 5:00 o’clock, 6:00 o’clock, 7:00 o’clock. There’s nobody up in the morning.
So I like to go to scribing, I like to go take at least a 30 to 45-minute walk on the ocean. That’s my goal, to get on the beach every single day. I didn’t do it this morning because I got up at 3:00 o’clock 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’s meditation. I like to pray a little bit in the morning. I like to give myself a prayer for the day.
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’s going on. And it’s like a routine. You try to create those really good habits in your life.
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—it’s happened to me so I like to get my stuff done in the morning.
Scott: But what if you’re not a morning person like me?
Jake: That’s an excuse though.
Gino: But you know what you do though? Define morning person. What time do you normally like to get up at?
Gino: I get up at 7:00 o’clock. 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.
Jake: What time do you go to bed?
Scott: 10 or 11.
Jake: If you went to bed at like 9:30, would that change your life in a big way? Are you missing out on something?
Scott: No, but I’d just get up—I’d go to bed earlier and get up earlier is the way I kind of think about it.
Jake: No doubt. So you get up, you go to bed a little earlier, you get up a little earlier. And now you’re a half hour, or 45 minutes ahead of all your employees or whoever you’re managing or whoever’s on your team, right? You’re sending stuff out to them. You’re getting your day prepared, cleaned up. You’re ahead. You’re basically starting ahead of everyone else. So then some stuff starts going. If you’re an overachiever, you’ll be able to get further ahead.
For me, I’m up at about 6:00 o’clock, 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’m out doing things trying to grow the business. So for me, I feel like a competitive advantage and it seems to work.
Brandon: For me, the whole morning thing, like Miracle Morning movement and all that, for me it’s more about proactive living than it is about time, right? It’s about saying I’m going to take a dedicated time in the morning to work on myself and to say, I’m going to define how my day is going to go. I’m not going to live reactively to what comes my way. But also, in addition to that, I’m just so much more productive in the morning. So like morning—an hour of work in the morning for me is like the equivalent of four hours of work at 11:00 o’clock. I don’t know if you guys notice that as well but I’m so much more productive because there’s nobody else up. Nobody’s around. Nobody’s e-mailing me or calling me bugging for my time.
Jake: Plus your brain isn’t totally with it so if there’s something you hate to do, like you’ve 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’t even happen, right?
The other thing is, I got the TB-12 Method. I stole it a little bit from Tom Brady here. I’m 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—
Brandon: Brain games? What are brain games? What are you talking about?
Jake: Brain games. Lumosity, man. It’s like 15 minutes but it’s like cognitive training so your brain’s functioning properly. It’s 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’m hitting it, alternate it. I don’t know if it does anything. It makes me feel good and I enjoy it so why not, right?
Brandon: There you go. One last thing about the waking up thing. Just an app that works really well for me, there’s an app called Alarm Me. Have you guys heard that? So Alarm Me is fantastic. It’s an app where it wakes you up like an alarm, right? Except for it makes you do—you can choose what you want it to make you do in the morning. For example, I have “Give me three math problems I have to solve when I wake up” in order for the alarm to turn off.
So I’m like, 19 plus 85 plus 62. And by the time you’re done with three simple math problems, I’m awake. Another one, it’ll 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’ve ever had in my life because like you have no option.
Jake: The brain games are similar. It’s got like division and mathematics falling from the sky and you have to hit it before the brain drops and explodes in the water.
Brandon: Yeah, just getting your head working a little bit in the morning. Anyway—
Jake: It sounds like a terrible morning but I’ll have to take up paddle boarding.
Brandon: Try it. It’s good.
Scott: Moving onto real estate and business though, I think what we’d really love to hear about is—
Jake: Dude, it is real estate and business. It all starts up front. 90% is in your head, right?
Scott: All right, we’re moving on. We talked last time about you guys building this real estate portfolio. I think that it’ll 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—
Jake: Yeah, I’ll 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’t 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’t want to really get less.
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—sometimes we go the community bank, we refinance it out, take the money and get it off to non-recourse.
So that’s 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’s a big vehicle. In the middle, you have your holding company and then there’s 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’s another stream of revenue there.
You can start a brokerage. We’re 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’t have to worry about it. If not, we’ll sell it for you. Right? So that’s one option we want. We’re 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?
We’re looking at, we’ve 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’re closing out, we’re going to be a little over 900 units here in April. We actually read the deal that we’re buying now this morning. You know, we’re going to give it a shot. We don’t know if we like it but we can say why not? Let’s give it a shot. We’ve got a bunch of investors that are on our list right now so let’s see if we can add that and give value that way.
So I think that if you’re a contractor, if you’re some guy that built houses, if you have management experience and you say, I want to get in the game—well 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’s not at all, go into a multi-family and forget the rest. People need a place to live. We’re all in a multi-family. We don’t do residential. We don’t do commercial stuff. It’s just multi-family homes and I think there’s a lot of ways that you can make money off of that.
It’s also vertical integration. We control the whole process. The more these businesses we control, we’re not paying fees to people that we’re 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.
Gino: 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’s got value. You can sell that. Same thing with the property management company. You can see it. You can still maintain the asset.
Let’s relate this—we call it multifaceted multi-family. That’s what we call it but just take any other businesses that anybody’s in right now. I was speaking to the guys at the restaurant that I owned. I tried to do this. Unfortunately, my brother didn’t want to do it. So if you have a brick and mortar store, which is dying right? It’s still a nice, viable option.
