Vested Capital
Vested Capital

Episode 11 · 1 year ago

(EP11): Pili And Jason Yarusi, $75 Million Multi-Family Real Estate Portfolio Of Over 1,000 Apartments

ABOUT THIS EPISODE

Pili and Jason Yarusi are real estate investors who today focus on multi-family properties -- buildings that can house for example 90 apartments.

They didn't start out focusing on this type of property. Like many, they began with renovation flips, buying single family homes, upgrading them, then selling for a profit.

During this podcast Pili and Jason take us back through some of their pre-property investment days, including how they met working at a bar, but didn't get together for ten years.

We learn about their first investments, how they switched to investing interstate using the support of a turn-key provider (a partner who helped source properties for them in other cities) and eventually, the mindset shift that led them to think really big, going after the multi-family market.

As you can imagine, it costs a lot more to purchase a 90-unit building compared to a single family home. Jason explains some of the different types of financing they use today to purchase the larger buildings.

If property investing is part of your capital growth strategy, this podcast will definitely open up your mind to bigger possibilities.

Enjoy the episode.

Yaro

Podcast: https://www.yaro.blog/pod/
Blog: https://www.yaro.blog/

Hey, hey, this is yarrow and welcome to vested capital Episode Number Eleven, featuring my guests Jason and peely, Ya Russie. Best of capital is a podcast about how people make money and put their capital to work. I interview start up founders who've enjoyed big exits, Angel Investors, venture capitalists, Crypto and Stock Traders, real estate investors like Jason and Peale, and leaders in technology. In today's episode you're going to hear from Jason and peeely, who are a couple who built a massive investment portfolio in multi family investments. Actually, towards the end of the episode, Jason mentioned they've just hit a thousand doors or a thousand individual units under management. But we actually go through their whole journey. We talked about how they met, some of the lessons they learned from before they gone to real estate, how they enter the real estate market, with peely actually becoming a real estate agent herself, what type of investments they made early on and why they didn't like those types of investments and why they did like those type investments. Good points, the bad points gown'm and all of that eventually led them to get into what they've been doing for the most recent history, which is these big multi family investments, which means apartment blocks that can have ninety four units in the one building and they purchase the entire building. They talk a lot about the smart aspects of doing that versus buying, you know, individual family homes or small duplexes and triplexes. And they also have a really, I think, a powerful mindset lesson here in terms of what the difference is between been buying, say, a single unit or a duplex or triple x versus trying to jump straight into multi family, and I think it's powerful. So it's something worth listening to the podcast just to hear when Jason and Pelee talk about that. They talk a little bit too about how they finance their current investments. So obviously when you're buying a complex of ninety four individual apartments, that's a big purchase. So you know you have to find different ways to raise the money and they have a syndicate so they have lots of small investors investing with them and Jason riffs on about all kinds of different forms of investment. Some of it I went over my head. He was talking about sonly different things, but hopefully you'll get a lot out of it. Before our first play on the interview with Jason and Peee, I recommend if you are personally in need of someone to help with your email, check out inbox donecom, which is the company I co founded several years ago. We've been helping all kinds of entrepreneurs and small businesses with their email and their social media management and basic admin tasks as well, but mostly we specialize in email. People like real estate agents. We actually have a few real estate clients who are like Jason and peely. We have mortgage brokers, we have some people in the health industries, venture capitalists, Angel Investors, online coaches. We recently had a candy store owner sign up, which I think is really awesome because you know, candy is Great. So really, anyone who's drowning an email we can help. So if you're a small business owner and you like the idea of not spending as much time in your inbox, head to Inbox donecom read about our services. You can check out out pricing there as well and then book a disc recall and you'd actually get to talk to me about your needs. I am the main person who does the discovery calls for inbox done currently, so I just book into the schedule there and we can have a chat about what aspects you need help with your email and I look forward to speaking to you. Okay, let's dive into the day's interview with Jason and Peelee Ruci. Hello, peelee and Jason, thank you for joining me. So happy to be here like here. So it's great to have you both. As I was just saying, it's always fun to have two guests on a show because you get both perspectives and and the battle of who gets the answer. What's questions? So I'm going to start with a question about both you. You're obviously in a property investment world. You rusie holding, so that's your family name. The last name, well, one of your family names anyway. You're married, you have children. I know the last number I saw reported was about seventy five million dollars of property under management portfolio, something like that. I know you got big numbers. I'm reading your website. Eight hundred units with partners for and fifty under management. That's massive. I can only imagine the logistics of controlling all of that. Have I summarized everything at any other highlight reels that I should throw in there. You know, you did a good job with it. That's been like there's like plus and singing. Then there we've had two acquisitions with another one coming up, and then we sold two properties. So but in realm, you know, that's part of the flow, right. So we're going to have that constant inflows and outflows as properties as we continue to go here. Tipwater's a cycle between three to seven years on which we hold properties, and so we really focus on one acquisition per quarter and that's what really our game plan is and our actions lead us where. It may not in line that we get a deal with quarter, but usually for the year, on the scoop of the year, if it falls out that we will find about four opportunities that will come upon us. Okay, how do you two divide up the work? Like it is one of you a specialist at one side and another especialist at the other. So we actually could ask this question a lot. We let's start with everything that happened like in two thousand and twenty. So in two thousand and twenty happen we like we have both had these conversations, like what part of the US do we...

