September 10, 2024 • 52 mins
In this engaging episode, we welcome Justin Brennan, a multifaceted real estate investor, to the studio in downtown San Diego. Justin shares his incredible journey from owning a single condo to managing over $100 million in apartments and mobile home parks.
Dive into the fascinating stories of dedication and resilience, including how Justin moved to Texas for a month to ensure the success of a $7 million investment. Learn about his strategic approaches to both multifamily and mobile home park investments, and the essential criteria for selecting profitable properties.
Discover the challenges and triumphs of scaling in different states, the intricacies of property management, and the importance of having a strong team on the ground. Whether you're a seasoned investor or just starting out, this episode offers invaluable insights into the world of real estate investing.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
You have $7 million of investor money sitting in there. I literally moved out
to the property for a month and a half.
Moved from San Diego to Texas to work with the onsite management to make sure
they got their ass in gear.
And we threaded that baby across the finish line because I was not letting that thing go.
I said, there's no way in hell. I said, the only thing keeping this thing from
getting to the finish line is effort.
(00:22):
All right, guys, welcome to another episode So to the report today,
we are in the studio here in downtown San Diego, and I got a special guest who
I've actually connected with through our Beers and Deals meetup here in San Diego.
And I'm super intrigued by this
individual. He owns over $100 million of apartments and mobile home parks.
I got my man, Justin Brennan. Justin, welcome to the show.
(00:45):
What's up, man? Thanks for having me. Yeah, dude. It's a pleasure to have you on the show.
I don't know a ton about your story, so I'm actually super excited to dive into
it. But man, you're right up the street. You said Scripps Ranch, huh?
Scripps Ranch, La Jolla, anywhere coastal San Diego. So we're both local.
You were telling me you're San Clemente, so we're all Southern California boys.
Yeah. San Clemente is where I grew up. That's why I love San Diego.
(01:07):
I'm like, you know, I'm an hour from home where my family is,
but it's like not too far, not too close, you know? So.
Question, do you surf? Okay. So San Clemente, growing up there,
you either grow up surfing or you grow up skateboarding.
Uh-huh. And for whatever reason, it was never both, but I like grew up hanging
out with the skateboarders and I grew up skateboarding. So skate parks,
skate parks, we, we would build like skate ramps and rails and all sorts of
(01:32):
stuff like on our cul-de-sac as a kid growing up.
And then I got into snowboarding at a later age, but a lot of those skills kind of transitioned over.
That's cool. You're a surfer. I'm not, I was going to ask you cause we're both
Southern California people.
And I had, I mean, I have a shark story with surfing, so that's why I don't
surf, but it was here and actually in San Diego probably 20 years ago.
I was out in Pacific Beach right near the pier around 5 p.m.
(01:54):
In the afternoon. I was with two other buddies. We were.
Sitting there waiting for the next set to come in and the like the sun was just
perfect right where it's hitting the water and we're waiting for the next set
next thing you know about a 15 foot shadow whoa goes right underneath all of
our boards and we all sit there looking at each other.
We all knew what it was like nobody had to really say anything because we knew
it wasn't a seal and it sure as heck wasn't a dolphin and we like all put our
(02:17):
hands up and we were we were long boarding throwing those babies around nice
slow paddle right back into shore i mean i i was i I mean, it was, it messed me up clearly,
but I've, I call it whomping, right.
Or bodyboarded. And yeah, I love, I kiteboard now.
So I love kiteboarding. Oh, so how common is the, the shark thing when you're
out here surfing in Southern California?
(02:38):
You know, they're out there. Yeah. That's what I hear.
I mean, I have friends that surf. I mean, obviously the odds are completely
in your favor, but it's, it's all unfortunately in my cabeza now.
Dude, I can imagine. I would be creeped out too, man. I don't like sharks,
but the kite surfing, that's, that's unique.
And that's something that I have. I've been always wanting to get into,
I know how to sail. I have a background in sailing.
(02:58):
And so, you know, if you combine sailing and surfing or, you know,
with my skateboarding background, snowboarding background as well,
I feel like it would be kind of a natural progression for me.
So I've always wanted to do it.
I'm always intrigued watching these guys on YouTube. You would love it. Tell me where you go.
So I started learning in Fiesta Island, San Diego during COVID.
I'm like, I'm going to need to pick something new up. Yeah, that's the perfect
(03:20):
time to learn. So you got taught, trained, and it's wild because I grew up wakeboarding.
And if you picture it, it's, you're essentially driving a boat and surfing at the exact same time.
So the hardest part is learning the kite, but with your background in sailing,
you understand wind, right?
Upwind, downwind, like these patterns of wind.
So you'd probably pick up on it a lot faster because you got to learn to fly that kite.
(03:42):
And once you figure that out, then it's, you know, the rest is.
How much wind do you need ideally?
Because I know the air here in San Diego is very light compared to other parts of the world.
But there's a lot of days where the wind never even hits six knots.
Right. So what's the ideal wind here, minimum?
12 to 20 knots. It's kind of where you want to, I have a little app,
like the wind app that shows you where all the wind's at and where it's hitting.
(04:03):
And then you're going to use a 14 to 18 meter kite. So it's a little bit bigger
kite than if you were in some higher wind areas like Hawaii.
Gotcha. So I see these dudes out in like South Africa where it's like,
it's gusting 45 every day. They're using a tiny kite. How big is that kite?
Six to eight meters. Wow. That's crazy. Like mini kites. Cause I mean,
they're launching. Yeah.
(04:23):
So dude, I'm, I'm super intrigued with, with your story here,
but first I got to ask you, man, like what is the biggest difference between
mobile home park investing and multifamily?
Well, with mobile home parks, obviously you're dealing with a different profile, right?
Cause it's different affordability and stuff like that. You know,
the, the kind of of the rule of thumb with any mobile home parks is you want a hundred pads or more.
(04:44):
You want them within five miles of a Walmart. You want them in a town of at
least a hundred thousand population or within distance of a population of a
hundred thousand or more because you need that demand supply.
Whereas with multifamily, I feel like as long as you're in good job centers
and you're in the top 75 MSAs in the United States, you'll be able to do well.
But I'd say the biggest difference is just your tenant profile.
(05:06):
Well, and the fact that I guess, you know, with mobile home parks, You own the land.
You're basically a landlord, literally, and you're renting the mobile home to
the person or they buy it from you and they own it. So they're just renting the space.
Ideally, do you want to own the homes on the park as well or do you want to
(05:26):
just have the tenants own it?
I just want to own the land. It's like an RV park with that.
You don't want that liability with the mobile home. You might as well let them
own it. Plus, eviction purposes and all that other things, they can control that liability.
You just want to be basically land lease in a way on the mobile home parks.
Much more efficient that way. I can imagine your expense ratio goes way down
(05:49):
if you're operating that way.
Yeah, because you're keeping everything pretty lean.
No repair maintenance, right? Yeah, because basically you're renting a pad,
a land lease. And I know they're not building a ton of new supply with mobile
home parks. Are there any areas to where they're building more?
Not so much building them as much as it is. There's a ton of them out there in different areas.
(06:10):
A vast majority are still mom and pop. Did you know that one of the largest
owners of mobile homes in the United States is Mr.
Warren Buffett? No, I did not know that. He owns 21st Century Mortgage,
too, which actually produces all the financing for the mobile home parks in the United States.
So I heard that Warren Buffett has some part ownership in a company that manufactured
the actual homes, but you're saying he owns a ton of mobile home parks as well.
(06:33):
Yeah, through funds and stuff. Yep.
The mobile homes, you said, the mortgages, the financing for them through 21st
century financing, but then he also has access to the mobile home parks. I guess it makes sense.
I mean, if you're manufacturing a lot of these homes, you probably have inside
scoop on a lot of these deals as well.
Big time. Yeah. I mean, all around the country. I mean, you can imagine Mr.
(06:54):
Warren Buffett. I mean, he's got all the people working for him,
but that guy is the quintessential investor, isn't he?
Yeah. Everyone knows him as like the quote unquote, like stock guy, right? Wall Street guy.
But no one really talks about him owning real estate.
And a ton of it too, but it's quiet, right? He doesn't talk about it because
he's kind of the guy that goes in and talks.
(07:14):
You know, operates companies, right. Or it has a piece of those companies and
helps them, you know, take it to the moon. Yeah.
So what kind of like mobile home parks do you guys target? And then typically
what is the business plan look like from a macro perspective?
So, like I said, a hundred, a hundred pads or more, that's how you get the volume
and the economies of scale.
You want all the utilities kind of controlled on site to where,
(07:35):
you know, city, like city, city utilities mainly, and you're a land,
you're a owner of the land. So you're leasing the pad back to the,
to the tenant and that's your main focus.
And then you look at other parameters for population growth within Walmart.
It's kind of like a funny joke, but if you know, if a Walmart's within five
miles of your mobile home park, you're, you're pretty good for weird reasons.
(07:57):
And what are the reasons behind that?
I, it's commercial based and it's job centers.
Cause you know that if you have a Walmart, right. And then usually the population,
cause Walmart has enormous amounts of data, right?
So when they're doing all their research for how they're going to put a Walmart
into a town, they know all the parameters. So that's kind of your tenant profile.
People that shop at Walmart. Yeah. Okay. Interesting.
(08:18):
So what's like, you know, I know like median household income in the U.S.
Is kind of in that 65K range.
What is ideally in these mobile home park areas, what kind of median household income are we talking?
About $45,000 on average. You know, even for the apartment stuff,
depending on the market, at north of 55,000, median household would start to
(08:41):
classify a decent apartment market.
Dude, I love that, man. So what do you guys own today?
Kind of give me like a snapshot of what you guys own. And then I do have a ton
of questions about the multifamily side, but what do you guys own today?
About 520 units, give or take in five different states, about 110 million plus in assets total.
(09:04):
But we started with one condo, man. Really? Damn.
2010 financial crisis, Murrieta, California.
We bought one condo, $100,000, put $25,000 down, got a $75,000 loan from Wells
Fargo, turned that into a duplex and a triplex and a couple of fourplexes all around San Diego.
And then from there, we got into that five to 10 unit space,
(09:25):
quote unquote commercial.
And then we're like, gosh, like we need to scale, but we can't really do that
locally because San Diego go is pretty expensive.
So we need to scale our money out of state. Well, that brings a whole nother
set of logistics. How do you manage it? How do you.
Logistics operations construction on and on and on and so
i spent a decent amount of time from really 2018 all
(09:45):
the way till now setting up infrastructure in states
like missouri oklahoma texas tennessee alabama arizona nevada and so now we
have assets in those states because we went in and you know three to six months
in advance of buying any properties we're setting up pm crews crews,
construction crews, brokers.
(10:08):
All kind of the infrastructure, the team on the ground to where that way it
feels super comfortable. And we know that we know the play.
We know the good areas, the bad areas. Where's the path of progress?
Where's the new development? Now, when you just mentioned all these states,
did you go in and identify multiple markets within those states to set up these teams?
Or did you just pick one market and say, this is the one market such as Phoenix, Arizona?
(10:30):
Oh, gotcha. Within the state. Is that what you're saying? man.
Yeah. Yeah. So Kansas city, Missouri was a great one.
And I had no idea. I was actually at a conference. Do you know who Dave Lindell is?
Yeah. He wrote one Ari mentor and all that stuff. Two of my favorite books.
Um, one of them is, uh, emerging real estate markets and the other one is multifamily millions. Yeah.
Multifamily millions is great because it kind of teaches you like,
(10:52):
it's like a good intro book to like commercial real estate and all those principles
apply to all asset classes.
It's not just multifamily, but like the idea of buying a underperforming,
tired commercial deal, improving it, renovating it from the outside in and forcing your equity that way.
But those same principles apply to the hotel stuff that we do and emerging real estate markets.
(11:14):
I mean, that's great just to kind of understand like, you know,
what moves pricing in different real estate markets across the country.
But anyway, so Dave Lindahl, you were connecting with?
Yeah, I went out to a conference in 2018 in Boston, Massachusetts and met,
you You know, there's thousands of people out there.
I met a bunch of people, connected, tried to identify markets that we were interested
in, ran into a couple of different brokers.
(11:36):
And one of this guy said, hey man, you need to come see Kansas City,
Missouri. And I'm like, Kansas City?
He's like, just trust me, come to Kansas City. And I said, okay.
So I decided I was going to fly out there in January, negative whatever degrees,
snowing. I think that's when the Chiefs were playing the Patriots in one of
like the AFC championship games. Did you go?
(11:57):
I'm a huge Patriots fan. Okay. I did not get a chance to go to the game but
I get to watch the Patriots win.
So I was happy with that. I've gone to one game at Arrowhead before. I'm a Charger fan.
But I went to a game there. It was the same thing. One at a time. It was cold as heck.
The fans are like they stand on these styrofoam like boxes on top of the concrete
and it kind of keeps your feet warm.
(12:18):
But dude, nicest fan base I've ever seen. Like literally they stand up the entire
game. Like even during timeouts they don't sit down.
