Working Capital The Real Estate Podcast

Demystifying Multifamily Investing with Whitney Sewell|EP14

Aug 4, 2020

In This Episode

Whitney Sewell is the founder of Life Bridge Capital LLC, he began his real estate investing career in 2009. Whitney’s passion is working with investors, helping them secure financial security via the exceptional opportunities that multifamily syndication offers. Whitney hosts The Real Estate Syndication Show, a daily podcast where he has now interviewed over 600 experts providing cutting-edge tools and strategies of the syndication business.  Whitney and his wife Chelsea are on a mission to help other families through the process of adoption.  They have personally endured the financial burdens that the process puts on families and have committed 50% of their profits to this goal.  Whitney and Chelsea have three children by adoption.

In this episode, we talked about how Whitney started in real estate while working in law enforcement, how coronavirus affects the industry, the type of deals he’s done, finding deals from the purchase and sale to raising capital to eventually closing the deal, overall syndication, their mission in the processing of adoption, his podcast “The Real Estate Syndication Show” and many MORE!

Quotes:

  • “I really realize that so many people have built wealth in real estate and I had no idea, if all these people can do this, I can do it too”
  • “It is about the relationship. It is about staying in front of your investors.”

Resources and Links:

Life Bridge Capital

The Real Estate Syndication Show

Never Eat Alone Book

Joe Fairless Book

 

Transcript

Jesse (1s):

Welcome to the Working Capital The Real Estate Podcast. My name’s Jesse Fragale. And on this show, we discussed all things real estate with investors and experts in a variety of industries that impact real estate. Whether you’re looking at your first investment, raising your first funnel, join me and let’s build that portfolio one square foot at a time. Ladies and gentlemen, we have the pleasure of having Whitney Sewell on the show today. Whitney is the founder and CEO of life. Bridge Capital. He owns and operates the business. He has a real estate investor who began his real estate investing career back in Oh nine. They now have 450 doors under management value of that over 50 million. Whitney how’s it going today? Great.

Whitney (41s):

Jesse a honor to be on your show. Yeah, thank you for coming on. I know it’s been a, I don’t even know now. It’s probably been a year since we last spoke. I’m, you know, a lot of what happened in the market and kind of the environment we’re in right now. How have you been holding up in and how has the last little while have been for you? It’s been good. I mean, ultimately not a whole lot changed for our family personally, other than just not going out as much, you know, but you know, as far as business is concerned, just doubling down on operations and, and, you know, focusing on the day to day operations, obviously I’ll eat tons, more communication with our management team on the ground and things like that. And just analyzing and really tried to project, you know, what it’s going to happen over the next, you know, few months, so we can be as prepared as possible.

Jesse (1m 26s):

Ultimately, you know, we, we like to say, you know, we were prepared for this before it happened to, you know, and we can talk about that a little bit, but, but ultimately yeah, if you’re just trying to prepare and now you’re late. So, you know, and so we, we were prepared for this. We, we can still sleep good at night because of that preparation, but, but ultimately, you know, doing things like trying to figure out, okay, how many tenants expect to lose their job, buy the next month to do you expect that you can pay your rent next month? What can we do to help work with them? You, no, we’re not trying to kick ’em out. You know, we, you know, and an empty, empty, unit’s definitely not gonna pay, you know, so a, you know, these people we’re just tenants or are experiencing hard times.

Jesse (2m 6s):

So we’re trying to work with them. I mean, we’ve even found a local farmer who sells produce, who, you know, who he can’t go sell his produce, but guess what? We can partner with him and provide value to our tenant’s at the same time, some things like that has come up, which it has been really good partnership’s and to see things like that happen, where we can provide value to the tenants and, and just show them that we do care about them, you know? And, and, but ultimately, you know, its made us think out of the box a little bit and I, which has been good and operations to even improve. But, but yeah, we are doing good. Yeah. So at the risk of, of dating the show, what we are talking about here, we’re in Kutu now, I guess for ’em, you know, kind of in the midst of the, this coronavirus and you know, we’ve talked about, it’s interesting that you said, we always talk about being prepared for a recession and this was kind of a force for a session on us, but it looks like it’s going to be an impactful one.

Jesse (2m 55s):

It has been already a putting a pin in that right now, what I’d like to talk about, you know, you don’t get a overnight with over 450 doors in this business, so why everybody started somewhere or what I’d like to do a Whitney is maybe you could give listeners a little bit of a background of how you got into real estate and what was it about real estate that, ah, that you found so interesting to pursue a career in it love to, and I’m going to go way back because I feel like there’s a few things that are important to what’s helped me to get to where we’re at now, Andy and I go back to even March of 2000 won. And in that way, in that months when I joined the military and, and I said, that’s important because at, at that time, you know, if you can remember that was before nine 11 and just six months before you, no, we didn’t have any idea.

Jesse (3m 40s):

We are going to war going, you know, our country are a nation, we’ll be at war. Mmm. You know, with a, you know, everything was just seemed great. As far as, you know, joining the military right now, I just felt like it was the right thing to do. I wanted to join. And, and, but, you know, I found myself a couple years late or spending a year and Iraq turning around a machine gun, ya know, praying everyday that I get to go home, you know? And, and unfortunately not everybody in my squad made at home. And so, you know, a very tough times butt, but ultimately, you know what I like to say, the, you know, in the military where the boot camp, whether its my time in combat and things like that, they can give me a never give up mentality, you know? And that’s served me so well through, you know, through many, many things, but ultimately even being an entrepreneur are pushing in real estate, you know, it’s just, you gotta have that mentality.