...sit on. So when something big happens, and it has nothing to do with me being the mom and Jason being the dad or our male or female, but he went totally business and I went totally family. We crossed each other's pass a lot. We definitely helped each other out, but when something big happened, we knew exactly where we were supposed to be at that time. So once everything's settled down, it took like, I don't know, two or three weeks for the dust to settle for us. We started going back into our I guess you could call it regularly scheduled program so usually I take more of like the speaking to investor's side. I'm part of more of the investor relations, whereas Jason. Yeah, so PEO's really investor relations. Branding really captures in that side a lot of social media aspects, and that all follows who with acid management and working on leads, acquiring leads, putting together the repositioning plan, and so that's good dividing factor for us and gives us good attention where we can both really parlay our strengths. Okay, and there must be a team under you, I'm assuming to like the do you have employees or contractors, of both. We have one employee. But we do here is we employed third parties for the property. So we buy a large property and in each area will have a set team members, internal and external, that will work with and within these a team members. So your externals are going to be your brokers, your bankers or property managers, right. Your internals are going to be your ass a managers and your assistant, your underwriters, who may in fact be us or also our employee. And then, past that, we will have now other partners who we may partner with, not always whether they bring us the deal or they can add they bring some kind of value to the deal. Who will be part of each deal, because each deals its own separate entity. We do single asset entities for each one. So each one will be its own LLC, and so the structure, although understandable, will be slightly different. The wage deal is packaged. Okay, so I know like as a person listen to this, you hear numbers like eight hundred properties. It doesn't sound like even possible to only have one employee, even if you have partners and everything. It just seems like that be so many pieces that I'm sure when you guys started, if we go back in time, I don't know if you ever thought maybe as a vision, eight hundred, but you were not thinking. You know, next week we're going to have a hundred properties under management. It's kind of a graduation process to work your way up to that. You might have to go back in time. I don't know who to start with here. Maybe we can go back before you even knew each other, before you were in property. I know, Jason, you've got an entrepreneural background. Peely, I'm not sure. I know from a previous podcast I'd there was a bit of an acting history in here. Get heading to Hollywood. So maybe we can go back, first of all where you both born, that we can start there. So I was born and he will have by you and I still New Jersey. So yeah, we're both oppot sides of the world right there, opposides of the US and yeah, peally, of course, the actress side. But you also did they all little, barely. Yes, I had a berry farm at one point. I was always busy. I went to college. I got a liberal studies degree because I didn't know what everyone to do. There was all these things. I wanted to do. I was always working odd jobs. I've been the librarian, I've took a dabble at farming, I went I was a bartender, waitress for years. I've done so much in my like I feel like I've had so many multiple like lifetimes in my one blessed life that it all kind of led up to where we are today. So so yeah, so many times you think you have to find that perfect job, the perfect rout, the perfect thing, but sometimes the best case scenario, or most times, is that you start doing things that are in front of you, define you don't want to do right and leached to where you want to go. Because ultimate we send the sideline but are trying to not take action until that perfect action comes up. But we usually miss it right because we're not ready. Where you haven't prepared, we have a point where the oppos aside. You see someone out there just plugging along doing something and put in their best foot forward and what they're doing, even if it's not their ideal. You know, whether they're pumping gas or, you know, working at McDonald. So you but they're putting it all in, noting this is and what they want to do with their grooming themselves to find where they want to go. Hmm On that point, is there a particular job, role experience both of you had before you were in real estate that highlight the part of that task or, you know, aspect of your life that you didn't like that was a big you know, Aha moment. Can you think of any specific examples? You know, I can give the ton I so I had loaded trucks on third shift on freezing docks and you know, in my s I've worked in all kinds of restaurants, bars, I worked in a construction I worked in just many capacities. what you have takeaways from what you do there. Right, you learn lessons and it drives you, whether it comes down to the point of a running big staffs or understanding and logistics or noting how negotiations work or understanding complexities of urgency verse actually needing to do right, and so you look at those and you find where you want to go. However, there's always those points,...

...right, because most of the time they said, well, if you knew you get that question. If you knew something. You knew this ten years ago and I what would you tell yourself? And it's well, it wouldn't matter because I wouldn't have been ready. I would have been prepared to be like Oh, cool, now I'll go. It would have been wasted because they get foundation was forming right, the foundation was being built, and I would have. If not, I would have just been, you know, stacking sticks on the ground here. That would have had no base to him. And every time I get that question, like what what I told my twenty year old self, I would actually tell my twenty year old self not to listen to me because everything that she went through, whether it's my fifteen year old self, twenty year old self, thirty year old self, everything she went through built up the person that I am today. So, no matter if I was in a job or in a situation that was not ideal, that situation created me. So I cannot tell that girl, that woman, to do something differently because, yeah, chances are I wouldn't have listened because I wouldn't have been ready and everything she went through, I am the fruit of what she did. So there's that. But is there like a you know, I was running a berry farm and I realized I hated fruit I want to stay away from produce or you know, I was packing in freezing temperatures and I want to stay away from cold weather. was there any like moments like that? He you know, that really made you change business models in your mindset. I guess is when I was saying no, I think you can go in season. I think we went out to help my dad with the family construction business. We knew this wasn't our ultimate goal, right, but it's not that we didn't find that you would and help my father, you know, excel in the time that that was there. Right, you all is. So it wasn't the hate. I don't think we go in that light to say that that would be the point of the question or the word. But it's like building blocks, right. So I'm thinking when we were lifting houses, I was doing a lot of the phone, phone calls, which I didn't like. I actually don't like to make phone calls. I don't like to talk to people. I don't know. I'm really good at it, though, so I used to make all phone calls. I used to do all the sales, and Jason, he is incredibly smart, he used to go out there and help out with the blocks and these are these like heavy, I don't know, forty fifty pound blocks to hold these homes up. was that the best use of his capabilities? Know, but the thing is those building blocks, being able to understand what went into that business has helped us. At least it helped us when we were first getting into real estate. So even those things that you're I know you're searching for that thing that we hate or don't like to do. But the funny thing is we taught hate, but all we talk and there's nothing to hate about life. It's all building blocks, every failure exactly. That's it's a building block. Yeah, and it goes back like doing a construction work. Not The best use of my time, but it builds a certain clarity, right, and so if you stay there forever, then been ultimately you've made the decision right. And most of us find the ways of blame everything on others. But we just start just taking responsibility, right, so you can control where you want to go if you just start making a decision, and it might not be we most of the time on something immediately where I made the decisions and I want it right, but we don't put the time and to see it right. So we assume that we plan to see in the next day where right, with all kinds of rewards, right, and then that doesn't show up and say well, this doesn't work. You know, we're not lucky, we're not this, and we go back to whatever we are doing doing right, and then we're miserable at it and we find the misery. I was actually just driving out one of our kiddos around and part of the conversation was that you're going to look for the good. Right. So if you want to look for the bad, it's all around you, but if you want to look for the good, it's always there too, right, and even if it's not the best place for you, if you can appreciate where you are, that's going to give you an easier pathy where you want to go. But if you're constantly pushing back on where you are, just saying despise, putting your best worse for forward, right, you're not putting the right energy and that's going to cascade on anything that you do further. Right. So anywhere you go, anywhere, anybody you're with, that's that energy. It compounds. Right. So you're not going to just shift and that's usually where most people miss is that they assume on the opportunity comes up up with my best for Ford. Right, I'll put all my energy then. But you're never ready, right, you're not ready. You haven't done the work, and so most people say, well, I'm not lucky. Well, the opportunity always comes to people, but most of US choose that we're not going to put any effort into where we are. So when the opportunity of the chance or the moment or the position arrives, we haven't done the work and so it seems too far fetched or just passes the by. Makes a lot of sense. I I mean, Hey, is not not the word are use. It's more like that nudging a different direction. You know, I had a business where the profit margins were very small. So it nudged me to change to a different business because I was looking for a greater profit margins. But I'd love to keep the story going forward. So you know clearly, as you said, you were building and all these experiences. When did you two intersectly, how did you guys meet? So we met on a rusty old barge on the Hudson River in New York City and the Chelsea peers area this is the early s before that whole area became very gentrified. Not to a beautiful park and it's a beautiful place...