Great fan base. And super loud. But after the game the Chargers won on like
a last minute drive. Like they won by one point and it was like late in December
had playoff implications.
And literally every fan on the way out was like, thank you so much for coming.
(12:38):
Isn't that crazy? That's the Midwest spirit. Yeah, it was Thursday night football.
So, you know, they do the set down on the field.
So we were all walking down to do the postgame set to go watch it.
And all the fans were coming up.
So they're all passing us in like a sea of red. And they were like, congratulations.
Thanks for visiting our town. I was like, I've never met. If you were in like
Pittsburgh or Philly or. Yeah.
They'd be giving you the bird the whole time. Yeah, four of us in our charger
(13:01):
gear. And I've never met such a friendly fan base. But anyways, we digressed.
That's great. So you were saying Kansas City, show up January.
Yeah, and I was blown away.
So Kansas City reminded me when I saw it of San Diego, downtown,
early 2000s when the ballpark was going up.
Cranes everywhere, everywhere. So I'm like, holy cow.
(13:22):
And then I get the lay of the land from the brokers. We're seeing where everything's
at, path of progress, growth, development, blah, blah, blah.
And he said, hey, here's kind of the areas you want to be. Here's where you don't.
And we ended up our first out-of-state deal was a 27 unit.
And then 31 unit. Those have been phenomenal for us.
And then started going into Texas, started looking in Nashville,
(13:44):
Tennessee and Knoxville.
And now we're in Las Vegas and Nevada with Rudy Medina. And then obviously I
love the Phoenix market now that it's coming back to earth, but Arizona is a great market. So.
What's the biggest asset that you guys own? 160 units in Las Vegas, Nevada.
That's a brand new construction class A that just completed.
And we're now we're moving it out of construction financing into permanent financing. Gotcha.
(14:05):
So that's, that's a challenge.
And was that a new development for you guys or you guys bought it?
Ground up. Yeah. Ground up dirt.
So Rudy and his crew built that from ground up and now we're bringing a new
capital to replace the construction capital and going to refinance it into permanent debt.
So, but it's, it's wild times in the capital markets, man.
Yeah. As you know. How long does it typically take to lease up,
(14:27):
you know, 160 unit building like that? You know, 12 to 18, I mean,
it depends on time of year, right? But in the summer months,
you're going to be doing...
10 to 15 leases a month if you're moving. So you figure something like that
and then you slow down in the slow seasons like right now.
So you figure at least 12 months, maybe 18 months total. So it just depends.
(14:48):
Yeah, that sounds about right. So what you guys are doing, you're buying a lot of the smaller stuff.
Are you guys kind of pivoting your strategy now and getting into larger buildings?
If you love real estate investing, passive income and tax benefits,
but don't have the time, My company, Summers Capital, is buying boutique hotels right now.
We source the deals, we renovate the properties, and we even handle all the
(15:10):
day-to-day management, making it truly hands-off for our investors.
If you want to learn more to see if we can help you, visit summerscapital.com
slash invest to book a call with our team.
Again, that's summerscapital.com slash invest.
Now back to the show. Yes, because the economy is a scale. And that's kind of
what we learned is, you know, our first out-of-state one was a 27 unit and then a 31 unit.
(15:30):
And I'm like, I'm looking at it going, gosh, you can go get a hundred unit deal
and it's easier to raise the money.
And there's more people, the banks want to give you the money easier because
the economy's a scaler there.
I mean, I ran into that with a private equity fund group and we were trying
to raise some money. And I said, Hey, I need, we need $3 million.
And they said, Justin, like, we love the deal. We love you, but we can't give
(15:53):
you 3 million, but we can give you 10.
10 i looked at him and i'm
like so let me get this straight i only need three but you're telling me you'll
give me 10 they're like yeah just go find us a deal like we want to invest with
you and that's kind of what triggered my mind like oh my gosh like we need to
get into the bigger space because now you're going to have a complex that's
(16:14):
self-contained its own management on-site payroll.
Leasing maintenance everything's self-contained focused on that property and
the economies of scale go with it.
Yeah, dude, I love that you brought that up. You're exactly right.
It's like, it's, it's almost like getting lending for multifamily and the bigger deals.
And when we see this with the hotels as well is easier.
You know, you go get a smaller loan amount for a multifamily deal and,
(16:37):
you know, deal with a lot of like regional banks and they're going to want full
underwriting and all this, you know, paperwork.
Or you go get a, you know, Fannie Freddie agency loan for multifamily,
you know, non-recourse debt, non-recourse.
They're not looking at your debts personal debt to income ratio you're
they're really just sizing up the deal based on two things the
the experience as as the sponsor and the dcr and the
(16:57):
way the deal pencils yeah yeah and shoot some
of those loans are so in terms of pricing are very competitive too
we just threaded the needle on one of our texas deals 121 units and we had purchased
it in december 2021 hindsight now peak of the multi-family market interest rates
as you all They started to go rocket ship in March of 2022.
(17:22):
And so we went from a four and a quarter interest rate on a bridge debt financing,
right? Because we were going to buy it. Four and a quarter bridge.
Oh, yeah. I mean, we're buying this. Everybody was there.
Thankfully, we only had one of these, but we bought it.
Four and a quarter interest rate and, you know, renovating the property,
business plans, perfect.
Everything's going great. And
obviously interest rates go from there to nine and a half percent on us.
(17:44):
And so we're now rushing to try and get this thing refinanced,
but we need to get renovated to have the rents high enough to then have a new valuation to refi.
But we had just had to do a huge $2 million cash in refi recently and buy down
the debt and get us into a Fannie Mae loan at 5.49%. And we just got extremely lucky, like so lucky.
I can't even tell you because literally a week after we closed on that loan,
(18:07):
the 10 year treasury went berserk. And then you can see where it's at today.
And so now you have a lot of these multifamily guys. And I'm telling you,
man, there is, I mean, when Grant Cardone talks about a storm of Bruin,
he's looking at the same data I am.
It's no joke. I mean, between coming up this year in 2024 through 2025,
you have an enormous amount of commercial debt set to reset or need refinancing,
(18:31):
coming to maturity, all these things.
And it's just a question of who's too big to fail, who can get workouts,
who can get extensions, because the refinancing is going to be very tough in
this environment right now.
Yeah. And you know what? It really depends on who you talk to.
I did just interview Robert Martinez, an apartment rockstar out in Houston about a month ago.
(18:52):
He's a buddy of mine too. I love it. And we were talking about he just foreclosed
on a $51 million multifamily note that he picked up in early 22.
And so he was trying to see some of that stuff. When you say he foreclosed on
it, meaning he gave it back to the bank or he, okay, gotcha. Yeah, yeah.
It was a Freddie, it was a Freddie floater that he picked up in early 22,
A-class deal, didn't have a lot of value add component.
But he said he switched over from in-house property management,
(19:15):
which he's been doing this entire time to third party right when he bought that deal.
And then he said they kind of ran that deal into the ground.
And anyways, the lender wasn't working with them and they ended up taking the property back.
So I think there's going to be more of those to come. But, you know,
to Grant's point, you're talking about Grant Carnone.
I mean, he was on this podcast telling me that he bought a billion dollar multifamily
(19:36):
portfolio in Fort Lauderdale in December of 2021.
Right before the rates went up on floating rate debt.
And he said that. I'm shocked he did that. He told me that he has an art refi.
He would have to bring tremendous cash in to refi right now but I'm shocked
he told me he's just basically from what I gathered I didn't really dig in too
(19:59):
much but from what I gathered.
He made it pretty clear that he is just basically covering that debt service
right now with his own money.
Holy moly. Yeah. Yeah. I'm actually really shocked that he did that because
he's relatively conservative on his underwriting and puts an enormous amount of equity into deals.
And typically he's class a fixed rate debt guy because of what he went through
(20:23):
in 2008, nine, which he talks about. He was very close to imploding.
So I'm shocked that that's the case, but everybody's affected by it right now,
which is why I said we got so lucky because of, had we not been able to refi
and thread that needle on that deal, it's likely going back to the bank.
You have $7 million of investor money sitting in there.
I wasn't, I, I, I literally moved out to the property for a month and a half,
(20:44):
moved from San Diego to Texas to work with the onsite management to make sure
they got their ass in gear.
And we threaded that baby across the finish line. Cause I was not letting that thing go.
I said, there's no way in hell. I said, the only thing keeping this thing from
getting to the finish line is effort.
And I said, what I'm not going to do is allow this thing because the onsite
PM company doesn't want to get their head out of there. You know what?
(21:06):
I said, I'm going to show them how to manage this baby. So we went in there with their staff.
We took it from about 82% occupied to 98.9, delinquency down to 2%.
All the work orders under 10, all the future renewals in line,
boom. Got the thing right across the finish line.
But that's what it takes. Yeah. I love that you did that. And quite frankly,
that's what it takes when when things go south the loan brokers were floored
(21:28):
they were floored they're walker dunlap guys they're like justin we have never
seen we've actually used to
use a case study because we've never seen an owner literally move on site.
To one of their assets to safeguard it but i
said i said thankfully it was we only had this one in this predicament so i
could focus and i said there was no way in the world i was going to allow seven
(21:51):
million dollars of investor capital to go poof which a chunk of it's ours not
going to happen what kind of techniques were you utilizing that worked well
hyper proactive aggressive.
Every day hammering things out because it's four reports i said you can manage
an entire And Robert Martinez knows this very well because he's a very good operator.
You can manage an apartment building if you focus on four reports,
(22:13):
the availability list, the work orders, delinquency, and renewal list.
If you've managed those four reports on any apartment building extremely well,
like white on rice, the financials will back it up and that thing will hum.
Income but i said if you don't manage those extremely close
like daily then you'll start to
see it suffer because those four reports will tell me where the property's
(22:35):
at today and where it's going to be at 90 days from now okay and if i can come
in there and manage those things correctly and it's it takes intensity which
is what a lot of these pm companies unfortunately you know i don't expect them
to care about our money the way we do i don't expect it right so if they're
not going to then i'm going to which is why i mean the pm company got pissed
they They didn't like that I was out there,
but I said, it's not your money.
(22:57):
Yeah. I said, quite honestly, you know, if I didn't need your systems running
the back end, you'd be gone.
They're on site. How big is this property? It's only 121.
It's 121 units. But you had on site, like what? On site leasing center, maintenance.
And then we had a kind of, they called a floating leasing person. Got it. Yeah.
Yeah. That's good that you guys had on site because you were talking about some
(23:19):
of the smaller deals you guys did early on, 28 units, 31 units.
Those are all off-site, yeah.
You telling me this story, it reminds me. So like one of our early deals was
32 unit building, Indianapolis.
It had all the problems. It had hookers, prostitution.
We showed up for the inspection and the cops were there like arresting some of the tenants.
But it was in a pretty decent area.
Really? Yeah, it was. It was just this property had all the problems.
(23:42):
Gotcha. And so we renovated half the units, but we got into a position because,
you know, with 32 units, you don't have on-site.
And so, you know, with those smaller buildings, I think one of the biggest challenges
is you're dealing with a lot of, you're not dealing with institutional level property managers.
You're dealing with a lot of mom and pop managers that might manage four plexes
and single family homes.
(24:03):
And so it's a little bit out of their wheelhouse. And so you're kind of in that,
that no man's land where it's a little bit big for those kinds of managers,
but it's way too small for the institutional, more professional level managers.
And so, you know, those properties, you got to get hands on and we're out of
state. We're like, fuck, you know, occupancy dips down to like the high 60s at one point.
And we're like, oh my gosh. Yeah, you're hyperventilating.
(24:24):
So what we did was we kind of reached a kind of a hybrid agreement with our
PM to keep them on. But we said, we're going to handle the leasing.
And so we put out a job posting for like all the local realtors in the area
that live within like a two mile radius of the property.
You did what I just did. Oh, you guys did the same thing?
I love it. Yeah. So we did this. We found a local realtor, young woman who was kind of a hustler.
(24:49):
And she was like, yeah, I'd love to. And we're like, hey, we're just going to
pay you a flat rate each time you lease up a new unit for us.
Get a commission. And then we went on Facebook Marketplace and Craigslist and
we just started slamming ads. Facebook Marketplace, Craigslist to lease up our units.
And then we would control all the leads that would come in. The flow.
And then we would funnel all the leads to her. And she would follow up.
(25:10):
She would schedule the appointment. She would do the tours.
So did you not have a PM software that was running kind of that syndication
onto all the portals and stuff?
Or you did? At this time, we weren't syndicating anything. This was our,
we JV'd this deal. No, no, no. Meaning in terms of for your available units.
Was it out to like apartments.com, apartment list, like all the portals?
Yes. The property manager was.
(25:30):
But we would like test them.
And this is good for any listeners out there. Like if you have third party PM,
like send them a lead from like a, you know, a random number and see what the response rate is.
And for them, it'd be like five days before you'd hear back.
And it's like, whoa, that's not going to work. You know what I mean?
