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Interview with Marjeanne Fields

Marjeanne Fields

Interview with Marjeanne Fields

Marjeanne Fields talks about how she has bought a 68-unit apartment complex and has two more in contract just eight months after deciding to get into apartments.

Video Replay of Interview with Marjeanne Fields

Podcast Replay of Interview with Marjeanne Fields

Show Notes:
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Transcription:

00:00 Hey everybody, thank you for joining us for today’s episode of real estate disruptors. Did we have Marjeanne Fields with AZ wealth builders. And she’s here to share how she’s bought her first apartment complex this year, this month. I’m now. This is your first time tuning in. I’m Steve Trang broker, owner of Stunning Homes Realty, founder of the offer fast homes APP, the only app you’ll ever need for wholesaling. And I’m on a mission to create 100 millionaires. So please private message me. It’d be ever if you ever have any need for a, uh, for help with your business and a very excited for today’s show, please give me a wave. Please give me some thumbs ups. And don’t forget I don’t charge a dime for this show. I don’t make any money doing this. So here’s all I ask. Uh, this is all the costs for you to listen to the show. If you get value today, please tell a friend either by sharing this episode now, tagging a friend below, or tell them them your best takeaway from the show later on. That way we can all grow together. And don’t forget, this is a live show, so Marjeanne is happy to answer any questions you guys have a when it comes to buying apartment complexes. Are you ready? I’m ready. Okay. So what initially got you into real estate?

01:06 Well, initially we got into real estate because my, at the time boyfriend and I were looking at renting a property and my now business partner sat us down and explained how dumb we were being. So especially as well, he’s a general contractor and um, it really just made a lot of sense for us to start flipping at the time, you know, it would buy the houses and flip them, especially with getting everything at cost. It made a lot of sense. And she was right. We were being dumb, right? So we got into real estate that way. I wanted to know all of the rules. So I did go out and I got licensed. I wanted to know exactly what boundaries were in place with real estate and don’t want to break any laws or licensed realtor. I am a licensed realtor. I don’t really practice in the same family space. I definitely would love to refer those out, but I don’t want it to make sure that we were protected and that we knew exactly what we were doing. Right. And so then we got into flipping.

01:56 Okay. So you got enough flipping. What got you into flipping?

01:59 I literally just that we, I, we were sending in a rental and, and had about a three hour discussion with my now business partner and at the time she was flipping, she’s been an appraiser for 18 years, so we relied heavily on her to help us find the properties, especially the ones that we could add a lot of value to and she would find this, the properties we would go in and rehab them at our cost and she would sell them for us. Um, we did about $11,000,000 buying and selling real estate and it became very abundantly clear that we didn’t start a business. We started a job. My husband looked at me after about a year or so and said, look, I can’t work physical labor 40 hours a week. And in addition to that work, 40 hours more and physical labor on these flips, you need to find something else. So you just got to work harder.

02:48 Yeah. So at that time I called back my business partner and said, you know, we, we can’t keep going down this line. Um, what else can we do? Just so happened there was a two hour seminar the next day on multifamily. And she said, well, you know, we’ve been kind of looking in the space anyways because we added more people to our group. Why don’t we go and really see if this is going to be a viable option for us. We went to the two hour, went to the three day and we signed up with the group that we’re a part of now. Really loved the, um, honestly, the numbers involved in multifamily. I like big Zeros, there’s six people in our, in our groups. So we needed to dig Zeros and I really liked the idea of long term passive income. You know, you work really, really hard initially and then it continues to pay you for years to come.

03:35 Right. So you went to a two hour seminar and they sold you into a three day workshop?

03:40 Yeah, you went in to our seminar and then they sold us into a three, a three day workshop

03:45 and so do you into.

03:46 And then they sold us the training. Best decision I ever made. You know, most people look at training and they say, oh no, I don’t want to. The way that we took approach is, look, we could go out there and we can make our own mistakes or we can get a new base point and learn from other people’s mistakes just like you do in college. Right? Pay The same amount for my college education as I did for my multifamily education. And it was the best decision I ever made. Um, it gave us a coach, it gave us a sponsor. It gave us all the things, all the pieces that we needed to fit to actually buy and move forward with multifamily. So it was a great decision. I would recommend education to anybody. Everybody.

04:20 Is there a particular program that you would recommend some way, Jeff, and see if they’re interested in getting into apartments?

04:24 I’m partial to Ra mentor. Um, you can go on Ra mentor.com. A lot of the big guys out there actually came from this particular organization. The guy that’s been running it has been doing it for 20 years. He actually was given an honorary degree from Harvard for his educational program. Um, but the thing I liked the most is it’s still a family oriented company, so it’s not this massive thing where they’re just trying to suck all the money that they possibly can. These people that work there have worked with him for 20 years and really truly care about each one of those students. Um, the integrity of that particular company was really what got me into it.

05:02 Very cool. So you said something there. Sponsor, you want to share what sponsor means? [inaudible].

05:09 So when you buy a multifamily building, um, the banks want a couple of things. They want to see net worth and they want to see a track record. They’re not going to lend on anything unless they know for sure that they’re not going to be taking it back. So a sponsor can provide one of those two things, or both. Our sponsor works with another partner. He is the high net worth individual. And then our actual sponsor has the track record. He’s been doing it since 2014. Okay. Anybody getting into the multifamily space? Align yourself with the people that are smarter than you have been doing it longer than you. You’re going to make mistakes. Don’t be afraid of it. But if you can lean on these people who have that knowledge, have that experience, it’s going to make life so much easier and it’s going to make your investors more money.

05:54 And how would you get in touch with a sponsor if you were looking to do that? Well, you need

05:58 to reach out to certain people. So for instance, um, people like me that have now owned the banks really looking for at least three properties of, of light kind. Um, so if you’re looking to buy 50 units, you want to reach out to a person who owns multiple 50 unit properties. If you’re looking to buy 400 units, you need to look for the person who owns multiple 400 units.