...to go and you can go and do like go to a restaurant and have some day drinking happening. When we first started working there, at these I surfer started working there, it was cold, miserable. They only reason why I think I got the management position was because I was the only woman who would, and I was twenty three at the time, would walk all that way onto this pier that was behind what was it? The horse stables, Basketball City, a small city, the sports and New York City at Oh like eleven pm at nights during the winter, and I worked all throughout the winter. So I started managing there at twenty three years old. I started managing this huge nightclub on the water. In comes this guy who wants to work construction. We are repainting parts of the bar and one of the other bartenders totally the boat. Yes, you didn't get to go to the bar. One of the other bartenders brings him on. He's like, this is my friend Jason, he's going to help us paint. Oh and by the way, he's he also bartends I'm like, yeah, I'll believe that when I see it. So actually, Jason Good bartend. He could actually bartend circles around me. And the one thing that I remember, remember thinking when I was twenty three and I was like, well, how am I? How am I the Bar Manager of this place? I'm just going to hire people who do it better than me. So everyone that I personally hired were all better than these. So that's how we met back in two thousand and three, but it wasn't until two thousand and twelve that we finally got together. Wow, how calm I was so long between its life's path right. I don't think it was a right way. We both had our other relationships or other turns. Peele moved to California, to Hawaii, to California, back to New York, back to Hawaii, you know. So she was on her moment. I was mostly in New York City right, but we were just on different paths at that time. And you pass find a route and it think it goes back to what we had said previously. You find what you don't want and that leads you to what you want right, and so we spend so much time with what we didn't want to put ourselves a position to be what we did want. And the funny thing is is that when I left for California, I guess who became the manager. So when I got back, now Jason was managing me. So turns we did a lot of I communication back in those days. But that was that was a good learning lesson to because, right, you look at that spot and we took that twenty five times revenue on that place. We probably had at one point two hundred and, you know, forty, two hundred and sixty employees, languages. You know, New York City, so melting pot of languages, right, but you learn how to make things more efficiently from a bar aspect, you know, from a conspect to end, from a restaurant aspect, and to be able to do that on a grand scheme. Where you go. We that bar was pretty incredible. One to actually two summers we sold more coronavirus, the most coronas in the world, and that was in three months compared to the Mexico like any place in Mexico or anywhere else for their entire year. Right. So that's how much a volume of was happening in that place. And so it didn't grow in size, he grew in how many people are coming there, and so we were able to maximize efficiency right, and that comes a lot to what we do today and buildings, is that you can't always change the size in the shaping and of places, but you could make the better places to live by doing a lot of things. Right now. Can that can go down to improving income, of course, trolling expenses, categorizing different ways to create community, and that trends to better places to live, better communities, better returns and happier investors. Yeah, we'd love to switch to property, but maybe just take us forward so youtube he can meet. Nine years is ten years later. You're actually together. Did either of you have property by the time you met, or do that all come after you were together? Now, at that point, you know at a restaurant in New York City, opened the Solda brewery at that point under no, I don't think I did it after and then we were still running on some of those places there. And then at Hurricane Sandy happened, huge storm in the east coast. Write a lot of detriment to a bunch of areas. But the flooding with the storm, work and my father's business is targeted towards lifting and moving structure. So his business went from do a handful, you know, twelve thirteen projects a year, two hundreds. You know. One time we had done like three major projects in a year. What at the Mac? So it that business went almost twenty times where it was. So my brother, who was working for us and us, we moved out to New Jersey, really just helped pop take the business to perform at that level. Right, and so that that was that step. But noting we did that step, we knew that this was a step right. This wasn't the okay, the end, this was the step. We didn't know where that was leading to us, and so we didn't know that we wanted to be, or at least learn or involve ourselves more in real estate. We thought that was going to be a direction for us. However, we were so busy with construction side. We're doing so much that all our time was used in construction. So we're pregnant, was our you know, peely was pregnant with Luca first. Maybe they're two thousand and thirteen. Two Thousand and thirteen, here we are saying that's getting the real estate and we find our way into it becomes an agent, we start flipping. We...

