December 27, 2023 • 32 mins
Welcome To The Real Estate Underground Show #99!
Today, we have a special guest, Dr. George Roberts II from Horizon Multifamily. He is not only a data scientist but also a multifamily investor. George's journey started in bioscience, but after his sister suggested getting into ground-up construction, he realized there was more to life than being a tech guy. He found his talent for entrepreneurship and realized the need for better housing economics in the multifamily investing world.
In this episode,
- George will share the story of how Horizon Multifamily got started and where they fit into the real estate marketplace. We'll also dive into his perspective on rent growth and cap rates in the market.
- George will provide valuable insights into what he looks for when evaluating a property, with a specific focus on financials, demographics, and growth numbers.
- Additionally, he will discuss how he determines if reserves are sufficient and what metrics he uses to make that judgement.
- When it comes to appreciation and value, George understands the importance of cash flow and will explain why he believes it's a safer bet.
If you're interested in learning more about George or Horizon Multifamily, you can connect with him on LinkedIn or visit www.horizonmultifamily.com. Don't miss out on the opportunity to get in touch and schedule a conversation with him!
Resources:
- Website: horizonmultifamily
- LinkedIn: https://www.linkedin.com/in/georgerobertsiii/
Additional Resources:
- Website: https://www.clarkst.com
- Phone: (860) 675-5800
- YouTube: https://www.youtube.com/@clarkstcapital
- Podcast: https://bit.ly/3LzZdDx
- LinkedIn: https://www.linkedin.com/company/clark-st-capital
- Twitter: https://twitter.com/clarkstcapital1
- Facebook: https://www.facebook.com/ClarkStCapital
- Instagram: https://www.instagram.com/clarkstcapital
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Ed Mathews (00:00):
And this is Real Estate Underground.
Greetings and salutations, RealEstate Undergrounders.
This is Ed Matthews with theReal Estate Underground podcast.
Thank you so much for joiningus today.
So today I get to introduce youto literally my favorite data
scientist on the face of theplanet.
He is a multifamily investor,both on the active side, as a GP
(00:24):
, as a KP, and I believe he hasseveral hundred units in his
back pocket as an LP as well.
So, Dr George Roberts and I'llonly call you Dr once welcome to
the show and good to see you.
My friend, how are you?
George Roberts III, PhD (00:39):
It's great to see you, ed, and thank
you for having on the show.
It's a great honor, Thank you.
Ed Mathews (00:43):
Yeah, so I am notorious for stalking, whether
it's Twitter, linkedin orFacebook, and it's how I find
really smart people to haveconversations like this one
about.
And so I actually gosh, got tobe a couple years now was
introduced to you through, Iwant to say, yona Weiss's
(01:04):
LinkedIn channel.
Oh, yes, right.
And so, yona, if you're outthere, thank you very much.
And then had the opportunity tojoin your weekly networking
group, which is amazing, and theamount of talent and brain
power on that Zoom call everyweek is mind blowing, and you
(01:28):
should charge for it, because Icertainly learn something every
time I'm on that call.
So, yeah, George, welcome to theshow and we're going to get
into all that.
We're going to unpackeverything your podcasts, your
meetups.
I understand there'spotentially a book coming up,
although we can't talk aboutthat, and that's cool, but I'm
going to make you come back andwe're going to talk about that
(01:49):
when you're ready.
George Roberts III, PhD (01:50):
Sounds good.
I'm looking forward to it.
Ed Mathews (01:51):
Yeah, and so anyway, george, welcome, and it's good
to see it.
George Roberts III, PhD (01:55):
Yeah, great to see you.
Ed Mathews (01:56):
Yeah.
So, George, for those folks whohaven't discovered you yet and
I assume it's only a matter oftime why don't you tell us a
little bit about who you are andwhat you do, and then we'll get
into it?
George Roberts III, PhD (02:07):
So I'm really just a tech guy who
discovered the fire ofentrepreneurship.
I worked as a bioscientist,became an award-winning data
scientist in fintech and thenone day my sister said hey,
let's launch a company.
Why don't we start doing groundup construction?
Right, and we're just talking.
A couple days back she said,hey, there are a lot of fourth
or fifth generation builders inthis business.
(02:28):
There are a whole lot of firstgeneration builders, and she's
absolutely right.
We picked one of the hardestbusinesses to break into and I
just had a blast doing it and Irealized there's more to life,
there's more life than being atech guy.
And I realized not only do Ihave a talent for
entrepreneurship, not only doesit light my fire, but also I
(02:50):
could repurpose a lot of what Ihad done.
So I had learned to become agreat data analyst, data
scientist, and had at that pointrealized well, look, I don't
think there's enough housingeconomics out there, explained
from the standpoint of themultifamily investor, for
example, a lot of single-formalstuff out there.
But if you're really trying toget in this and you want to be
(03:13):
successful in the business,whether you are a passive
investor or an active investor Ithought you know I could really
fill a niche, and that reallyhelped to provide the impetus
for me rebranding as the datascientist of real estate, and
that's what I'm here to do helppeople understand what's going
on so you can invest withconfidence.
Ed Mathews (03:34):
So it's interesting.
You know, obviously you are aperson of high intellect and
capability.
Why real estate?
I mean you could do anythingright, so why did you pick real
estate?
George Roberts III, PhD (03:42):
Every question.
So, as a data scientist, I feellike part of my job is just to
survey the world and make surethat I'm in the right place.
Am I in the right occupation?
Am I investing in the rightasset class?
And that survey led me directlyto multifamily real estate.
I jokingly call it the gatewaydrug to commercial real estate.
(04:04):
But let's be clear it is morestable.
It's not like buying a singletenant.
Industrial Multifamily is a lotmore buffer than that and I
think it provides a greatopportunity.
And it provides particularly agreat opportunity for people who
enjoy people you're going toneed a network more to succeed
in this business and also peoplewho enjoy numbers.
(04:26):
If you like the finance side ofthings, or if you can find
somebody on your team who does,then I think you've potentially
got a bright future withmultifamily Because, again, I
think you're really merging.
You're sort of sitting at thenexus of finance and commercial
real estate.
Ed Mathews (04:39):
Yeah, and I would add marketing to that as well.
Right, it's an industry thatenables also I am a former, I
guess recovering technologyperson and it allows folks like
you and me and other people outthere to utilize the skills that
(05:00):
they created in corporate worldto and directly apply to the
success of a particular projectand investors and your own
company, right.
George Roberts III, PhD (05:10):
And where you're coming from.
I call myself recovering PhD.
Ed Mathews (05:13):
Yeah, there you go, so horizon was trying to make
good.
Yeah, that's all right.
You know, just incrementalimprovement over the over time,
right?
Fabious talks yeah, so tell meabout Horizon Multifamily and
where that fits in themarketplace and what your focus
is.
George Roberts III, PhD (05:31):
Sure, so we started out a few years
back, met at Dealmaker Live Iwas actually the last to join.
I met one of our partnerslocally and it's a perfect
example of just how you can getstarted in this business Get
together with some people, startunderwriting deals and next
thing you know then you'rerunning deals and that was our
evolution.
So over the last few yearswe've gone from analyzing 100
(05:56):
deals to being apartment ownersnow on about five deals.
And my focus particularly Ilike the sort of middle
attitudes of the country, thisupper south, lower north, this
area that's nice enough, it'swarm enough for people to want
to move there, but it justhasn't gotten quite as built up
as, say, texas or Florida orArizona.
(06:16):
I mean there's some areas thatare already starting to sort of
figuratively feel the heat.
And these areas that haveexperienced these super hot
markets I like to say there'ssomething to that.
I mean, like some of them, Ithink, are a little too hot to
touch and I don't have a crystalball, I don't know what's going
to happen and you could seethat these hot markets may go on
for one, two, three or fivemore years.
(06:37):
But I certainly feel a lot morecomfortable in a place like,
say, tennessee, where I can seethat it's beautiful.
People love the Smoky Mountains.
They love to work from home oraway from home.
These days, as you can doworking remotely and places like
that are really drawing peoplein Kentucky is also amazing.
I mentioned East Tennessee,kentucky.
These are areas that are notterribly rent constrained.