06:21 So a person with experience with three, 100 unit complex is, isn’t that qualified in the bank size to buy a 400 unit now?

06:28 Correct? Correct. Interesting. Yeah, it’s very, it gets, you know, you know how the banks get, I love the banks, I do, but they, they’re very conservative in their underwriting and they’re trying to protect their investments as well. And I understand that. So you really want to get yourself aligned with someone and it’s not just that they have to own it, they have to be successful with them. There’s no foreclosures. The banks never really worried about them. I’m losing any money. The Noi is good. They need to be successful in that space first.

06:54 Yeah. And so you said net worth and track record, so net worth, what are they looking for as far as net worth goes? What do they, what do you need to be able to verify or prove,

07:04 so you need to have proof of funds, so if you’re buying a million dollar property, your high net worth has to have at least a million dollars in liquid assets. If you’re buying a $10,000,000 property, your high net worth needs to have at least $10,000,000 in high net worth assets and that really depends on the lender, so anybody that’s looking to get into that space, I would encourage you to reach out to multiple lenders and find out exactly what their underwriters are looking for,

07:26 so they need to be able to pay off the property if need be.

07:31 If the. Yeah. If the bank calls the loan, do they need to be able to pay off the property? For instance, if you’re not running it the way the bank thinks you should or if you hit below a certain occupancy is sometimes the banks will have that in their, in their lingo, but they really want you to be able to pay it off. If the, you know what hits the fan,

07:49 give it a moment. Hey, by the way, we need you to pay off the loan.

07:51 Yes. Well, yes. Technically technically in multifamily you’re in default before you every. Wow, that’s great. So just kind of how it works.

08:01 So what were some of your early struggles getting into getting into this?

08:04 Well, some of our early struggles we must have. We walked six properties before we actually were able to close on our first one. There’s a huge learning curve when it comes to multifamily and you can get really excited about a deal, really excited about the numbers and you go to the property and there’s drug dealers hanging out on the corner selling drugs. A little kids probably not the best property to buy. So it really was.

08:31 That’s a great reason to low ball the home. The property owner,

08:36 yes, but in multifamily opposed to single family. Single family is kind of easy to change that reputation in multifamily because it’s so large and it’s surrounded by that community. It really does get a known for whatever. And if you are buying into a deep property, that property is known as the drug central property. It’s known as this is where you know, the prostitutes go to have their fun, so changing that reputation even though you could potentially make money off of it, changing that reputation can cost you years and years and years and if you have those d properties, your tenants don’t necessarily care about the property as much as you do, so in the interim of trying to change that reputation, you could be literally bleeding money. So if you’re a diy property buyer, you are only buying d properties, you’ve got to have a solid plan on how you’re going to make that thing functional and you’ve really got to find very specific lenders. We do not buy d property, so I can’t give any advice on that. I don’t know how to identify one. I know how to identify them. Oh yeah, they’re pretty clear.

09:45 Okay, so drug dealers. That was an interesting experience. What else? What were some of the other early struggles?

09:51 We had a property that we were looking at because we buy out of state, we look for emerging markets and this one property in misery that we were looking at. It was a great property, it was functioning really well. The numbers looked great, right? The property manager was one of three in the entire area and you know, I understand that sometimes people don’t pay, but when the property managers telling me, well, her mom died so she can’t pay her rent, you know, I, I’m empathetic. I am. But at the same time I’ve always paid my rent even when things happened to me in my life. So I just couldn’t quite understand that connection. Well, it’s a very small town. They were one of three in the area and they only existed because the other two were so bad. So they’re the best of the worst.

10:36 Right? Right. So even though we love the property, we really did like the area, it just didn’t make sense for a long term. Um, and because we’re using other people’s money, I’m always very careful about where I’m buying when I’m buying. My job is to make sure that they are making money and that I’m protecting their money and I just couldn’t feel comfortable protecting them in that particular scenario. Any other struggles? Lots. Buying your first property, you’re going to run into a million struck. Do not hire longwinded attorneys. Oh yeah. They charge by the hour. That was a $5,000 learning curve there. So you know you’re going to have struggles at the end of the day. You just have to keep pushing forward and especially in your first property, you’re stumbling along. You know, I always tell people I’m, I’m not a stupid person. I have a loving experience, professional experience. This is the first time in my life I really truly felt dumb and it was very grateful for the people that I had surrounded myself with that or lifting me up saying, no, it’s okay. This is normal, this is not do this, adjust here. So I had my hand held the whole way in and I’m so incredibly grateful for that.

11:49 So I mean obviously the differences are the challenges you’re gonna face flip fixing and flipping houses. Is gonna be different than the challenges you have. Buy An apartment complex, but let’s say your son was experienced as flip and four or five houses at a time. How much harder is it to buy an apartment complex versus challenges you have dealing with contractors dealing with not a praise, praise is not coming in, like what are the stress levels?

12:10 Just it’s different. Um, the, the struggle comes in is when you’re new in the multifamily space or you’re new in the flipping space, anytime you’re new at anything, the struggle is 10,000 times harder. Right? Yeah. So it’s hard for me to compare and say, well one was more than the other when we were first starting with flipping. It was a little bit easier. Um, just because we had that background in construction and again, I had a strong team, um, and I had more background in that myself. It’s easier to understand the single family space. There’s less legalities and an SCC laws and attorneys and everybody that goes into it. So while it’s more difficult, that’s why you get paid more. So it’s time versus reward. Frustration versus reward. Yeah. All things being equal. I would still go with a multifamily because there again, there’s more zeros on that and I, I can see as we progress, things were getting easier and easier and easier and there’s still more Zeros attached to it. Right? So for the people that are afraid to get into anything, the biggest thing I would say is just just jump. Whether it’s multifamily, whether it’s single family, don’t get stuck on. How difficult is this going to be? Just know that you’re capable. You’re human. Humans are capable of the most amazing things if they put our minds to it. So if you put your mind to it, it doesn’t matter which one’s harder, just jump, just do it.