...started doing wholesales and we learned is that we were so busy and now we just added a lot of other active things on top of it. So the lesson learned there was that we found real estate, but we didn't altimately find our right direction because we were just stacking busy. Right. So here's our time and now our times going smaller with everything happening, and we're just stacking busier and busier and busier. So we were going further away from our ultimate go and just really control our day, control our time, you know, be able to choose what we want to do, when we want to do it and how we wanted to do it. So that opened up a lot of questions, right. That opened a lot of things for us and peely met someone who who actually was doing ript was out of state. So I went to a real meeting and I met the judgment and he was like and he told me about turnkey rents and I was like, we don't want to do that. Do that. Sorry, Billy, I want to interrupt you. There is one thing I have to know before you tell that story. Why did you even use to become a real estate agent, like what was because of what? That was the gateway to all of this. By the sounds of things, is that far? I know you said you were building and adding on and you were. Sounds like real estate was in your mind for both of you, but committing to becoming an agent is saying I'm getting into real estate right. It made sense to us because so we both wanted to get in and getting my real estate license gave me access to this amazing thing called the MLS, which I had no idea what that was about. And I look back and I get asked this question lot like could you have done it without getting your license? CAN INVESTORS GET into real estate without getting their real estate license? And I told him yes, but it was great for us, especially when we're flipping in wholesaling, because I had my license, I had access to all the numbers, I had access to the data, I had access to incredible training and Jason had access to construction numbers. He could dig in on that end. So our education combined allowed us to take those steps forward. So yes, by getting that license, and I was I was in my first trimester, but I took that real stip exam and I got over ninety percent. So it just seemed like the next step to take. Like you'd asked previously, like how did we take that next step? How did one thing launch us into the other thing? So I don't want to be in the restaurant industry anymore. I mean we like to tell people we're just two bartenders that got into real estate. I don't want to bartend anymore, I don't want to manage restaurants and I certainly in New York City's amazing. I certainly didn't want to live there anymore. So we decided to move into New Jersey and take these steps, one on top of the other, to get to where we are today. Okay, so then you have your license, you've got this great combination of the ability to no construction numbers and access to MLS and understanding real estate. How do you come to the conclusion of what your first investment or deal is going to be? Yeah, well, we actually used what we're doing right now to we were taking the houses and lifting them higher so hopefully wouldn't flood again. Right, and with that becomes a lot of things that FEMA requires to make the house flood resistant or at least as flood resistant as possible. Rights, there's a lot of things, the height, just the area of the space, the way utilities are performing there. So we found a house and we did this. We decided to. We're going to add the value by just really duplicating the footprint and just adding to square footage, right, because that the one thing about New Jersey. It's a very expensive state to operate right starting cost more. You know trade, you are going to cost more. Things are going to cause more taxier and to cost more. However, you can get a lot more per square foot right, then maybe you could some other areas, but we couldn't really envision here was that the timelines with flips that a lot of things is really just be able to be an efficient and cut down your timelines. However, what we were running up to in a lot of our projects we're just doing a construction side of it, is there's a lot of things that become out of control. We had that time when sandy happened, hur against Andy, all the billing departments went from maybe having, you know, ten, twenty fifty permanency year two hundreds of permancy year. Right. So now their backlog started happen. So they were trying to get people out there, and then the same thing happen now if they don't have enough people to inspect. Well, the same thing happens now with utility companies. Right. Utility companies now have this overflow of houses to have to meet certain requirements to shut off the utilities and Cap Utility spelled shut off. So they go from this horizon maybe it's going to take a week to six weeks, eight weeks, twelve weeks out here. So we lost control the timeline of our projects here. And then we went from a project, the first project, was going to be a really profitable deal and making some money, but nowhere nearer, because the project went to take like ten months right when it's supposed to be like a five six month project, because of all these variables where we no longer we're in control right, and that usually the point here. We've learned that most life is control which you can control, and so you can really focus on the timeline of which can control. However, unfortunately, here are being on this first large project. We were had a lot of money out of key on this point. You know, we had done in cash, but a lot of things happening here, and so that was driving really the direction of where we were going in the future, but also gave us good learning experiences, but helped us understand more of what we didn't want to do, which was these long, extended projects. I mean we did, we actually did end up doing a bunch of them because they were...

...they were actually fun to do. I mean we got to add so much value and we had this dream are one of our value proposes was to raise communities one house at a time. It took in our house raising capabilities and we really wanted to just change up the neighborhoods that I got to flood ravage, but these projects were taking so long to do. So finally we started to do easier flips and then we got into wholesaling, which was a whole nother ball game. Okay, I love the sort of a metaphor they're raising up the property to raise up the community. That's fantastic. wholesaling is obviously a subject that even I remember when I first was interested in properly investing. I was like, wholesale, how does that? What does that even mean? Like I know I can buy e commerce products at wholesale and then seldom retail, but I never thought of you can't buy a house at wholesale. Is Not like an alley Baba for houses or something like that. And I also want to tie this into with the question around viability as a business to support your life stuck, because it sounds like you two had left the bar tending, left New York. I don't know how much your family, with your Father Jason, how much that business with maybe still supporting you, because you guys are your family. You're growing, you've got children now. So you have to sort of balance what you're making from these flips potentially with other income streams you had and sounds like you were kind of, like you said, busy, easier adding more things on top of it. So the decision to go wholesale? was that also because maybe you're looking for a more consistent income stream? Is that accurate to I don't know if we've ever needed consistent income stream. I think one part for us is that I'm always in there sumption I can make more money, and that's always been at the fact right here and when you're I guess just how it is that. You know we've never had that like traditional, like I want to go to work and so this Friday and expect the check and I don't get that check out right. It's always been a fact that just kind of either US always had jobs, right, and you find ways to figure it out and you find ways to make money and that's just been how we've operated. So the whole ceiling was a natural progression right from where we were. And what we did a little bit differently is that we started really focus on one city that had a lot of development going on and we weren't cold and quote, finding these wholesales or properties where we could just literally push off to someone who wants it as a quick flip. We were looking to find up sites where the house is were not being optimized for the site because they people were buying these two do development, and so we got to the point here we're finding we were wholesaling the properties work too. Were basically going to be utilized as lodge for development and that worked very favorable for us and it was a short term horizon. I don't think we did wholesaling for long, but when we did get very specific were we're going out, that's when we were most beneficial. But I don't think we'd like that. I don't know if I like that. Loved being able to help sellers and help sellers because somebody that's going to wholesale or there that's going to sell their property to us. We're very, very transparent. As a real estate agent I had to be. I had to disclose everything. Is My fiduciary duty, so I disclosed everything. I'd let them know what we're going to do, that there is going to be an end buyer and a lot of these people just needed out of their properties and they would come to us because we would that our customer service is second to none, because we would go in there, we would help them out, anything they needed, we would try to provide any any services they needed, we would try to provide. So, on top of being able to get them out of their property quickly, we would help them out with whatever life struggles that they were going through. So that was my favorite part about wholesaling. But when it came to flipping and wholesaling as a business, because these are I mean there were really two separate businesses, again, we were just so busy. We had at that point we had two children. We were going out every day looking for properties. We were still in the construction company. We were just starting to get into this thing called multi family and if you want, I can jump into the story. That kind of catapulted us into that asset class where we are. Actually we love it, like flipping and wholesaling became a job. And if you've understood anything from what Jason I had told you, like we're not job type of people. We're not nine to five vers. We like to have control over our lives and when we feel like we don't have control, we stopped. That stops being our focus. So once we got into large multifamily and multifamily in general, we found that we had more control over our time. Okay, yeah, I'd love to hear that. That switch the multi family and maybe you can tie in with this one question that's in sitting in the back of my head here. How do you finance all of this? So how is the finance of aolved to this point? I know it continued to involve after as well. As you hit a multi family wholes it was different. So yeah, so I mean flipping wholesale, maybe cash, maybe hard money lenders, maybe private investors, right and when, and as we transistor multi family, it's a mix of our capital. We raise capital from investors where they help with the down payment, the closing cost, the capital expender church and fees, and we partner that...