Jesse (4m 27s):

I like to call it the never, you know, my never give up mentality. But ultimately then I came home trying to figure out what I’m going to do for work. How am I gonna provide for a future family? I wasn’t married at that time, but I, I quickly got into law enforcement now out of 1200 applicants. There were only five positions with Kentucky state police. And I was blessed to have one of those, but that never give up mentality was still so important. And it, and it, and it had to show from the way I wore my uniform too, the way I responded to every dispatch. Okay. But ultimately at that point I had an income problem. You know what I mean? There, you know, I was maxing out, you know, and like a hot thirties, you know, 30,000 for a year. It may be 40,000 if I worked all the over time that I could, which I always did every night, weekend and holiday, you know, you’re out there on the road, which I love working the road, I’ll have the structure, the disciplined, just like the military we’ll have to being in uniform I’m, but you know, the sill, you know, I can see that there are guys retiring that were making, you know, in a low forties, you know, they had been there for 25 years, for 30 years, you know, working on the road as the police officer and what do they had to show for?

Jesse (5m 34s):

It’s so unfortunate. It’s so important and that’s right. That’s right. And I’m thankful for those guys, you know, but, but quickly, you know, when I got married too, we just pass each other in the hallway, the first whole year of marriage. Cause you know, I am working nights, you know, obviously she was working during the day. I was like, OK, you know, this is, I have as much as I enjoy working on the road. It, it just wasn’t what was best for our family. But, but I was trying to supplement my income. I didn’t think that I would probably go to another job or, or leave a law enforcement, however, you know, but it did put me on a track to searching for some way to supplement. And this was in 2009. And, and so I, I read rich dad, poor dad amongst lots of other books, but my eyes were open to the possibility of what real estate could do for us.

Jesse (6m 18s):

And I, and I, you know, and it wasn’t till then that I really realize that so many people had built wealth in real estate. And I had no idea, you know, that this option was even out there wasn’t raised and a family of entrepreneurs, a real estate investors and sew. But at that point it was like, okay, you know, it, all these people can do this or I can do it here. And so we just started educating. We started looking pretty quickly. We bought two triplexes that were in our local town and learned a lot, the hard way made tons of mistakes. And a, and we are happy to dive into that as much as you want, but ultimately it was a, at the end of became a federal agent. And so that moved as to Virginia where we are still live now, you know, but steel, you know, obviously in pursuing better income, better benefits, better schedule for family, things like that, which I gained all that.

Jesse (7m 8s):

But then quickly, still he hit a ceiling, you know, still he still had a ceiling. I’m like, OK, you know what, it’s going to happen now? You know, and I was still doing some real estate stuff, but not putting out at the level where our now of course, but I was still pursuing small multis and single family, you know? And it wasn’t till, you know, a few years later, that’s my eyes were opened to get to this possibility of Syndication. I had no idea that this was out there. And a few, if you just said, Whitney, you know, when we go by a 100 unit complex, I would’ve laughed at you, you know, and said, well, may be 20 years from now. Or, you know, Jesse, I, it was just not even possible. You know, I don’t know who those guys are that can do that, but you know, it’s just not me. And, but I was doing, you know, I was wrong.

Jesse (7m 49s):

And that way of thinking had to broaden my, my mind a little bit and take those blinders off, write. And ultimately we did And and happy to share more about just how are we gonna send information and, and yeah.

Whitney (7m 59s):

And I’d love to jump into Syndication, but just, just so, so the, the events there, the sequence of events. So,

Jesse (8m 6s):

So you’re, you’re in the military, you move into law enforcement, you feel like you’re kind of hitting a ceiling. You’ve already picked up some smaller multifamily units at what are we, are we getting close to the great recession at this point? Are we still in kind of his, this way before, or that are kind of, where are we, what year are you in when your, basically you moved to Virginia and now you’re starting to look at what you can do next. Yeah. So we moved too. So we started with those first few rentals in Oh nine and then, but quick, pretty quickly I got the federal position as a special agent. And then we moved to Virginia, probably it was 2011. So just a couple of years later and we sold those units, but I was still, even though I had a different job now, I’m still pursuing, finding more rentals, but I was still just focused on a single family or a duplex fourplex type of properties that all that, you know, I had in my mind that the, at that time, and it was thinking of Okay how many, how many doors is it going to take, you know, to replace my income or supplement, you know, that type of thing.

Jesse (9m 6s):

So it wasn’t too, All numerous years later when I got to, to talk at 15 units, you know, so if we had grown sun, but I still a, you know, had no idea that the Syndication a possibility was out there and it wasn’t until a few years later. Yeah. It’s, it’s actually kind of a, kind of funny, the you’re the second person on the show. We had Brian Burke on the show. That’s been in law enforcement and moved into the Syndication head. And I think that I, if I’m remembering the, you know, he didn’t talk about this story on the podcast, but I’m pretty sure he talked about his first race. And it was basically a bunch of guys with guns in the room, also known as police officers. But so the, so moving on, moving on to that, your you’re buying these A these smaller units, you know, you’re probably doing better than most.