13:34 And is there anything you’d do differently if you were starting over brand new today? I mean, I know you’re still, like you were talking about earlier, you just jumped into march, so it’s pretty amazing what you’ve accomplished in just eight months, but if you were starting over today, what would you do differently?

13:47 Not by three at once. And I think my business partner will attest to that. I have fortunate, I have the most amazing business partner. I’m, like I said, she’s been an appraiser for 18 years and she just finds these properties. She finds things that nobody can find. I always tell people, you know, if there’s a needle in a haystack and the needle is only this big, she will find it and that’s a very good thing and it also can be very challenging thing when you’re trying to raise money for three properties at one. Soon as we all know, a confused mind says no, I kept running into walls and simply because they were confused. So if I were to do it over again, I would do one completely stop, get another one on contract contract, stop. Get another one under contract. Stop one at a time to just simplify the process just a little bit, but that’s just not who we are. So adapt and move on.

14:39 We’re gonna get into that another little bit. So, uh, Fernando wants to know where are you looking at purchasing a multifamily because you were talking about Memphis or Missouri, Texas. How are you? I mean, we find emerging in

14:52 emerging market, emerging market, but we look for job growth, we look for population, um, we look for what is really not only job growth, but what are the actual economic drivers in that area, what is the population growth, you know? Okay. So for instance, when everybody’s talking about, you know, Amazon’s going here, we look for where exactly is Amazon going because all of those one jobs for every one job that is created, there’s 10 jobs around it that are right. So when there’s 10 other jobs that are created around it, you need more housing. So when you need more housing, the pricing’s kind of changed. So we always look for that emerging market of the housing is starting to rise, the job market starting to rise and yes, you can still find them in this market. People tell me all the time while there’s no deals out there, while you’re just not looking in the right spot, find the emerging market.

15:38 The first one that we bought is in a town called big spring, while they just found oil out there. So it’s been this little bedroom community that has been tucked away for years and years as everything else around it starts to rise and it just so happens that now they have oil in that area and so they’re seeing a huge influx of population growth in addition to that, they have a change in, um, a political change in like their mayors and, and um, those people. So because of they’ve had that change, they’re now seeing a lot of building and growth. So that would be a true emerging market, right? The politics have changed, the area’s changed. You’re seeing the influx and honestly talking to the millennials at starbuck’s millennials that starbucks are wonderful sources to find out exactly what’s going on in that market. And they’re all telling me, you know, we’ve just seen a lot of growth.

16:28 Millennials are coming here at the college is getting really busy. So it’s, it’s this hidden little community that now seeing this explosive growth. Like what Phoenix was three, four years ago right now, this little communities saying it. And that’s exactly what we look for. Whether it be in Missouri, Texas, Oklahoma, you can take those key things that you look for and you can move them to any state anywhere, um, and find exactly what you’re looking for and if it fits, it fits. If it doesn’t, we move on. We don’t try to force something to work.

16:56 And I think there was something else when we talked before was the Walmart’s parking lot.

17:02 Yeah. They’re literally kicking people out of the Walmart parking lot of people are rolling in with their rvs because there’s nowhere to live. I told you we have, um, a property down there that has 1600 square feet, three bedrooms. We’re renting those for about $1,100 a month. The new bill down the street that they just built has a 900 square foot, three bedrooms and they’re renting it for $2,900 a month. That my friend is an emerging market. They don’t have enough. They simply don’t have enough housing. So yeah, if you go out there, the motel six, everybody knows the motel six is about $50 a night, right? In big spring is 250 to 300. If you can find one available. It’s crazy. It is insanity out there.

17:43 So you started in March and said if you had to do it differently, you would just do one at a time instead of three. So it’s still impressive, right? And just eight months you’ve closed on one and you’re in the middle of two. Yes. So what do you attribute that to you? Because it’s kind of crazy, like, you know, a rod was on the show a few months ago or a month or two ago and it’s crazy, right? Think of the idea is like, I’m just going to buy an apartment complex, you know? Uh, and I even had a couple people like reach out to me and say, man, that was a great show and now I want to go do it, but you, I mean, just not too long ago, so I’m going to do it. And you’re in the process of closing on your second and third one. What do you attribute that to?

18:22 No excuses. Stop making excuses. Excuses don’t make you money. If you decide you’re going to do something, do it, and at least follow it through to the very end. It may be the worst mistake you’ve ever made in your life, but if you at least follow through, you can go and and and tell people, this is what I’ve done and even if you want to pivot, let’s say you buy an apartment complex and you hate it. You hate the experience. You want nothing to do with it you and instead of doing that, you want to go and do it. At least you can tell the people in it that you are sharing your business with, hey, I’ve done this. I am already a success and now I’m doing this. The more that you do in the bigger track record that you have of things that seem impossible but are really not, the more people really do believe you in.

19:05 The more people will align with you and help you. But at the end of the day, I see so many people. I want to do this or I’m going to do this next year. You know, I just have to do this in order to do this low. We didn’t know what the heck we were doing. We were still getting educated. If you align yourself with the right people, people that are smarter than you, that have done it before and trust that you are human and you are capable of amazing things because you’re a human, not because of all your crap that you have in your baggage and your life, but because simply because you’re a human, you are capable of amazing things. You can do it. Just go jump and just go do it. Reach out and talk to people and reach out to me. Reach out to Radcliffe. All these people, they all want to help. That’s another thing I love about multifamily is we all play really nicely in the sandbox. It’s a team sport and we all recognize that, so we’re willing to help other people that want to get started. You can do very small things to help someone else who’s already successful and learn from them. You, you know, if you don’t want to or you can’t afford the education, just be helpful and yes, yes, but just do it. Get off the couch and do it.