So that's when we kind of took it in our own hands.
But we got that thing leased up. We ended up renovating half of the units, 50%.
(25:53):
And cap rates compressed. We ended up owning it for two years. We bought it for 1.1.
And we exited exactly two years later for 3.1. Good for you.
And that's a good two times on that.
Yeah. And so that was kind of my first taste of like operating a multifamily
deal in that kind of that range right there.
But that is the management portion for those types of deals that are kind of from 20 to 80 units.
(26:17):
It's very hard. You have to manage the managers.
Yes. And this is what I've learned. And quite honestly, look,
it doesn't matter. And it doesn't matter how big or who the PM company is. It can be RPM.
It could be asset living. It could be some other ones out there that are the
big conglomerates nationwide.
It's irrelevant. It's all about the people because they all have systems.
They have their PM softwares. They got their payment processors.
(26:37):
They have all their systems, all their, it's great.
But if you don't have strong people, your community manager,
right? Or the person that's offsite managing your property, right?
And you don't have that person that's strong. And then if they don't have services
in house to handle the leasing and the followup and all that stuff,
if you have an offsite manager.
You're going to struggle. And that's why it's critically important.
And if you're managing out of state that you, you set up the infrastructure
(27:00):
in place in advance, which is what we did in all the markets we got.
If we were offsite management, we met with a couple of PM companies that were
kind of mid size that did a lot of that.
So we didn't have the small little guys, but we didn't have the big guys either.
But even then, I mean, we just had to do this and I'm still doing it on the
Texas deal because I'd been asking for a floating leasing agent for 12 months from this PM company.
(27:24):
And they kept giving me, you know, temp agent crap.
And I said, guys, I'm going to show you how this is done. You want to see how this is done?
Boom. Went to Facebook, went into the real estate groups, San Antonio, Texas.
Within seven days, I had an amazing leasing agent on site moving like what, you know, just humming.
Boom. Seven days. I said, it took you guys 12 months. You couldn't get your head out of your ass.
(27:45):
I did it in seven days. It's just effort, Guys, it's effort.
I mean, it's unbelievable.
And so you saved the $7 million of equity. I mean, you mentioned you guys brought
$2 million at a table to refine the firm.
So five originally, two more. So total of seven. Okay. Correct.
And that's because the rates went up pretty significantly. Yeah.
I mean, we had to buy down the debt because Fannie Mae was only going to give
us 63% loan to value based on financials, based on interest rates,
(28:10):
debt coverage ratios, all these things that are important.
And because of that, we had to bring a cash in. Now, thankfully,
Hopefully we did not over leverage that property going in the door.
We only put 70% debt going in. Thank goodness.
Because it had, we jacked it up like a lot of syndicators did that 2 million
would have been four or five.
And then most of the investors would have said, we can't like, that's crazy.
(28:32):
It doesn't make sense anymore. And that's what you're starting to see happen.
So there are amazing opportunities coming that I can tell you,
like we just launched our opportunity fund or $25 million opportunity fund.
And we're going after this stuff.
Because I know it's starting now through 2024, 2025. And it's interesting you
say that because we're starting to see deals shake loose on the hotel side.
What is the opportunity fund that
(28:54):
you guys are launching and what kind of assets are you guys targeting?
Hey guys, real quick, the only way the show grows, the only way we continue
to bring on bigger and better guests is if you guys rate, review, and share the show.
So if you could take two seconds or the click of the thumb to review on Apple
or Spotify, it will mean the world to me.
But more importantly, we'll be able to reach more entrepreneurs and more real
estate investors and to help them build wealth through this podcast. Now back to the show.
(29:16):
Multifamily specific, dedicated towards really cash distressed assets,
where we can come in, pick up an existing product, right?
That just needs cash infusion, take it over and run it, right? A new valuation.
But we'll probably pick it up direct from the asset managers inside these debt funds.
There's about five or seven debt funds, big guys that a lot of these deals,
and they made these kind of riskier bridge debt variable rate deals over the
(29:39):
last three to five years.
So I'm inside those guys right now, just talking to them and saying,
Hey, if you have loans or deals and problem properties in these regions, where are your people?
Cause it's not, you're not going to, it's not going to see the light of day.
You know, the black rocks, the black stones, all these guys are going to gobble up the big stuff.
You're going to get kind of the low hanging fruit, but decent stuff.
And that's how a lot of these kind of distress deals.
(30:01):
And then also construction deals where people have gone in new construction
and they're trying, they can't move it out of the construction financing and
they need cash infusion to kind of come in and you can take an ownership of
something that needs help.
Great asset, maybe great location, but it got caught up in all the interest rate pops.
And they went through 11 interest rate hikes, right? Over a what? Nine month window.
(30:23):
I mean, it's causing a complete Esho and a lot of people are just hanging on
for dear life and kicking the can down the road, hoping they can refinance in
the future as rates drop.
And maybe that happens. Maybe it doesn't, but it's a very precarious situation
in the commercial space right now.
Yeah. We're doing the same thing right now. So one of the deals that we're picking
(30:45):
up December 13th is through our, one of our bridge lenders, but they're like
a big, basically debt fund.
They're like a REIT, but they do bridge lending for all commercial real estate.
And so they have, you know, some bad, some stuff that's going bad.
Right. And so this particular deal they brought to us and they said,
Hey, you know, we're taking this one back, but we think you guys would be the
perfect operators for it.
(31:05):
It lasts appraised for 7.5. We're picking
it up for 4.87 beautiful and it's two years old
and it doesn't require any reno nothing like that see that i mean that is
like music to my ears yeah i love that some of
my guys like you know we're busy right now with a bunch of other stuff that
we're doing but like guys we we have to pick this one up and so i'm like let's
just be as easy as we can to work with let's make this one go smoothly because
(31:26):
when they have future stuff go bad like i want to i want to be the first to
find out about it so i love that strategy well and it works because the the
debt fund we just paid off on that refi.
I won't mention who they are, but they were ecstatic. They were surprised that
we actually were able to pull it off and they were ecstatic.
And they were like, Justin, like, wow. And then I said, well,
(31:47):
it's been two weeks since we paid you off.
I just wanted to ask, do you have any other bad loans that are on your books
that you may need to have a discussion about?
And so you get into the asset manager and these are, that's how it's going to get done.
It's not going to the brokers. It's kind of not coming on market.
This is all going to be belly to belly inside these asset managers.
Do you think a lot of these bad multifamily deals that are, you know,
(32:11):
potentially going back to the lender, do you think a lot of these or a good portion of them,
will actually have some sort of capital injection come in and the initial borrower
is not going to have to give the deal up, but they might give up some equity
to that capital partner?
I think you're going to have a combination of all the above.
And it really depends on on what does it look like?
Meaning how bad is your debt? How much did you over leverage? What's the valuation?
(32:35):
Because cap rates are rising, right? So that's causing a massive challenge in
some of these markets. So, you know, what is the property worth?
Does it make sense to come in with new equity and stack it?
Or does it make sense to wipe everything clean and start fresh?
And come in at a different cost basis. Correct. Because that's really the challenge
is the basis because, you know, we all know no, everything, ta-ta-ta-ta-ta,
(32:57):
because of low cap rates.
And now in the short term, everything's dropping in value.
Now, if you have good debt.
And you're fixed and you can just hold on for dear life, then hold on for dear
life. Yeah. Because it's a holding game. Well, it's not a great time to sell.
If your property is performing well, you don't want to sell it.
Right. So you might, even if you're not performing that well,
but you can ride through it, ride through it because it's no different than
(33:21):
if somebody came to me in 2008 and 9 and said, oh my gosh, I just watched my
home value drop 65%. It's never coming back.
I'm never going to see my value again. I'm just going to give it back to the
bank. Well, I can understand why you would think that, but now that you've seen
it, you know that it's coming back.
It came back for all the homeowners, and then it's going to come back for everything
else. It just may take five, six, seven years.
(33:42):
You may have to hold that asset where your business plan was three,
and now it's going to be seven, maybe more. More. Yeah.
Maybe more. It'll be interesting to see, though, like what happens next year.
We got election year. Yeah. I saw an article come out recently.
I think it was Forbes, but don't quote me on who put it out.
But it said that, you know, they're foreseeing rates to actually drop next year,
(34:03):
like four times what the market's actually pricing.
And so they were looking at like, you know, basically early Q1 of next year,
us to officially enter like a recession and for them to do rate cuts between
Q1 next year to the end of the year, somewhere around like two and a quarter.
Yeah which is very significant it's possible i mean
i it's been so unpredictable but it's going to come down
to economic data and at the end of
(34:25):
the day it's all about jobs right it's all about jobs meaning if
that job report is strong they're not dropping rates if the job report starts
to get weak and consumer data starts to go south they're probably gonna drop
rates it's all about the jobs that is going to dictate where we're going true
but i mean initially they said the rate hikes were because inflation now inflation's
back down you know yeah i mean the data is showing that,
(34:47):
but they're still not going to drop the rates until the jobs go with it. Yeah.
They're just, they, they can't because, you know, the Fed's dealing with a really
interesting situation where inflation or whatever's out there is actually helping
them in some ways really mitigate their own debt.
But at the same time, if they, they can't raise interest rates anymore because
then they're paying right debt on their own debt, interest on their own interest, and it gets nasty.
(35:10):
But, you know, right now they're going to stay right where they're at until
they see some sort of economic data that gives them the indication that,
hey, we need to come save the world again. Yeah.
And then rates go. So I'm curious, as we look out for the next 12 months,
let's say end of 2024, I'm not going to hold you to this, but where do you foresee
multifamily cap rates and interest rates, generally speaking, December of 24?
(35:34):
They're going to continue to go up. Really? All of next year.
Interest rates too? No, no, no. Interest rates are going to stay right where they're at.
I think we peaked on that part. So cap rates will just catch up.
I mean, unless you have some crazy inflation data, their interest rates are
staying right where they're at.
And if anything, they will drop, but I don't think they're going up anymore.
I don't think the Fed can.
Like they're at that precipice where it's like... Got it. So you're saying cap
rates are just going to catch up to the rates.
(35:56):
Correct. Got it. Because you're still having that...
Delta between what sellers want and you know buyers can
pay and blah blah blah but it's it's going to take time for that to
filter through yeah yeah because right now even in you
know i mean for even new construction stuff you're seeing caps at six percent
in some markets six and a half in some markets for class a new construction
and then other markets if you went into texas you may see temporarily cap rates
(36:20):
at seven percent that were previously at four and a a half. I mean, it's jumped that much.
Now, I'm not even looking at those right now because it'll make you go sick
to your stomach on how temporary valuations are on some of these buildings.
But if you have decent debt on your property and you can hold,
you just hold through it and you'll be fine. Yeah.
(36:42):
It's funny. There's a lot of operators that are probably kicking themselves
right now because they had an opportunity to exit in like 21 or early 22 for some absurd number.
And they're like, ah, we're going to hold a little bit longer.
And now they're like, oh, shoot.
But then you also have some operators that literally sold in early 22,
right before the rates went up.
And, and they're just like, oh my gosh, thank God.
(37:04):
Tyler Devereaux out in Maui, he was on, he was telling me. He's a good dude.
Very good dude. I love Tyler.
Yeah. Tyler's a great dude doing some big things out there in Maui.
And I've always been like inspired by him, like just a good dude to talk to,
positive and just growth minded.
Yeah. He actually invested in our boutique hotel fund, but dude,
talk about a great human being, you know? Yeah, he's got a good vibe.
(37:25):
I went to his multifamily mindset out in Vegas a couple years ago.
Got to meet with him and some folks, and very sharp.
Good human being good vibe good energy dude i talked to him i talked to him
last couple weeks ago but he told me that he he broke up with his partner they
broke up oh wow it's crazy right because they have a lot of stuff together i
mean just on the ownership side but also with the,
(37:45):
mindset stuff or the mastermind so he was it's funny because like on the podcast
we're having a conversation he was asking some questions about partnerships
and all that and then talked to him two weeks ago he's like yeah he didn't break
up with him but his partner said hey i'm I'm not going to do this anymore.
He's like, I'm going to hang it up and call it a day. So obviously Tyler is
like, you know, he's, he's going to keep this thing going, but he's going through
(38:07):
a lot of like restructuring right now.
What do you do? How do you, do you have a morning routine?
Like, do you, how do you handle the kind of mindset stuff? I'm always curious
about how people handle like their daily activities, even meditation or,
you know, the mind game, right? Cause it's so much of what we do every day as entrepreneurs.
Dude, I gotta be honest with you, man. Like I don't do a ton of like morning routine stuff.
(38:28):
So I'll tell you what I do. I wake up and- What time do you wake up?
I usually try to wake up at seven. Okay. You get to sleep in a little bit.
Yeah. That's good. I wish I had that. To me, that's not really sleeping in.
To me, I'd be like, holy cow, it's noon. Because if I'm in bed by 1130 and I'm
up at seven, that's seven and a half hours. That's good.