(06:58):
A lot of people are way under30% of their monthly income in
these areas.
These are areas that have roomto run.
What's the part of the countryright now that's growing the
fastest in terms of rents?
It's the Midwest.
So you got to remember whateverwas hot yesterday is not
necessarily what's going to behot tomorrow, and when you get
towards the end of the cycle, asit appears we're at right now,
(07:19):
what was hot yesterday may beprecisely what you don't want to
be in tomorrow.
Ed Mathews (07:23):
You mean there's economic cycles and things
change.
George Roberts III, PhD (07:26):
Yeah, thank you.
You know I love it.
Two tech guys Maybe this is alittle obvious to us, but I
think a lot of people.
If you're listening to a gurutalking on YouTube from a year
ago, I got news for you thatthere may be an expiration date
on that advice.
Ed Mathews (07:40):
Yeah, look behind you.
It was a little bit back.
It's not today or tomorrow,right?
So, as far as you know, I'minterested in you and I haven't
talked about this in a littlebit but I'm curious about your
perspective on the market interms of so you and I tend to
chase I don't think we chase thesame deals.
I think you're operating in amuch larger complex than I do,
(08:00):
than I focus on.
But I've fallen in love withKentucky myself and I was
actually just down in Tennesseelast gosh when was that?
Last September?
And yeah, I mean I wasmarveling at the amount of built
to rent and, as well as youknow, short term rentals, but
not a ton of multifamilyactivity, at least not that I
(08:24):
saw.
I mean, memphis has always beena great cash flow market, but
there's lots of opportunityeverywhere, but in that slice of
the world it seems to be thatit's loosening up a little
faster than, say, where I livein Connecticut, which is, you
know, everybody's high fivingwhen they close a deal at a four
cap and I'm just cringing andpraying for their successful
(08:47):
refinance when the bridge loancomes to.
So, in terms of your perspectiveon the market some people say
we're in a recession, somepeople say winter is coming.
I'm curious about yourperspective and what you're
seeing in your markets in termsof rent growth or lack thereof,
as well as cap rates, whetherthey're compressing, expanding,
(09:10):
whatever.
George Roberts III, PhD (09:10):
Well, in my markets I think we're
seeing a lot of leveling.
I mean East Tennessee, it seemsit's just like crazy.
I mean there's a lot of yougotta remember a lot of these
places.
Even when you see the newleases stop going off.
Okay, let's say you literallyhit a wall and ask them toad.
Well, you've still got a lot ofloss to lease because your
renewals have time to catch up.
You'll increase them a littlebit when you renew and when they
move out perhaps increase evena little bit more.
(09:32):
So some of those markets Ithink you were making a little
bit of a joke about we'recasting in the rear view mirror
earlier.
There can still be a little bitof life left there, even as you
do level out.
So I think I'm seeing a lot ofthat in my markets.
I know Orlando is still growing,although it depends exactly
precisely where you are.
I mean we've captured suchincredible rent increases that
(09:54):
right now we're quite happy justto stay where we're at.
If we can keep our place leasedup.
We're happy because we're doingfine.
We did not buy at the top ofthe market, we bought quite a
while back, and so I guessthat's the first thing I would
say is make sure that whateveryou're looking at, whatever
metrics you're looking at, makesure you're making a
differentiation between newleases versus releases,
(10:16):
absolutely.
And then, as far as othermarkets, yeah, I mean, we are
still continuing to see rentincreases, I would say in most
of the markets of the US.
And it's just like I justchecked out earlier today,
trying to find the citation, ifI can.
It's $1,000 is the premiumbetween owning and renting.
(10:37):
So it is very, very expensiveand it's been like that for a
few months.
We've gone a little higher andwe sort of leveled off $1,000.
I mean that is just insane.
Or to see how we have a wholelot of new homeowners when you
have that sort of premium.
Of course is calculated betweenwhat is your mortgage payment
versus what is your rent payment.
Now people are not backing outof that how much equity you're
(10:59):
getting in the home each monththrough amortization.
But the point of the matter isthat that's sort of wondering
where we're going to be down theroad five or seven years when
you cash out that mortgage.
That's a luxury only if you'remaking your bills.
Ed Mathews (11:14):
Correct and I've seen study after study that says
that the average American haswhat?
$400 in a rainy day fund onaverage, which is terrifying,
but the so it's interesting herein the Northeast the last I'd
say, two and a half, three years, rents have exploded and
(11:34):
they're still growing, but, likeyou were saying, they've kind
of stabilized.
They're not growing anywherenear as fast as they were.
It seems to be that they'rekind of reverting back to the
historical norms the three, fourpercent year over year, which I
think is healthy, because thefact is that at least here in
our market, what's driving rentis supply and 0809, 2010, 11
(12:01):
wiped out the general contractorclass here in this area that
was building multifamily.
So there's been a 10, 12 yeargap of no multifamily
construction and it turns outhuman beings continue to make
babies and they continue to needhousing, and here in
(12:22):
Connecticut I think we're 26,000units behind where we need to
be for the 2030 projection,which is a lot for a small state
.
George Roberts III, PhD (12:29):
Yeah, that's huge and, like I
mentioned, those are in manycases the fourth and fifth
generation builders.
They were out.
Takes a long time for them tocome back in or for new players
to come back in.
And another thing aboutConnecticut and Northeast is
that I understand you're alsokind of built up and that makes
it harder to build new carwashes.
Ed Mathews (12:48):
So that's another play out there.
Right, absolutely.
George Roberts III, PhD (12:50):
People who are buying these car washes
in the rest of the country.
I don't know, but if you'rebuying out there in the
Northeast where it's really hardto find land, that stuff that's
good.
So anyway, I guess we can talkabout car wash bubble another
day.
Ed Mathews (13:03):
Yeah, we'll save that for a different show, but I
was always fascinated by thatbusiness model.
But, in terms of theappreciation and what is your
philosophy when you're going tobuy?
I know you're an expert inrepositioning.
I mean, that's kind of yourwheel, one of your wheel houses,
and so when you're looking at aproperty, what are you
particularly focused on?
(13:24):
What are you looking at interms of the financials and the
area, demographics and growthnumbers and all that?
George Roberts III, PhD (13:31):
Sure, I'd love to give you a citation
on that last thing I mentionedabout the $1,000 gap that, john
Burns?
Ed Mathews (13:36):
Oh, okay.
George Roberts III, PhD (13:36):
From the show notes.
So I love to see a lot of lostrelease.
I love these mom and pop deals,so I know you also operate in
the smaller space.
I think smaller units can begreat.
You can have a lot of meat onthe bone and when we say these
are small deals, if you got 10or 20 or 30 units, that is a big
deal.
It's a big deal.
Ed Mathews (13:53):
That's way bigger.
George Roberts III, PhD (13:54):
It's enormous, right, Incredibly big
and it's way bigger than youknow.
Hey, a single family home burror a fix and flip.
So yeah, these small to mediumdeals can be huge and a lot of
times, particularly if you getthem out in a tertiary market,
you can have people who haven'toptimized the property.
I'm looking at one right nowand there's literally no
advertising, not even free stufflike Google, no, yell, none of
(14:17):
that.
You can even put up a verycheap website and that's not
being done either.
And sure, yeah, I think it getsout on Zillow when there's, but
it's really just word of mouth.
So I look for these sorts ofthings.
Properties was a huge loss tolease, where you know you might.
You might look for somedeferred maintenance or you
might even find an operationsplace, somebody who's been
running it okay, but they'rejust not running it like they
(14:40):
should because, who knows, maybethey have the brother-in-law
and the payroll and things arecosting a lot more than they
should, or they don't keep theoccupancy, like you know that
the other properties in the areaare looking, and I think that's
the huge thing.
Now we might be towards the endof a cycle or we might be just
taking off again If rates godown.
I say we're in mid-cycle, asyou mentioned, we're way
underbuilt, so it's entirelypossible that we plateau for a
(15:01):
little while.
I mean, actually we're alreadyup.
As we record this, in themiddle of June, January was the
lowest point in the median salesprice of homes sold in the US
and we've been coming back upsharply since then.
Ed Mathews (15:14):
Yeah, there's no inventory.
Yeah, I mean, there's zero.