People still have to go out and eat. Well, write a cookbook. There’s another stream of revenue. Do some online training educations. There’s another stream of revenue. Why don’t you do some physical products? Maybe you want to sell some knives. There’s another stream of revenues. Hey, how about some tomato sauce? There’s another stream of revenue.
So as entrepreneurs, find out what the market wants, try to supply it, and try to expand that one stream because we’re always locked down to one stream. But if you start thinking outside the box, all of a sudden, you’ve 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’s how you become wealthy.
Scott: Well, let’s think about this for a second. Let’s say I’m a new investor and I’ve 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?
Jake: So number one, you’re in the game. So congratulations. You took the first step. You got in the game. You already got three deals done. So you’re 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.
So I started, in my own personal experience, I started managing. I was working full-time so I don’t want to hear I don’t have the time. I can’t get up early enough, all that stuff, right? You can. Just work a little harder. You’ve 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.
Scott: What was your job, by the way, when you were doing that?
Jake: I was selling vaccines at the time.
Gino: So the thing is, you guys have to understand. He talks as if everyone is built like him. He’s a machine. The problem is, we all have to figure out our “whys”. If you have a strong enough “why”, you figure out “how”. It’s just as simple as that.
I had a strong enough “why”. 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’t want to be there anymore. That’s a great motivator. I don’t 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—I would have my mom again come and say to me, why are you working during lunch?
I’m 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’re on this podcast, because we love to do this stuff. So if you can get to that second type, you’re going to be the Steve Jobs of the world. You’re going to be the Bill Gates of the world. If you love what you’re doing and money is not the cause, it’s the result. And that’s when you start living a truly passionate life.
Jake: And that’s spot on because people say “do what you love”. It’s all about finding what you love. You know what’s awesome doing what you really love? It’s being successful. When you get good at something—no, let’s not belittle it. If you put the work in and you start to get good at something, guess what? You’re going to start liking it.
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.
So guess what? It wasn’t that I wasn’t passionate about it—so now we have a gym right underneath where we are, in my house. It’s awesome. I love it. I go downstairs and work out when I want to. I don’t 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.
My employees are our customers. We were talking about before the show a little bit. We’re doing financial education for our employees this week because we know that they need it. We’re bringing in bankers. I flew in the big G-Dad from Florida because he’s like Mr. Life Coach and everything and he’s 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.
So now, myself, I’m 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’ll go and clean an office or something. Whatever needs to get done. I don’t mind doing it. But it’s really working on the business and creating additional businesses and allowing people to move up through the business.
My biggest thing that I’m doing that I love is being able to take someone that’s 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’re a rock star in an organization, you don’t stay in your seat for six months because you’re moving up or buying something else.
Scott: No, I love it.
Jake: You’re firing me up today, man.
Scott: It’s fantastic to have that passion and particularly to bring it to other people. That’s 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.
Jake: One other thing about it, it’s like I’m a football fan. So everyone’s talking about Andy Reid’s 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’re in my tree and they know if they need something, Jake’s there. He’s going to take care of me. I’ve helped folks within the organization outside on personal things. It’s that kind of commitment to your employees. These are your customers, folks. Whoever you’re employing. Help these folks out. Take care of them and it’s going to pay you back tenfold.
Scott: Well, let’s 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—can 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’d that business grow?
Jake: 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’re going to try and screw you. They’re not doing the right thing. Until you start to find there’s good people out there. So the number one thing is you’ve got to be willing to fire. We fire extremely quickly. If it’s 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.
So it’s getting folks in there and then it’s starting to create systems. We have all these different—and 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’re 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.
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’m 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.
Gino: I think “employees” is the wrong word to use. Sometimes they’re not bad employees. Sometimes they’re a bad hire. They’re in the wrong seat. There are sh*theads out there that don’t belong in the company.
Scott: Let’s 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?
Gino: Real quick, that’s the allure of multi-family. So if you have 25 properties, it’s a single-family home. It doesn’t substantiate it. What you want to do is try to scale as quickly as possible because that’s 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’s 60 units within four months and it’s like, talk about the snowball effect because it’s your first deal, right? Get into your first deal no matter what it is, whether it’s a three-unit or a 30-unit.
And I always tell people, it’s easy to hear people say—I’m not going to name the gurus—go 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’ve 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?
Now that you have 900 units, you say, oh another mold problem, you grow into your problems and you outgrow your problems. That’s 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’s not the end of the world. It is the end of the world to them but not to us.
Jake: Well, it is the end of the world for that person.
Gino: You know what I’m saying? It’s a big problem but it’s something that you dealt with. It’s 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’s happened a couple of times now. It’s part of the business.
You have to have thick skin in the game. And that only happens with experience. So if you’re going to go and buy 150-unit deal and try to take it down when it’s your first deal, it’s 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.
Jake: Start small but scale quickly though. I mean, I think it’s okay because it’s all up here, right? If you can do like a five or ten unit or something, you’re going to realize well, it’s no different. It’s just add zeros onto it and more employees. And that’s 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’m sorry, Scott, to go back to your point, 25-unit.
Gino: We had a resident manager on. He wasn’t a great manager. We worked with him.
Jake: Or a human being.
Gino: 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’re able to hire a pretty decent staff and that’s what I think really helped us out to scale.
Scott: 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?
Gino: 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—that’s a great question. Now that I’m 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’t sell my house in time and I didn’t get down here in time.