20:10 Nike had a great logo. Okay, so one of the questions was how do you determine a maximum mobile

20:17 offer for apartments? That goes a lot into the underwriting. We have an underwriting template that we follow and it’s all based on what we’re willing to buy as far as cap rate. We actually have what’s called the Holy Trinity. We’re looking for a minimum of seven percent cap rate, preferably at least eight, 12 percent cash on cash return, and at least one point six per a dcr debt coverage ratio. If it doesn’t hit those, it doesn’t matter what the purchase prices, but if it does hit those, it kind of still doesn’t what the price or the purchase price as long as it hits those three things. And that’s where multifamily is a little bit different than single family and single family. They’re always looking for price. I want the discount, I want the discount, right? I don’t care what the prices. As long as my and uh, why is making my investors’ money? So as long as those three things are hitting, it could be $20 million, it could be $150 million. I don’t care as long as those three holy trinity numbers are being hit.

21:11 So that was great down each one of those things. For those that aren’t aware of what these means, right? So cash and cash. 100,000 then I’m going to get it was a 12 percent. So 20 percent of that back. Correct. A net, a net operating income, was it? No cap rate. The cap rate for is for you guys don’t know his purchase price divided by net operating income. And then the last one, I don’t even know what this means. Debt coverage ratio,

21:35 how many times the property can pay for itself based on the income it produces.

21:38 So in of course of a year,

21:40 I’m really more like a month. Well yeah, like a year. So when you break down the Noi, it’s all based on the year. So yeah. So it’s based on the year your mortgage is x and your noi is y and y needs to cover x at least one point six times. The banks require one point two. We really require. We can go down to one point four, but it really gets kind of Iffy at that point. Again, everything we do is to protect our investors money. So why would we push that? You know, we, we want to make them money.

22:13 Oh, it’s great. They’re right. Like, you know, this is a yes or a no face out. This the Holy Trinity.

22:18 Yep. We can look at an analyze a deal in 10 minutes until you right away if we’re going to buy it or not.

22:22 Yeah. Um, and then do you, is it possible to assign apartment complexes?

22:30 It is possible. It gets a little tricky. Um, you, you can do it. What’s kind of happening in the market right now that’s a little funky though, is that a lot of the earnest monies were going hard. So if you’re raising money for earnest money, you’ve got to kind of involve these people that are giving you that money to let them know, hey, this might be happening. We actually have a deal in phoenix that we could assign to somebody. We’re buying it for $88,000. It’s worth 115. We could go in and assign that. Um, but we couldn’t have. If we have an investor who’s money is at risk, if they say no, then you kind of really can’t do that unless you replace them. So. But it is, it is possible. Yes.

23:11 Okay. Does it happen, like, do you guys hear about it in your, in your, in your circles?

23:15 It doesn’t happen. Like it doesn’t single family. Yeah. It’s not nearly as common.

23:20 Uh, so you were talking about other people’s money and so I think it’s important here to talk about how you get opm

23:28 raising. Private money is a wholesale. We could go on and on about that for a whole hour. Steve, you know that right?

23:34 We got, we got 37 more minutes.

23:35 The biggest thing that I would say to people and raising other people’s money is people only buy from people they know, like and trust it. You could have the best deal in the whole if they’re not familiar with the space that you’re in, if they’re not familiar with who you are as a person, the answer, you could have like 50 percent returns and they’re still going to say no because they just don’t trust you. They don’t know you. They don’t know that language. They don’t know that space. So where I was looking for money is people that want to get into multifamily that are in process of education and what we do is we offer them a position with our company and say, look, if you want to do this, let’s have you raised some money here. Here’s some ways to do it from your family and friends and people that you know that you’ve already in your context sphere and then that way you can raise just a little bit of money. Get familiarized with the process and the system and how you’re going to do it. Bring it in and work with us, and you can also learn this other side of how these things get taken down and what happens after they get taken down. So that’s really what we’ve kind of gotten into. And, and we love that little model. I’m raising. OPM is a very, it can be a very difficult thing and the more that you get to know other people, the better off that you will be honestly.

24:54 So how does syndication play into this?

24:57 So syndication and if you have two or more people investing in your deal that are not going to take a role, right? So they’re not going to have a management job to do is they’re strictly investors, then you have to create a syndication. You can do five slash six B, you can do five or six. It just depends on whether you’re going after accredited investors or sophisticated investors. Um, you’ve got to file with the SEC, all the investors that you have to notify the sse in every state. It’s very expensive. The expecting to spend about 25,000 on that, but it’s really worth it. Especially if you’re doing, if you’re going after accredited investors because you can advertise so you can take your property and I can blast it on facebook and says, see that I have this property and don’t you want to invest in it and isn’t it great, but if it’s not for just it’s.

25:48 If it’s not the right I’m offering, then you can’t, so you’ve really got to engage in SCC attorney. If you think you might be doing an indication before you even buy the property, before you truly submit an Loi, you need to contact an attorney, an sec attorney, and make sure that you’re going down the right path. Make sure the things that you’re saying is legal. This is another reason why I highly suggest people get educated in the multifamily space. If I say one wrong thing, I’m going to jail and there’s, you know, I could tell you, oh, I have a great deal. Technically that’s illegal, right? That’s probably, I’m not going to and I’m not sitting here saying that I have a great deal that you should invest in. I’m given an example for educational purposes only. You see my disclaimer here because I will not mess with the FCC. Yeah. That’s not a group that you really want to violate or mess with. Yeah.