Jesse (9m 49s):

So I’m assuming in a sense that you are investing your you’re actively in the game now, in terms of a, your real estate holdings. I’m always curious when people talk about a kind of an inflection point, not necessarily when they leave their current job to go on a full time, but kind of get over that mental hump of knowing that that is something that they want to do. What was that process for you and where were you at in terms of what you had in real estate at that point, because, and is just as a caveat, I will say it’s even more interesting to me when it’s it’s guys like yourself that have very good jobs, full pensions, typically, you know, you are trying to leave that and you really want to make sure that when you do leave, that you’re going to be Okay and your family was going to be okay.

Jesse (10m 32s):

Yeah. So during that time 15, you know, it was the largest that I’ve had gotten up too, you know, as far as before we moved in to Syndication, but there was a kid and I’ll back up just a little bit to say when I was a federal agent and then I’ll, I was also, I was, I also had another business that was taking lots of time outside of real estate. And I was a professional horse trainer. A most people have no idea. It’s just do it, all that, but I will be in the arena until, you know, midnight, most nights and weekends, I was training lots of horses, selling lots of very expensive horses. And, and that was just a passion of mine since I’ve I was a little boy and it, but it really came to fruition. I was doing clinics. I was teaching lots of people, horsemanship skills, all over the country.

Jesse (11m 13s):

I was traveling and I mean, in front of LA, you know, large groups of people and training and teaching and things like that. And, and so it was going very well. However, I, and I was also working fulltime and so still have rentals too. You know, it was just mad, you know, as hard as I can go. And then once one fall, my wife and I, we were at the beach and we were just praying and reading and, and ah, you know, it just finally hit us that, you know what, this is like, it’s not worth this, you know, like I, I’m never seeing the family at a young boy’s at the time. I don’t even, you know, I don’t even remember the first couple years of their lives almost, you know, just cause I, I wasn’t, there are nearly, and, and so, you know, and it finally hit me that, that the horse training business, as much as I enjoyed that, as much as I’m doing riding and training and teaching people with like, that was never going to be passive every, you know, everybody, they wanted me to get work for them because of my skills, you know, wanted me to do the work.

Jesse (12m 8s):

It wasn’t, it didn’t matter who I had working for me. So my wife and I made the decision to sell our farm, to sell everything and just be committed to the real estate business. And so now it was, you know, working fulltime as well, but I’ll just cut out all the horse training, everything. And so, ah, and I just didn’t want that distraction at all. It just kind of had to burn that bridge, even though I’d spent so much time growing that said, okay, you know, its not what’s best for long term. So we did, we sold everything. We are actually pursuing our 30 adoption at that time as well. And there’s just a, a large expenses related to that. So we sold everything, their, and so we just said, okay, we are going to downsize. And, and we’re going to be able to just focus all my energy on the real estate business, in that at the same time as when I was getting in the Syndication business, I hired an amazing coach.

Jesse (12m 54s):

And so, you know, somebody that’s been there and done that and I, you know, I wanted somebody that could really help me and just know that I am being productive, taking the right steps, ah, you know, to moving forward, I was already, I was already like running on a treadmill and going as hard as I could go, but I know I, I knew I needed some direction. I knew I wanted somebody that have been there and cars. I was willing to put the time. Yeah. But you know, I wanted that direction and ultimately all that kind of happened right. Then I found a coach, numerous couches, but, but one amazing coach and we sold everything and just, and just jumped in to the Syndication business.

Whitney (13m 26s):

That’s fantastic. It’s so funny how there’s so many commonalities when it comes to real estate investors. And I find that obviously self-improvement, but coaching comes up time and time again, just mentorship in general, I’m in terms of the job that you did have so that you, you know, you have this great job or, you know, a consistent kind of, you know, we always call them cash for Life job’s, you know, you, as long as we don’t do anything terrible, you are going to make a pretty good income and you are going to have a pretty decent, a decent life leaving that job. What was that calculus like? Was, is that a stressful thing for you where you are, where are you, where are you able to do that wholistically with kind of giving up the, you know, what you’re doing with horses and kind of all happened at once.

Jesse (14m 7s):

So it did not. And, and let me clarify, I’m still working in the federal job now in there you go on. And so I do plan to leave very sane. I’ve actually planned to lay for a long time. However, we are, we’ve been in the process of adoption of adopting our third child or daughter for a long time or for almost two years or more than that. Now I’m has been almost three years ago. Now that we started that process. However, she’s been home for eight or eight or nine months now, but, but I have really good health benefits honestly. And I wanted to keep those until she got home and we knew she was good and, and whatnot, but, but yes, I plan to leave within the next, probably four to six weeks with a day job. So, but you had been looking to leave that for a long time because if you know, I’ve been burning the at both ends for a long time now and, and the, you know, the real estate business is doing great and you know, we’ve definitely put the time in their as well, but it, it, it is, it’s a way past time leaving the job.

Jesse (15m 4s):

So just on a side note, there I is that, is that typical? It’s just

Whitney (15m 7s):

Three and it’s like three, four years process for, for me.

Jesse (15m 10s):

So it’s usually at at least a two year process. We had a failed placement and we were in the process a long time and it had a field placement, you know, and it pretty much started it. We didn’t start completely over. It’s a long story, but it’s a long process. Right?

Whitney (15m 25s):

I think sometimes people listen to podcast, whether it’s about, you know, business or real estate and they forget that the people on the show actually have lives outside of this too. So

Jesse (15m 33s):

No, no. Yeah. I mean that that’s become our whole one and our whole mission behind the life of Bridge capital, you know, he’s helping people through the adoption process to children. And so anyway, that’s been a big, big Bush, you know, behind it, what we’re doing now.