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’s also control. So if you’re controlling the asset, it runs much more efficiently. You’re hands-on and we’re able to grow. So that’s what we wanted to do but it just didn’t work out then.
Jake: And going back, I think you were asking like what was the goal in the beginning? My goal was, I didn’t like the stock market. I didn’t like this up and down, and frankly, I don’t 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’s telling me it was a good idea.
So I said, I just want yield. Give me a nice return. Then all of a sudden we get into it and we’re 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?
All these little things that start to pop out of it, I’m like, this is amazing. I feel like we are in the best business in the world. Because you can’t go on and buy an apartment right now on Amazon. They can’t ship it to you. It’s your home or whatever. Everyone is going to need a place. This is a basic human need, right? You’re controlling land. You’re controlling where people live.
I love it. I think we are in the best spot. I don’t like fixing and flipping really because it’s a job. You burn out and the thing is done. Poof, it’s 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’s what we’re in the process of doing.
Scott: That’s awesome. I love it.
Brandon: So I wanted to bring up one point that you brought up a minute ago about how when you first start, everything that’s a problem, it’s 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’t want to deal with that. Then guys like us are like, oh, another eviction. All right, whatever. Oh, fire? A building burn down? It’s like, okay.
You’re like, so I want to encourage people to listen to this. If there is some fear that’s stopping you right now from saying, I’m 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’m not saying you should text and drive but like, it’s so passive to them. It’s such not a big deal. These things that other people will go for—lean in, what?
Jake: Lean in, man. If you’re scared of it, an eviction? Lean in. If you’re scared of mold, lean in. Figure it out. Because once you understand it—it’s 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’t know I needed some kind of lawyer’s license or whatever the hell it is they’re called to do evictions because we had an LLC. Whatever the hell that means, right?
So I said, you know in the beginning, I’m going to do this. I’m going to do that. I’m going to do everything. So I’m the guy. I went in, went into court a couple of times. I was 3 in 0. I didn’t 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’re an LLC. I said, oh I’m 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?
Gino: But Brandon, to your point, if someone wants to get in and they’re afraid, maybe they go work for a property management company. Maybe they do the ropes. Maybe they see how it works and maybe it’s not that daunting. Maybe they work for a brokerage company and do a couple of these tasks and see, hey, wow. It’s really not that hard.
Brandon: It’s the fear of the unknown.
Jake: You know what, there’s this thing out there. It’s called Google. You can go on and type it in. You can literally figure out everything like that. I know I’m being a smartass but seriously, you just lean in and figure it out. The fear is worse than reality, right?
So we were joking a minute ago and I said, it’s all in your head, right? 90% of the game is won up here when you say okay, I’m going to stop being afraid. I’m going to get past my fears. I’m going to lean in and figure this out. It’s not that big of a deal. Oh and guess what, I just built this awesome team around me or I’m working on it and the team will help bare some of this as well. So we’re in this together. We’re trying to win.
Scott: I think it’s fantastic. And what you’re doing is, you’re like, you keep saying it. Lean in. You’re embracing these problems and more than that, where the big problems come, you just can’t 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.
Jake: Here’s the other thing. The minute someone calls you and says hey we have a problem, you have to squash that. Don’t give me the lead-up. Don’t give me, oh my, God. Something’s going on. Hit it right now because I’m 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—I 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.
Not really, but you know. You’ve got to just stop with the lead-ups. Anything that’s going to create stress or drama because you’ve 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’re going to fix the problem and then we’re moving onto the next thing.
Brandon: 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’re 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?
Jake: It’s 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’t have to worry about the guy supplying them. So you want to control everything that’s 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’re doing out. I’m compensating them 3%. They don’t gotta worry about getting paid and then if they bring the deal up, they can sell it. That’s basically creating my supplies and everything I need in-house and taking it, right?
So that’s one of the ways that we work. We want to be vertically integrated and control the main asset pieces to our business. They’re actually going to reduce costs and make the business more efficient. So regardless of what business you’re in, if you’re a baseball team, maybe you go out and you start manufacturing your own baseballs or something like that. That’s just a silly example but it’s doing the things that you’re going to control. Keep your costs down. And make your business run more efficiently.
Gino: And I think there’s 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’re going to bring an HVC company? Maybe bring in a partner on that and split that revenue with that.
So I think partnerships are really powerful. No one—it seems like a lot of people don’t want to split, right? I’d 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?
So we have ideas. And it’s great because when you’re not involved in the day-to-day, you can actually take what’s the word—a less emotional view. Higher emotions means lower intelligence. So I can look at it—I remember the first time we had a problem with one of our employees. This guy wanted to go out and kill a guy.
No! I said listen, I’m going to deal with it. I have no emotions. I said, the guy stole some money from us. I said, if you’re going to go after him, he’s 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’t been there to buffer that, I think something might have happened.
Jake: You make me sound like a meathead over here. The first time we had a problem with our employee.
Gino: Am I a meathead? I mean it’s just like I’m glad I was there and I’m glad he was there to actually balance it off and actually get perspective on it, right? Same thing with me. Sometimes I’ll be talking to someone on a day-to-day basis, I ask him a question and all of a sudden, he’ll say something. Well, I didn’t even think of that. I think partners are awesome. I love it. I love partnerships.
Jake: Here’s another example. We just bought 110 units from a guy who’s a developer. And he’s trying to look for his next project. And you know, we haven’t built anything yet because the price per unit has not been attractive. We’ve got about six to eight acres by the lake over here and we’d really like to develop it. I actually took that guy out there the other day and we’re 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?