I have a property in EastHartford, connecticut, which is
a secondary city here, and therealtor, the agent who is trying
to talk me into selling thatproperty, sent me an email the
other day that said there isactually just one duplex per
sale in the city of Hartford,east Hartford and you should
(15:36):
really think about selling.
It's a four family and youshould really think about
selling, because I was lookingat it in terms of trading up,
taking the wind because I'veowned it forever taking the wind
and then trading up to a muchlarger building and I haven't
decided yet because it's my baby.
It's on Clark Street in EastHartford, which is I named my
company after, so it's literallythe first building I ever
bought.
George Roberts III, PhD (15:56):
But yeah, I mean you're 100% right.
Ed Mathews (15:59):
There's just not a lot of inventory and so when you
go to reposition of building,obviously there's the economic
piece, where we look at rentupside, we look at reducing the
cost envelope of the building.
But where does appreciation andvalue kind of figure into your
thinking?
Are you a cashflow guy, anappreciation guy?
(16:23):
A little bit of both.
George Roberts III, PhD (16:24):
I think it's fair that we should all be
a little bit of both, but Iwould lean toward the cashflow.
It's a lot safer and, again, Ithink that safety is what people
need to focus on right now,even though I do expect the
prices will continue to rise.
We are in a volatile situationright now and if the economy
takes a major tumble, the fourrates come down.
And remember it takes time torefinance and you can find
(16:45):
yourself with a building full oftenants that are out of a job
and not being able to serviceyour market.
So you definitely want to havereserves and you definitely want
to have cashflow.
So I would say I would alwaysprefer cashflow, but, yeah,
there has never been a bettertime to have reserves on the
sidelines.
Ed Mathews (17:02):
Yeah, so when you look at reserves, how do you
judge you have enough?
I mean, is it by the operatingmonth, is it?
What is the metric you use todetermine what your reserves
should look like?
George Roberts III, PhD (17:15):
Sure, Well, one rule of thumb is that
you want to have at least threemonths of operating expenses as
operating capital.
That's a great start.
If you can have six months ofprincipal interest stocked away,
that's even better.
Now are you putting away $250per unit per year for
replacement reserve?
That's if things are going well.
What if you've got to replaceyour roof in five years?
(17:35):
You're not going to get there,so you have to look at the
property as well.
Ed Mathews (17:38):
Yeah, not a 250 bucks a pop right.
George Roberts III, PhD (17:40):
No, not , unless it was just replaced.
Ed Mathews (17:42):
Right, exactly yeah.
And then it becomes someoneelse's problem 25, 30 years from
now, and fortunately, you'llhave saved the $250, all those
pennies get put away and youcould afford the roof, but
you're not going to becauseyou're going to go buy someone
else.
So all right.
So I think I understand and youand I tend to think similarly
in this fact that, regardless ofeconomic cycle, cash flow, it's
(18:03):
wonderful in good times andit's even better in difficult
times, because that is what getsyou through the winter, as they
say.
So, in terms of your business, Iam a fundamental believer in
business systems and technology.
I look at a business and firstthing, I think, is process and
(18:25):
procedures.
And then, okay, technology wise, how do we enable those
processes so that we can makethe business as simple as
possible, so that when I hirepeople, I don't need A++ players
.
I can hire someone you'retalking about IQ before someone
of an average to above averageIQ and put them in a position to
succeed.
(18:45):
So I'm curious about the typesof systems that you tend to look
at as you run your own business, and how do you manage them?
How are you put together For?
George Roberts III, PhD (18:54):
me.
I think a lot of it is justgetting good people and having
them nailed down so you don'thave to get the A++ people.
I think that's outstanding, butjust realizing when you need
help.
So I've got a VA doing all ofthe social for me so that I
don't have to deal with thatWith my events.
That's hugely helpful.
I'm about to hire a bookkeeperbecause that's something that I
just certainly don't have timefor, even with five assets.
(19:17):
I'm under contract on somethingelse and there's no time left.
Ed Mathews (19:21):
Yeah, but it's high as an excuse Again yes, high as
the best use.
George Roberts III, PhD (19:24):
You've always got to be hiring and your
partners can only go so far.
I got someone who's great atconstruction and I can do the
accounting.
I actually find it interestingto a certain point, but it's
really time to let that go.
For me, it's just delegatingand knowing when it's time to
let go.
Ed Mathews (19:43):
Yeah, I mean, it's a really good point.
How much value, on an hourlybasis, do you, as the leader of
your company, bring to thatcompany?
I would submit it's well abovethe 20 bucks an hour you're
spending on a bookkeeper or lessif it's offshore, and time is
one of those things you cannever get back.
So how are you going to spendyour time?
(20:05):
That's what we were talkingabout.
For the folks out in theaudience, is that highest and
best use means at this verymoment, as George and I are
sitting here talking, is thisthe best use of his time in my
time?
The answer is, you know, atleast in my perspective, is yes,
for a lot of reasons.
But you know, the fact is isthat I am not a bookkeeper.
I do not enjoy bookkeeping.
(20:25):
It is I make me.
I make myself do it on Fridaymornings before I get to do any
fun stuff, so that I get it done, because then my accountant
won't yell at me.
And but the fact is, is thatyou know you've got to figure
out, you know what works for you.
George Roberts III, PhD (20:40):
Yeah, I think that's great.
I'd love to amplify that if youdon't mind.
Sure, going out on a podcastappearance, writing a book these
are the sort of things thatonly I can do.
Yes, delivering an interviewfor the foundry I suppose
someday I could hire somebody todo that for me.
That'll be great.
That'll show that my show hasreally stood the test of time.
But truly these sort of thingslike the one to many, marketing,
where you are literally layingout what is your philosophy and
(21:04):
attracting new investors, thoseare really the only things.
Even deciding who can come onmy podcast or what podcasts I
should go on, even that issomething that I can handle off
to someone else, even as just afirst pass filter.
Ed Mathews (21:16):
Sure, yeah, I mean, as long as you're clear on what
you're looking for.
I mean, that's it's talkingwith Neil Hube, nick Huber, who
was on a previous show, and wewere talking about value chain
and the Tony Robbins concept,where there's communication and
then there's crystal clearcommunication and it's okay.
(21:38):
Social media manager, I needyou to post these three threads,
or these three posts at theseparticular times, and the
creation.
But the creator budget on thatis X dollars and we need to do
that consistently every day,three times a day, or whatever
your model is.
And then here's the clear partshe's coming back to you saying,
(22:00):
okay, here's what I heard.
You need three posts, threethreads posted at these times
and for this budget.
And yes, I can make all thathappen and meet your
expectations.
And it's so important to beable to do that because it just
frees you up to then go do thethings that only you can do.
Like truly sad yeah.
(22:21):
So, george, I'm curious.
You've had a lot of experienceand you're a master networker,
so I know you know a lot ofpeople in this industry mentors,
peers, whatever and so this isvery much a people business.
I'm curious about folks thathave mentored you over the years
and, in particular, I'm curiousabout the best advice you ever
(22:41):
got, and I would love to knowwho gave it to you.
George Roberts III, PhD (22:44):
Wow see , that's very good.
I would say just going back tobeing trained as a scientist
that the best thing you can doif you're having trouble with
something is just go down thehall and talk to somebody who
made that sort of experimentwork in the last two weeks.
That is the best thing you cando.
So even the most technicalfield, it's extraordinarily
important to have that network,to know who's done what.
And then when you do run intothese technical difficulties
(23:06):
because when you're in alaboratory you might be one of
like five in the world who'sdoing this sort of research and
you can't call tech support andyou can't really Google it.
You can read research articlesbut that may not tell you
exactly what obvious thingyou're doing wrong.
So that I think, might havebeen one of the early on the tip
of networking best advice.
(23:26):
But I'll tell you what otherpeople forget is if you're new,
you're networking, you'reprobably trying to get 25
business cards at the end of thenight.
That's not the most importantthing.
Most important thing is meetone person that can help you, or
find one person whom you canhelp.
The deeper you go, the betteryou'll be, and 25 business cards
will get lost in a shoebox.
But that one person that youactually intend to call, or who
(23:48):
is going to call you becausethey know that you can help
solve their problem, is gonna beworth 10 shoeboxes 100% agree
with that.