...was some kind of debt product. So whether it's from a fanny or Freddy Lender right where we do an agency loan, or it's from a community bank, or it's a bridge loan product, which is similar to in half Rieties, that hard money loan for single family we're partnering each project based on the need of the project. Right with the Bible loan that works for this. So it's a partner of equity and debt and typically we're we're bringing seventy five percent, seventy percent in debt and then the rest is coming from the equity side. You always have your cost to capital here, so we're looking at from a proponent here of the equity. Typically a most points it's going to cost more in the debt. So we're usually parlaying that. We will maximize where we can to have the right debt product but not be over leveraged when the same time gives us the ability to make good returns for our investors based on the capital brought it. Okay, so maybe you can switch to the multifamily story and even how did you finance the first deal in that? Sure, so we got into much multi family, because this will do small multi family. First went to a couple of couples. Yes, yes, yes, yeah, so I was at the real meeting and a gentleman approaches me about the turnkey properties that he has and I'm just like not interested, not at all. But he's like no, you have to look at these here. I'll send you a couple. Just run the numbers, I promise you, though if you're not, because we weren't doing any rentals at that time. So I look at them, Jason, I look at them and were like these actually look really good, and Jason's like, well, I wonder if they having duplexes or for plexes. So I go back to him. I'm like this looks great. Do you have do flexes or for Flexes? He sends us a few and we end up jumping in because they made so much sense. And if you're talking about finance it, we actually bought these ourselves because the entry level was, I don't I think one of them was like Sevenzo and the other ones like yeah, we're by is it like all and like K oh Andy and run rights, are said with constructions that we were buying them, you know, the pleated areas. But what he gave us to the point here was up and allowed US understand, you know, investing a thousand miles away, how to package the team and put people in the right spot, because some we're finding New Jersey is. Would have the New Jersey as your close to all your projects. So you can become the Bottlenecker, you can become the person who says I can do everything better, I can do it quicker, I can do it cheaper, or any one of those combinations. Right when you start getting back to the premise, like we were at the bars, that you look at this and collectively you can't do it yourself, but how can you empower other people to do it well so we could all benefit, right, because it were when we say like yeah, I could do a better maybe potentially I could probably not, but if I could write well, I'm taking a job away for somebody to probably do it just at least some level of proficiency close to me or a better and then I can be focusing on big things. So right now, if we're not in our large multifamily business. Focusing on leads and focusing on money, there's no business right. So if I'm here, you know, focusing on you feel in the blank and it's not one of those two points here, then I'm taking a roll away from somebody else who who that's a good role for them to be in that position, and I'm not focusing on the court components that keep driving the business forward. So it allowed us to basically put the hammer down. We allowed us to just manage the property, manage the managers, because the gentleman ended up having the team set up, he had everything set up. We went in, we took down the property, we took down the construction, but we were able to manage it from New Jersey and these properties were in Indianapolis, Indiana. So that happens and all of a sudden the world blows open because now we know that investing out of state is possible. Now I know investing in rentals out of state is possible. So I'm usually not the one that brings the new big idea to the table. It's usually Jason. So of course Jason sees this in the his head starts and the other numbers start to turn his head even one day it's like peely, what if we can do fifty, a hundred, two hundred, and I'm just like what, Oh my God no, and I just I like all of a sudden his name numbers scare me because I'm like that just seems like so out of reach and I couldn't see that far. But Jason could see it. So he let us on this path of education to get to where we are today and we were able to take down that first ninety four unit in Losville, Kentucky within eight months. Do you mind, just because I know I'm getting a little loss with the numbers? Before you said even with that those first multi families, you were talking eight Ninezero construction cost. What do you mean exactly? He's full. You're being honestly. The houses were completely gutted and, you know, run down areas or that a tona in Indiana. So we were buying these houses very cheap and then putting in thirty, Fortyzero to fix them up right, to get a house of their tenzeros that were presents. Now Fifteen, sixteen right there, sixteen, you know. So there's a ton of imagory out there's who were buying them very cheap. They were predominantly, you know, probably see MIAs areas, right, and so I like the mailman was living in the block, right. And so you would have houses that and you could retail them higher than that once you got on board, right, but you were able to because there were so much inventory at the time. You're able to buy these houses cheap because you were just so many that they were just looking to dispose...