Let’s just control every facet of our business. I know this guy’s not in the syndicating scene. I don’t want to do property management. I don’t want to do this. I’m not saying that’s lazy but there’s more out there if you want it. If you want to sit back, syndicate a few deals and play Xbox, that’s cool, too. It doesn’t matter. Real estate is about creating the life that you want to live. I just enjoy this stuff and I’m into it, man. I like get pumped up talking about it with you. But it’s all what you want and it’s the life that you want to create.
Scott: Let’s hear about some of these partnership ideas that you’re talking about. I mean, that’s something that’s 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—
Jake: 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’s 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’s getting down and saying, what are your goals? What are you trying to achieve? And making sure your goals are aligned.
But also not starting a partnership with someone that’s lazy if you’re a high energy guy. Like if he was sitting around playing Xbox all day and I was out here hustling, I’d be like, dude. This sucks. Why are you not contributing? So I think it’s 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’s a slug. If you’re a slug, partner with a slug. But if you’re a rock star, partner with a rock star.
And then make sure the person’s ethical. You don’t want to be doing business with someone that’s cutting you checks and then all of a sudden, it’s showing up light every month, right? So it’s making sure the attitudes are there, making sure the goals are there, making sure it’s a similar type of work ethic and you know, I think we share some similar kind of traits but maybe there’s things that he’s good at but that I’m not so good at and vice versa. And then that can become a synergistic effect.
Gino: 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’t like the guy and you go into business, it’s going to end. I’m telling you, it’s 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’s 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.
And if you have a big enough “why” between the two of you—we both had a big enough “why”. 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 “why” 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’m feeding his family. He’s feeding my family. So that’s important. That’s 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.
Scott: I love it. I have a million questions on this topic. So first of all—
Jake: I think it sounds like you have something in mind. Like are you identifying somebody and you’re like, what are you doing, Scott? What business do you want to operate, buddy?
Scott: I’ve just got a lot of ideas, you know. A lot of ideas. Secrets. Trade secrets.
Jake: Come on board. I think he’s coming on board.
Scott: But suppose that I’m a new investor. Should I partner with someone who’s super experienced or should I look for someone of about my level of wealth, career, success, or whatever? How does that work?
Gino: Well the first thing, when you think about being a partner is I think most people don’t 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.
So if you’re going to partner with an attorney who’s working 82 hours a week but just wants to make a 6% pref and you have the time, the ability, and the deal. There’s a lot of value. There’s a tradeoff there. So there’s a marriage there. But if you’re a newbie and you sit around and go hey you know, I’ve got a deal. It’s not going to work. So think about the goal-givers, says it best, right?
You have to give more value than what you’re going to get back in currency. If you can do that in life, if I’m giving you this pen, it’s worth a buck. Are you going to give me—then you’re all golden. That’s not the case. If you’re not thinking about creating value for the other person, then the partnership’s 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.
He in return had a lot of value for me. He lives on the property. He lives right near. He’s 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’s dealing with the people, so I think that’s one way—that’s why we’re successful, I think.
Scott: Were you friends—oh, go ahead, Brandon.
Brandon: I was thinking that about family. Go ahead and ask yours because yours is related to that.
Scott: Were you friends before you began the partnership or was that—
Gino: Not as much. He was more friends with my brother.
Jake: He would stand at the back of the restaurant like this. I’ve got my arms crossed. And he had big brother Gino in the back, banging the meat.
Gino: I didn’t have my arms crossed—I had knives—
Jake: And he’d look around, and I was like, dude, what’s up with your brother, bro? He’s like eh. Marco was in the front dealing with the reps, interacting, smiling. Gino was in the back with the kitchen guys so he’d 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’ s nice guy.
Scott: Just a softie first impression. Go ahead.
Jake: He’s so intimidating, really.
Brandon: What do you guys think about partnering with family? Is that a good idea, bad idea, do you recommend it? Especially for newbies.
Gino: I was in a partnership with my brother for 20something years. There’s a trust factor there so I know at the end of the day, money’s 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’m doing $15 an hour work when I should be doing much more work and he’s 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’s not about giving money. It’s about offering opportunity. That’s 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.
Jake: He texted me last night with the ten checks he got last month from the properties so he’s pretty happy. Because he’s in some of the deals with us. And actually, it was like, thanks, bro!
Gino: 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’s a tough business. The restaurant business is a very difficult grinding daily business and if you allow it to be—and my hope for him is to get him to be financially free also.
Scott: Awesome. Now, I’ve got a question for you about the structure of these partnerships. And this is not—don’t 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’s the agreement there for that?
Jake: Hit the sword, Gino.
Scott: The Lord of the Rings sword?
Jake: Yeah, I mean, at the end of the day, this is tough—and 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’s just going to get checks every month. You know. On a residual basis. So that’s 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’s it. So could we do that? Yeah, I don’t think anyone—I’m not interested. I don’t think your brother is. No, I don’t want to do that.
Gino: I’d 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’s great for bookkeeping. It’s easier because if you want to refile the property, you have the numbers there.
Jake: Doing it with an agency is easier.
Gino: 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’s very easy from that perspective to do that and that’s how you run your thing. You arrive, every operating agreement has their own set of rules. That’s how we do it.
Brandon: So it’s not like a master partnership for everything in a way? Every deal kind of stands alone?