26:39 Yeah. So I’m Fernando. He was asking opn is equity partners. Yeah. It’s other people’s money. Fernando and then syndication and we’re talking about 25 k, you know I’ve heard ranges between 20 k, 12 K or 30 K’s syndicate. Is that per complex or just a one time deal?

26:54 Oh No, that’s pretty old. That’s per complex for us.

26:57 Every time I do an offering I got to pay for a new syndication. It’s like a new franchise

27:03 every single time. While you’re starting a new business, every single time you’re actually. When you have a band, Kate’s. So it took us two weeks to get a bank account, let’s just put it that way. We have like nine levels of LLC is so you have your property llc and then under that you have a management and investor LLC and under that you’re selling, but you’re only selling the class shares and the shares from this major, from this main llc, the Property Llc. But everything gets funneled down, right? So the SEC attorneys, they lay out these incredibly long operating agreements that clearly define who’s getting what, what y’all say gets what llc gets what, who has a role doing what, how are the investors getting paid? What happens if we lose all their money? What happens if we need a capital call? Everything is explicitly laid out in those operating agreements to the t.

27:53 So it’s worth every penny to pay the sec attorney. It’s just a very expensive because of what it is and the liability and risk that really goes into it. And I don’t want to deter anyone from doing a syndication. Syndications are awesome. It’s worth the $25,000 because then I can raise as much money as I really need and I can sell those shares off. Um, and I can do it legally. But be prepared. It’s very expensive, it’s very time consuming. You’re going to be reading a lot. If you are a person that does not like to read at all, you need to find some business partner who does because you weren’t going to need to read those documents or an attorney that likes to read. No, you. You need to read those documents because you’re telling your attorney to do it and then you’re cross checking to make sure that they’ve done it correctly. Oh Wow. That sounds like a whole lot of fun. Yeah, we had, we had at one point I think three attorneys on staff. A good attorney is worth their weight in gold though.

28:44 Yeah. So we’re talking about finding deal. So I mean, how do you go about identifying the different multiple markets? How are you finding the properties to where the deals. That makes sense, right? Because you know, it was a big spring. What’s it called? Big Spring, right? So the guy’s no dummy. He knows it’s going up. Right? So why is he selling it to you? Or. Well, I guess, let me take a step back. Are you buying it at a discounted price or are you buying at retail?

29:13 It’s multifamily is kind of retail and again that all depends. Right? So like out here we’re buying one that is a high six cap. That’s retail in my opinion. Right. And people are buying three, four caps out here all day long. We don’t buy those, but that’s what they do. That to me is retail. As soon as you get into that kind of eight cap to me are getting a little bit of a discount. I’m the reason that they were selling because they voted for. This is how multifamily is. They’ve owned it for five years. It’s time to sell. They’re moving on like period. So typical whole time in a multifamily is three to seven years. We make our money, we leave a little bit of meat on the bones for the next guy and we’d get out and buy another one. Just getting a new car every year or every few years.

30:00 Yup. Yup. And just rinse and repeat. And, and I think those guys too, we’re going more into developing, especially in that area because they’re located in Lubbock, which is an hour away from big springs. So they, they see the potential for development. We’re not there. I have an interest in development but not at this time. So they’re, they’ve been doing it longer and they’re at that step and so they’re selling it off and they’re gonna put some money into developing. Okay. And then are you working with apartment brokers or are you doing postcards to the landlords know? I like brokers. I’m finding a good broker again is worth its weight in gold in multifamily. You’ve got to understand that this is a team sport. You are not going to be doing this 100 percent on your own. And why would you? There’s so much that goes on.

30:45 There’s so many details and, and so many people involved in the team to take these properties down that I encourage everybody, find some really good brokers and let them do their job. They do it well, let them do it. Um, and our broker out here, he’s actually out here, but they have a group where they have multiple locations. So I have people in almost every state. He’s phenomenal and he knows exactly what we’re looking for. He knows that we’re, we’re able to close, um, which is the hardest thing. Getting to know brokers, they need to know that you are going to close. My business partner has a slight advantage because she’s been an appraiser. She calls the brokers and they’re willing to talk to her because she’s an appraiser. If you’re not an appraiser, you still need to get them convinced them that yes, you are able to close.

31:29 So things like calling the broker, my team and I meaning your sponsor and your coach have closed over. I know in my team they’ve closed, I think over like $20,000,000 in the last few years, um, in, in real estate. So when you’re saying these things to brokers now that now you’ve got their attention, because that’s the hardest part of multifamily is, is getting the brokers to pay attention to you. And, but as soon as you get that one, you’ve got to treat them right, you’ve got to close, otherwise they will never, ever, ever talked to you again. Right? Um, with exception of extenuating circumstances. Um, but yeah, finding the right broker, he throws deals our way all the time, all the time, more than we can even really keep up with. And that’s the kind of broker that you really, really, really want to find. And it negates the need for the postcards for sitting down with the individual sellers.

32:21 Yes, you can do that, but you’re always kind of getting into an emotional state at that point. And remember, this is commercial. We’ve got. You’ve got to take the emotion out of it. Single family. You’re sitting down with a mom and a dad that has bought this house and that’s been their lifelong dream and commercial. You’re sitting down with a business person who just wants to make money, right? So I personally, I don’t want to sit down with a seller. I’d rather have the broker talk to the broker on a person who’s ready and willing to sell that way. I don’t have to convince them to do something that they maybe do or do not want to do. Right?

32:54 Uh, Ron, Ronald Wilson. Know when wholesaling department, are you regulated by the FTC or any other entity?