Ed Mathews (23:55):
Yeah, quality over quantity every time.
And you know cause the thing is.
Is that you need, you know,really, in order to kind of
advance your thinking, advancethe business you need three to
five people who are willing tothrow an arm around you and tell
you the truth, and because,even if that small group, all
that small cadre of people,don't know the answer to the
(24:16):
question, they have their ownnetworks that they can reach out
to and find the answer withintheir world and then bring it
back to you.
So it's yeah.
I couldn't agree with you more.
So I know this is a loadedquestion, but I'm gonna ask it
anyway.
Leaders are readers, obviously,you know, almost to a person,
and so I am always interested tofind out.
You know, first off, how dopeople take in information,
(24:38):
right?
You know podcasts, physicalbooks, audio books, youtube
videos, conferences, whatever.
So I'm always interested inthat.
And then also, I'm curiousabout who they're paying
attention to.
So those are my questions.
You know, how do you sharpenthe saw, so to speak, and who
you pay attention to these days?
George Roberts III, PhD (24:53):
Yeah, sharpening the saw is so
important.
My favorite habit, habit numberseven from Stephen Covey.
And you really have to maketime for it, though, because
with the on-rush of things youneed to do you got acquisitions,
you got operation oh yeah, it'seasy to get stuck.
So how I'm learning at themoment depends on what else I'm
doing, because multitasking iskey these days.
So, these days, what am Ireading?
(25:14):
I'm reading the dichotomy ofleadership by Jack O'Willing,
and this is autumn, so if I'mout exercising, I'll be
listening to the dichotomy ofleadership.
If I'm in front of my computerand I'm lifting weight, then I'm
watching YouTube, and I'mprobably going to be learning
something about lending, becauseI think most people don't
really understand that.
And here's the thing you canwatch, or listen to a thousand
(25:35):
interviews and I hope you listento all of Ed's interviews
because they're great, and Ihave watched your show before
but, seriously, just watching athousand interviews isn't going
to get you any deeper.
What you really need to do isyou need to decide what do I
need?
What is the next hurdle?
So if you're looking for a loanright now, then I think every
podcast you're listening toshould be about lending.
And if you're having troublewith operations, then go out and
(25:56):
find out who's overcome hurdleswith occupancy or whatever
issue you're facing.
Go deep.
If you go deep, I guaranteethat you'll continue to learn.
You can just listen to podcastsrandomly, maybe not.
Ed Mathews (26:08):
I agree.
Yeah, I mean, the fact is, isthat one of the things that I
admire about one of my mentors?
And I said how do you thinkabout a particular subject?
And what he said was I don'tbounce across the top of topics,
right, because I don't want togo an inch deep.
What I do is I, I target atopic and I read as many books
as I can about that topic, andthen, you know, I consume
(26:31):
information about that specifictopic to the point where I feel
like, maybe not an expert, but Iam, you know, certainly an
authority on, on figuring outwhat that topic is all about and
how I think about it.
Right, and so it's, it's, it'san interesting, it's an
interesting perspective because,you know, most people that I
talk with uh, bounce across, youknow, bounce across the top of
(26:53):
the, uh, the proverbial way ofhistory, right?
George Roberts III, PhD (26:54):
So absolutely Absolutely.
I was going to show you therest.
I feel like this is the mostauthentic way to do it is just
show you what I'm actuallyreading.
It's what was it?
Get smart by Brian Tracy.
I found that on Blinkist.
That's the way you can dothings quickly.
So we live in a day and age,yeah, where you can learn things
really quickly.
Yeah, like Blinkist is a greatthing.
Uh, 15 minutes you'llunderstand the gist of a book.
But there's nothing like a book.
Get that print book, and so Ialso use Amazon figure what they
(27:17):
call it.
But that Kindle Unlimitedthat's what it is.
Yes, $10 a month and you canget 10 free books, and it seems
like half the books on Amazonare free.
Go get that book, hold it inyour hands and you can actually
look at the figures.
You'll learn 10 times faster.
The only reason that I learnedaudio visual it's because I'm
doing something else at the time.
If I'm focused on learning andI set the set, the uh, the work
(27:38):
aside, then I'm reading a book,excellent, all right, so, uh.
Ed Mathews (27:42):
So I'm curious.
You know, given the the veryexperiences professionally that
you've had, you know, if you had, if you were 18 year old,
George again, and you had yourlife in front of you, what would
you do differently in terms ofand I'm speaking specifically
professionally, obviously youknow what would you?
Would you would you change your, your path, or would you do
something different?
George Roberts III, PhD (28:01):
Well, yeah, obviously I wish I would
have discovered investing andentrepreneurship a lot earlier.
But in terms of mindset, I cantell you what I have learned is
focus.
If I could go back to my priorcareers and just focus more you
know, it always feels like it'ssuch a slog that there's so many
things you need to do but if Ihad taken a little more time
away each day and realized thatyou're not going to be doing
(28:22):
whatever you're doing right nowforever, whatever it is, even if
you just go to this, tell youretire, I mean, trust me that,
uh, there, that there is.
You know you're not going to bedoing this forever, literally
just a pedal to the metal.
I don't know how to explain it.
But when I go back and I lookat my careers, just realize,
look, I could have pushed alittle bit harder, I would have
survived, I could have focused alittle bit more and, yeah, just
(28:45):
play that much harder.
Ed Mathews (28:46):
Yeah, you know, I'm 53 and I I have yet to figure
out what I want to do with mylife when I grow up, right, you
know it's I'm on my third careerthere, at least, and you know,
but it's, it's not a race either, right?
So, you know, everyone hastheir path and everyone, uh,
grows at their own pace.
But you know, the other thing,though, is and I think it kind
(29:06):
of dovetails in what you weresaying is that the other, the
other side of that, the otherend of that, really, is that I
have never heard of a person onthere nearing their deathbed
wishing damn, I wish I workedmore, right?
So you know, you might as welldo something that kind of gives
you that juice, like, you knowwhat we do for a living, and, uh
, and the excel at that, right.
George Roberts III, (29:24):
Absolutely .
I know I'm excited to get up inthe morning.
It's certainly a lot more funto chart your course and know
that, wherever you are, it wasbecause of your effort, because
of your planning and because ofyour execution.
Even when you don't like whereyou're at as an entrepreneur, I
still think it's a lot morepalatable than to feel like you
know you're dealing with officepolitics or don't like the
project you've been put on.
(29:45):
All those things, I think, addunnecessary stress to your life.
Couldn't agree more.
Ed Mathews (29:49):
Yeah, I mean it's uh , uh, you are the sum total of
all the decisions you've madeand you are where you are
because of those decisions andit's it's never too late to to
make a change.
But yeah, so, uh, george, I'mcurious about, uh, you know,
from a non real estateperspective, um, when you are
are not uh chasing deals, or youknow, uh meeting with uh your
(30:11):
team?
You know how do you love, justhow do you like to spend your
free time?
George Roberts III, PhD (30:14):
It's always great to spend time with
the kids, but you know we allneed our Shangri-La that place
you can go when, uh, you justneed to be away, and for me,
that's my sailboat.
So, yeah, I'm going to go headout there, hopefully tomorrow,
if nothing blows up or let onfire and I'm going to take that
out, give her her maiden voyageof 2023.
(30:35):
She's the Sally Mae and it'sjust a beautiful place to be.
Now I've got to do a lot ofelectrical work and so this is
not a voyage my wife is going tocome on.
We've already learned ourcomfort zone.
So, look, if it's not 15minutes and we're underway, then
she doesn't want to come.
And that's okay, because it'sless fights for both of us.
I'll go out there, do do thefinal electrical hookup and then
(30:57):
I'll spend a little time havingfun.
Ed Mathews (31:00):
Yeah, speaking of stress, right?
Yeah, you want to limit thatand so understand what the goal
of the of the trip is, so thatyou don't put your wife in a
position where she asksquestions.
That will not go well, right?
So, hey, george, as always,I've really enjoyed our
conversation.
Thank you again.
So if people want to learn moreabout you or Horizon
(31:20):
multifamily or anything elsethat you're doing, you know
what's the best way for them tointroduce themselves to you.