Whitney (15m 45s):

No, that’s fantastic. And actually that’s a, that’s a great segue too. You know, you’re not, you’re definitely kind of into the social media world and, and I wanted to talk to you and we, we didn’t get to talk about it the last time I was on your show, but it was always here

Jesse (15m 57s):

Curious, you know, some investors chose to invest. So yeah.

Whitney (16m 2s):

You know, they are happy to do that. And then some light to educate and sunlight too, you know, get on the podcast. You’re all good.

Jesse (16m 7s):

You’ll see what the Syndication Show you’ve gone the one way or what was that, you know, how did you get into that and what was the drive for that? And you kind of alluded to it a little bit here, but I’d love to, I’d love to hear about that. So, you know, doing a daily podcast is a massive commitment. It is insane. I mean, it is. And I, I try not to downplay that cause it it’s been very difficult, you know, but ultimately it is about in this, you know, you’ve heard numerous people say this, I’m sure about lots of different businesses, but its about your team is about building systems and processes. And, and so I feel like, you know, if I had done a daily or weekly Show, I probably would have already quit Okay because I would be trying to do it all myself.

Jesse (16m 49s):

I would be doing the editing. I would be trying to do the show notes, you know, and I would’ve gotten frustrated and it would have gotten behind and would have quit probably. However, knowing that I’m doing a daily show seven days a week, you know, from the beginning I knew that I couldn’t do those things, I guess just I knew it was not possible. So I had to build a team. I had a team of four to five VAs from all over the world, virtual assistants who we’re doing different parts of Show doing something almost every day for the show. And so, you know, I’ve had to build that team and then we have 60 days recorded before we ever launched, you know, coz you know, you know, you no managing those people from all over the world, like there’s going to be a hiccough somewhere. Right. And so it is something that you can’t account for us.

Jesse (17m 30s):

And so we had, we had, you know, plenty of runway. So when that does happen, we could fix it a but ultimately then it’s managing that team and we’ve evolved and improved our systems and processes greatly since then, however, you know, it was building that team, but that, you know, making that decision was, you know, there are obviously, there’s an, you know, I only know have one other daily real estate podcast and you know, he’s done Joe, you know, and he’s a good friend of mine and, and just been a anyway amazing connection. And as, as just think the world of him a bit, but you know, I I’ve seen the success of that. He had him like, okay. And you know, again, if he, if he can do it, I can do a day. And so, but, but you know, when I was in that process, I would go back and say, I spoke to tons of other podcasters.

Jesse (18m 14s):

And before actually launched my show up in numerous, have them stressed and me how much work it was and how every week they just can’t seem to hardly get it done. And their, all the big thing though, is that they did, they were doing a weekly podcast and you’re, I’m looking at doing a daily and I’m, you know, when I started second guessing myself, right? Like, well, may you know, maybe I should rethink this, you know? And, and, but ultimately that’s where that coach comes back in. I was talking to him about, and he’s like, Whitney, that’s why you have to do it cause nobody else is going to do it, you know? Sure. So, so I just, you know, that really kicked me back in gear, you know, to just not give up and say, Okay, you know, we can figure this out. We can make it happen. Ah, you know, and obviously we’ve done them all 600 interviews now in the last time, you know, you’re a year and a half the year.

Jesse (18m 59s):

And so the 2018 to 20 months. And so we have a process now and it still a lot of work, but, but it’s all about the team and systems,

Whitney (19m 7s):

A military guy, and you seem to be kind of a glutton for punishment, but when was it at, at the time, what was it, whether it was gonna be a week or it was going to be daily? What you do you want to have that type of a type of venue or Avenue to talk to people about real estate and Syndication right.

Jesse (19m 25s):

So a few different ways are a few different things. And one thing to think about was a, my education, you know, where, when else do I get 30 to 40 minutes just like yourself to talk to all of these experts, right? And I can ask any question. They may not. There are a lot of people that are, you know, way ahead of you are in some kind of a business venture. You know, the guy who see themselves as if a very successful, they can talk to everybody on the phone that wants to talk to them. It’s just not possible. I mean, I experienced that now, you know, it’s just not possible. However, you know, that they may not give you 10 minutes on the phone, but they will give you 30 minutes to talk to you on a podcast. You know? So, you know, creating that, that platform where I can talk to all of these experts in my industry, but then also just growing my network extremely fast, but then also providing so much value to other people in the industry.

Jesse (20m 12s):

That’s a, you know, that’s a, you know, are at my level as it was some, you know, and providing value to even people that are way ahead of me still, but tons of people that are way behind me, you know, and just a, you know, reach in a handbag to really help pull them along as well. So they can meet these people and industry and they can hear my interviews. They can here, the questions that I have.

Whitney (20m 28s):

Yeah. So were kind of tip toeing around now, you know, your show is called the Syndication show. So maybe what I’d like to do here is talk briefly, maybe five to 10 minutes about, you know, what it is for somebody that’s, ah, you know, into a real estate or want to break into investing, but doesn’t really understand it, right. Concept of Syndication maybe you could just kind of do overview of what Syndication is and briefly, and I know, you know, even talking with Brian in this could be a, in a two hour show talking about syndication’s alone, we talked about assets, ah, you know, it’s a asset structure for two hours, but you know, kind of an overview of when you do find a property, what does that process look like from the purchase and sale to raising capital, to, you know, eventually closing on the deal.