If I'm in bed by 1030, that's a really good night right there.
(38:51):
But anyway, so yeah, as you wake up, first thing I do is I go straight to the gym.
I don't try to open my phone or anything like that. I was driving to the gym.
I get a good workout in, come back, shower change, and then I'll walk into the office.
I'll grab a little Starbucks on the way in and come to the office and just jump right into it.
They always say like, you know,
you should, the most important things of the day you should do first.
(39:14):
And so for me, the most important thing is taking care of my,
my body. Yep. And so that's why I try to go out and go and work out first thing in the morning. Yeah.
In the afternoon, if I don't get my workout in the morning and I try to go after,
you know, full day in the office, I just have so many more excuses not to go.
But also like the energy and the vibe is different in the gym at that hour.
It's like you go in the morning, like the people in the gym are like,
(39:36):
they're there because they want to be there.
They're getting after it. And there's a whole different energy.
And then you go in the late afternoon or evening, it's like people that are pissed off.
Yeah. People are kind of dragging their feet. They're there because they They have to be there, right?
And so anyways, that's what I kind of do. And I jump into it.
I would say like work weeks wise, like Monday, we do a ton of meetings.
We do our level 10 meeting in the morning.
I mean, I jump into like a lot of one-on-ones. I do a call every Monday afternoon with my business coach.
(40:01):
And Tuesdays, more meetings and stuff like that.
And then we have our mastermind calls for Tuesday, Thursdays.
Wednesdays are always content days.
So we'll do two podcasts, sometimes three podcasts on Wednesdays.
And then Fridays I just kind of like leave open.
I try not to schedule anything on Fridays and it's just kind of a day for like
(40:21):
thinking or whatever things I want to do on Friday I'll do.
Have you read that book Atomic Habits? No. By James Clear? I've heard of it. Incredible.
Incredible book. I'm about halfway through it right now. Okay.
But it talks about mastering your morning, you master your day.
And habit stacking and like these other things that if you either want to get
(40:42):
rid of bad habits or put some good ones in and how you specifically do that.
I mean, I can't even summarize it right now, but I tab all my books, right?
So that way, if I have to go back through them to pick up a piece of info,
you know, it wasn't just like I read an entire book and then I think it's going to stay here.
So I actually will tab and highlight areas that I,
was curious in, but incredible book. If you, I mean, and so I started doing that habit stacking.
(41:06):
It's what they call it. Meaning I will wake up at 5 AM.
After I wake up at 5 AM, I will make my bed.
After I make my bed, I will do 10 pushups. After I do 10 pushups,
I will go downstairs and make coffee, right?
So your habit stacking these things in line with other things you already do.
So that way it'll naturally fall versus, I mean, if it was something you didn't
(41:28):
like and you would, but you needed to do, you try and habit stack it.
So it'll fall in line with what you're already doing in your normal day.
If you actually were to track what you do in the morning and then try and sit
something in there, because it takes 67 days to actually instill. Have a habit.
A little habit. What does the book say about having a morning routine past making
(41:48):
your bed and making a cup of coffee? Well, they say it's incredible.
I mean, I, I, so I set my, cause my biggest thing was is if I have a great morning
like set up, even before kids wake up and chaos starts and all that stuff,
any parents can speak to this,
having that about an hour to maybe an hour and a half, if you're lucky,
which is why I wake up at 5am, kids wake up at 630.
(42:10):
I need that hour and a half to kind of get moving, do what I need to do,
do a workout, coffee, meditation, listen to affirmations, all these things that need to happen.
So that way my energy is in the right position to then deal with these little
beautiful souls and get them to school and deal with that. And then before the business chaos starts.
(42:30):
Because if I'm waking up any later than that, then emails are starting,
texts are starting, all that stuff's already blowing up.
And I need that hour to kind of get set before I feel like here comes the world for me.
And that's helped tremendously.
Yeah, that's good. I know everyone has like their things that they're into.
I tend to side more with like that Alex Ramosi approach.
(42:52):
And he basically says like he likes to just, he's very extreme,
but I'm not that extreme, but he just wakes up and starts working.
He just jumps right into it and goes, I like to wake up. He doesn't have kids yet.
No, he doesn't have kids yet. I guarantee that changes when he has children.
So he'll like get up and literally just starts working. And he'll work, work, work.
(43:13):
And then sometime middle of the day, he'll go to the gym, take a break,
and then come and work in the afternoon.
But I like to wake up and literally I just, instead of opening my phone and
all this BS, making coffee and all that, I literally just brush my teeth,
put my workout clothes, and I'm out the door.
Yeah. I literally don't, I don't even eat before I go to the gym.
I just bring a protein shake with me and some water, some electrolytes and that's it.
(43:33):
Yeah. You know what I had to do to stop looking at my phone?
One of the first or two things that people do when they wake up, right? Yeah.
Is this goes to the atomic habits book is you want to attach something that
you typically do that's not good for you, but you do it because you just want to do it to a reward.
So you'd say, I can't look at my phone until I do this.
(43:57):
So you actually complete those habit stacks.
And then by doing that, then I can go now look at my phone.
I can go look at my social media real quick or scroll through pointless stuff.
Yeah. I don't look at the phone because I know if I just get out the door and
get over to the gym, like, okay, now I'm going to get my workout in. A hundred percent.
Once I'm at the gym, I'm not going to open my phone and get in this whole like,
(44:19):
you know, digress thing. thing but like you know you open your phone sometimes
it's like you got like you said you got texts emails all this stuff there's
always problems fires you got to put out as an entrepreneur you know that's better than me.
And, you know, for me, I'm like, I like to attack things right away when I see
him or be responsive and stuff like that.
So for me, I'm like, let's just, let's just wait, get the workout in.
(44:40):
And then when I get in the office, then I start. Well, yeah.
If you start scrolling through your phone and emails, it becomes a barrage of like a hole.
So yeah, a hundred percent with that. What works best for you in terms of the
mindset to go take on something that's maybe going to push your comfort zone?
Because we've all been there.
The first time I did my first deal, I was nervous. It was overwhelming.
(45:01):
Those smaller deals that I did early on or that condo that you did as your first
deal, that thing doesn't scare you anymore. more, but I'm sure you're doing
stuff now that's like, okay, it's pushing the comfort zone a little bit.
What kind of techniques work well mindset-wise to get you prepared to go take
on something that's going to make you feel uncomfortable for a period of time?
Yeah. So this comes down to personality traits. This is actually a great lead-in
(45:23):
for somebody that kind of fits this personality.
So when I did my disc testing, so that's by Tony Robbins, I was a CS,
right? So C is you're hyper analytical, organized.
You have a plan for a plan and a plan for that plan, right? So that's great,
except you can also get caught up in paralysis by analysis.
And then the secondary was the S that was like the soccer mom.
(45:44):
So I'm sitting there going, wait a minute. So I'm analytical and I'm a soccer mom.
That's not going to work, which means I'm great with customer service.
I'm great with people, but then I avoid risk.
I like no change. I like consistency. Don't
move just keep even even steven right but
if you have analytical and organized with don't
take any risk and stay steady eddie you might as well just go get a
(46:05):
cubicle job because you're not going anywhere like that's where you need to
be and i was like well that's not where i want to go so i honestly had to start
manipulating the second one and i moved the c's there that's not going to change
but the secondary is now a d that's the driver director which means we got to
go we can analyze all we want.
We got to get to the edge of the cliff and we can say, we've done all the analysis
(46:28):
we can on a deal. We've looked at the risk.
We've, you know, call it, I guess, calculated risk, but then you get to the
edge of the cliff, you got to go and allow the how to show up.
You got to go and allow the how to show up. And it will, especially if you're
a go-getter and you're a doer and not a dreamer, the how will show up because
it has to, because you'll.
Get into something and you'd be like oh crap it
(46:49):
happens all the time and you will find your way through it because
you'll just fight fight fight fight fight so that has to be in there and
so that d inside of me was the one that made that happen and
once i gained the confidence and going through that once
or twice in realizing that every broke
person was rich i'm sorry i take that back every rich person was broke at some
(47:10):
point right you can take everybody whether it's grant cardone whether it's you
know some of the the billionaires that elon musk of the world they were all
broke at some point right jeff bezos broke in a garage at some point and they
just had to push push push
they had a dream they had a vision but they made it happen they were a doer
not just a dreamer because my dad would always say that he'd say listen there
are two types of people in this world there are doers and there are dreamers
(47:31):
dreamers you know will just dream but doers they'll take their dreams and make
them a reality that's the difference doers will take their dreams and make them a reality.
Well, dreamers are just talk, talk, talk. They dream, dream, dream.
They're the ones that say what they're going to do all the time,
but that they never execute. And it's typically because of fear.
They get to the edge of the cliff and they walk themselves back. Fear the unknown.
Yeah. They, they allow, this is another thing I had to learn through psychology,
(47:55):
but you have the frontal cortex and then you have this thing called the ablum
gata or whatever it's called here in the base of your spine.
In your human biological brain, when you go towards anything,
it automatically wants to stop you and protect you. That's this here.
And it's usually bigger than this.
So when that's happening, you have to basically say F you to this thing with
your frontal cortex and you got to go.
Yeah. And that's usually the difference maker. That's what's gotten you to where you're at.
(48:18):
That's where Grant Cardone's gotten to. I mean, his story in San Diego is incredible.
We were chatting about that before we came on, right? His first two deals were here in San Diego.
You know, he's from Louisiana, did some house flipping and rentals in Houston,
moved to San Diego, was living on Camino de la Acosta in a house and this was
in the nineties ended up walking across the street one day.
There was a house that was not even on the market waterfront.
(48:39):
He ended up looking over the fence, met a broker that was going to shop this house.
And he ended up buying it off market for $4 million and change,
flipped it for $9 million and change. And that was his first big chunk of money.
And then he met with a bunch of people here in San Diego. One of them was Rudy Medina.
And he was a Marcus and Mila chap at that time. But then he partnered with Rudy,
I'm sorry, with Grant on his first two deals.
(49:00):
And one of those two deals was the 37 units in Vista that he talks about?
He had the Vista deal and then Point Loma.
Gotcha. And then they did those deals, did well. And then, you know,
Grant ended up going off and doing stuff in Arizona.
And then obviously Grant's Grant, right? And it's wild to watch.
I love it. Yeah. That's crazy.
There's a good quote out there that says, if you have all the information to
(49:21):
do the deal, you'll never have the deal.
And it's so true. And like everyone has a different level of risk tolerance.
And, you know, I used to have a couple of partners and one of the main reasons
I decided to go on my own is because we were just not aligned in terms of level
of risk tolerance and having the confidence to, you know, push back,
push past certain things.
And so I just felt like I was never going to reach my full potential working
(49:43):
under that, that structure.
And so, you know, I think it's okay for everyone to have a different level of
risk tolerance, but, you know, to me, you know, and I'm sure for you,
like a lot of the stuff that, you know, looking back, a lot of people might
think is risky, but, you know, in all reality.
You know, as an entrepreneur and as a real estate investor that's growing,
it's like, Like, to me, it's not risky because I know that, you know,
(50:06):
when things go south and they will go south with every single deal that I have
the confidence and the team and the resources to come up with a solution and push past it. Right.
And so there's always going to be unknowns. But, you know, and it is scary.
Right. But what would you say your biggest fear is?
Well, it's funny because, like, looking back, it was like, you know,
that first my first deal was 11 unit building in Cincinnati and I cashed out my 401k to get it.
(50:30):
And everyone told me it was too risky. You know, I would say my biggest fear
looking forward really is, is the fear of regret.
I don't want to, I don't want to get to. I knew you were going to say that.
And you know why? It's because they ask anybody on their deathbed at 80 years old, what is your fear?
Greatest thing and they say regret that i didn't do this regret
that i didn't do that regret that this right like my biggest
fear is literally myself now meeting
(50:52):
my 80 year old self and having to tell that 80 year old
self dude i'm sorry that's so that i didn't freaking go
for it that's so good you hear the quotes all time you see them on social media
right your biggest thing is not going for it right i mean you're staying in
the same place this year that you were last year or you know that's even if
we make it to 80 like i just saw i just saw an article recently that said that
the life expectancy age for a male in the U.S. has actually dropped from like, it was like 77.
(51:18):
It's dropped from like 77 to 73. I feel like it's going to go up with all these
weird things we got going on. Yeah.
73, man. That's not too far away. But one in four are getting cancer.
I mean, it's, it's, I'd be willing to bet you it's, there's amazing podcasts
and there's amazing things on it about the food supply system.
Yeah. Well, dude, Justin, I
appreciate you coming on, man. Where can listeners get in touch with you?
(51:39):
Go on Instagram, I guess, man. That's probably the easiest way if they want
to follow it. Just put in Justin C.
Brennan and it has all our contact info there and love to be resources for people
and just give back as much as we can.
And you're going out to Cancun, is it tomorrow for Ryan Panetta's mastermind?
Yeah, I'm stoked for that. I'm getting on a plane and heading down there tomorrow morning.