33:01 Just the same as you would be in the single family. You’re technically regulated with that and this depends on how you’ve set it up. Initially when you’re going to sell ’em. If you are under a syndication, it is defined in that operating agreement how you’re going to sell it, who’s going to sell it, who gets paid, what, who has what job. So that’s a kind of a difficult question to answer just because it all really depends on when you bought it. That’s why you always want, when you’re underwriting these multifamilies, you want to buy it and sell it in the same breath, right? So you want to look at it from, okay, if I’m buying it like this, what is the five year projection? How am I going to get rid of this? What is my target to be able to get rid of this thing? How am I going to be able to pay my investors back? Who’s going to sell the property manager going to sell it? Are you gonna hire a licensed broker to sell it? So all of those things are thought out and defined at the very beginning in that operating agreement. That’s why your attorney costs you 25.

33:51 That was starting to. Sorry to make a little more sense. So then what does your organization look like today? My organization. I mean you got your part, you got two partners? Yes. And how many.

34:04 Technically we have six, so it’s we were still in the subcontractor stage or the 10 99 stage so and because we have so many people were really kind of doing what we’re best at. So my husband and I are involved in my business partner and her husband are involved and then my other business partner and his wife are involved. They are the asset managers. My business partner who is an appraiser is acquisition specialist and I am the syndicator and then we have our little support team with us. Right. So it’s not like. And, and that’s pretty typical in multifamily, you don’t have a marketing team and all these people trying to do all these things, you know, like I’ve seen those single family wholesalers, they’ve got a team of 20 people, the bird dogs that go out and do that. You don’t necessarily do that because you have 20 brokers that are working for you.

34:58 So the team is structured differently. They get paid, but they get paid on performance, not on, I’m paying you every month to put out this or that or whatever. You can get underwriting specialists. It depends on how busy you are or you can get just a college kid that come in and just simply do the underwriting. You can get marketing people in. Just to be quite frank, we’re just not at that level yet. Honestly. I’m eventually probably will add a few more, but it’s never going to be a large corporation. It just comes you at this pace. Yeah, if I can, yeah. Hopefully our goal next year is spent five more. So yeah, we want 5,000 units, um, in five years. Cool. That’s cool. Wow.

35:37 Oh, okay. And then we were talking about all these other places you’re in, so you’re not really excluding the markets as long as they hit the holy trinity.

35:44 There are some markets that we do exclude based on insurance prices and also zoning. So like Houston, Houston doesn’t really have a ton of zoning laws, so you can have a d next to an, a or industrial next to residential. They don’t, man, it’s kind of wild west out there. Um, because we’re not familiar with exactly what streets are good. Um, we don’t really invest in Houston. New Orleans can, is pretty much similar. And if you notice these are also places that have high hurricanes and floods. And so, you know, Florida, we tend to stay away from um, California. I don’t like it when the earth shakes so, so we tend to stay away from and, and, and you also have to watch like the politics, right? So California politics are not always investor friendly, especially for the multi family space. They’re very tenant friendly, very tenant friendly. So we tried to invest in places that are like that. Not that we’re doing anything wrong, we just don’t want to fight.

36:46 Right, right, right. To get the person out of our property who’s literally destroying it. I mean, it’s just not worth it. It’s not going to protect my investors money. No, it’s not. Right. So what kind of overhead do you guys have in this industry as well? And again, that’s really kind of her property. The, the Nice thing about what we do is it has actually a very, very low overhead for our business. High overhead for the property, which makes sense, right? Right. So our marketing costs are currently under 2000. Um, and because we’re all assigned a job, we don’t have any payroll really except for us, but we’re all owners. So, so our overhead is really not that high. I anticipate even at the height will probably be under 20,000 a month in overhead. And um, when we were completely where we want to be, just simply because you don’t have, we don’t have to have an office, we don’t have to, we can work from home, we don’t have to have all these personnel and support personnel and people processing this and that.

37:51 Um, I’d say the biggest expense is legal and a CPA and I’m happy to pay him. No, you don’t want to be doing that stuff. Nope. And they, like the CPA is paid for themselves, so I’ll hire the most expensive CPA because he’ll pay for themselves 10 times over the attorneys. They’re paying for themselves because you do not want to stand in court and have to explain why. Oops, I messed up on one wording. My bad, your honor. I’m sorry. Oops. So those people are really good to pay, but um, again, they pay for themselves. So not, not a ton I’ve ever had. No.

38:23 Are there any car, I mean, I guess you’re on probation or are there any tools or systems you could not live without doing the business that you’re in?

38:30 Well, okay, so live without. Well, if I had to, I could break it down on paper, but that’s the, that’s what I mean by just do it. Don’t I hate to answer this question because there’s really good systems out there. Yes. But cannot live without. No. If it came down to it, I can do this on a piece of paper and pen if I absolutely had to. And so should you don’t get held back because you don’t have this system where you can’t afford this particular program or whatever. People have been doing this for centuries on paper and pen. It’s perfectly fine. Right? Um, but that being said, some crm or some systems that I really do enjoy Trello, t r e l l o is phenomenal for project management and active campaign is phenomenal for a cash raising, for, to just monitor who is bringing in one who has an interest.

39:17 Um, constant contact to mailchimp. Love Him. I love him. Um, and then a lot of times we’ll use, I do actually use sometimes insightly, which is a free sorry crm for my database, but I’ve kinda gotten away from that once I got into active campaign, one thing I do want to suggest to people that I tell everybody, I called them from a digital marketing background. I worked with Google, I had a digital marketing company at one point, um, and one tool that I love and it’s only like 50 bucks a month. It’s the best, it’s called meet Edgar. It’s a social media tool so you can go in and create all your content and it’ll randomly pick from which content you can kind of assign. I’d have, you know, I want a picture here or I want to um, uh, like a blog here and at this time and day, but it, it’s, it kind of takes away from having to go in every single week and set up every single post and lifestyle so much easier.