George Roberts III, PhD (31:26):
By all means reach out on LinkedIn.
I'm always there and alwayswill be there, and you can also
find me at wwwhorizonmultifamilycom.
That's a place where you canget a hold of my schedule and
let's get to know each other,whether you are looking for
deals and you think we canpartner up, or whether maybe you
want to get in passively.
Either way, happy to talk.
Ed Mathews (31:47):
Well, thank you, george, it's it's.
Thank you for all the wisdomand information you just
provided to our audience.
And you know, once again, I amgoing to make it when your book,
when you're ready to talk aboutyour book, you're coming back
and oh you got a deal there,it's been a great pleasure.
Alright well, thanks, george,good to see you.
This has been the real estateunderground podcast.
Thank you so much for listening.
(32:07):
Don't forget to rate, reviewand subscribe.
It helps us grow.
Until next time, happyinvesting.
And this is Real Estate Underground.
Greetings and salutations, RealEstate Undergrounders.
This is Ed Matthews with theReal Estate Underground podcast.
Thank you so much for joiningus today.
So today I get to introduce youto literally my favorite data
scientist on the face of theplanet.
He is a multifamily investor,both on the active side, as a GP
(00:24):
, as a KP, and I believe he hasseveral hundred units in his
back pocket as an LP as well.
So, Dr George Roberts and I'llonly call you Dr once welcome to
the show and good to see you.
My friend, how are you?
George Roberts III, PhD (00:39):
It's great to see you, ed, and thank
you for having on the show.
It's a great honor, Thank you.
Ed Mathews (00:43):
Yeah, so I am notorious for stalking, whether
it's Twitter, linkedin orFacebook, and it's how I find
really smart people to haveconversations like this one
about.
And so I actually gosh, got tobe a couple years now was
introduced to you through, Iwant to say, yona Weiss's
(01:04):
LinkedIn channel.
Oh, yes, right.
And so, yona, if you're outthere, thank you very much.
And then had the opportunity tojoin your weekly networking
group, which is amazing, and theamount of talent and brain
power on that Zoom call everyweek is mind blowing, and you
(01:28):
should charge for it, because Icertainly learn something every
time I'm on that call.
So, yeah, George, welcome to theshow and we're going to get
into all that.
We're going to unpackeverything your podcasts, your
meetups.
I understand there'spotentially a book coming up,
although we can't talk aboutthat, and that's cool, but I'm
going to make you come back andwe're going to talk about that
(01:49):
when you're ready.
George Roberts III, PhD (01:50):
Sounds good.
I'm looking forward to it.
Ed Mathews (01:51):
Yeah, and so anyway, george, welcome, and it's good
to see it.
George Roberts III, PhD (01:55):
Yeah, great to see you.
Ed Mathews (01:56):
Yeah.
So, George, for those folks whohaven't discovered you yet and
I assume it's only a matter oftime why don't you tell us a
little bit about who you are andwhat you do, and then we'll get
into it?
George Roberts III, PhD (02:07):
So I'm really just a tech guy who
discovered the fire ofentrepreneurship.
I worked as a bioscientist,became an award-winning data
scientist in fintech and thenone day my sister said hey,
let's launch a company.
Why don't we start doing groundup construction?
Right, and we're just talking.
A couple days back she said,hey, there are a lot of fourth
or fifth generation builders inthis business.
(02:28):
There are a whole lot of firstgeneration builders, and she's
absolutely right.
We picked one of the hardestbusinesses to break into and I
just had a blast doing it and Irealized there's more to life,
there's more life than being atech guy.
And I realized not only do Ihave a talent for
entrepreneurship, not only doesit light my fire, but also I
(02:50):
could repurpose a lot of what Ihad done.
So I had learned to become agreat data analyst, data
scientist, and had at that pointrealized well, look, I don't
think there's enough housingeconomics out there, explained
from the standpoint of themultifamily investor, for
example, a lot of single-formalstuff out there.
But if you're really trying toget in this and you want to be
(03:13):
successful in the business,whether you are a passive
investor or an active investor Ithought you know I could really
fill a niche, and that reallyhelped to provide the impetus
for me rebranding as the datascientist of real estate, and
that's what I'm here to do helppeople understand what's going
on so you can invest withconfidence.
Ed Mathews (03:34):
So it's interesting.
You know, obviously you are aperson of high intellect and
capability.
Why real estate?
I mean you could do anythingright, so why did you pick real
estate?
George Roberts III, PhD (03:42):
Every question.
So, as a data scientist, I feellike part of my job is just to
survey the world and make surethat I'm in the right place.
Am I in the right occupation?
Am I investing in the rightasset class?
And that survey led me directlyto multifamily real estate.
I jokingly call it the gatewaydrug to commercial real estate.
(04:04):
But let's be clear it is morestable.
It's not like buying a singletenant.
Industrial Multifamily is a lotmore buffer than that and I
think it provides a greatopportunity.
And it provides particularly agreat opportunity for people who
enjoy people you're going toneed a network more to succeed
in this business and also peoplewho enjoy numbers.
(04:26):
If you like the finance side ofthings, or if you can find
somebody on your team who does,then I think you've potentially
got a bright future withmultifamily Because, again, I
think you're really merging.
You're sort of sitting at thenexus of finance and commercial
real estate.
Ed Mathews (04:39):
Yeah, and I would add marketing to that as well.
Right, it's an industry thatenables also I am a former, I
guess recovering technologyperson and it allows folks like
you and me and other people outthere to utilize the skills that
(05:00):
they created in corporate worldto and directly apply to the
success of a particular projectand investors and your own
company, right.
George Roberts III, PhD (05:10):
And where you're coming from.
I call myself recovering PhD.
Ed Mathews (05:13):
Yeah, there you go, so horizon was trying to make
good.
Yeah, that's all right.
You know, just incrementalimprovement over the over time,
right?
Fabious talks yeah, so tell meabout Horizon Multifamily and
where that fits in themarketplace and what your focus
is.
George Roberts III, PhD (05:31):
Sure, so we started out a few years
back, met at Dealmaker Live Iwas actually the last to join.
I met one of our partnerslocally and it's a perfect
example of just how you can getstarted in this business Get
together with some people, startunderwriting deals and next
thing you know then you'rerunning deals and that was our
evolution.
So over the last few yearswe've gone from analyzing 100
(05:56):
deals to being apartment ownersnow on about five deals.
And my focus particularly Ilike the sort of middle
attitudes of the country, thisupper south, lower north, this
area that's nice enough, it'swarm enough for people to want
to move there, but it justhasn't gotten quite as built up
as, say, texas or Florida orArizona.
(06:16):
I mean there's some areas thatare already starting to sort of
figuratively feel the heat.
And these areas that haveexperienced these super hot
markets I like to say there'ssomething to that.
I mean, like some of them, Ithink, are a little too hot to
touch and I don't have a crystalball, I don't know what's going
to happen and you could seethat these hot markets may go on
for one, two, three or fivemore years.
(06:37):
But I certainly feel a lot morecomfortable in a place like,
say, tennessee, where I can seethat it's beautiful.
People love the Smoky Mountains.
They love to work from home oraway from home.
These days, as you can doworking remotely and places like
that are really drawing peoplein Kentucky is also amazing.
I mentioned East Tennessee,kentucky.
These are areas that are notterribly rent constrained.
(06:58):
A lot of people are way under30% of their monthly income in
these areas.
These are areas that have roomto run.
What's the part of the countryright now that's growing the
fastest in terms of rents?
It's the Midwest.
So you got to remember whateverwas hot yesterday is not
necessarily what's going to behot tomorrow, and when you get
towards the end of the cycle, asit appears we're at right now,
(07:19):
what was hot yesterday may beprecisely what you don't want to
be in tomorrow.
Ed Mathews (07:23):
You mean there's economic cycles and things
change.
George Roberts III, PhD (07:26):
Yeah, thank you.
You know I love it.
Two tech guys Maybe this is alittle obvious to us, but I
think a lot of people.
If you're listening to a gurutalking on YouTube from a year
ago, I got news for you thatthere may be an expiration date
on that advice.
Ed Mathews (07:40):
Yeah, look behind you.
It was a little bit back.
It's not today or tomorrow,right?