...of, right. So we're buying these houses, putting them back a line, of course continue to carry them forward. And then it we just saw it wasn't really scalable like it had context. But if we want to go where we want to go, it's not like we were going to do, you know, fifty, seventy, a hundred, two and three families around town and just sounded like we're gonna have organized chaos, which were some kind of chaos, to try and control that. How ever, if you do get back to the fact here buying a large property now, it's all under one how right. And so you look at these buildings, a two unit, you know, if one day can unit. Now your fifty percent occupy, a hundred unit, one vacant. Ninety nine percent occupy right and so any small changes. I I go in there and do something to save water and a two in it, it's not going to move the needle that far, although we've done that on a hundred unit and savings increased values hundreds of thousands of dollars because we're doing things that just move the lever just slightly. But when you compound it over such a big build it right, so it becomes much more favorable. The banks like it more too, because there's less risk on that right. So you get a lot more tenants that contentially pay the rent. There's a lot of different ways that you could win with large multi family and it becomes a commercial property and becomes a property's specifically target it at us. So they're not looking at us from the banking side. Are Looking at us to make sure we're not bad actors, but it's really focused on the property to say is this property a business that the business plan could be viable to improve the operations of of course pay the debt. Okay. I mean in my mind that it's a big jump between buying a tenzero run down house putting Thirtyzero in to renovate it. I'm assuming you're putting in a tenant and it was cash flowing. Small numbers because they're starting from a small base. But to jumping to an anty four unit complex, we're, you know, running an entire little village basically, with tenants and maintenance and construction and so on. Did you make that jump from that smallth of that bigger or the steps in between? Now? We did. Absolutely. Yeah. Well, there the step in between was getting educated. Yeah, like really getting out there and like learning and going to those people who already knew how to do exactly what we wanted to do and made sure that we just hung on for the ride, because we like we just like put our head down into the books, learned everything there was to know about large multi family and we are able to take that jump because we were able to do that because we got the mentor because we got the education. Yeah, because a mental gap, right when you start thinking about it here, is that I have. Most people think it's safe. Right, oh, it's safe. I'M gonna go from a single family up to a for Unit because that would be safer, right. or I'm going to go to an eight unit of ten. You could that would be safer. Well, when you get back to the core things we just mentioned. Right here, a for Unit One Bacon. Now you're seventy five percent occupied right now. That it's going to be looking at you from the personal side. It's going to have all these other restrictions and and also you're probably going to be in a whole different subset of buyers. The more you grow, the more you can leverage improving a business. Right. So if I had a three hundred sea where even the thousand seat restaurant like we did right, where they can take that occupancy, or a twenty seat restaurant right, you might think this twenty seats safer, but you're limited to your capacity, right. You're limited to how many turns you could do, how many people we could put in a door, and you still have your fixed costs with the same thing operates like this. What a business? So if I do something on the twenty seat right there and you know, I order a bunch food and nobody comes in here, the scale ability of what happens here is much more hurtful to the business compared to a large business here where if I can control or be more efficient on much and many different components, you can really drive the business for and I completely understand where your questions coming from, because that's the same thing that happened to me when Jason had this grand idea of jumping into these larger apartment bills and I was like, how can we do that? How can we go from what we're doing to those numbers, to those dollar signs, to those Zeros? I could not make the jump, but it was education and mentorship that allowed me to take those next step and truthfully it was that first closing that really just blew open the doors for me. Yeah, could you take me through that first closing, because I'm currently live in Montreal and I remember when I first decided to buy property here, I was looking at like you guys are talking about sort of small duplex, replex for plex, but then there's this website that has these large multi families all the way up to sort of three hundred unit things, but I look at the price tag and I'm at well, this, you know, fifty unit complex is six million. So I obviously I'm not going to take six million on my bank account and buy it, or the bank's not going to give me, you know, at twenty percent. I kind of I don't even have twenty percent down for that. So I know obviously have to final turn your financing partners some kind of deal. How did you guys address that in my kind of explaining similar number that you are up against compared to the smaller ones? Yeah, sure, so let's take that for example. You're so a six million dollar property. Typically you're going to have to raise about a third of it. So you need to raise about two million dollars, right, and you're still going to be finessing about seventy five percent. So I have four and a half million hours to either you're going to have to have that balance sheet, the network requirement to be able to show that to the bank, or you're going to have to find a partner that can represent that right. So those are those two gaps. And so if you can look at your balance right now, your personal financial statement, and luckily for our first project we had that had to balance, you to do it right. But if you have to look at...