40:15 So if I can say a one single one, would we meet Edgar? I love it. Okay, awesome. I haven’t heard of that. So that’s pretty cool. Yeah, most people have and it was one of those random things I found on facebook and fell in love with and we’ll never get rid of. Okay, cool. What would you do if the market took a dip? Celebrate. Celebrate. I’m waiting for the market to take a dip in. Let me explain why this is great. Okay, so single family space. The value of a single family home is based on the comparables around it. What? Everything around it has sold, right? The value of a multifamily property is based on the income that it produces, so when, and I hate to be this person, but when everybody’s kind of losing their houses and the single family space, they still have to live somewhere, so they all fled to apartments, which drives up my noi, which drives up my price so I can wait for the market to go down.

41:02 I’m like, let’s go. That’s good news. Popping bottles. I know. I hate to say that as people are losing their jobs, but let’s face it, we’re all investors here, right? That’s the Dubai where there’s blood in the streets. Yes, yes. Yup. By when is buying the shoes, I mean, that’s a great famous. I know, I hate it, but it’s a very real thing. That’s how you get a discount. That’s how you get good deals and make more money. So what is your why? The instant thing that comes to my mind is my family. Um, I recently got married. I got married in October and my husband and I have a dream, we call it our empire and I know that sounds really kind of, you know, whatever. But um, we want to create longterm sustainability for people in the sense of I want to teach people, you know, finances, because our country’s divorce rate is astronomically high.

41:56 They teach you how to make a doily but they don’t teach you how to balance a checkbook. And then we wonder why have her people are getting divorced, you know. So my wife is, is my dream that I have with my husband of the simplifier of education and really affecting people’s lives. The other thing that I think of and that my vision is I, and I think I shared this with you, I’m after the 40,000 and most people look at me say, what do you mean 40,000? I’m one of those were people I want to stand up on stage and talk to 40,000 people, not because I think I’m so special that they need to hear what I have to say that because I want to impact them to take action in their lives that make a significant difference to their family and their lives. I want to be able to say that one thing that makes all of their dreams come true, that where they’re able to run with it and make their own dreams control true. So I guess my way of serving others and building an empire,

42:51 that’s awesome. And I think there’s a lot of commonalities, right? I mean action taker and then the, the wanting to give back and wanting to help and lift those around as. I think there’s a common theme between a lot of the other people that I’ve been on the show as well. So it’s pretty cool. Cool. Cool. Uh, what, uh, what is your biggest struggle right now? Besides emails?

43:07 I’m, I keeping up with my business partner who I love very dearly. Um, she’s getting more, more properties under contract then I can meet people enough for them to find money. So I’m always looking for investors. Um, you know, they always say the multifamily always looking for investors and we’re always looking for properties. Well, she’s, she’s got the properties. I am always looking for investors. People that want to get into the multifamily space but are maybe a little hesitant when a group on with people and learn or just simple simply get a mailbox money. I’m open to it all. Um, my business partner and I love to teach and we love to help others. So even with the people that want to buy their own well, let’s see what you can do as far as helping raise some money and get involved and we can teach you. And then I am also after the people who have money sitting in their Iras going, okay, well I’m making okay money, but I’m watching this market go down. What am I going to do? How am I going to get better returns? We’re looking for 16 to 20 percent annualized returns, which is far better than the stock market or banks forever going to be able to produce. So those specific types of people is my biggest struggle finding right now.

44:18 Let’s describe the perfect or ideal candidate for you know, for you, what would that w, w, what would that person’s financial situation be?

44:27 Sure. So my ideal client has just like the 20 other people that really invested into our last deal. They’re in their forties, fifties, sixties, um, either close to retirement or right at retirement. They’ve worked at companies all their lives. So they built up a really good 401k. They’re watching the stock market go down and afraid of what’s gonna Happen. Um, especially the people that lost a bunch of money in 2008 and the stocks and are now looking at this going, I don’t want to repeat that because if I do, I’m not going to be able to retire him and have to work at Walmart as a greeter for the rest of my life. I can offer those people away to have quarterly income coming in and big fat checks when we go to sell it with returns, like I said, between 16 and 20 percent.

45:17 I especially love the people who, who turn over the money they want their monthly reports, they want to know what’s going on, but they don’t want to be actively involved. I love the passive investors are the easiest ones to work with, especially when they have Iras. If somebody has an IRA and their Iras tell them you all, I can’t do this or I can’t do that. We can help them turn it into a self directed IRA where they maintain all of their control and then they, it’s a way to create tax free wealth, which nothing’s ever really tax free. It’s all tax deferred. Yeah, exactly. But let’s call it. Yeah. Um, so those are the people that I’m really looking for. Yeah. Okay. Cool. And what is your superpower?

45:58 Okay.

45:59 Um, I have no fear and we came in here on the gentleman and assisting. You asked me, you know, are you nervous being on a podcast? No, I’m not. I’m not nervous standing up and talking in front of other people. I’m, I’m that person that I have no problem just getting up and talking and, and being bold and trying new things and sometimes it sits, hindered me in my life and cause extremely detrimental effects. But um, that was all my twenties. We don’t talk about that in my 30 years. I learned how to hone in that and actually make an impact for the world. So that is my superpowers. I just really don’t have a lot of fear and things. I just do it well. I think that’s a natural consequence of some bad things are gonna happen, but a lot of good things going to happen too. So I like that. What is the greatest lesson you’ve learned in this or in life? In Life? Oh, you know what? It actually correlates for both.