So, as far as you know, I'minterested in you and I haven't
talked about this in a littlebit but I'm curious about your
perspective on the market interms of so you and I tend to
chase I don't think we chase thesame deals.
I think you're operating in amuch larger complex than I do,
(08:00):
than I focus on.
But I've fallen in love withKentucky myself and I was
actually just down in Tennesseelast gosh when was that?
Last September?
And yeah, I mean I wasmarveling at the amount of built
to rent and, as well as youknow, short term rentals, but
not a ton of multifamilyactivity, at least not that I
(08:24):
saw.
I mean, memphis has always beena great cash flow market, but
there's lots of opportunityeverywhere, but in that slice of
the world it seems to be thatit's loosening up a little
faster than, say, where I livein Connecticut, which is, you
know, everybody's high fivingwhen they close a deal at a four
cap and I'm just cringing andpraying for their successful
(08:47):
refinance when the bridge loancomes to.
So, in terms of your perspectiveon the market some people say
we're in a recession, somepeople say winter is coming.
I'm curious about yourperspective and what you're
seeing in your markets in termsof rent growth or lack thereof,
as well as cap rates, whetherthey're compressing, expanding,
(09:10):
whatever.
George Roberts III, PhD (09:10):
Well, in my markets I think we're
seeing a lot of leveling.
I mean East Tennessee, it seemsit's just like crazy.
I mean there's a lot of yougotta remember a lot of these
places.
Even when you see the newleases stop going off.
Okay, let's say you literallyhit a wall and ask them toad.
Well, you've still got a lot ofloss to lease because your
renewals have time to catch up.
You'll increase them a littlebit when you renew and when they
move out perhaps increase evena little bit more.
(09:32):
So some of those markets Ithink you were making a little
bit of a joke about we'recasting in the rear view mirror
earlier.
There can still be a little bitof life left there, even as you
do level out.
So I think I'm seeing a lot ofthat in my markets.
I know Orlando is still growing,although it depends exactly
precisely where you are.
I mean we've captured suchincredible rent increases that
(09:54):
right now we're quite happy justto stay where we're at.
If we can keep our place leasedup.
We're happy because we're doingfine.
We did not buy at the top ofthe market, we bought quite a
while back, and so I guessthat's the first thing I would
say is make sure that whateveryou're looking at, whatever
metrics you're looking at, makesure you're making a
differentiation between newleases versus releases,
(10:16):
absolutely.
And then, as far as othermarkets, yeah, I mean, we are
still continuing to see rentincreases, I would say in most
of the markets of the US.
And it's just like I justchecked out earlier today,
trying to find the citation, ifI can.
It's $1,000 is the premiumbetween owning and renting.
(10:37):
So it is very, very expensiveand it's been like that for a
few months.
We've gone a little higher andwe sort of leveled off $1,000.
I mean that is just insane.
Or to see how we have a wholelot of new homeowners when you
have that sort of premium.
Of course is calculated betweenwhat is your mortgage payment
versus what is your rent payment.
Now people are not backing outof that how much equity you're
(10:59):
getting in the home each monththrough amortization.
But the point of the matter isthat that's sort of wondering
where we're going to be down theroad five or seven years when
you cash out that mortgage.
That's a luxury only if you'remaking your bills.
Ed Mathews (11:14):
Correct and I've seen study after study that says
that the average American haswhat?
$400 in a rainy day fund onaverage, which is terrifying,
but the so it's interesting herein the Northeast the last I'd
say, two and a half, three years, rents have exploded and
(11:34):
they're still growing, but, likeyou were saying, they've kind
of stabilized.
They're not growing anywherenear as fast as they were.
It seems to be that they'rekind of reverting back to the
historical norms the three, fourpercent year over year, which I
think is healthy, because thefact is that at least here in
our market, what's driving rentis supply and 0809, 2010, 11
(12:01):
wiped out the general contractorclass here in this area that
was building multifamily.
So there's been a 10, 12 yeargap of no multifamily
construction and it turns outhuman beings continue to make
babies and they continue to needhousing, and here in
(12:22):
Connecticut I think we're 26,000units behind where we need to
be for the 2030 projection,which is a lot for a small state
.
George Roberts III, PhD (12:29):
Yeah, that's huge and, like I
mentioned, those are in manycases the fourth and fifth
generation builders.
They were out.
Takes a long time for them tocome back in or for new players
to come back in.
And another thing aboutConnecticut and Northeast is
that I understand you're alsokind of built up and that makes
it harder to build new carwashes.
Ed Mathews (12:48):
So that's another play out there.
Right, absolutely.
George Roberts III, PhD (12:50):
People who are buying these car washes
in the rest of the country.
I don't know, but if you'rebuying out there in the
Northeast where it's really hardto find land, that stuff that's
good.
So anyway, I guess we can talkabout car wash bubble another
day.
Ed Mathews (13:03):
Yeah, we'll save that for a different show, but I
was always fascinated by thatbusiness model.
But, in terms of theappreciation and what is your
philosophy when you're going tobuy?
I know you're an expert inrepositioning.
I mean, that's kind of yourwheel, one of your wheel houses,
and so when you're looking at aproperty, what are you
particularly focused on?
(13:24):
What are you looking at interms of the financials and the
area, demographics and growthnumbers and all that?
George Roberts III, PhD (13:31):
Sure, I'd love to give you a citation
on that last thing I mentionedabout the $1,000 gap that, john
Burns?
Ed Mathews (13:36):
Oh, okay.
George Roberts III, PhD (13:36):
From the show notes.
So I love to see a lot of lostrelease.
I love these mom and pop deals,so I know you also operate in
the smaller space.
I think smaller units can begreat.
You can have a lot of meat onthe bone and when we say these
are small deals, if you got 10or 20 or 30 units, that is a big
deal.
It's a big deal.
Ed Mathews (13:53):
That's way bigger.
George Roberts III, PhD (13:54):
It's enormous, right, Incredibly big
and it's way bigger than youknow.
Hey, a single family home burror a fix and flip.
So yeah, these small to mediumdeals can be huge and a lot of
times, particularly if you getthem out in a tertiary market,
you can have people who haven'toptimized the property.
I'm looking at one right nowand there's literally no
advertising, not even free stufflike Google, no, yell, none of
(14:17):
that.
You can even put up a verycheap website and that's not
being done either.
And sure, yeah, I think it getsout on Zillow when there's, but
it's really just word of mouth.
So I look for these sorts ofthings.
Properties was a huge loss tolease, where you know you might.
You might look for somedeferred maintenance or you
might even find an operationsplace, somebody who's been
running it okay, but they'rejust not running it like they
(14:40):
should because, who knows, maybethey have the brother-in-law
and the payroll and things arecosting a lot more than they
should, or they don't keep theoccupancy, like you know that
the other properties in the areaare looking, and I think that's
the huge thing.
Now we might be towards the endof a cycle or we might be just
taking off again If rates godown.
I say we're in mid-cycle, asyou mentioned, we're way
underbuilt, so it's entirelypossible that we plateau for a
(15:01):
little while.
I mean, actually we're alreadyup.
As we record this, in themiddle of June, January was the
lowest point in the median salesprice of homes sold in the US
and we've been coming back upsharply since then.
Ed Mathews (15:14):
Yeah, there's no inventory.
Yeah, I mean, there's zero.
I have a property in EastHartford, connecticut, which is
a secondary city here, and therealtor, the agent who is trying
to talk me into selling thatproperty, sent me an email the
other day that said there isactually just one duplex per
sale in the city of Hartford,east Hartford and you should
(15:36):
really think about selling.
It's a four family and youshould really think about
selling, because I was lookingat it in terms of trading up,
taking the wind because I'veowned it forever taking the wind
and then trading up to a muchlarger building and I haven't
decided yet because it's my baby.
It's on Clark Street in EastHartford, which is I named my
company after, so it's literallythe first building I ever
bought.
George Roberts III, PhD (15:56):
But yeah, I mean you're 100% right.
Ed Mathews (15:59):
There's just not a lot of inventory and so when you
go to reposition of building,obviously there's the economic
piece, where we look at rentupside, we look at reducing the
cost envelope of the building.