Whitney (21m 10s):

Maybe he can kind of a kind of give us an overview there.

Jesse (21m 13s):

Sure. And it is a big process, but you know, just think about, you know, when you go to, by and say that that 10 unit or four-plex even on or whatever it may be, you know, you may do a joint venture, meaning you’re just partnering with another person. You all are going to work on this property together. Or maybe you’re both putting money in, you know, they’re, you know, but you know, you’re a, everybody’s kinda working on this project. A lot of times you may have some investors, but ultimately they are helping in some way or you’re doing it Syndication and don’t know it. But the ultimately, you know, if you know, doing a Syndication allows us to buy that hundred unit complex or 200 unit complex or 300 unit complex where we couldn’t normally by, on her own write. So it gives investors, people that they don’t want to be active in real estate say they’re really busy.

Jesse (21m 57s):

They’re busy professionals. Maybe they’re just retired. And, and they do not, they do not want to do the, the day to day grind and work. They are done with that. However, they understand the value of investing and investing in real estate and they understand how real estate can build some wealth. Ah, you know, even, even if they’re not having to lift a finger, they understand the Syndication business. I can do that. But ultimately it allows us to bring hundreds of investors in to purchase a large property that we couldn’t purchase on our own and us all right. The reward of that, as opposed to doing, you know, a smaller deal. And so, but the Syndication business. What I loved too, is that I love operating professional business professional brand, working with professionals.

Jesse (22m 38s):

And one thing that I got tired of is searching for MORE tenants and tall that’s when I was doing, you know, the single family in small Maltese, you know, and that was just my mindset, right? How many doors, you know, I’m looking for that next duplex, I’m looking for that next single family home, you know, I’m taking the tenant calls, I’m, I’m going and doing repairs as I can, are at higher and somebody else obviously, but it, or trying to do it myself, you know, thinking, okay, you know, it’s how I’m going to save some money. That’s how they’re going to cashflow MORE. But this is just really Syndication is a different way of thanking, right? And it’s a much bigger scale, but allow so many other people too, have a role and, and, and to gain the reward, you know, has limited partners with, which are passive investors or are, you know, obviously a limited partnership.

Jesse (23m 19s):

So a general partnership side, which has active investors like myself guys, who were actually finding the deals and performing, but you know, we have to raise that capital from investors, which means we have to build relationships. We have to, you know, and that’s another reason the Podcast is so beneficial. So people can get to know me at a large scale without me having to have lots of conversations, right. So they get to know me about listening to the show everyday and they connect to the website or the, or they just, you know, email me or call or whatever. And we built a relationship and then they invest with us in these large projects. So they make a great return. They never have to lift a finger. And, you know, then we have a professional brand professional company in, and work with professionals to operate these

Whitney (23m 60s):

Larger properties at a big scale. So that answered your question, but that’s a great, a kind of starting point on kind of an overview now, in terms of, you know, you kinda mentioned that there’s a general partner being, you know, AKA the sponsor of the deal, you know, your kind of the boots on the ground, raising the capital, looking for the property. And then you have these limited partners, these passive partners, when you do find, for instance, a property that you find interesting, have you pre raised the Capital in terms of not necessarily having it in a, in a fund, but you know, you’ve talked to people, you know, if you saw a deal like this, would you be interested in it? I’ve heard different syndicators talk at a little bit differently about that first part.

Whitney (24m 42s):

And then when you do actually go to put the purchase and sale, you know, is it a mad scramble now at 30 day, a 60 day at a 90 day to get that Capital together? What, what’s your process like in that, ah, you know, in that Ave, it is a big process. No doubt about it. It is

Jesse (24m 59s):

Their relationship. It is about staying in front of your investors. You know, it’s just, when you have a deal, it can’t be the only time they’ve ever see you. Right. Or it can’t be the only time you are connecting with them. Cause you know, if an investor is, if it is, if they are confused or if there’s any doubt, you know, understand it, they’re not going to invest. You’re right. It’s just not going to happen. And so ultimately I tell people your always raising capital, whether the, you know, it or not, you know, while you’re at the gym, you’re talking to your buddy, he knows people. Or if he, you know, you, he may even be at an investor and he doesn’t even know what yet, you know? Umm, but you know, you are talking about what your doing, how you present yourself all the time is so important. You know, you’re always building relationships. Right. And, and, and is that change of mindset that you’re not asking for money you’re providing.

Jesse (25m 44s):

I mean a great value here, a great investment for them. You know, if they just last 30 to 40% on the stock market, as you know, that’s a great time to be talking about real estate, you know, we didn’t lose this asset, you know, there’s a, we plan for things like this. We still have the asset. We said, you know, you know, investors can go see it. You know, you know, the stock market didn’t drop and we had four buildings disappear. You know what I mean? That didn’t happen. You know, those buildings are still, there are still managing them. And, and so its a great, it was just a great time to be talking about that. But as far as the process, we’re always raising capital. We’re always building those relationships. And once we find a property that we are going to pursue, let’s say we get it under contract.