Yeah, Ryan Panetta's got a kind of a mastermind retreat for the end of the year
(52:02):
that I got into and play some golf and chat about some good stuff.
So I'm excited. Cool, dude.
Well, man, I appreciate you. He's Justin Brennan. I'm Rich Summers.
Listeners, thanks for tuning in. We'll see you in the next one.
Music.
You have $7 million of investor money sitting in there. I literally moved out
to the property for a month and a half.
Moved from San Diego to Texas to work with the onsite management to make sure
they got their ass in gear.
And we threaded that baby across the finish line because I was not letting that thing go.
I said, there's no way in hell. I said, the only thing keeping this thing from
getting to the finish line is effort.
(00:22):
All right, guys, welcome to another episode So to the report today,
we are in the studio here in downtown San Diego, and I got a special guest who
I've actually connected with through our Beers and Deals meetup here in San Diego.
And I'm super intrigued by this
individual. He owns over $100 million of apartments and mobile home parks.
I got my man, Justin Brennan. Justin, welcome to the show.
(00:45):
What's up, man? Thanks for having me. Yeah, dude. It's a pleasure to have you on the show.
I don't know a ton about your story, so I'm actually super excited to dive into
it. But man, you're right up the street. You said Scripps Ranch, huh?
Scripps Ranch, La Jolla, anywhere coastal San Diego. So we're both local.
You were telling me you're San Clemente, so we're all Southern California boys.
Yeah. San Clemente is where I grew up. That's why I love San Diego.
(01:07):
I'm like, you know, I'm an hour from home where my family is,
but it's like not too far, not too close, you know? So.
Question, do you surf? Okay. So San Clemente, growing up there,
you either grow up surfing or you grow up skateboarding.
Uh-huh. And for whatever reason, it was never both, but I like grew up hanging
out with the skateboarders and I grew up skateboarding. So skate parks,
skate parks, we, we would build like skate ramps and rails and all sorts of
(01:32):
stuff like on our cul-de-sac as a kid growing up.
And then I got into snowboarding at a later age, but a lot of those skills kind of transitioned over.
That's cool. You're a surfer. I'm not, I was going to ask you cause we're both
Southern California people.
And I had, I mean, I have a shark story with surfing, so that's why I don't
surf, but it was here and actually in San Diego probably 20 years ago.
I was out in Pacific Beach right near the pier around 5 p.m.
(01:54):
In the afternoon. I was with two other buddies. We were.
Sitting there waiting for the next set to come in and the like the sun was just
perfect right where it's hitting the water and we're waiting for the next set
next thing you know about a 15 foot shadow whoa goes right underneath all of
our boards and we all sit there looking at each other.
We all knew what it was like nobody had to really say anything because we knew
it wasn't a seal and it sure as heck wasn't a dolphin and we like all put our
(02:17):
hands up and we were we were long boarding throwing those babies around nice
slow paddle right back into shore i mean i i was i I mean, it was, it messed me up clearly,
but I've, I call it whomping, right.
Or bodyboarded. And yeah, I love, I kiteboard now.
So I love kiteboarding. Oh, so how common is the, the shark thing when you're
out here surfing in Southern California?
(02:38):
You know, they're out there. Yeah. That's what I hear.
I mean, I have friends that surf. I mean, obviously the odds are completely
in your favor, but it's, it's all unfortunately in my cabeza now.
Dude, I can imagine. I would be creeped out too, man. I don't like sharks,
but the kite surfing, that's, that's unique.
And that's something that I have. I've been always wanting to get into,
I know how to sail. I have a background in sailing.
(02:58):
And so, you know, if you combine sailing and surfing or, you know,
with my skateboarding background, snowboarding background as well,
I feel like it would be kind of a natural progression for me.
So I've always wanted to do it.
I'm always intrigued watching these guys on YouTube. You would love it. Tell me where you go.
So I started learning in Fiesta Island, San Diego during COVID.
I'm like, I'm going to need to pick something new up. Yeah, that's the perfect
(03:20):
time to learn. So you got taught, trained, and it's wild because I grew up wakeboarding.
And if you picture it, it's, you're essentially driving a boat and surfing at the exact same time.
So the hardest part is learning the kite, but with your background in sailing,
you understand wind, right?
Upwind, downwind, like these patterns of wind.
So you'd probably pick up on it a lot faster because you got to learn to fly that kite.
(03:42):
And once you figure that out, then it's, you know, the rest is.
How much wind do you need ideally?
Because I know the air here in San Diego is very light compared to other parts of the world.
But there's a lot of days where the wind never even hits six knots.
Right. So what's the ideal wind here, minimum?
12 to 20 knots. It's kind of where you want to, I have a little app,
like the wind app that shows you where all the wind's at and where it's hitting.
(04:03):
And then you're going to use a 14 to 18 meter kite. So it's a little bit bigger
kite than if you were in some higher wind areas like Hawaii.
Gotcha. So I see these dudes out in like South Africa where it's like,
it's gusting 45 every day. They're using a tiny kite. How big is that kite?
Six to eight meters. Wow. That's crazy. Like mini kites. Cause I mean,
they're launching. Yeah.
(04:23):
So dude, I'm, I'm super intrigued with, with your story here,
but first I got to ask you, man, like what is the biggest difference between
mobile home park investing and multifamily?
Well, with mobile home parks, obviously you're dealing with a different profile, right?
Cause it's different affordability and stuff like that. You know,
the, the kind of of the rule of thumb with any mobile home parks is you want a hundred pads or more.
(04:44):
You want them within five miles of a Walmart. You want them in a town of at
least a hundred thousand population or within distance of a population of a
hundred thousand or more because you need that demand supply.
Whereas with multifamily, I feel like as long as you're in good job centers
and you're in the top 75 MSAs in the United States, you'll be able to do well.
But I'd say the biggest difference is just your tenant profile.
(05:06):
Well, and the fact that I guess, you know, with mobile home parks, You own the land.
You're basically a landlord, literally, and you're renting the mobile home to
the person or they buy it from you and they own it. So they're just renting the space.
Ideally, do you want to own the homes on the park as well or do you want to
(05:26):
just have the tenants own it?
I just want to own the land. It's like an RV park with that.
You don't want that liability with the mobile home. You might as well let them
own it. Plus, eviction purposes and all that other things, they can control that liability.
You just want to be basically land lease in a way on the mobile home parks.
Much more efficient that way. I can imagine your expense ratio goes way down
(05:49):
if you're operating that way.
Yeah, because you're keeping everything pretty lean.
No repair maintenance, right? Yeah, because basically you're renting a pad,
a land lease. And I know they're not building a ton of new supply with mobile
home parks. Are there any areas to where they're building more?
Not so much building them as much as it is. There's a ton of them out there in different areas.
(06:10):
A vast majority are still mom and pop. Did you know that one of the largest
owners of mobile homes in the United States is Mr.
Warren Buffett? No, I did not know that. He owns 21st Century Mortgage,
too, which actually produces all the financing for the mobile home parks in the United States.
So I heard that Warren Buffett has some part ownership in a company that manufactured
the actual homes, but you're saying he owns a ton of mobile home parks as well.
(06:33):
Yeah, through funds and stuff. Yep.
The mobile homes, you said, the mortgages, the financing for them through 21st
century financing, but then he also has access to the mobile home parks. I guess it makes sense.
I mean, if you're manufacturing a lot of these homes, you probably have inside
scoop on a lot of these deals as well.
Big time. Yeah. I mean, all around the country. I mean, you can imagine Mr.
(06:54):
Warren Buffett. I mean, he's got all the people working for him,
but that guy is the quintessential investor, isn't he?
Yeah. Everyone knows him as like the quote unquote, like stock guy, right? Wall Street guy.
But no one really talks about him owning real estate.
And a ton of it too, but it's quiet, right? He doesn't talk about it because
he's kind of the guy that goes in and talks.
(07:14):
You know, operates companies, right. Or it has a piece of those companies and
helps them, you know, take it to the moon. Yeah.
So what kind of like mobile home parks do you guys target? And then typically
what is the business plan look like from a macro perspective?
So, like I said, a hundred, a hundred pads or more, that's how you get the volume
and the economies of scale.
You want all the utilities kind of controlled on site to where,
(07:35):
you know, city, like city, city utilities mainly, and you're a land,
you're a owner of the land. So you're leasing the pad back to the,
to the tenant and that's your main focus.
And then you look at other parameters for population growth within Walmart.
It's kind of like a funny joke, but if you know, if a Walmart's within five
miles of your mobile home park, you're, you're pretty good for weird reasons.
(07:57):
And what are the reasons behind that?
I, it's commercial based and it's job centers.
Cause you know that if you have a Walmart, right. And then usually the population,
cause Walmart has enormous amounts of data, right?
So when they're doing all their research for how they're going to put a Walmart
into a town, they know all the parameters. So that's kind of your tenant profile.
People that shop at Walmart. Yeah. Okay. Interesting.
(08:18):
So what's like, you know, I know like median household income in the U.S.
Is kind of in that 65K range.
What is ideally in these mobile home park areas, what kind of median household income are we talking?
About $45,000 on average. You know, even for the apartment stuff,
depending on the market, at north of 55,000, median household would start to
(08:41):
classify a decent apartment market.
Dude, I love that, man. So what do you guys own today?
Kind of give me like a snapshot of what you guys own. And then I do have a ton
of questions about the multifamily side, but what do you guys own today?
About 520 units, give or take in five different states, about 110 million plus in assets total.
(09:04):
But we started with one condo, man. Really? Damn.
2010 financial crisis, Murrieta, California.
We bought one condo, $100,000, put $25,000 down, got a $75,000 loan from Wells
Fargo, turned that into a duplex and a triplex and a couple of fourplexes all around San Diego.
And then from there, we got into that five to 10 unit space,
(09:25):
quote unquote commercial.
And then we're like, gosh, like we need to scale, but we can't really do that
locally because San Diego go is pretty expensive.
So we need to scale our money out of state. Well, that brings a whole nother
set of logistics. How do you manage it? How do you.
Logistics operations construction on and on and on and so
i spent a decent amount of time from really 2018 all
(09:45):
the way till now setting up infrastructure in states
like missouri oklahoma texas tennessee alabama arizona nevada and so now we
have assets in those states because we went in and you know three to six months
in advance of buying any properties we're setting up pm crews crews,
construction crews, brokers.
(10:08):
All kind of the infrastructure, the team on the ground to where that way it
feels super comfortable. And we know that we know the play.
We know the good areas, the bad areas. Where's the path of progress?
Where's the new development? Now, when you just mentioned all these states,
did you go in and identify multiple markets within those states to set up these teams?
Or did you just pick one market and say, this is the one market such as Phoenix, Arizona?
(10:30):
Oh, gotcha. Within the state. Is that what you're saying? man.
Yeah. Yeah. So Kansas city, Missouri was a great one.
And I had no idea. I was actually at a conference. Do you know who Dave Lindell is?
Yeah. He wrote one Ari mentor and all that stuff. Two of my favorite books.
Um, one of them is, uh, emerging real estate markets and the other one is multifamily millions. Yeah.
Multifamily millions is great because it kind of teaches you like,
(10:52):
it's like a good intro book to like commercial real estate and all those principles
apply to all asset classes.
It's not just multifamily, but like the idea of buying a underperforming,
tired commercial deal, improving it, renovating it from the outside in and forcing your equity that way.
But those same principles apply to the hotel stuff that we do and emerging real estate markets.
(11:14):
I mean, that's great just to kind of understand like, you know,
what moves pricing in different real estate markets across the country.
But anyway, so Dave Lindahl, you were connecting with?
Yeah, I went out to a conference in 2018 in Boston, Massachusetts and met,
you You know, there's thousands of people out there.
I met a bunch of people, connected, tried to identify markets that we were interested
in, ran into a couple of different brokers.
(11:36):
And one of this guy said, hey man, you need to come see Kansas City,
Missouri. And I'm like, Kansas City?
He's like, just trust me, come to Kansas City. And I said, okay.
So I decided I was going to fly out there in January, negative whatever degrees,
snowing. I think that's when the Chiefs were playing the Patriots in one of
like the AFC championship games. Did you go?
(11:57):
I'm a huge Patriots fan. Okay. I did not get a chance to go to the game but
I get to watch the Patriots win.
So I was happy with that. I've gone to one game at Arrowhead before. I'm a Charger fan.
But I went to a game there. It was the same thing. One at a time. It was cold as heck.
The fans are like they stand on these styrofoam like boxes on top of the concrete
and it kind of keeps your feet warm.
(12:18):
But dude, nicest fan base I've ever seen. Like literally they stand up the entire
game. Like even during timeouts they don't sit down.
Great fan base. And super loud. But after the game the Chargers won on like
a last minute drive. Like they won by one point and it was like late in December
had playoff implications.
And literally every fan on the way out was like, thank you so much for coming.
(12:38):
Isn't that crazy? That's the Midwest spirit. Yeah, it was Thursday night football.