46:54 You are not. No Man is an island. Surround yourself with incredible teams and you can do anything in the world you ever desire. Honestly, that’s the, you know, I, like I told you when we were closing this property, um, we were in Boston for a training and vacation the last day. My then fiance tells me I have to go to the hospital. He was in there for 10 days. We got back two weeks to the day before we got married. The next week was my bachelorette party. Two days later we launched a BNI chapter. Three days after that, we got married. In two weeks after that, we closed the property. So how the heck did I do all of that? I didn’t. My team did. My mom was helping me. And my wonderful mother, who I love dearly is helping me with the wedding. My business partners are helping with the property going, okay, it’s okay.

47:40 It’s going to be okay. And I had a great team with, with the BNI that picked up the slack. So all I had to do was the very specific things that only I can do in reality. That is how you should be acting every single day, every single step in your life, in order to get the most amount you want done. I heard someone say, you know, you can do anything in this world if you get other people to do it. And it is very, very true. I’ve heard that one before. I’m not good at certain things. Um, I, I like analyzing numbers, but to have me sit down and underwrite, it’s the most frustrating thing in the world for me. But my business partner, that’s the one thing she is really good at. Hates talking to people. Guess what I do. So. Right, right. So know what you’re really good at. Hire the rest, empower your team and you can go far in life. You can go anywhere you want. I always want to work for you. You’re welcome.

48:33 There’s a lot of truth to that though, right? Like, you know, um, because there’s a lot of things I’m that great at and, but I got incredible people behind me that make things happen because if you’re waiting for me to get done, I mean, it’s kind of a kind of a small joke, I don’t know. But if you want something to get done, don’t give it to Steve.

48:48 Yes, you’re the thinker. Then we’ve got one of those two big thinker and he has great ideas. Um, and I love his wife because she’s the doer.

48:58 Yeah. Yep. And that’s kind of how that goes. So what is your. Oh, actually one more thing on that was that I really liked that you can buy it through the most stressful things

49:06 you could have happened. Two weeks ago I mentioned that our flight was delayed. They lost the bag. I was just like, that’s not what you’re supposed getting married though. Oh yeah. Well actually by the time we got married I was like, I was fine because. Well, especially because when he was in the hospital I really realized what’s important, right? What is really, truly important in life and what is important in our marriage. And I had, you know, I didn’t turn it into Bridezilla. At least that’s what they tell me. Um, but yeah, hopefully not. But um, you know, I was worried about everything being perfect and the flowers and the decorations and what about this and him going in the hospital really, really hit home and like I told him at the end of the day it’s you and me and it’s what we say to each other and that’s all that matters.

49:50 Yeah. And at the end of the day, if I lose everything tomorrow, I have him, I have my family and that’s all that matters. The rest of it is to me, it was just fun stuff you get to do in your life. I got to buy a multifamily apartment complex in my life. That was pretty cool. I started a business where we bought multiple and multifamily palm plexes I got to make an impact for the world. Right? But at the end of the day I got to go home and be with my family and make an impact. In my small little world and being mad or really, really a lot to these very few people and it’s huge, you know? Um, um,

50:21 so yeah. Yeah. Knowing what’s important, that’s what’s important. Yeah. So your favorite best or most interesting failure.

50:31 My business is going to hate this, but I’m going to tell a story. I was homeless. Yeah. I was 19 years old, spent a summer homeless. Um, it was from taking a job I thought was going to be great and it wasn’t great and I failed miserably to the point where I was literally on the streets asking for money. But I tell you, in your greatest failures, become your most valuable training. I can talk to anyone because I had to talk to everyone in order to get money to eat right. So I was able to take my greatest failure in my most embarrassing thing that’s ever happened to me. And the thing I look back and go, why? Why did I do that? Right? And turn that into a lesson to grow. And so even though it was a failure, I look at it as I’m grateful for that. I’m grateful that that, that I chose that, that I felt I fell down and I felt hard because I know exactly what it means to pick yourself up, dust yourself off, and keep moving forward. That’s why I keep saying, you know, everybody wants to give excuses. Well, I can’t do it because of this and I can’t do it because of that. Yes, you can get up, get dressed, move forward every single day and just go, you’ll be fine and that’s all you’ll feel you’ll get back and do it again.

51:47 And so you know, it’s the same point we’ve heard over and over again on this show is that the things that define you and help you get to the next level is massive failure, right? Yeah. Being homeless, like if you weren’t homeless, you wouldn’t have that tenacity and courage maybe to speak to every single person. Nope. All right.

52:06 Wouldn’t. I wouldn’t know what it means to wake up in the morning starving and having to go find a way to eat and going all day until the wee hours because you’re just trying to keep your head afloat. You’re just trying to eat, so the work ethic, the ability to talk to people, the empathy that came from that, you know, I don’t judge anybody, anybody that comes at me with a terrible story, you know what? I respect them more because they’re telling me because they’re being vulnerable because they’ve come from those challenges. It gives you all those things. Yeah. So take the lesson, you know, look for failure. Don’t try to fill, but look for, look for the greatness in your failures. You’re going to fail, you’re going to struggle, you’re going to make mistakes. You might as well grow from it. If my part, the purpose, I think everybody is here for, I think of a tree. What does a tree here for to grow. So why would a human be any different?

52:59 Right?

53:01 That’s awesome. I love it. So I think that’s a really good point to a place to end. Uh, and so guys, thank you for watching. Thank you for doing this, for having someone wanted to reach out to you, learn more about this. How would they go about doing?

53:14 Best Way to get ahold of me is through email. Can I give my email? Let’s please it’s m as in Mary, J as in Jane Dot rise [email protected] SoM , j. rise above

53:26 at Gmail Dot Com and don’t forget to tune in guys on Friday we’ve got a special guests. We got Jaylin white coming in. He’s going to talk about how he, before he graduated high schools are ready to wholesaling and he’s only 20 once a day and he’s crushing it with a big team in wholesaling, so don’t forget to check that out. Friday 2:00. Awesome. Thank you so much. This was awesome. Thank you.

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