Jesse (26m 24s):

We are going to have a couple of weeks of quick due diligence to ensure, you know, this is still something we’re going to pursue. But ultimately we’re preparing also for the capital raise, you know, we are going to have, you know, we’ll just say 45 days or so to raise that capital, you know, it, we may have 60 days, it, depending on the length of time that we allow. But, but ultimately, you know, we do that. There’s a couple of ways, different ways to do that. You can have a fun, that’s just open all the time. Yeah. And you know, ultimately then investors don’t always know the deals that they are investing in their distrusting, you, you know, to invest that capital. But the types of deals that we do each deal is it’s own fund. And so investors’, you know, when we sent out that email and, and some paperwork, even to their home, they get to see the property, they can even go visit it if they want, will meet them there, you know, and walk the property.

Jesse (27m 9s):

But they get to see the property, they get to see the numbers, they get to ask questions about this specific Market this specific opportunity and their background, all those things, ah, you know, in the negative side, you know, to invest in that specific opportunity. So they’ll have numerous weeks to do that. A lot of investors will invest immediately. Some, you know, will take a couple weeks, you know, it varies depending on their background and, and how much they know us already, you know, but if they’ve invested in numerous deals already, then you know, a lot of people are ready to invest. You know, if you, because they trust our due diligence, they can trust us, which, you know, there’s a lot of wait on us, but that, you know, it’s a great when we get to that, to that point. And so, but at that point, yeah, we have 45 days are so that, you know, they can invest, but it usually doesn’t take that long to fund because investors are ready is that we’ll have a limit.

Jesse (27m 53s):

You know, we can only raise this many million and once that’s reached out, you know, we will raise the little extra, but ultimately, you know, that’s it. Then we close it off and say, you, no, I’m sorry. You, and you’ll be on a wait list then, you know, for a w you know, there will always be somebody dropout Life happens. Right. But, but ultimately that’s a, that’s the time period.

Whitney (28m 12s):

So now you got the deal. So at this point, I’m, you know, you’ve got to deal. Do you typically know this is a kind of varies from syndicator to syndicate the syndicator, but when you do have a Capital event, whether it’s a refinance, a, you know, you’re, you’re selling the property, do you keep the investors in when there’s a, for instance, a refinance event, or do you try to pay them out? I’ve, I’ve heard kind of different, different things from different syndicators on that.

Jesse (28m 39s):

A great question. And it’s always something I encourage a passive investor to ask. Hmm. You know, you need to know that that’s a great question. And so we always leave investors in, if there are some kind of Capital event, but you know, like a refund refinance, we will say we were do a refinancing year three, you know, the first capital that comes back to them is paying them back where they are an investment, you know, refunding that. But they’re still, if they invest that a hundred thousand, guess what they are still, there are still invested at a hundred thousand. Hmm. You know, even though we’ve paid that back. I, and so that’s the beauty of the Syndication business as well. I mean, I just haven’t seen anything like that. You know, where, you know, they could get their, the return of Capital really quickly, but there are still invested at a a hundred thousand was still making that a preferred return or, or whatever the return his, you know, on that initial investment through that

Whitney (29m 24s):

Of the deal. Yeah. I’ve always found it. I don’t know if its just myself, like we’ve, we’ve purchased properties, we have apartments, but I’ve never, I’ve always felt that there’s just something off about returning the capital back to the people that helped you get the deal to me, its kind of keeping them in and, and kind of growing together. It’s always seemed like the right thing to, to a certain extent.

Jesse (29m 43s):

Yeah. It, well, it’s really personally, I just feel like it’s having the long term, mind you no long term game in mind, you know, because these are our are business partners. We hoped for 20 years or a longer, you know, ah, you know, it’s we want them to be treated extremely well. We want them to make great returns on every deal. And I mean, because we want them to be ready to invest, you know, in the next deal, on the next deal, the next deal. All right. And so that’s, that’s just what we have in mind is we, you know, we plan to do this as long as we can. Great.

Whitney (30m 12s):

So what I’d like to talk about now is just kind of The so your, you know, you have the company now you have been syndicating for a while. You know, we’ve talked about team it just as it relates to kind of the show. Can you talk a little bit about the team a when it, as a,

Jesse (30m 27s):

Your business in Syndication you? No, I’m assuming, you know, I have somebody that’s an acquisitions. Do you have somebody that’s managing? What is that team look like today for you? A great question. And so we have people that our in house, obviously under Life Bridge Capital, but then we have, you know, external team members who are just as important and you know, who can be like brokers or a property management teams, things like that. But you know, inside of, you know, a lot of pressure Capital obviously, Oh, you know, I have a business partner who lives in Denver, his name, Sam rust, and an amazing guy with the numbers and, and just acquisition’s, you know, he’s really AR boots on the ground. Ah, you know, in, in, in Colorado he loves their, but, but in the West end, so he is, he’s doing the book of the underriding and acquisitions, you know, especially on the West.

Jesse (31m 9s):

And, and, and so, you know, he, he and I play the biggest roles, but then obviously we have lost to support, you know, I, you know, my, my executive assistant, I put a lot of weight on her position, right. I mean, she is a lot of times I’ll say she’s my right hand and half my leg, you know, I mean, she, you know, is such a valuable member too, the team, but there’s other people that support us in doing, you know, she does lots of things for me and Sam, you know, has an assistant as well, but there’s other people that work for us too. You may be MORE, you know, tasks specific oriented, you know, this is what they do it every week. This is one or two things. So, you know, ah, you know, and she may be helping you in my ear and my executive, it may be helping me manage those people. But ultimately, you know, then we may have an analyst who does, it was like doing an intern, you know, internship with us, who’s helping analyze properties and helping us through that process so that we can look at more properties, you know, as we increase our deal flow.