So, you know, they do the set down on the field.
So we were all walking down to do the postgame set to go watch it.
And all the fans were coming up.
So they're all passing us in like a sea of red. And they were like, congratulations.
Thanks for visiting our town. I was like, I've never met. If you were in like
Pittsburgh or Philly or. Yeah.
They'd be giving you the bird the whole time. Yeah, four of us in our charger
(13:01):
gear. And I've never met such a friendly fan base. But anyways, we digressed.
That's great. So you were saying Kansas City, show up January.
Yeah, and I was blown away.
So Kansas City reminded me when I saw it of San Diego, downtown,
early 2000s when the ballpark was going up.
Cranes everywhere, everywhere. So I'm like, holy cow.
(13:22):
And then I get the lay of the land from the brokers. We're seeing where everything's
at, path of progress, growth, development, blah, blah, blah.
And he said, hey, here's kind of the areas you want to be. Here's where you don't.
And we ended up our first out-of-state deal was a 27 unit.
And then 31 unit. Those have been phenomenal for us.
And then started going into Texas, started looking in Nashville,
(13:44):
Tennessee and Knoxville.
And now we're in Las Vegas and Nevada with Rudy Medina. And then obviously I
love the Phoenix market now that it's coming back to earth, but Arizona is a great market. So.
What's the biggest asset that you guys own? 160 units in Las Vegas, Nevada.
That's a brand new construction class A that just completed.
And we're now we're moving it out of construction financing into permanent financing. Gotcha.
(14:05):
So that's, that's a challenge.
And was that a new development for you guys or you guys bought it?
Ground up. Yeah. Ground up dirt.
So Rudy and his crew built that from ground up and now we're bringing a new
capital to replace the construction capital and going to refinance it into permanent debt.
So, but it's, it's wild times in the capital markets, man.
Yeah. As you know. How long does it typically take to lease up,
(14:27):
you know, 160 unit building like that? You know, 12 to 18, I mean,
it depends on time of year, right? But in the summer months,
you're going to be doing...
10 to 15 leases a month if you're moving. So you figure something like that
and then you slow down in the slow seasons like right now.
So you figure at least 12 months, maybe 18 months total. So it just depends.
(14:48):
Yeah, that sounds about right. So what you guys are doing, you're buying a lot of the smaller stuff.
Are you guys kind of pivoting your strategy now and getting into larger buildings?
If you love real estate investing, passive income and tax benefits,
but don't have the time, My company, Summers Capital, is buying boutique hotels right now.
We source the deals, we renovate the properties, and we even handle all the
(15:10):
day-to-day management, making it truly hands-off for our investors.
If you want to learn more to see if we can help you, visit summerscapital.com
slash invest to book a call with our team.
Again, that's summerscapital.com slash invest.
Now back to the show. Yes, because the economy is a scale. And that's kind of
what we learned is, you know, our first out-of-state one was a 27 unit and then a 31 unit.
(15:30):
And I'm like, I'm looking at it going, gosh, you can go get a hundred unit deal
and it's easier to raise the money.
And there's more people, the banks want to give you the money easier because
the economy's a scaler there.
I mean, I ran into that with a private equity fund group and we were trying
to raise some money. And I said, Hey, I need, we need $3 million.
And they said, Justin, like, we love the deal. We love you, but we can't give
(15:53):
you 3 million, but we can give you 10.
10 i looked at him and i'm
like so let me get this straight i only need three but you're telling me you'll
give me 10 they're like yeah just go find us a deal like we want to invest with
you and that's kind of what triggered my mind like oh my gosh like we need to
get into the bigger space because now you're going to have a complex that's
(16:14):
self-contained its own management on-site payroll.
Leasing maintenance everything's self-contained focused on that property and
the economies of scale go with it.
Yeah, dude, I love that you brought that up. You're exactly right.
It's like, it's, it's almost like getting lending for multifamily and the bigger deals.
And when we see this with the hotels as well is easier.
You know, you go get a smaller loan amount for a multifamily deal and,
(16:37):
you know, deal with a lot of like regional banks and they're going to want full
underwriting and all this, you know, paperwork.
Or you go get a, you know, Fannie Freddie agency loan for multifamily,
you know, non-recourse debt, non-recourse.
They're not looking at your debts personal debt to income ratio you're
they're really just sizing up the deal based on two things the
the experience as as the sponsor and the dcr and the
(16:57):
way the deal pencils yeah yeah and shoot some
of those loans are so in terms of pricing are very competitive too
we just threaded the needle on one of our texas deals 121 units and we had purchased
it in december 2021 hindsight now peak of the multi-family market interest rates
as you all They started to go rocket ship in March of 2022.
(17:22):
And so we went from a four and a quarter interest rate on a bridge debt financing,
right? Because we were going to buy it. Four and a quarter bridge.
Oh, yeah. I mean, we're buying this. Everybody was there.
Thankfully, we only had one of these, but we bought it.
Four and a quarter interest rate and, you know, renovating the property,
business plans, perfect.
Everything's going great. And
obviously interest rates go from there to nine and a half percent on us.
(17:44):
And so we're now rushing to try and get this thing refinanced,
but we need to get renovated to have the rents high enough to then have a new valuation to refi.
But we had just had to do a huge $2 million cash in refi recently and buy down
the debt and get us into a Fannie Mae loan at 5.49%. And we just got extremely lucky, like so lucky.
I can't even tell you because literally a week after we closed on that loan,
(18:07):
the 10 year treasury went berserk. And then you can see where it's at today.
And so now you have a lot of these multifamily guys. And I'm telling you,
man, there is, I mean, when Grant Cardone talks about a storm of Bruin,
he's looking at the same data I am.
It's no joke. I mean, between coming up this year in 2024 through 2025,
you have an enormous amount of commercial debt set to reset or need refinancing,
(18:31):
coming to maturity, all these things.
And it's just a question of who's too big to fail, who can get workouts,
who can get extensions, because the refinancing is going to be very tough in
this environment right now.
Yeah. And you know what? It really depends on who you talk to.
I did just interview Robert Martinez, an apartment rockstar out in Houston about a month ago.
(18:52):
He's a buddy of mine too. I love it. And we were talking about he just foreclosed
on a $51 million multifamily note that he picked up in early 22.
And so he was trying to see some of that stuff. When you say he foreclosed on
it, meaning he gave it back to the bank or he, okay, gotcha. Yeah, yeah.
It was a Freddie, it was a Freddie floater that he picked up in early 22,
A-class deal, didn't have a lot of value add component.
But he said he switched over from in-house property management,
(19:15):
which he's been doing this entire time to third party right when he bought that deal.
And then he said they kind of ran that deal into the ground.
And anyways, the lender wasn't working with them and they ended up taking the property back.
So I think there's going to be more of those to come. But, you know,
to Grant's point, you're talking about Grant Carnone.
I mean, he was on this podcast telling me that he bought a billion dollar multifamily
(19:36):
portfolio in Fort Lauderdale in December of 2021.
Right before the rates went up on floating rate debt.
And he said that. I'm shocked he did that. He told me that he has an art refi.
He would have to bring tremendous cash in to refi right now but I'm shocked
he told me he's just basically from what I gathered I didn't really dig in too
(19:59):
much but from what I gathered.
He made it pretty clear that he is just basically covering that debt service
right now with his own money.
Holy moly. Yeah. Yeah. I'm actually really shocked that he did that because
he's relatively conservative on his underwriting and puts an enormous amount of equity into deals.
And typically he's class a fixed rate debt guy because of what he went through
(20:23):
in 2008, nine, which he talks about. He was very close to imploding.
So I'm shocked that that's the case, but everybody's affected by it right now,
which is why I said we got so lucky because of, had we not been able to refi
and thread that needle on that deal, it's likely going back to the bank.
You have $7 million of investor money sitting in there.
I wasn't, I, I, I literally moved out to the property for a month and a half,
(20:44):
moved from San Diego to Texas to work with the onsite management to make sure
they got their ass in gear.
And we threaded that baby across the finish line. Cause I was not letting that thing go.
I said, there's no way in hell. I said, the only thing keeping this thing from
getting to the finish line is effort.
And I said, what I'm not going to do is allow this thing because the onsite
PM company doesn't want to get their head out of there. You know what?
(21:06):
I said, I'm going to show them how to manage this baby. So we went in there with their staff.
We took it from about 82% occupied to 98.9, delinquency down to 2%.
All the work orders under 10, all the future renewals in line,
boom. Got the thing right across the finish line.
But that's what it takes. Yeah. I love that you did that. And quite frankly,
that's what it takes when when things go south the loan brokers were floored
(21:28):
they were floored they're walker dunlap guys they're like justin we have never
seen we've actually used to
use a case study because we've never seen an owner literally move on site.
To one of their assets to safeguard it but i
said i said thankfully it was we only had this one in this predicament so i
could focus and i said there was no way in the world i was going to allow seven
(21:51):
million dollars of investor capital to go poof which a chunk of it's ours not
going to happen what kind of techniques were you utilizing that worked well
hyper proactive aggressive.
Every day hammering things out because it's four reports i said you can manage
an entire And Robert Martinez knows this very well because he's a very good operator.
You can manage an apartment building if you focus on four reports,
(22:13):
the availability list, the work orders, delinquency, and renewal list.
If you've managed those four reports on any apartment building extremely well,
like white on rice, the financials will back it up and that thing will hum.
Income but i said if you don't manage those extremely close
like daily then you'll start to
see it suffer because those four reports will tell me where the property's
(22:35):
at today and where it's going to be at 90 days from now okay and if i can come
in there and manage those things correctly and it's it takes intensity which
is what a lot of these pm companies unfortunately you know i don't expect them
to care about our money the way we do i don't expect it right so if they're
not going to then i'm going to which is why i mean the pm company got pissed
they They didn't like that I was out there,
but I said, it's not your money.
(22:57):
Yeah. I said, quite honestly, you know, if I didn't need your systems running
the back end, you'd be gone.
They're on site. How big is this property? It's only 121.
It's 121 units. But you had on site, like what? On site leasing center, maintenance.
And then we had a kind of, they called a floating leasing person. Got it. Yeah.
Yeah. That's good that you guys had on site because you were talking about some
(23:19):
of the smaller deals you guys did early on, 28 units, 31 units.
Those are all off-site, yeah.
You telling me this story, it reminds me. So like one of our early deals was
32 unit building, Indianapolis.
It had all the problems. It had hookers, prostitution.
We showed up for the inspection and the cops were there like arresting some of the tenants.
But it was in a pretty decent area.
Really? Yeah, it was. It was just this property had all the problems.
(23:42):
Gotcha. And so we renovated half the units, but we got into a position because,
you know, with 32 units, you don't have on-site.
And so, you know, with those smaller buildings, I think one of the biggest challenges
is you're dealing with a lot of, you're not dealing with institutional level property managers.
You're dealing with a lot of mom and pop managers that might manage four plexes
and single family homes.
(24:03):
And so it's a little bit out of their wheelhouse. And so you're kind of in that,
that no man's land where it's a little bit big for those kinds of managers,
but it's way too small for the institutional, more professional level managers.
And so, you know, those properties, you got to get hands on and we're out of
state. We're like, fuck, you know, occupancy dips down to like the high 60s at one point.
And we're like, oh my gosh. Yeah, you're hyperventilating.
(24:24):
So what we did was we kind of reached a kind of a hybrid agreement with our
PM to keep them on. But we said, we're going to handle the leasing.
And so we put out a job posting for like all the local realtors in the area
that live within like a two mile radius of the property.
You did what I just did. Oh, you guys did the same thing?
I love it. Yeah. So we did this. We found a local realtor, young woman who was kind of a hustler.
(24:49):
And she was like, yeah, I'd love to. And we're like, hey, we're just going to
pay you a flat rate each time you lease up a new unit for us.
Get a commission. And then we went on Facebook Marketplace and Craigslist and
we just started slamming ads. Facebook Marketplace, Craigslist to lease up our units.
And then we would control all the leads that would come in. The flow.
And then we would funnel all the leads to her. And she would follow up.
(25:10):
She would schedule the appointment. She would do the tours.
So did you not have a PM software that was running kind of that syndication
onto all the portals and stuff?
Or you did? At this time, we weren't syndicating anything. This was our,
we JV'd this deal. No, no, no. Meaning in terms of for your available units.
Was it out to like apartments.com, apartment list, like all the portals?
Yes. The property manager was.
(25:30):
But we would like test them.
And this is good for any listeners out there. Like if you have third party PM,
like send them a lead from like a, you know, a random number and see what the response rate is.
And for them, it'd be like five days before you'd hear back.
And it's like, whoa, that's not going to work. You know what I mean?
So that's when we kind of took it in our own hands.
But we got that thing leased up. We ended up renovating half of the units, 50%.
(25:53):
And cap rates compressed. We ended up owning it for two years. We bought it for 1.1.
And we exited exactly two years later for 3.1. Good for you.
And that's a good two times on that.
Yeah. And so that was kind of my first taste of like operating a multifamily
deal in that kind of that range right there.
