MFM Live: Passive Investor Panel Learn The Ins and Outs From Experienced Passive Investors

Passive Investor Panel Learn The Ins and Outs From Experienced Passive Investors

We are excited to have Mark Chappell and Jenny Gou as speakers for our Passive Investing Panel.

More about Jenny Guo: https://verticalstreetventures.com/about/
More about Mark Chappell: https://www.markchappell.com/about-us

VIDEO TRANSCRIPTION

00:00
hey do you want to go ahead and
00:02
introduce yourself and maybe briefly
00:03
just maybe
00:04
you know your background where you’re
00:06
located and
00:08
what have you done on the passive
00:09
investing side of things
00:11
yeah absolutely well first off thanks
00:12
for having me wow i’m so honored to be
00:14
here what a great group of people you
00:16
guys have put together
00:18
um i see some familiar names and a ton
00:20
of new faces
00:21
i am excited to be every one of you but
00:24
a little bit more about me
00:25
um so again my name is jenny goo i
00:28
actually spent 13 years in corporate
00:30
america
00:31
working for a company called procter
00:32
gamble selling soap
00:34
for about 13 years and then during that
00:36
time started
00:37
investing in single families like many
00:39
of you i’m sure
00:40
learned the magic formula for real
00:42
estate and then
00:44
decided to quit my job uh last year in
00:47
february of 2020 right before covid
00:50
shut everything down and then just dive
00:52
head first into multi-family
00:54
and then 12 months later uh you know
00:57
accumulated over 950 units both
01:00
passively and on the gp side
01:03
but really what i’m passionate about is
01:05
just sharing
01:06
what i know my story um just because i
01:09
wish somebody taught me
01:10
about investing 10 15 years ago so i’m
01:14
happy to be here love and appreciate all
01:16
the questions you guys have
01:17
and hopefully um you know get to share
01:19
the knowledge that
01:20
i have as well so um a little bit more
01:23
about what i invest in um
01:24
passively i invest in currently um
01:27
texas and georgia and hopefully a few
01:29
more this coming year
01:30
and then from a gp kp standpoint i focus
01:33
on the arizona market today
01:36
all right good overview thank you very
01:38
much jenny
01:40
and mark i see you on as well same
01:42
question to you do you mind just giving
01:43
a little bit of background and where
01:44
you’re located
01:46
you know and what what have you been
01:47
kind of doing so far on the passive
01:49
investing side of things
01:50
i’m here and i should have went after uh
01:53
should not have went
01:54
after jen it was should went before her
01:55
so i didn’t uh
01:57
didn’t uh get it hard i’m a little bit
01:59
nervous now
02:00
um yeah i’m a real estate broker i’ve
02:03
been for 20 or so years
02:04
and um for my first investment i was
02:08
an lp in florida with another company
02:11
and um
02:12
i’ve since invested in three more and as
02:14
ferris knows
02:15
i’ve been out to uh the atlanta market i
02:18
think we looked at
02:19
one or two days we looked at like five
02:21
properties so they kind of joke with me
02:22
calling me active
02:24
passive or passive active or passive
02:25
aggressive i’m not sure
02:27
but um but i get out i like to see the
02:29
properties and learn more i don’t want
02:30
to just sit and just get a check
02:32
i’d rather have some activity in it so
02:34
that i
02:35
i can touch it feel it uh taste the
02:37
property a little bit make sure i
02:39
i’ve done all my due diligence that i
02:40
can do and then get to know ferris a
02:42
little bit and ben
02:43
uh more so and uh try to find out for
02:46
sure if these are
02:47
these are people that i want to be in
02:48
business with on a long term basis
02:50
because really
02:51
ultimately that’s it it’s not it’s not a
02:53
one-time thing and it’s a long-term
02:56
a long-term process so you know i i’ve
02:59
met them
02:59
through um they’re another friend ronnie
03:01
i don’t see ronnie on here at the moment
03:03
he may be
03:04
uh but um i met ferris and then through
03:07
ronnie uh with uh kingly
03:09
and uh and him through my son travis so
03:12
kind of got to know everyone in that in
03:14
that way and i’m
03:15
an lp now on yeah four total
03:17
transactions
03:18
getting ready to hopefully soon be a gp
03:21
or a kp on something here in the very
03:22
near future
03:24
all right so yes mark uh we’d like to
03:26
say is an active passive investor
03:28
so really kind of some people can make
03:31
this a very very passive
03:32
business some people like to make a
03:33