Jesse (32m 2s):

And, and so that’s really important as well. But then also, you know, outside of that, you know, like our property management company, you know, they’ve been in our market since the early nineties, you know, and so they understand the market better than we probably ever will, you know, and their, their managing thousands and thousands of units there. And so, you know, they are such an important team member and we’ve experienced it through this time right now as well. I mean, they have been just amazing, ah, you know, it just, but just the importance of who they are and they’re experience and knowledge on the market. It’s just invaluable. You just can’t put a value on it. And so, you know, we knew that it, like when we partnered with them, I mean, they’d been there like said for 30 years. And so at them, and obviously brokers are a very important team member.

Jesse (32m 44s):

You know, it’s a little different relationship obviously, but, but it still a team member because we want long term relationships with them, you know? So not only are we buying a deal through them, but when we’re ready to sale, you know, we are going to look at them as well. Cause it is our relationship business and we won’t them to benefit as well, you know, but from the opportunity’s that we purchased for sell both, but that’s the quickest, you know, there’s, there’s obviously contractors that we work with on a daily basis and, you know, mechanics and a maintenance people. I mean, there’s all kinds of team members. A but those are the, some of the key ones that, that we are, I guess stress’ the most outside of obviously all of our investors, you know, who are part of our team, but in a little different way that we already talked about, Oh, that was the broker I have.

Jesse (33m 25s):

Thank you for your kind words. There we are that we love getting calls from clients usually the other way around, but in terms of the, the geography. So you said partner with the management company. So does that mean that it is external management? It’s not, it’s not an in house management team. And then a secondly, just at that point of geography, a, you know, when you started, where are you starting? Just in terms of Syndication where are you starting in Virginia? Or are you you guys kind of all over the map are good questions. So we, we, we partnered on it about a 800 or eight or 900 units in Texas. And then, and then ultimately, you know, with Sam being in Denver, we love Colorado Springs. It’s a great market, has been for many, many, many years.

Jesse (34m 5s):

And so we started purchasing properties there and grew pretty quickly. And, and now with him being there, that’s been, our focus is in the West. I mean, ultimately Colorado Springs. We are, like I said, we’ve grew there really quickly. And now that we have, you know, we have a pretty good presence there. We’re seeing a lot more deal flow and, and, and getting to see better, better opportunities. And so that is our focus. I didn’t, you know, after investing in the small Multifamily like we talked about and you know, that some of that was in Virginia, a but after that, and you know, we haven’t bought anything large, a in Virginia or even close to Virginia, it’s all been, ah, you know, in the South or, or a, you know, in an West. So if we’re to talk about, let me just say, you know, putting the crisis that we’re currently in right now, aside, if you were to say, you know, two months ago, if somebody brought a deal to you in the West, ah, you know, in terms of cap rate, a tenant mics unit size, what would it be an ideal Diehl for you?

Jesse (35m 3s):

We are currently look for anything and we’d like to have 150 units or more property, usually class C I’ll say, see, plus, you know, not everything you have to have a Bulletproof vests down to go collect ramp, ah, you know, not anything that’s crazy. We will consider something, you know, sum harsher rehab type of properties, but ultimately why do we want them to be stabilized? You know, we want them to have, you know, 80 to 90% occupancy, you know, when we take them over a majority of the time. And so those are the types of properties we are going to be looking for a will look at anything that’s a hundred units or more, I, if we’re going into a new market will consider something even as a little last just to get into the market. But ultimately, you know, we prefer a 150 units.

Jesse (35m 43s):

MORE 15, 15 to $40 million process process

Whitney (35m 47s):

In, in, in the markets that you were talking about again, you know, pre you know, we were, I think were now, if not, we we’ll be dipping into a recession. I think you no technical recession or at least in, in terms of, ah, what you were looking at in the, for, from a yield perspective, from a cap, right. What kind of cap rates were you able to stabilize cap rate out in the West in the kind of the markets that you’re investing in?

Jesse (36m 8s):

Yeah. So in the high high fives, you know what I will say, like 5.7 to six, somewhere in there, it would be where we would be looking a, obviously that would vary right.

Whitney (36m 17s):

A little bit, but that’s ultimately where, where we were at. And in terms of, like you mentioned stabilized and you know, our market is more like a kind of a New York or a, you know, a San Francisco. So we’re very, we’re very hot. And I always think that, you know, Syndication is great, but, you know, we can’t squeeze out a pro a preferred return in our markets. It’s just so tight. So for, for your team, you know, when you do offer, you’re a, you know, you do find a property and you do have that preferred return in the event that, you know, in the first year Capital is not where it’s, that is that just an, a crucial that happens. And that kinda just goes on the balance. You know, those LPs we’ll see that as time goes by and, and the property starts cashflowing, it would accrue.

Whitney (36m 59s):

However, we, we strive to that

Jesse (37m 1s):

Have a preferred return. And so, ah, you know, I like and deals in the past, they would have to pencil at like 8% preferred return with a 14 to 15% rrr minimum on a five-year hold. You know, ultimately we would like to have 17, 18%, you know, rrr or better, right. A, you know, so like the last deal that we close, we even have a, ah, you know, we didn’t, we didn’t have a waterfall until 20% rrr so that she would tell you, we expect you to do better than say, you know, we projected at 17% are, are, but we didn’t create a waterfall or a hurdle until 20%. Ah, you know, so, you know, that tells you, we expect it to do a lot better than that, but yes, we, we want, and as a preferred return, we wanna, you know, investors are a, you know, are going to earn a preferred return on a monthly basis, obviously annualized, but on a monthly basis and in a way in 30 days in, they are going to be getting there first, first distribution.