But that is the management portion for those types of deals that are kind of from 20 to 80 units.
(26:17):
It's very hard. You have to manage the managers.
Yes. And this is what I've learned. And quite honestly, look,
it doesn't matter. And it doesn't matter how big or who the PM company is. It can be RPM.
It could be asset living. It could be some other ones out there that are the
big conglomerates nationwide.
It's irrelevant. It's all about the people because they all have systems.
They have their PM softwares. They got their payment processors.
(26:37):
They have all their systems, all their, it's great.
But if you don't have strong people, your community manager,
right? Or the person that's offsite managing your property, right?
And you don't have that person that's strong. And then if they don't have services
in house to handle the leasing and the followup and all that stuff,
if you have an offsite manager.
You're going to struggle. And that's why it's critically important.
And if you're managing out of state that you, you set up the infrastructure
(27:00):
in place in advance, which is what we did in all the markets we got.
If we were offsite management, we met with a couple of PM companies that were
kind of mid size that did a lot of that.
So we didn't have the small little guys, but we didn't have the big guys either.
But even then, I mean, we just had to do this and I'm still doing it on the
Texas deal because I'd been asking for a floating leasing agent for 12 months from this PM company.
(27:24):
And they kept giving me, you know, temp agent crap.
And I said, guys, I'm going to show you how this is done. You want to see how this is done?
Boom. Went to Facebook, went into the real estate groups, San Antonio, Texas.
Within seven days, I had an amazing leasing agent on site moving like what, you know, just humming.
Boom. Seven days. I said, it took you guys 12 months. You couldn't get your head out of your ass.
(27:45):
I did it in seven days. It's just effort, Guys, it's effort.
I mean, it's unbelievable.
And so you saved the $7 million of equity. I mean, you mentioned you guys brought
$2 million at a table to refine the firm.
So five originally, two more. So total of seven. Okay. Correct.
And that's because the rates went up pretty significantly. Yeah.
I mean, we had to buy down the debt because Fannie Mae was only going to give
us 63% loan to value based on financials, based on interest rates,
(28:10):
debt coverage ratios, all these things that are important.
And because of that, we had to bring a cash in. Now, thankfully,
Hopefully we did not over leverage that property going in the door.
We only put 70% debt going in. Thank goodness.
Because it had, we jacked it up like a lot of syndicators did that 2 million
would have been four or five.
And then most of the investors would have said, we can't like, that's crazy.
(28:32):
It doesn't make sense anymore. And that's what you're starting to see happen.
So there are amazing opportunities coming that I can tell you,
like we just launched our opportunity fund or $25 million opportunity fund.
And we're going after this stuff.
Because I know it's starting now through 2024, 2025. And it's interesting you
say that because we're starting to see deals shake loose on the hotel side.
What is the opportunity fund that
(28:54):
you guys are launching and what kind of assets are you guys targeting?
Hey guys, real quick, the only way the show grows, the only way we continue
to bring on bigger and better guests is if you guys rate, review, and share the show.
So if you could take two seconds or the click of the thumb to review on Apple
or Spotify, it will mean the world to me.
But more importantly, we'll be able to reach more entrepreneurs and more real
estate investors and to help them build wealth through this podcast. Now back to the show.
(29:16):
Multifamily specific, dedicated towards really cash distressed assets,
where we can come in, pick up an existing product, right?
That just needs cash infusion, take it over and run it, right? A new valuation.
But we'll probably pick it up direct from the asset managers inside these debt funds.
There's about five or seven debt funds, big guys that a lot of these deals,
and they made these kind of riskier bridge debt variable rate deals over the
(29:39):
last three to five years.
So I'm inside those guys right now, just talking to them and saying,
Hey, if you have loans or deals and problem properties in these regions, where are your people?
Cause it's not, you're not going to, it's not going to see the light of day.
You know, the black rocks, the black stones, all these guys are going to gobble up the big stuff.
You're going to get kind of the low hanging fruit, but decent stuff.
And that's how a lot of these kind of distress deals.
(30:01):
And then also construction deals where people have gone in new construction
and they're trying, they can't move it out of the construction financing and
they need cash infusion to kind of come in and you can take an ownership of
something that needs help.
Great asset, maybe great location, but it got caught up in all the interest rate pops.
And they went through 11 interest rate hikes, right? Over a what? Nine month window.
(30:23):
I mean, it's causing a complete Esho and a lot of people are just hanging on
for dear life and kicking the can down the road, hoping they can refinance in
the future as rates drop.
And maybe that happens. Maybe it doesn't, but it's a very precarious situation
in the commercial space right now.
Yeah. We're doing the same thing right now. So one of the deals that we're picking
(30:45):
up December 13th is through our, one of our bridge lenders, but they're like
a big, basically debt fund.
They're like a REIT, but they do bridge lending for all commercial real estate.
And so they have, you know, some bad, some stuff that's going bad.
Right. And so this particular deal they brought to us and they said,
Hey, you know, we're taking this one back, but we think you guys would be the
perfect operators for it.
(31:05):
It lasts appraised for 7.5. We're picking
it up for 4.87 beautiful and it's two years old
and it doesn't require any reno nothing like that see that i mean that is
like music to my ears yeah i love that some of
my guys like you know we're busy right now with a bunch of other stuff that
we're doing but like guys we we have to pick this one up and so i'm like let's
just be as easy as we can to work with let's make this one go smoothly because
(31:26):
when they have future stuff go bad like i want to i want to be the first to
find out about it so i love that strategy well and it works because the the
debt fund we just paid off on that refi.
I won't mention who they are, but they were ecstatic. They were surprised that
we actually were able to pull it off and they were ecstatic.
And they were like, Justin, like, wow. And then I said, well,
(31:47):
it's been two weeks since we paid you off.
I just wanted to ask, do you have any other bad loans that are on your books
that you may need to have a discussion about?
And so you get into the asset manager and these are, that's how it's going to get done.
It's not going to the brokers. It's kind of not coming on market.
This is all going to be belly to belly inside these asset managers.
Do you think a lot of these bad multifamily deals that are, you know,
(32:11):
potentially going back to the lender, do you think a lot of these or a good portion of them,
will actually have some sort of capital injection come in and the initial borrower
is not going to have to give the deal up, but they might give up some equity
to that capital partner?
I think you're going to have a combination of all the above.
And it really depends on on what does it look like?
Meaning how bad is your debt? How much did you over leverage? What's the valuation?
(32:35):
Because cap rates are rising, right? So that's causing a massive challenge in
some of these markets. So, you know, what is the property worth?
Does it make sense to come in with new equity and stack it?
Or does it make sense to wipe everything clean and start fresh?
And come in at a different cost basis. Correct. Because that's really the challenge
is the basis because, you know, we all know no, everything, ta-ta-ta-ta-ta,
(32:57):
because of low cap rates.
And now in the short term, everything's dropping in value.
Now, if you have good debt.
And you're fixed and you can just hold on for dear life, then hold on for dear
life. Yeah. Because it's a holding game. Well, it's not a great time to sell.
If your property is performing well, you don't want to sell it.
Right. So you might, even if you're not performing that well,
but you can ride through it, ride through it because it's no different than
(33:21):
if somebody came to me in 2008 and 9 and said, oh my gosh, I just watched my
home value drop 65%. It's never coming back.
I'm never going to see my value again. I'm just going to give it back to the
bank. Well, I can understand why you would think that, but now that you've seen
it, you know that it's coming back.
It came back for all the homeowners, and then it's going to come back for everything
else. It just may take five, six, seven years.
(33:42):
You may have to hold that asset where your business plan was three,
and now it's going to be seven, maybe more. More. Yeah.
Maybe more. It'll be interesting to see, though, like what happens next year.
We got election year. Yeah. I saw an article come out recently.
I think it was Forbes, but don't quote me on who put it out.
But it said that, you know, they're foreseeing rates to actually drop next year,
(34:03):
like four times what the market's actually pricing.
And so they were looking at like, you know, basically early Q1 of next year,
us to officially enter like a recession and for them to do rate cuts between
Q1 next year to the end of the year, somewhere around like two and a quarter.
Yeah which is very significant it's possible i mean
i it's been so unpredictable but it's going to come down
to economic data and at the end of
(34:25):
the day it's all about jobs right it's all about jobs meaning if
that job report is strong they're not dropping rates if the job report starts
to get weak and consumer data starts to go south they're probably gonna drop
rates it's all about the jobs that is going to dictate where we're going true
but i mean initially they said the rate hikes were because inflation now inflation's
back down you know yeah i mean the data is showing that,
(34:47):
but they're still not going to drop the rates until the jobs go with it. Yeah.
They're just, they, they can't because, you know, the Fed's dealing with a really
interesting situation where inflation or whatever's out there is actually helping
them in some ways really mitigate their own debt.
But at the same time, if they, they can't raise interest rates anymore because
then they're paying right debt on their own debt, interest on their own interest, and it gets nasty.
(35:10):
But, you know, right now they're going to stay right where they're at until
they see some sort of economic data that gives them the indication that,
hey, we need to come save the world again. Yeah.
And then rates go. So I'm curious, as we look out for the next 12 months,
let's say end of 2024, I'm not going to hold you to this, but where do you foresee
multifamily cap rates and interest rates, generally speaking, December of 24?
(35:34):
They're going to continue to go up. Really? All of next year.
Interest rates too? No, no, no. Interest rates are going to stay right where they're at.
I think we peaked on that part. So cap rates will just catch up.
I mean, unless you have some crazy inflation data, their interest rates are
staying right where they're at.
And if anything, they will drop, but I don't think they're going up anymore.
I don't think the Fed can.
Like they're at that precipice where it's like... Got it. So you're saying cap
rates are just going to catch up to the rates.
(35:56):
Correct. Got it. Because you're still having that...
Delta between what sellers want and you know buyers can
pay and blah blah blah but it's it's going to take time for that to
filter through yeah yeah because right now even in you
know i mean for even new construction stuff you're seeing caps at six percent
in some markets six and a half in some markets for class a new construction
and then other markets if you went into texas you may see temporarily cap rates
(36:20):
at seven percent that were previously at four and a a half. I mean, it's jumped that much.
Now, I'm not even looking at those right now because it'll make you go sick
to your stomach on how temporary valuations are on some of these buildings.
But if you have decent debt on your property and you can hold,
you just hold through it and you'll be fine. Yeah.
(36:42):
It's funny. There's a lot of operators that are probably kicking themselves
right now because they had an opportunity to exit in like 21 or early 22 for some absurd number.
And they're like, ah, we're going to hold a little bit longer.
And now they're like, oh, shoot.
But then you also have some operators that literally sold in early 22,
right before the rates went up.
And, and they're just like, oh my gosh, thank God.
(37:04):
Tyler Devereaux out in Maui, he was on, he was telling me. He's a good dude.
Very good dude. I love Tyler.
Yeah. Tyler's a great dude doing some big things out there in Maui.
And I've always been like inspired by him, like just a good dude to talk to,
positive and just growth minded.
Yeah. He actually invested in our boutique hotel fund, but dude,
talk about a great human being, you know? Yeah, he's got a good vibe.
(37:25):
I went to his multifamily mindset out in Vegas a couple years ago.
Got to meet with him and some folks, and very sharp.
Good human being good vibe good energy dude i talked to him i talked to him
last couple weeks ago but he told me that he he broke up with his partner they
broke up oh wow it's crazy right because they have a lot of stuff together i
mean just on the ownership side but also with the,
(37:45):
mindset stuff or the mastermind so he was it's funny because like on the podcast
we're having a conversation he was asking some questions about partnerships
and all that and then talked to him two weeks ago he's like yeah he didn't break
up with him but his partner said hey i'm I'm not going to do this anymore.
He's like, I'm going to hang it up and call it a day. So obviously Tyler is
like, you know, he's, he's going to keep this thing going, but he's going through
(38:07):
a lot of like restructuring right now.
What do you do? How do you, do you have a morning routine?
Like, do you, how do you handle the kind of mindset stuff? I'm always curious
about how people handle like their daily activities, even meditation or,
you know, the mind game, right? Cause it's so much of what we do every day as entrepreneurs.
Dude, I gotta be honest with you, man. Like I don't do a ton of like morning routine stuff.
(38:28):
So I'll tell you what I do. I wake up and- What time do you wake up?
I usually try to wake up at seven. Okay. You get to sleep in a little bit.
Yeah. That's good. I wish I had that. To me, that's not really sleeping in.
To me, I'd be like, holy cow, it's noon. Because if I'm in bed by 1130 and I'm
up at seven, that's seven and a half hours. That's good.
If I'm in bed by 1030, that's a really good night right there.
(38:51):
But anyway, so yeah, as you wake up, first thing I do is I go straight to the gym.
I don't try to open my phone or anything like that. I was driving to the gym.
I get a good workout in, come back, shower change, and then I'll walk into the office.
I'll grab a little Starbucks on the way in and come to the office and just jump right into it.