...the project and say, do I have that balance sheet and if not, I might have to track back to a size which I could afford or find a partner who wants the partner with us and be the network balance. Now on the other side. You have to now find that two million dollars. So that two million dollars. Now, let's say if you're raising money from investors and you're asking for Fiftyzero from each investor here, that's going to be that you least on minimum, neat forty investors. Right. Maybe someone put a hundred, maybe someone could fifty, maybe some going a two hundred. Let's just say you need forty investors. So you need to start talking to people and it's going to be about you, right, the people that know you. Is going to be your initial part. You're going to start talking to people who have been in your network and seal you've operated. So we didn't have the large multi family background or experience before will we had, you know, we were in other businesses. They'd seen US do other things. They knew that we were proactive when we fall through with what we were going to do and say we're going to do so. Do you look at those forty investors you have to have say that you need to have three conversations to get one? Yes, well, that would tell you that if you need forty investors, you need to have a hundred, twenty conversations to get to that point here. So you start building out your return. And when you think of that like that, it makes it easy, because I hear all the time I don't know who to asks. Well, you just start explaining to people where you're doing and there's going to be people that you did not expect who are looking for this, because with any real estate project there can be a lot of them words. Right will multi family is usually and even during covid was a darling of covid because it has so many different ways. You can win with forced appreciation, you can win with depreciation, tax images, and know some of these things are not going to translate the same way to Canada, but they have somewhere components right. Then you get debt paid down and you get cash flow right, and so you look at these points here. That's easily five ways. And portfolio diversification if someone's just all in the stock market, right. And now six ways that you can win with multi family. Well, if it's a flip, you can fix it and hope to sell it. That's kind of your route, right, and most of the time we're not going to work his rentals in these higher priced areas, right. So you have one exit right. So wholesale, typically you're going to hope we find an in buyer who can capitalize in that point. You're not going to buy it yourself. Right. You know the stock market. You put your money in the stock market and it's a dollar for dollar. get a dollar of apple right here. I could equatably put twenty cents in or twenty five cents then and get that share of Apple. But it's real estate, right. So you see, your money can go a lot farther. So when you start breaking this down and make it approachable, it doesn't make it that the top amount vesuvious and makes it to the point here where we're okay. I said to figure out, you know, what kind of boots to put on here and then let me Figar out the next question of next question and make it actionable so the investors will we did is that prior to having the deal. We didn't wait for that because we didn't want to pay ourselves, since subserviences needing the money. We went out and start explained everybody we're going to do to generate the interest, to get people involved, to be specifically what we're looking for where we want to go after and we were building this stable of investors who were giving us the affirmation that they were going to be interested. Right. It wasn't like here's our money, because we weren't asking for at the time. We didn't know where the project was going to come from and it took us six, seven, eight months to find that first project. But when we did, we had had clarity, with enough conversations to understand it. We could raise that. They had a raise eight hundred thousand on the first one that we already felt that we can raise that money. So we went back to that. We just went back to the investors who had already said yeah, be interested, to put in, you know, twenty five or fifty or seventy five thousand hours and just said, remember, we were talking about we were looking for this kind of habit our property will here's the property, we're ready to go. Are you still interested? And it made our gap much smaller. It made so it made it easier to get to the finish science of starting get cold, trying to explain who we are, what we're doing now, why we're doing it, the type of things we're trying to do and then also, you know the structure right, because most people can understand maybe a flip or to understand investing in anything right, so a stock market or putting money into, you know, mutual fund or something of that. But not everybody even knows that it's available to invest in a part buildings, to say hey, we can go buy that apartment building, because in their mind, if they do know about it, they believe it's just for the reach or the larger players or the black rocks or so many larger players out there that aren't approachable to a person like them. So we can say that we can do this right by pulling money together from like kind of people, that we can achieve this same results. That's also another mental hurl at the investor has to understand to take forward. So if we go to like today, is it a case of what you just described as your typical formula? Like you two are out there looking for that Avatar, that ideal multi family property, you find one and now you have a syndicate, basically a people who are all ready, when you present deal to them, that they're going to put in some amount of money to own percentage of this deal. And then you either eventually sell it, like you said, and then distribute the profits or I'm assuming there might be some cash low if it's a refen you producing profit. Is that kind of in summary, like what is the big strategy for you guys now in terms of how you run the business today? Yeah, sure, we do look for value out opportunities. Typically these are each their own syndication. So we partner each one with it a holding period, so five to seven years we're going to hold a property. We look to come into a property that's under performing, whether it's on that the building side or the property side or...

...demandament side. Typically it's a combination of bolth right. From that context, we look to put in a proper practices that can improve the operations and, of course, improve the revenues and improve the cash flows and returns. So and we partner that by Brainos investors in and we look to of course, meet the business plan and then exit in the timeline that we talked about earlier. So, as a snapshot today, and this is kind of like a question I was curious about in terms of you guys and how you're generating like how do you decide to take out your own money from this project, you do you just take the capital from one, because it sounds like you could forever just take capital from one put in the next, but you have to, you know, feed the kids, you have to pay, you know, live somewhere and medical all those sorts of things. So how do you draw money from a business yourself? It's sure actually, because you must be always tempted to put it into the next project to right, like how do you beals that? Yeah, they're great deals. So we like to invest side by our investors and as our philosophy, wherever we have for packaging and find a deal, we do get these rights. We get an acquisition feed coming off the front and we get an asset management fee for, of course, the operation of the project here and then we'll get to split a cash flow right. And so at some point here, whether we sell and get our investment back, where that can go into it, or we refinance and pull that capital alt we do have other cash flows and other fees that come out of project for preparing and partnering and, of course, doing the plan for the investors. So yes, to answer your question, we do and we try our best to invest in every single deal that we have the only times we have an invested is that if we are over subscribed. Yea. We would rather provide the opportunity to our investors that want to get into our ideals then to just hold the space for ourselves. Yeah, if we haven't put out that, we would be invested. If it does come to context where we have so many investors, which happens frequently, you know, we race. Sometimes in a day we'll get these raised where we won't put the capital and because we'd rather have more people be able to seek the opportunity. And you're not all syndicates. We actually closed one the other day here where the investor came in and wanted to be the sole partner, so he put in the soul capital for the project. That was fun. Yeah, one person to deal with forever. A little slightly easier on the the just sticks. Maybe last question for you too, or maybe second last. We'll see if I'm a person listen to this. I've got twenty FIVEZERO dollars in my bank account. I was thinking about where to invest. You know, I mentioned shares and all that, but I've decided property is it. But I thought with my twenty Fivezero, I'm going to buy a CONDO and put a tenant in there or, best, I'm going to buy a duplex and maybe live in the bottom and put a tenant in the top in like help for pay my rent. Would you steer that person to something different or do you think they still should start there? I know everyone's different, but maybe from where you guys stand today. So the conversation would always be, what does the investor want to do? We would provide the information on large multifoundly would tell them this is exactly what we do start to finish. Are you interested in it? But if that's something that they want to do, say the conversation comes out they need some place to live, so house hacking is a great way to have some place to live and to have the tenant pay for the entire mortgage. So it really comes and this is what I tell everyone, it comes down to the other person and you. What kind of opportunity can you provide to them? And is that an opportunity that they need? Because if they don't need that opportunity, I'm not going to shove it down their throat because, number one, it's not that they're not going to appreciate it and number two, chances are at they're not ready for that opportunity. Once they are ready, I'm going to be right there waiting. There a friend that knows large multi family and that they know that they can can talk to me about their financial needs, about their struggles, their needs, their wants, their goals, because it's not about me. It's not about me raising money. I'm using air quotes. is about me providing them and opportunity. It's about Jason and I having the opportunity to give them some place to safely put their money. Yes, well, I have investors come over to your CEE Holdings and talk to us about investing, right, and so. But part of the narrative here is that we this is a partnership. You're going to be with us for a while, so we want to make sure that the goals align right. And so some of the things here is that these are longer opportunities, right. So we said three, five, seven years. So if you're looking for a short term horizon, you know, six to twelve months, it's not going to be the right opportunity for you, and that's fine. Right, maybe not today, but maybe tomorrow. If you're looking for to be active, right we're not looking for active partners right, just would be a passive investment. Right. So again, would it be the right investment? Right? So we don't need you. We would love to give you the opportunity, we don't need you to be invested. We want to make sure it aligns with Your Business Strategy Right, aligns with your goals right, so aligns with where you're trying to go for your future. Right. And so in that usually come to context where it may be right for you or may not. And it may not be right for you today but maybe in a year or two years or three years it is all right. Sounds good, guys. So where can we send people to? If they are just it and getting in touch with US learning more, I can get us at our website, www dot holdingscom. Awesome. Any...