Gino: No. Everything kind of stands alone. Yes.
Brandon: That’s smart. Because yeah, you might get into bed with somebody that you don’t actually find out until after a deal or two that they aren’t pulling their weight. And it’s a whole lot easier. That’s good.
Jake: Well, it’s called an operating agreement. Right?
Brandon: Exactly. Exactly. I know what you’re talking about. No one’s confused here.
Scott: 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’re going to pass it down to our heirs when that day comes. But we also have contingency factors in place in case that doesn’t happen. But you know, it sounds to me like that’s a really smart approach to partnerships in general, is you plan on making it forever or indefinite. And having that option.
Jake: We’re married.
Scott: Yeah, it’s almost like a marriage.
Gino: 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’s 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.
We cost-seg these things so that’s what our strategy is. So we want to do that. So that’s how we structure our partnership. Another guy’s partnership, maybe they’re syndicating a deal. They’re going to get into a partnership with the other guy. Hey, listen, this is a three to five year hold. This is what we’re doing.
Jake: And that’s how they get paid. That’s why they’re doing it, right? They’re syndicating in three to five years. That guy’s getting ready to sell it. We’re just like, well, you’ll get all your depreciation eventually and you’re not going to have anything left. That’s why we keep buying more because as long as we keep buying, the tax party keeps going on. We buy new asset, it’s passed through a W-2. Its taxes get wiped. So let’s just keep buying these things. Let’s keep building. Let’s 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’ll be underwriting this thing for ten years.
Gino: We’re not looking to sell so if you want to invest with our company, we’re infinite long-term and that’s how we translate into that business also.
Brandon: Can you explain, because this is probably—I don’t think we’ve ever actually covered—maybe a long time ago—and this is a super advanced strategy, sort of, but you don’t have to be an expert to do it. Cost-segregation. What did you mean by cost-seg? What is that?
Jake: Yeah, basically what we’re doing is, we have this engineer come out here and going back to having great teams, right? And he’s 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’re getting this huge swell of depreciation, it’s 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’re 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’s just a strategy. It especially works well for us that if we’re holding.
Gino: A simple book to read is Tom Wheelright’s book, Rich Dad, Poor Dad. 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’s done, because they know they can’t provide affordable housing. They’re short every year and they’re going to become shorter into the future.
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’s a wonderful thing. That’s 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.
Jake: Yeah. And the other thing is, too, we went back and said we brought investors onto something and we syndicated a deal—our 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’s not like you got your money tied up forever. You’re getting the initial capital back and then you sustain for some. You’re continuing the cash flow and you’re rolling your money into the next deal. That’s how we funded our 900 units up to this point.
Brandon: 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’re repositioning of apartment complexes, so you’re BRRRing apartment complexes to grow your wealth, get your money out, and do it again and again and again.
Scott: How long is your holding period on this? Are you holding them for that 7 to 10 years while you, you know—
Jake: That’s what I’m saying. We’re holding them forever because regardless, because what happens is it’s 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—that’s just wiping out the taxes. That’s why I said the party doesn’t stop as long as you keep buying, because you keep building up a swell of depreciation.
Scott: So I’ve got an advanced math question here that may—I hope everyone can follow here. But supposed you buy this property and it’s not in very good shape. You raise the rents. You increase it, right? What you’ve done is you’ve increased the amount of net operating income, right?
But you’ve 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?
Jake: It depends on what the market’s doing. And for you to look at, now this thing—here’s the thing. A lot of these asset classes, A, B, C, it’s based on a lifespan. Like if it’s 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.
I’m not some real estate wizard. Maybe that’s true and I don’t want to give some term definition thing because these guys get pissy and complain about it but say, how’d you give it a C plus and now you’re 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’s being valued on a lower cap rate. Therefore, the value is highter. Does that make sense?
Scott: Yes. So what I’m 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—
Jake: Dude, it’s 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.
Scott: No, that’s a great answer.
Brandon: 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’t do a 1031 exchange, you now owe all the like back depreciation for everything you had taken. Which means I wasn’t—like 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.
So I don’t 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’t realize how hot the market for—I thought I could find another similar—and 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’s 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.
Scott: That answers my question, then. The difficulty in executing that strategy is what is kind of the risk there because you guys are like—
Jake: I don’t want to sell anything either.
Brandon: 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’re 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’s what people are doing. They’re overpaying and that’s why I sort of—I wouldn’t say bubble in the multi-family, but there’s a lot of 1031 money going on that has to get placed and they made these huge capital gains.
So they’re willing to pay another million bucks for the property to save $300,000 in taxes. That’s what these guys are doing. Unfortunately, a lot of people are doing that right now so you can’t compete with that. So look at strategy, see if it’s beneficial for you to do that. It might be beneficial but there’s 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–
Jake: It was like $300,000 or something, right?
Gino: A lot of steps that you have to do to take it. So just don’t say 1031s are great. They’re 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’s what you want to do.
Jake: I think 1031s suck. I would do it—I’m just kidding.
Brandon: So the 1031, I think where it comes in really handy is let’s 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’s no—but having like what I did—
Jake: Why do you sound like a pimp?
Brandon: 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.
Gino: 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’re like, hey, I need $4,000 a month to live. Maybe that would have been like hey, I don’t want to touch it. I’ve 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’t want to exit it out.