They always say like, you know,
you should, the most important things of the day you should do first.
(39:14):
And so for me, the most important thing is taking care of my,
my body. Yep. And so that's why I try to go out and go and work out first thing in the morning. Yeah.
In the afternoon, if I don't get my workout in the morning and I try to go after,
you know, full day in the office, I just have so many more excuses not to go.
But also like the energy and the vibe is different in the gym at that hour.
It's like you go in the morning, like the people in the gym are like,
(39:36):
they're there because they want to be there.
They're getting after it. And there's a whole different energy.
And then you go in the late afternoon or evening, it's like people that are pissed off.
Yeah. People are kind of dragging their feet. They're there because they They have to be there, right?
And so anyways, that's what I kind of do. And I jump into it.
I would say like work weeks wise, like Monday, we do a ton of meetings.
We do our level 10 meeting in the morning.
I mean, I jump into like a lot of one-on-ones. I do a call every Monday afternoon with my business coach.
(40:01):
And Tuesdays, more meetings and stuff like that.
And then we have our mastermind calls for Tuesday, Thursdays.
Wednesdays are always content days.
So we'll do two podcasts, sometimes three podcasts on Wednesdays.
And then Fridays I just kind of like leave open.
I try not to schedule anything on Fridays and it's just kind of a day for like
(40:21):
thinking or whatever things I want to do on Friday I'll do.
Have you read that book Atomic Habits? No. By James Clear? I've heard of it. Incredible.
Incredible book. I'm about halfway through it right now. Okay.
But it talks about mastering your morning, you master your day.
And habit stacking and like these other things that if you either want to get
(40:42):
rid of bad habits or put some good ones in and how you specifically do that.
I mean, I can't even summarize it right now, but I tab all my books, right?
So that way, if I have to go back through them to pick up a piece of info,
you know, it wasn't just like I read an entire book and then I think it's going to stay here.
So I actually will tab and highlight areas that I,
was curious in, but incredible book. If you, I mean, and so I started doing that habit stacking.
(41:06):
It's what they call it. Meaning I will wake up at 5 AM.
After I wake up at 5 AM, I will make my bed.
After I make my bed, I will do 10 pushups. After I do 10 pushups,
I will go downstairs and make coffee, right?
So your habit stacking these things in line with other things you already do.
So that way it'll naturally fall versus, I mean, if it was something you didn't
(41:28):
like and you would, but you needed to do, you try and habit stack it.
So it'll fall in line with what you're already doing in your normal day.
If you actually were to track what you do in the morning and then try and sit
something in there, because it takes 67 days to actually instill. Have a habit.
A little habit. What does the book say about having a morning routine past making
(41:48):
your bed and making a cup of coffee? Well, they say it's incredible.
I mean, I, I, so I set my, cause my biggest thing was is if I have a great morning
like set up, even before kids wake up and chaos starts and all that stuff,
any parents can speak to this,
having that about an hour to maybe an hour and a half, if you're lucky,
which is why I wake up at 5am, kids wake up at 630.
(42:10):
I need that hour and a half to kind of get moving, do what I need to do,
do a workout, coffee, meditation, listen to affirmations, all these things that need to happen.
So that way my energy is in the right position to then deal with these little
beautiful souls and get them to school and deal with that. And then before the business chaos starts.
(42:30):
Because if I'm waking up any later than that, then emails are starting,
texts are starting, all that stuff's already blowing up.
And I need that hour to kind of get set before I feel like here comes the world for me.
And that's helped tremendously.
Yeah, that's good. I know everyone has like their things that they're into.
I tend to side more with like that Alex Ramosi approach.
(42:52):
And he basically says like he likes to just, he's very extreme,
but I'm not that extreme, but he just wakes up and starts working.
He just jumps right into it and goes, I like to wake up. He doesn't have kids yet.
No, he doesn't have kids yet. I guarantee that changes when he has children.
So he'll like get up and literally just starts working. And he'll work, work, work.
(43:13):
And then sometime middle of the day, he'll go to the gym, take a break,
and then come and work in the afternoon.
But I like to wake up and literally I just, instead of opening my phone and
all this BS, making coffee and all that, I literally just brush my teeth,
put my workout clothes, and I'm out the door.
Yeah. I literally don't, I don't even eat before I go to the gym.
I just bring a protein shake with me and some water, some electrolytes and that's it.
(43:33):
Yeah. You know what I had to do to stop looking at my phone?
One of the first or two things that people do when they wake up, right? Yeah.
Is this goes to the atomic habits book is you want to attach something that
you typically do that's not good for you, but you do it because you just want to do it to a reward.
So you'd say, I can't look at my phone until I do this.
(43:57):
So you actually complete those habit stacks.
And then by doing that, then I can go now look at my phone.
I can go look at my social media real quick or scroll through pointless stuff.
Yeah. I don't look at the phone because I know if I just get out the door and
get over to the gym, like, okay, now I'm going to get my workout in. A hundred percent.
Once I'm at the gym, I'm not going to open my phone and get in this whole like,
(44:19):
you know, digress thing. thing but like you know you open your phone sometimes
it's like you got like you said you got texts emails all this stuff there's
always problems fires you got to put out as an entrepreneur you know that's better than me.
And, you know, for me, I'm like, I like to attack things right away when I see
him or be responsive and stuff like that.
So for me, I'm like, let's just, let's just wait, get the workout in.
(44:40):
And then when I get in the office, then I start. Well, yeah.
If you start scrolling through your phone and emails, it becomes a barrage of like a hole.
So yeah, a hundred percent with that. What works best for you in terms of the
mindset to go take on something that's maybe going to push your comfort zone?
Because we've all been there.
The first time I did my first deal, I was nervous. It was overwhelming.
(45:01):
Those smaller deals that I did early on or that condo that you did as your first
deal, that thing doesn't scare you anymore. more, but I'm sure you're doing
stuff now that's like, okay, it's pushing the comfort zone a little bit.
What kind of techniques work well mindset-wise to get you prepared to go take
on something that's going to make you feel uncomfortable for a period of time?
Yeah. So this comes down to personality traits. This is actually a great lead-in
(45:23):
for somebody that kind of fits this personality.
So when I did my disc testing, so that's by Tony Robbins, I was a CS,
right? So C is you're hyper analytical, organized.
You have a plan for a plan and a plan for that plan, right? So that's great,
except you can also get caught up in paralysis by analysis.
And then the secondary was the S that was like the soccer mom.
(45:44):
So I'm sitting there going, wait a minute. So I'm analytical and I'm a soccer mom.
That's not going to work, which means I'm great with customer service.
I'm great with people, but then I avoid risk.
I like no change. I like consistency. Don't
move just keep even even steven right but
if you have analytical and organized with don't
take any risk and stay steady eddie you might as well just go get a
(46:05):
cubicle job because you're not going anywhere like that's where you need to
be and i was like well that's not where i want to go so i honestly had to start
manipulating the second one and i moved the c's there that's not going to change
but the secondary is now a d that's the driver director which means we got to
go we can analyze all we want.
We got to get to the edge of the cliff and we can say, we've done all the analysis
(46:28):
we can on a deal. We've looked at the risk.
We've, you know, call it, I guess, calculated risk, but then you get to the
edge of the cliff, you got to go and allow the how to show up.
You got to go and allow the how to show up. And it will, especially if you're
a go-getter and you're a doer and not a dreamer, the how will show up because
it has to, because you'll.
Get into something and you'd be like oh crap it
(46:49):
happens all the time and you will find your way through it because
you'll just fight fight fight fight fight so that has to be in there and
so that d inside of me was the one that made that happen and
once i gained the confidence and going through that once
or twice in realizing that every broke
person was rich i'm sorry i take that back every rich person was broke at some
(47:10):
point right you can take everybody whether it's grant cardone whether it's you
know some of the the billionaires that elon musk of the world they were all
broke at some point right jeff bezos broke in a garage at some point and they
just had to push push push
they had a dream they had a vision but they made it happen they were a doer
not just a dreamer because my dad would always say that he'd say listen there
are two types of people in this world there are doers and there are dreamers
(47:31):
dreamers you know will just dream but doers they'll take their dreams and make
them a reality that's the difference doers will take their dreams and make them a reality.
Well, dreamers are just talk, talk, talk. They dream, dream, dream.
They're the ones that say what they're going to do all the time,
but that they never execute. And it's typically because of fear.
They get to the edge of the cliff and they walk themselves back. Fear the unknown.
Yeah. They, they allow, this is another thing I had to learn through psychology,
(47:55):
but you have the frontal cortex and then you have this thing called the ablum
gata or whatever it's called here in the base of your spine.
In your human biological brain, when you go towards anything,
it automatically wants to stop you and protect you. That's this here.
And it's usually bigger than this.
So when that's happening, you have to basically say F you to this thing with
your frontal cortex and you got to go.
Yeah. And that's usually the difference maker. That's what's gotten you to where you're at.
(48:18):
That's where Grant Cardone's gotten to. I mean, his story in San Diego is incredible.
We were chatting about that before we came on, right? His first two deals were here in San Diego.
You know, he's from Louisiana, did some house flipping and rentals in Houston,
moved to San Diego, was living on Camino de la Acosta in a house and this was
in the nineties ended up walking across the street one day.
There was a house that was not even on the market waterfront.
(48:39):
He ended up looking over the fence, met a broker that was going to shop this house.
And he ended up buying it off market for $4 million and change,
flipped it for $9 million and change. And that was his first big chunk of money.
And then he met with a bunch of people here in San Diego. One of them was Rudy Medina.
And he was a Marcus and Mila chap at that time. But then he partnered with Rudy,
I'm sorry, with Grant on his first two deals.
(49:00):
And one of those two deals was the 37 units in Vista that he talks about?
He had the Vista deal and then Point Loma.
Gotcha. And then they did those deals, did well. And then, you know,
Grant ended up going off and doing stuff in Arizona.
And then obviously Grant's Grant, right? And it's wild to watch.
I love it. Yeah. That's crazy.
There's a good quote out there that says, if you have all the information to
(49:21):
do the deal, you'll never have the deal.
And it's so true. And like everyone has a different level of risk tolerance.
And, you know, I used to have a couple of partners and one of the main reasons
I decided to go on my own is because we were just not aligned in terms of level
of risk tolerance and having the confidence to, you know, push back,
push past certain things.
And so I just felt like I was never going to reach my full potential working
(49:43):
under that, that structure.
And so, you know, I think it's okay for everyone to have a different level of
risk tolerance, but, you know, to me, you know, and I'm sure for you,
like a lot of the stuff that, you know, looking back, a lot of people might
think is risky, but, you know, in all reality.
You know, as an entrepreneur and as a real estate investor that's growing,
it's like, Like, to me, it's not risky because I know that, you know,
(50:06):
when things go south and they will go south with every single deal that I have
the confidence and the team and the resources to come up with a solution and push past it. Right.
And so there's always going to be unknowns. But, you know, and it is scary.
Right. But what would you say your biggest fear is?
Well, it's funny because, like, looking back, it was like, you know,
that first my first deal was 11 unit building in Cincinnati and I cashed out my 401k to get it.
(50:30):
And everyone told me it was too risky. You know, I would say my biggest fear
looking forward really is, is the fear of regret.
I don't want to, I don't want to get to. I knew you were going to say that.
And you know why? It's because they ask anybody on their deathbed at 80 years old, what is your fear?
Greatest thing and they say regret that i didn't do this regret
that i didn't do that regret that this right like my biggest
fear is literally myself now meeting
(50:52):
my 80 year old self and having to tell that 80 year old
self dude i'm sorry that's so that i didn't freaking go
for it that's so good you hear the quotes all time you see them on social media
right your biggest thing is not going for it right i mean you're staying in
the same place this year that you were last year or you know that's even if
we make it to 80 like i just saw i just saw an article recently that said that
the life expectancy age for a male in the U.S. has actually dropped from like, it was like 77.
(51:18):
It's dropped from like 77 to 73. I feel like it's going to go up with all these
weird things we got going on. Yeah.
73, man. That's not too far away. But one in four are getting cancer.
I mean, it's, it's, I'd be willing to bet you it's, there's amazing podcasts
and there's amazing things on it about the food supply system.
Yeah. Well, dude, Justin, I
appreciate you coming on, man. Where can listeners get in touch with you?
(51:39):
Go on Instagram, I guess, man. That's probably the easiest way if they want
to follow it. Just put in Justin C.
Brennan and it has all our contact info there and love to be resources for people
and just give back as much as we can.
And you're going out to Cancun, is it tomorrow for Ryan Panetta's mastermind?
Yeah, I'm stoked for that. I'm getting on a plane and heading down there tomorrow morning.
Yeah, Ryan Panetta's got a kind of a mastermind retreat for the end of the year
(52:02):
that I got into and play some golf and chat about some good stuff.
So I'm excited. Cool, dude.
Well, man, I appreciate you. He's Justin Brennan. I'm Rich Summers.
Listeners, thanks for tuning in. We'll see you in the next one.
Music.
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