But where does appreciation andvalue kind of figure into your
thinking?
Are you a cashflow guy, anappreciation guy?
(16:23):
A little bit of both.
George Roberts III, PhD (16:24):
I think it's fair that we should all be
a little bit of both, but Iwould lean toward the cashflow.
It's a lot safer and, again, Ithink that safety is what people
need to focus on right now,even though I do expect the
prices will continue to rise.
We are in a volatile situationright now and if the economy
takes a major tumble, the fourrates come down.
And remember it takes time torefinance and you can find
(16:45):
yourself with a building full oftenants that are out of a job
and not being able to serviceyour market.
So you definitely want to havereserves and you definitely want
to have cashflow.
So I would say I would alwaysprefer cashflow, but, yeah,
there has never been a bettertime to have reserves on the
sidelines.
Ed Mathews (17:02):
Yeah, so when you look at reserves, how do you
judge you have enough?
I mean, is it by the operatingmonth, is it?
What is the metric you use todetermine what your reserves
should look like?
George Roberts III, PhD (17:15):
Sure, Well, one rule of thumb is that
you want to have at least threemonths of operating expenses as
operating capital.
That's a great start.
If you can have six months ofprincipal interest stocked away,
that's even better.
Now are you putting away $250per unit per year for
replacement reserve?
That's if things are going well.
What if you've got to replaceyour roof in five years?
(17:35):
You're not going to get there,so you have to look at the
property as well.
Ed Mathews (17:38):
Yeah, not a 250 bucks a pop right.
George Roberts III, PhD (17:40):
No, not , unless it was just replaced.
Ed Mathews (17:42):
Right, exactly yeah.
And then it becomes someoneelse's problem 25, 30 years from
now, and fortunately, you'llhave saved the $250, all those
pennies get put away and youcould afford the roof, but
you're not going to becauseyou're going to go buy someone
else.
So all right.
So I think I understand and youand I tend to think similarly
in this fact that, regardless ofeconomic cycle, cash flow, it's
(18:03):
wonderful in good times andit's even better in difficult
times, because that is what getsyou through the winter, as they
say.
So, in terms of your business, Iam a fundamental believer in
business systems and technology.
I look at a business and firstthing, I think, is process and
(18:25):
procedures.
And then, okay, technology wise, how do we enable those
processes so that we can makethe business as simple as
possible, so that when I hirepeople, I don't need A++ players
.
I can hire someone you'retalking about IQ before someone
of an average to above averageIQ and put them in a position to
succeed.
(18:45):
So I'm curious about the typesof systems that you tend to look
at as you run your own business, and how do you manage them?
How are you put together For?
George Roberts III, PhD (18:54):
me.
I think a lot of it is justgetting good people and having
them nailed down so you don'thave to get the A++ people.
I think that's outstanding, butjust realizing when you need
help.
So I've got a VA doing all ofthe social for me so that I
don't have to deal with thatWith my events.
That's hugely helpful.
I'm about to hire a bookkeeperbecause that's something that I
just certainly don't have timefor, even with five assets.
(19:17):
I'm under contract on somethingelse and there's no time left.
Ed Mathews (19:21):
Yeah, but it's high as an excuse Again yes, high as
the best use.
George Roberts III, PhD (19:24):
You've always got to be hiring and your
partners can only go so far.
I got someone who's great atconstruction and I can do the
accounting.
I actually find it interestingto a certain point, but it's
really time to let that go.
For me, it's just delegatingand knowing when it's time to
let go.
Ed Mathews (19:43):
Yeah, I mean, it's a really good point.
How much value, on an hourlybasis, do you, as the leader of
your company, bring to thatcompany?
I would submit it's well abovethe 20 bucks an hour you're
spending on a bookkeeper or lessif it's offshore, and time is
one of those things you cannever get back.
So how are you going to spendyour time?
(20:05):
That's what we were talkingabout.
For the folks out in theaudience, is that highest and
best use means at this verymoment, as George and I are
sitting here talking, is thisthe best use of his time in my
time?
The answer is, you know, atleast in my perspective, is yes,
for a lot of reasons.
But you know, the fact is isthat I am not a bookkeeper.
I do not enjoy bookkeeping.
(20:25):
It is I make me.
I make myself do it on Fridaymornings before I get to do any
fun stuff, so that I get it done, because then my accountant
won't yell at me.
And but the fact is, is thatyou know you've got to figure
out, you know what works for you.
George Roberts III, PhD (20:40):
Yeah, I think that's great.
I'd love to amplify that if youdon't mind.
Sure, going out on a podcastappearance, writing a book these
are the sort of things thatonly I can do.
Yes, delivering an interviewfor the foundry I suppose
someday I could hire somebody todo that for me.
That'll be great.
That'll show that my show hasreally stood the test of time.
But truly these sort of thingslike the one to many, marketing,
where you are literally layingout what is your philosophy and
(21:04):
attracting new investors, thoseare really the only things.
Even deciding who can come onmy podcast or what podcasts I
should go on, even that issomething that I can handle off
to someone else, even as just afirst pass filter.
Ed Mathews (21:16):
Sure, yeah, I mean, as long as you're clear on what
you're looking for.
I mean, that's it's talkingwith Neil Hube, nick Huber, who
was on a previous show, and wewere talking about value chain
and the Tony Robbins concept,where there's communication and
then there's crystal clearcommunication and it's okay.
(21:38):
Social media manager, I needyou to post these three threads,
or these three posts at theseparticular times, and the
creation.
But the creator budget on thatis X dollars and we need to do
that consistently every day,three times a day, or whatever
your model is.
And then here's the clear partshe's coming back to you saying,
(22:00):
okay, here's what I heard.
You need three posts, threethreads posted at these times
and for this budget.
And yes, I can make all thathappen and meet your
expectations.
And it's so important to beable to do that because it just
frees you up to then go do thethings that only you can do.
Like truly sad yeah.
(22:21):
So, george, I'm curious.
You've had a lot of experienceand you're a master networker,
so I know you know a lot ofpeople in this industry mentors,
peers, whatever and so this isvery much a people business.
I'm curious about folks thathave mentored you over the years
and, in particular, I'm curiousabout the best advice you ever
(22:41):
got, and I would love to knowwho gave it to you.
George Roberts III, PhD (22:44):
Wow see , that's very good.
I would say just going back tobeing trained as a scientist
that the best thing you can doif you're having trouble with
something is just go down thehall and talk to somebody who
made that sort of experimentwork in the last two weeks.
That is the best thing you cando.
So even the most technicalfield, it's extraordinarily
important to have that network,to know who's done what.
And then when you do run intothese technical difficulties
(23:06):
because when you're in alaboratory you might be one of
like five in the world who'sdoing this sort of research and
you can't call tech support andyou can't really Google it.
You can read research articlesbut that may not tell you
exactly what obvious thingyou're doing wrong.
So that I think, might havebeen one of the early on the tip
of networking best advice.
(23:26):
But I'll tell you what otherpeople forget is if you're new,
you're networking, you'reprobably trying to get 25
business cards at the end of thenight.
That's not the most importantthing.
Most important thing is meetone person that can help you, or
find one person whom you canhelp.
The deeper you go, the betteryou'll be, and 25 business cards
will get lost in a shoebox.
But that one person that youactually intend to call, or who
(23:48):
is going to call you becausethey know that you can help
solve their problem, is gonna beworth 10 shoeboxes 100% agree
with that.
Ed Mathews (23:55):
Yeah, quality over quantity every time.
And you know cause the thing is.
Is that you need, you know,really, in order to kind of
advance your thinking, advancethe business you need three to
five people who are willing tothrow an arm around you and tell
you the truth, and because,even if that small group, all
that small cadre of people,don't know the answer to the
(24:16):
question, they have their ownnetworks that they can reach out
to and find the answer withintheir world and then bring it
back to you.
So it's yeah.
I couldn't agree with you more.
So I know this is a loadedquestion, but I'm gonna ask it
anyway.
Leaders are readers, obviously,you know, almost to a person,
and so I am always interested tofind out.
You know, first off, how dopeople take in information,
(24:38):
right?
You know podcasts, physicalbooks, audio books, youtube
videos, conferences, whatever.
So I'm always interested inthat.