Brandon: It really comes down to what do you want? What are your goals? What are you looking for? And at that point, I wasn’t looking. I didn’t get a ton of cash flow or the equity I had. I knew I could get—so I actually took the 24 and I turned it into 70 units. And now, I’m getting real good cash flow off those 70 units, right?
Jake: The other thing, too, is we’re in a situation where we get really good cash flow in our market. We’re in the Southeast. You invest in the SEC. I always say that. If you’re on the Coast, sometimes they’re buying these things in like San Francisco, New York, it’s kind of like a flip game regardless of if it’s a housing or if it’s an apartment game. They’re buying, trying to get the rents up and then flip it. So it’s a little bit more you know, of a different strategy and mindset, I think. So if I was on the Coast, I’d probably be doing the same thing.
Scott: Go ‘Dores, by the way.
Scott: Vanderbilt. Commodores. SEC.
Jake: Oh, I didn’t even know that was a thing. We’re in Knoxville, all right, my friend? So it’s Jesus and then it’s UT football. So you’ve just got to take it easy.
Scott: Doesn’t the cheer go, “Hey yeah, it sucks to be a Tennessee Vol”? Sorry.
Brandon: Okay, moving on. I’ve got one more question before we head into the Fire Round. Finding deals. It’s a hard, competitive market today. How are you finding deals today?
Jake: You know, a lot of guys are out there and I think they’re trying to make it rocket science or something that it’s not. We just got a deal. It’s 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’re closers. They know we’re going to get it done so we get deals brought to us and then we execute and we perform on them. Okay?
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’s a bigger one, maybe they’re going to give you a whack at it because it’s hard right now. A lot of deals that people are doing may never hit the market. You may never find out about them.
You have to have the relationships. You can create a strategy where you’re calling owners up and sending mailers out. We’ve never done it. I’m 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’s really important—find the brokers in your area that are real multi-family brokers.
We get some of these wannabes sometimes showing us deals and things like that and it’s a five cap and they’re never going to sell this thing. But there’s a few good—probably 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.
Yes, they’re 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’re going to perform when they bring you the deal.
Gino: It’s amazing, John Roller. He had a great, great podcast. I love that whole thing and it’s 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—hey, if he’s a Vanderbilt guy and he likes football, get him something from Vanderbilt football.
Scott: I’ve never heard of them before.
Gino: It’s 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’s a five cap. I’m 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’re a closer and they know you’re a closer—
Jake: They get you a deal, analyze it and get back to them. And say hey, I don’t want to waste your time. This is not the one for me. But I’ve looked at it and this is what I think about it. I want to see the next one, though.
Brandon: I love that. Yeah. I love that. That’s such a good tip. And that’s 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’t like about it and give them that feedback and then wait for the next one to come.
Jake: 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.
Scott: So once you have these deals, how have you funded them?
Jake: Cash money, brother. We just say, refi rule. No, I’ll be a little more specific. I’m just kidding. So we’re moving a lot more to the agencies, Freddie Mac. We’re getting agency debt on these things but we’re going in, we’re finding real opportunities. We’re not getting deals that you know, like a five or six cap, right? We’re finding real opportunities. We’re increasing NOI. We’re 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.
Gino: I’ll 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.
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.
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’ve got a three-year term, guys. That stunk but we were so desperate—
Jake: Don’t do that.
Gino: 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.
Scott: Can I jump in here real quick and say hey, you’re talking about the note is going to come due in three years. That’s when you say a three-year term. Just for future—
Gino: Exactly. It’ll 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’s 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.
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%.
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’s 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’s going to like it.
So that’s what we call a velocitization of money. We’re actually becoming the bank. That’s why banks are wealthy. Because we’re using money. We’re using phantom money that we’ve created, a phantom value that we’ve created to velocitize the next deal. Now listen, don’t go out and don’t spend the money. Don’t party. You have to be diligent. You have to use this money to repurpose it into another deal.
Jake: He’s got a sick Porsche. Don’t listen to him.
Brandon: No, I was just thinking, you got a 30-year mortgage on a multi-family from Freddie Mac? That’s awesome.
Scott: It sounds like the goal here is to get something that you can refinance.
Gino: They’re all 30 year ams, but they’re ten-year terms. They’re locked for ten years. But HUD’s got a program. It’s 35 years fixed that you can go and refi.
Jake: That’s 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’s 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—
Gino: Working with the government.
Jake: Yeah. But that’s why we’re actually getting another assistant on to handle that paperwork. Because if you do it over there, it’s like boxing and now playing defense, right? How do I stay in this in the long-term? Getting something that’s fixed for 35 years when an interest rate is your biggest risk that you have. That’s what we’re trying to do right now.
Gino: 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’s why—
Jake: 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’t have done that, nothing else happens. That’s why I’m saying you guys gotta lean in. Get in. Figure it out. Google what you’re afraid of. Google will say it’s okay and you’ll get past it and you can do it. I don’t want to sound like a motivational crazy person but I really do believe that.
Scott: 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’re 30 years, super low.
Jake: 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’s all negotiable. Shop with three to five different banks but don’t do the guys that are established. Get the community banks in your area that are hungry, looking to grow. You’re going to be able to work with them and then just pit them against each other. Say, this guy is doing that. He’s doing this. And then they start to fight each other. We don’t do that though. But I’m saying you could do it. It’ll probably work, right?
Gino: Scott, just think of money as a commodity, right? Once something becomes a commodity, it trades and spreads and becomes really thin. And that’s 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.