Jesse (37m 52s):

So I immediately, they are going to start getting a monthly, monthly check.

Whitney (37m 55s):

Okay, I’ll stop there. I promise we won’t talk about hurdle rates in IRS today. Let’s do early in the morning. Well, you know what, Whitney, we’re, we’re coming up to the time here. I’d like to, I’d like to just talk a little bit, you kind of mentioned it in kind of the intro that you, you said about coming up and getting into real estate, but the resources that you found were helpful at the beginning of your career, you know, Richard, that poured out, it was one thing you mentioned where are there other books or people, or, you know, Podcast that, you know, we are invaluable to you and that you’d be able to recommend too to listeners

Jesse (38m 29s):

Of course. And I like to stress and, and I’m actually pulling it my audible account right now. So cause you know, I just, where audible out and, and, and so, but ultimately I, there’s tons of real estate books that are just really good, you know, and if you’re looking to learn the Syndication business, Joe, Fairless, Book the best ever apartments. Syndication, Book like, I cannot recommend that enough for me. It just breaks down so much. That’s like, you just need to know, you know, if you’re getting into this business, he just really goes through a lot of great things. But, but before you even read real estate, Book I just like to stress the importance of self improvement. And because ultimately that is when I started to see a big change in my business is when I started just on this, this self improvement journey.

Jesse (39m 16s):

Okay. And, and, and initially that started with, ah, how are our rods, the miracle morning? And, you know, I read that a few years back in and I can’t say I would probably agree with everything in that book. However, it did make me change the way I thought about my morning and structuring my morning and that started to change everything. Right? Yep. It did. You know, I like let’s get up early still, unless make things happen. What’s going to happen how much structuring the time, but not only that, but it helped me to have that time set aside too, for even more readings. Right. For more jumping into other books that are very important, that has helped shaped are business and help shape who I am personally and professionally. And the way we operate is so important just self-improvement and you know, I would even encourage yesterday or reading real estate books.

Jesse (40m 1s):

Cause we gotta know that business. Right. We gotta understand it. However, I will always love writing some type of self-improvement a book it’s the same time or as you know, every month as well. And a couple of books, other books that I highly recommend is never eat alone. And it’s just a great book. Great book. It’s is that a Ferazi? It is. Yeah. Great. Book love that. And then a I’ll give you a couple of others that were really good influence by Robert Cialdini. Is it called <inaudible> children? That’s a thank you. And I’m on the road.

Jesse (40m 42s):

Less stupid. Keep going. I’m going to write that down. I’ve never heard of that’s a good one. We’ll pop all these in the show.

Whitney (40m 48s):

No, no it’s so that, you know, people can come get them. Yeah. The likes

Jesse (40m 53s):

Is, which is another one that I don’t ever hear mentioned, but it’s a, it’s another good book about negotiating and just networking and talking to people. And, and I, you know, I go back to, to a book called who moved my cheese and I there’s a kids version of that. And I read it to our boys, you know, who are fi they were five and six, maybe four and six when I started reading it to them and they love it. A but even the kids’ version is, is so good. Even for adults. Yeah.

Whitney (41m 18s):

Well, you know what I’m going to actually, I have to send you a book now in a, it’s going to

Jesse (41m 22s):

A blank out at Marco center, Ellie. He recommended it. And I don’t know if you’ve heard of it. I don’t, I’m going to have to get the title, but it’s basically a father. It’s a, it’s a, a letter or a book of, from father to a son, a about real estate and financial management. It’s a very good I’ll, I’ll find it. And I’ll, I’ll put it in the show notes. That’s fantastic. So just a wrap up here. If people want to see what you do, listen to your podcast, just learn a little bit more about life Bridge Capital A where can they find you are? Obviously they can go to Life Bridge capital.com. They can email meWhitney@lifebridgecapital.com. They can call or text me at five, four, zero five eight five four three, three eight. We have a whole report on passive investing and things.

Jesse (42m 4s):

They shouldn’t know the benefits, pros, cons like that on the website that, you know, they can get really easily. Ah, you know, if somebody was looking to invest passively, I’d love to talk to you or help you any way I can. If you’re looking at growing your business in the Syndication business, or just looking to invest in, grow your wealth, you know, passably as well. My guest today has been the amazing Whitney soul Whitney thanks for coming on the shelf. My pleasure Jesse All

1 (42m 27s):

Is it? And also if your listeners’ to anybody, that’s looking in

Jesse (42m 29s):

You to adopt a child, it’s a long, horrible process to process. However, it’s a very worth it very worth. It can’t stress that enough.

1 (42m 38s):

If we can help in any way, my wife and I schedule favor listening to the working capital, the pocket better. My goal was to help <inaudible> you enjoyed the show process with a brand love to help. Anyway, he gave us a rating on iTunes. Thanks again.

Jesse (42m 54s):

If you have any questions, want to learn more or Lake me to cover a specific topic on the show, please reach out to me via instagram@joeforgalsorheadtowwwdotjessefragale.com. My name is Jesse Fragale and I’ll see you back here for the next episode or the Working Capital The Real Estate Podcast.