And then also, I'm curiousabout who they're paying
attention to.
So those are my questions.
You know, how do you sharpenthe saw, so to speak, and who
you pay attention to these days?
George Roberts III, PhD (24:53):
Yeah, sharpening the saw is so
important.
My favorite habit, habit numberseven from Stephen Covey.
And you really have to maketime for it, though, because
with the on-rush of things youneed to do you got acquisitions,
you got operation oh yeah, it'seasy to get stuck.
So how I'm learning at themoment depends on what else I'm
doing, because multitasking iskey these days.
So, these days, what am Ireading?
(25:14):
I'm reading the dichotomy ofleadership by Jack O'Willing,
and this is autumn, so if I'mout exercising, I'll be
listening to the dichotomy ofleadership.
If I'm in front of my computerand I'm lifting weight, then I'm
watching YouTube, and I'mprobably going to be learning
something about lending, becauseI think most people don't
really understand that.
And here's the thing you canwatch, or listen to a thousand
(25:35):
interviews and I hope you listento all of Ed's interviews
because they're great, and Ihave watched your show before
but, seriously, just watching athousand interviews isn't going
to get you any deeper.
What you really need to do isyou need to decide what do I
need?
What is the next hurdle?
So if you're looking for a loanright now, then I think every
podcast you're listening toshould be about lending.
And if you're having troublewith operations, then go out and
(25:56):
find out who's overcome hurdleswith occupancy or whatever
issue you're facing.
Go deep.
If you go deep, I guaranteethat you'll continue to learn.
You can just listen to podcastsrandomly, maybe not.
Ed Mathews (26:08):
I agree.
Yeah, I mean, the fact is, isthat one of the things that I
admire about one of my mentors?
And I said how do you thinkabout a particular subject?
And what he said was I don'tbounce across the top of topics,
right, because I don't want togo an inch deep.
What I do is I, I target atopic and I read as many books
as I can about that topic, andthen, you know, I consume
(26:31):
information about that specifictopic to the point where I feel
like, maybe not an expert, but Iam, you know, certainly an
authority on, on figuring outwhat that topic is all about and
how I think about it.
Right, and so it's, it's, it'san interesting, it's an
interesting perspective because,you know, most people that I
talk with uh, bounce across, youknow, bounce across the top of
(26:53):
the, uh, the proverbial way ofhistory, right?
George Roberts III, PhD (26:54):
So absolutely Absolutely.
I was going to show you therest.
I feel like this is the mostauthentic way to do it is just
show you what I'm actuallyreading.
It's what was it?
Get smart by Brian Tracy.
I found that on Blinkist.
That's the way you can dothings quickly.
So we live in a day and age,yeah, where you can learn things
really quickly.
Yeah, like Blinkist is a greatthing.
Uh, 15 minutes you'llunderstand the gist of a book.
But there's nothing like a book.
Get that print book, and so Ialso use Amazon figure what they
(27:17):
call it.
But that Kindle Unlimitedthat's what it is.
Yes, $10 a month and you canget 10 free books, and it seems
like half the books on Amazonare free.
Go get that book, hold it inyour hands and you can actually
look at the figures.
You'll learn 10 times faster.
The only reason that I learnedaudio visual it's because I'm
doing something else at the time.
If I'm focused on learning andI set the set, the uh, the work
(27:38):
aside, then I'm reading a book,excellent, all right, so, uh.
Ed Mathews (27:42):
So I'm curious.
You know, given the the veryexperiences professionally that
you've had, you know, if you had, if you were 18 year old,
George again, and you had yourlife in front of you, what would
you do differently in terms ofand I'm speaking specifically
professionally, obviously youknow what would you?
Would you would you change your, your path, or would you do
something different?
George Roberts III, PhD (28:01):
Well, yeah, obviously I wish I would
have discovered investing andentrepreneurship a lot earlier.
But in terms of mindset, I cantell you what I have learned is
focus.
If I could go back to my priorcareers and just focus more you
know, it always feels like it'ssuch a slog that there's so many
things you need to do but if Ihad taken a little more time
away each day and realized thatyou're not going to be doing
(28:22):
whatever you're doing right nowforever, whatever it is, even if
you just go to this, tell youretire, I mean, trust me that,
uh, there, that there is.
You know you're not going to bedoing this forever, literally
just a pedal to the metal.
I don't know how to explain it.
But when I go back and I lookat my careers, just realize,
look, I could have pushed alittle bit harder, I would have
survived, I could have focused alittle bit more and, yeah, just
(28:45):
play that much harder.
Ed Mathews (28:46):
Yeah, you know, I'm 53 and I I have yet to figure
out what I want to do with mylife when I grow up, right, you
know it's I'm on my third careerthere, at least, and you know,
but it's, it's not a race either, right?
So, you know, everyone hastheir path and everyone, uh,
grows at their own pace.
But you know, the other thing,though, is and I think it kind
(29:06):
of dovetails in what you weresaying is that the other, the
other side of that, the otherend of that, really, is that I
have never heard of a person onthere nearing their deathbed
wishing damn, I wish I workedmore, right?
So you know, you might as welldo something that kind of gives
you that juice, like, you knowwhat we do for a living, and, uh
, and the excel at that, right.
George Roberts III, (29:24):
Absolutely .
I know I'm excited to get up inthe morning.
It's certainly a lot more funto chart your course and know
that, wherever you are, it wasbecause of your effort, because
of your planning and because ofyour execution.
Even when you don't like whereyou're at as an entrepreneur, I
still think it's a lot morepalatable than to feel like you
know you're dealing with officepolitics or don't like the
project you've been put on.
(29:45):
All those things, I think, addunnecessary stress to your life.
Couldn't agree more.
Ed Mathews (29:49):
Yeah, I mean it's uh , uh, you are the sum total of
all the decisions you've madeand you are where you are
because of those decisions andit's it's never too late to to
make a change.
But yeah, so, uh, george, I'mcurious about, uh, you know,
from a non real estateperspective, um, when you are
are not uh chasing deals, or youknow, uh meeting with uh your
(30:11):
team?
You know how do you love, justhow do you like to spend your
free time?
George Roberts III, PhD (30:14):
It's always great to spend time with
the kids, but you know we allneed our Shangri-La that place
you can go when, uh, you justneed to be away, and for me,
that's my sailboat.
So, yeah, I'm going to go headout there, hopefully tomorrow,
if nothing blows up or let onfire and I'm going to take that
out, give her her maiden voyageof 2023.
(30:35):
She's the Sally Mae and it'sjust a beautiful place to be.
Now I've got to do a lot ofelectrical work and so this is
not a voyage my wife is going tocome on.
We've already learned ourcomfort zone.
So, look, if it's not 15minutes and we're underway, then
she doesn't want to come.
And that's okay, because it'sless fights for both of us.
I'll go out there, do do thefinal electrical hookup and then
(30:57):
I'll spend a little time havingfun.
Ed Mathews (31:00):
Yeah, speaking of stress, right?
Yeah, you want to limit thatand so understand what the goal
of the of the trip is, so thatyou don't put your wife in a
position where she asksquestions.
That will not go well, right?
So, hey, george, as always,I've really enjoyed our
conversation.
Thank you again.
So if people want to learn moreabout you or Horizon
(31:20):
multifamily or anything elsethat you're doing, you know
what's the best way for them tointroduce themselves to you.
George Roberts III, PhD (31:26):
By all means reach out on LinkedIn.
I'm always there and alwayswill be there, and you can also
find me at wwwhorizonmultifamilycom.
That's a place where you canget a hold of my schedule and
let's get to know each other,whether you are looking for
deals and you think we canpartner up, or whether maybe you
want to get in passively.
Either way, happy to talk.
Ed Mathews (31:47):
Well, thank you, george, it's it's.
Thank you for all the wisdomand information you just
provided to our audience.
And you know, once again, I amgoing to make it when your book,
when you're ready to talk aboutyour book, you're coming back
and oh you got a deal there,it's been a great pleasure.
Alright well, thanks, george,good to see you.
This has been the real estateunderground podcast.
Thank you so much for listening.
(32:07):
Don't forget to rate, reviewand subscribe.
It helps us grow.
Until next time, happyinvesting.
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