Jake: He was teaching me about this block chain, bitcoin, and the black side of the internet today and I’m like, dude, I don’t even get it. I mean, things are going on there, right? So dude, it’s happening.
Brandon: That’s awesome.
Scott: Brandon, how do you feel about bitcoin?
Gino: It’s an amazing technology. I mean, it is the essentialization. It is what’s going to be happening, bro. Give it about ten years. Every thinks of it as a currency. It’s not the currency. It’s actually the technology. It’s going to be awesome. I can’t wait. I can’t wait until banks have no control anymore. I just can’t wait. I can’t wait until everything’s open source. I can’t wait. I wish—I hope I’ll be around for that.
Jake: Gino’s going to be here for a while.
Brandon: All right.
Scott: We’re going to have a video called “Bitcoin is a Stupid, Horrible, Terrible Thing to Invest In”.
Gino: It starts out that way. Everything we have starts out that way. And then in 15 years later, we’re like, wow.
Jake: I have no idea what it is so I have no comment.
Brandon: So that was my point. It’s like nobody knows what it is and yet people are like, I’m out of real estate. I’m going to go throw my money into bitcoin when it was like at the peak.
Scott: You just don’t understand.
Brandon: That’s block chain, Brandon. And I’m like, no, it’s called—yeah, anyway.
Jake: It actually sounds like some kind of candy or something to eat. I have no idea what it is.
Brandon: All right. We’re moving on.
Scott: Onto the Fire Round here.
It’s time for the Fire Round.
Brandon: Now, let’s get to today’s Fire Round. Of course, you can get to—these questions are from the BiggerPockets forums which you can get to at BiggerPockets.com/forums. We’re going to fire them at Jake and Gino here, so what you’ve got to say.
Number one. Let’s 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?
Jake: I mean, I think there’s a lot of things. I think you want to find ways to create additional revenue streams within your business, whether you’re doing rubs, whether you’re doing a trash valet, whether you’re making money on your applications. There’s so many ways to make money that’s not just on the rent. And this is not like fee-ing people to death. He gave me like this book, The Fee Bible or something. It’s not about that but it’s when you’re providing services.
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’s got to pay the rent. And we make some money on doggie, okay? So I think it’s finding additional revenue streams within your business and then building additional revenue streams outside your business to support your business.
Gino: 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’s always about creating value for tenants. I mean, was it a pain in the ass? Yeah.
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’t know where to start. So I actually started building it out. So it’s 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’t know how to move and ended up doing that.
Brandon: 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.
Jake: And you can pay your rent on the website so folks out there listening, don’t forget to pay your rent on the website. That’s as techy as I get right there, okay. I don’t know the block chain but I know we can pay online.
Brandon: There you go. I really like that a lot. That’s cool.
Scott: What is the best flooring? What’s your go-to flooring for your rentals?
Jake: 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’s Spandex, the concrete stuff, we will go with vinyl but as I said before, the only thing we sub out, we’ve 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’s 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’re good at it. I’m not. When we put it together. We keep it simple. We got a good price for vinyl flooring.
Gino: We use Seacrest Properties, so that’s what we use in our properties.
Jake: But we fancy, though.
Brandon: We fancy. All right, good. Number three. I’m 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?
Jake: Get the hell out. Get the hell out. What are you doing there? Someone told me it’s like 10-15% state income tax. Get out of there, man. You’re nuts. No, but seriously, get out. Because you’d just get raped. You’d 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’s still a nice beach in Jax or you could go to Tampa, too. That would be cool.
Gino: Well, you know what? What are your goals? So you’re self-employed. Do you want to stay self-employed or do you want to have real estate become your full-time business? That’s 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.
Come educated. Educate yourself. It’s all about responsibility. So know what you want to do with that money. The Richest Man in Babylon. Best book I ever read. Easiest book you could ever read. 10% of your income. Don’t go into business with dirtbags, basically. Only trust people—you’re 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.
Learn the ropes from him if that’s 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’s doing it. You don’t have to reinvent the wheel. Go copy somebody who’s doing it. Or learn from somebody who’s doing it. That’s what you want to do.
Jake: And if you can work for us, you get hour-long sessions of this during our financial training.
Brandon: I love it.
Scott: Very serious and difficult final question here which is tenants are complaining of paranormal activity. How should I handle it?
Jake: Block chain. I mean, it’s 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’s going on with the paranormal activity? We’re here for you, right? Customer first. We believe that renting is person and our residents are our number one priority. Okay?
That’s us. We’re those guys. If we can go, we’ll look for those aliens with you. We’ll make you feel good about it. Maybe we’ll put a camera up or something so we can catch the alien and shoot it. I don’t know, but we’re going to try to be there for you and make sure that you’re feeling like you’re being taken care of, number one.
Gino: On a more serious note—
Jake: Dude! I’m going to blast it.
Gino: Maybe it’s 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’s objections and complaints. Because if they’re objecting about something, whether you’re selling them something, that’s good. Because they’re interested in it. So they’re interested in your property. Go figure out what they’re really talking about and try to solve that problem.
Jake: Oh, so it’s at a deeper level. Life coach, folks.
Scott: Well, are you ethically required to disclose a haunting, do you think?
Brandon: I don’t think so.
Jake: I can ask HR. We’ve got HR in the house.
Scott: This is actually my question.
Jake: Oh, you’re talking like IT, like a clown that’s killing people, right?
Scott: It could be either.