...other places you want to send people too? And I know if you guys are you on twitter or anything like that all over the place, but really, if you go to that website you will find us on all the other social fine peelely on Instagram, at Pilli Rucy or Jason Vercy on Instagram, if you want the personal side there. But yeah, business side, you want to learn about the investment standpoint, your rucy holdings would be the best spot and you to have a podcast to write. So do you talk a lot about this, these sort of multifamily topics on that show? Yeah, well, multi family live podcast is, as said, strictly devoted to talking about multi family, so from all sides, from just it the mental aspect, to the actual meet potatoes up the business itself. Yea, and you can actually also find that link on our website. Fantastic. All right. Well, thank you for your time. I appreciate it and I'm sure it's a year or two from now that number will be like a thousand properly doors or one hundred. So it's gonna be going a thousand mark. But I have to check, okay, actually to see where we are update the website. Yeah, you probably up to their website. Went a week at the moment. So now I do apprecy the time and thanks for the inside into what you guys have done and the journey from, you know, bartending to multi family. It certainly well, you've been busy. It sounds like it's been a lot going on. So yeah, thank you for sharing. Thank you are thank you. There you have that episode with peely and Jason, I hope you enjoyed it and hope you're feeling motivated to to go after perhaps a bigger goal than you otherwise set for yourself. That was one of the big takeaways I took care because, you know, buying a one unit family house or maybe a duplex, versus buying lots and lots of units in one complex to me seems like a big difference, but I got the impression that a lot of that's mindset. So it is just about making the decision to go after something that might feel out of your comfort zone, but you can make it work, especially if you start building the right contacts for financing. You know, build your relationships, your network, and those sorts of big multi family deals are possible. And I think that extends to other business models as well, not just for real estate, but if you're, you know, getting into starting your own business or you're planning on building some kind of portfolio with other kind of investments, there are ways to do things on a bigger scale than you might otherwise be planning to do. I often think back to when I was a brand new entrepreneur. My goal was to make a million dollars by the time I was thirty and at the time that seemed massive. I look back on it now and I feel like I didn't aim high enough. I should have aimed for five million dollars or ten million dollars by the time I was thirty, and it might have changed the way I decided to build my business, as what kind of business models I went after. Just everything I did and how I thought about what I was doing would have changed. I'm not in regret about it. I did achieve that one million dollars, certainly in net worth, by the time I turned thirty, so I was proud of that achievement. But I do know now in my forties, looking back, it feels like a much smaller number to me than it was in my s. But everything's a journey, of course, but big message, aim bigger, shoe higher, and I'm certainly doing that when I consider my own property investments now, because I am actually in property, it's not my main focus. It is I guess you call a side when called a side hustle. It's one of my more handsoff investment strategies and I do like property. I think property is one of the only places where I feel comfortable having the leverage. Obviously a home loan or any kind of property loan is a form of leverage. I don't feel comfortable using that kind of leverage to buy stocks or cryptocurrency or even necessarily in my business. I never wanted to raise capital or get a loan in those kind of business models. But with property, I don't know why, I just feel comfortable getting a homelan. It's just, I guess, more established doing that. It's something physical. Although this might be not necessarily true, it does seem like type of asset that very rarely goes backwards in value, especially in the areas that I'm looking in. Everything is possible, but yes, it is the one space where I do feel that sense of confidence in the asset class to borrow against it. Okay, so I'm going to end up the podcast here. I hope you enjoyed it. As I said, just one last note. If you have yet to subscribe to best a capital, ID love to have you as a subscriber. There will be a follow or a plus or subscribe button in the APP you're currently using to listen to this. If you are not using an APP, go to your phone, open up spotify or apple itunes or Google's APP for podcasts or any of the other players. There's one for Amazon. Audible, as I recently found out, has podcasts and I found this podcast. Best the capital is inaudible under the PODCAST TAB too, so you can subscribe through that channel as well. I'm a big user of audible for audio books, so hey, you can use it for podcast as well and subscribe. And also perhaps this episode or one of the previous episodes you've heard was valuable and maybe off to you, but for a friend of family member or colleague, maybe it's a person getting into real estate or person who's a startup founder, who's launching their first company. Maybe you heard something that you thought you know what my friend needs to know about this. My friend needs to be inspired by this or hear about this technique for growing their traffic or their audience or getting customers or, you know, changing how they think about buying property or getting into professional poker or some of my previous guests have...

...focused on whatever it might be. Share the episode with them, just tell them to go to best the capital Episode Eleven for Jason And pee with property, and they can download, they can subscribe and hopefully they will get a lot out of that and really appreciate you for referring them to the episode. I also would love it if you are able to leave me a review on itunes. It's pretty simple. You just open up the podcast in your apple itunes and you'll find a review button there. To link is also available on my blog. If you had to. Why? A R Oh dot blog. There's a podcast have there and you'll find the link to directly to go to apple to leave that review, and I would really appreciate that. Helped me to rank higher, helping to reach New People, which means I can get bigger and better guests, produce more episodes. Everything gets better for all of us. If you can do that, just takes one minute. I really would appreciate that if you do that right now, and I'm going to stop so you can go and do that. Thanks again for listening to this episode. My name is Yaro and I'll talk to you soon.

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