Brandon: Blair Witch Hunting? It could happen. All right, we’re moving on. All right, let’s head into the last segment of the show which we call our Famous Four.
All right, it’s time for the Famous Four. These are the same four questions we ask every guest every week. We’ve asked you guys this before when you were on the show last time but we’ll 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’s not your own. Because I know you wrote one, right?
Gino: No. It’s Ken McElroy.
Brandon: Oh, okay.
Gino: I love Ken McElroy’s books. The ABCs of Real Estate Investing. It had a tip guide in property management. Breaks it down really simple and he’s done it. We’ve had him on the show. He’s had 10,000 units. He’s syndicated. He makes it really easy for guys. I love the books. I think they’re awesome.
Jake: Gotta go with my boy, Fixer J. It’s the one and only thing I’ve read, my boy Fixer J. I’m sure I said the same thing last time.
Brandon: He’s got some good books. I also read some. I do like Fixer J. All right. Scott.
Scott: What is your favorite business related book? That doesn’t have to be real estate?
Jake: I always go back to Atlas Shrug was the most impactful book that I’ve ever read. I think it’s business related. I said it before. it’s all up here in your head. So it gets your mind right. Be objective. And give me some Ayn Rand all day.
Gino: I don’t know if it’s business related. I just like Napoleon Hill, Think and Grow Rich. I mean, it’s basically, every guru’s stolen from Napoleon. He’s 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’s awesome.
Brandon: All right. Number three. Trench?
Scott: What are your favorite hobbies? What do you guys do for fun?
Jake: We build businesses, man. We really enjoy it. No, like he came down with the family this year. There’s a flood in Florida. We went out in the lake. We were doing paddleboarding. I don’t know. We just like to kick back. Spend time with the fam. And you know, pretty easy. Keep it simple. Hold on, there’s something I’m working on right now. I said before, you may here the grinding in the background but I’ve bought this really awesome, somewhat distressed three-acre house on the lake last year and we got all these trees around it. So we’re clearing up all these trees, doing beautiful landscaping and I’m really, really enjoying that right now. So I got a rehab going on that I don’t plan on selling.
Brandon: 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?
Gino: Real easy. It’s giving up. It’s giving up and it’s 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’t 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’s 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’re just doing one to the next and the next and the next. Focus on what you really want to try to accomplish.
Jake: Going back to it, you’ve gotta work your ass off, lean in, and make it happen. I know it’s like way oversimplified but don’t quit. Work your butt off and you can figure this stuff out. It’s not rocket science. You know, we talked about the buy right manage rate, finance earlier. There’s frameworks out there. There’s a lot of education out there so if you’re willing to put the work in, if you’re willing to work past your 9 to 5 if you need to, you’re going to figure it out. It took us about a year and a half and then things really took off for us so we’re not like the smartest two guys by any means. We just have serious blue collar ethic and we’re willing to do it. So if you’re willing to do it, lean into it, and I think you’re going to be successful. I shouldn’t even have graduated high school, I think they just pushed me into it. I can’t read. I can barely write. You know.
Scott: Do you have a website or anything like that where people can find out more about you?
Jake: Yeah, we’ve got a few websites. We’ve got JakeandGino.com which is really, really awesome. We’ve got RandPropertyManagement.com. We’ve got RandPartnersLLC.com. We’re trying to contain everything into those three sites right there. Oh yeah, and our podcast is freaking awesome, man. Can I say that?
Brandon: Yeah. I’ve been on it. It’s good. All right guys, thank you so much. This has been awesome and we’ll see you around.
Scott: Bye, guys. Thanks.
Brandon: 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’re doing more and more and I love picking people’s brain like that.
Scott: Yeah, I think it was fantastic. They have a ton of great perspective on there. They’ve clearly fought through their strategy from a very high level and they’re like, hey, we’re going to do all these different things to increase our odds of success with all these ancillary—
Brandon: Ancillary. I don’t know. Somebody hit up Scott on Twitter @ScottatBP. Is that your Twitter?
Scott: It’s @ScottTrenchBP, yeah.
Brandon: Okay, well, whatever it is. Hit him up on Twitter and let him know how to pronounce it. I don’t know how you do that over Twitter but we’re going to do it.
Scott: Yeah, tell me how you pronounce ancillary. Is it ancillary?
Brandon: Ancillary. Anyway, solid show. Solid guys. Solid dudes. Check out their podcast. It’s good. And yeah, you guys want to learn more about multi-family investing, we’ve got a lot of information all over BiggerPockets all about it. You’ve got a search bar. It’s in the Quick Tip. Type in “multi-family apartment complex”. Or whatever. You’re going to find more information than you’ll ever read in a lifetime.
So, anyway. Scott. Didn’t you get hurt the other day or was that an old picture that I saw, that you sent me and Josh?
Scott: No, no. Josh likes to every once in a while circle around the picture of my fresh eye wound from rugby.
Brandon: Okay, because I was going to say I’m looking at you right now and you look fine. I was like, wait a second, I just saw a picture of you—
Scott: I’ve got the scars. But no fresh wounds.
Brandon: Thick, thick scars.
Brandon: Let’s get out of here. You want to take us out?
Scott: All right.
Brandon: How do I take us out? I don’t know what I’m doing.
Scott: Hold on. I haven’t done this in a while.
Brandon: Well, I think Dave should leave us hanging. This is great. You’re going to say—
Scott: For the BiggerPockets podcast, this is Scott Trench, signing off.
Brandon: That was the best ending ever.
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