little bit more active so you know he
03:35
gets out there
03:36
gets his hands dirty he gets to
03:37
understand what he’s getting into so
03:38
that’s good
03:39
um so maybe let’s kind of back up a
03:42
little bit right i like to really kick
03:43
it off with
03:44
how did you guys first get exposed
03:47
to just the world of multi-family
03:50
passive investing
03:51
right is the first question and then my
03:54
second question is you know
03:56
what was your goal whenever you kind of
03:57
got exposed to it right were you looking
03:59
to just deploy capital where are you
04:01
looking for something else
04:03
so i’ll do the reverse this time so mark
04:05
you know so jenny doesn’t steal your
04:06
thunder you want to go first
04:08
all right sounds good to me so uh
04:10
originally uh my son had told me i need
04:12
to be listening to podcasts more in
04:14
general
04:15
and then in particular start listening
04:17
to this guy grant cardone
04:20
and i should listen to him he’s uh he’s
04:22
uh
04:23
investing doing all these things and i
04:25
let it sit for probably six months eight
04:27
months before i jumped in
04:28
and started listening and listened to
04:30
him first and really didn’t know
04:32
anything about the whole
04:33
syndication side other than what i was
04:35
learning from grant
04:36
and i don’t remember what happened how i
04:38
got this particular connection then the
04:40
next connection for me was getting into
04:42
a a um rod cliff event one of his uh
04:47
masterminds uh and then also then one of
04:49
his uh
04:50
three-day events that he has so uh
04:52
what’s he called um
04:54
lifetime cash flow uh so i got in to one
04:58
of his three day events and that was
04:59
really my first
05:01
full exposure to understanding how
05:04
all the intricacies and stuff of the
05:06
syndication world and really
05:08
understanding that
05:09
this is not something that’s all that
05:11
complicated i feel like i could have
05:12
done that
05:13
uh many years ago and uh ultimately
05:17
through that three-day process and i’ve
05:19
been to several of those i’ve been to
05:21
several mfi ends the one that ferris has
05:24
and learning that process and going down
05:27
that path
05:28
making sure that uh if i go ahead and or
05:31
when i go ahead and uh gp on something
05:33
i have a pretty good background before i
05:35
do so
05:37
and so were you intending to
05:41
get into this space right i know your
05:42
son was kind of telling you to get it
05:43
you can was that because you were
05:45
looking to deploy
05:46
capital or yeah i’m yeah they was that
05:48
just kind of a side benefit
05:49
yeah i was selling stuff i was selling
05:52
off a bunch of single family that i
05:53
owned and some multifamily and he knew
05:55
he knows that i’m invested and and enjoy
05:58
like
05:58
the multi-family space uh you know
06:00
investing in owning
06:01
and multi-family but i just didn’t know
06:03
i used to think and i’ve been a realtor
06:05
for
06:05
many many years i just really think that
06:07
all the money used to be mine or
06:09
i would get with a partner or two and we
06:11
would have to pull it down together like
06:12
in a jv
06:13
type of a scenario i really didn’t
06:15
understand the whole fundraising equity
06:16
raising thing
06:18
uh so uh playing capital was first with
06:20
grant
06:21
and then once i started learning the
06:23
process then it was all about learning
06:24
the process and becoming
06:26
more actively involved in it all righty
06:30
thank you very much mark and we’ll come
06:31
back and continue on the story
06:33
here in a minute so jenny same question
06:36
and feel free now you know now that you
06:37
have it on after you
06:38
kind of go go on and on
06:42
can’t go after the master mark right um
06:45
yeah so i think again like a lot of
06:47
folks out there
06:49
uh finding we wanted to to find
06:51
financial freedom
06:52
okay my husband and i and so we started
06:55
passively investing in single family but
06:57
it really
06:58
clicked when we learned about
07:00
multi-family and like many others
07:02
i’m sure you’ve heard of the little
07:04
purple book called rich dad poor dad
07:07
it’s the real estate and i would say
07:09
entrepreneurial
07:10
bible read that and then met the right
07:13
people so it’s all about like ferris
07:14
mentioned earlier meeting the right
07:16
people finding a mentor connecting with
07:19
folks and so when we lived in cincinnati
07:21
we just found the right people through
07:23
these meetings
07:24
my husband attended one of joe
07:26
fairless’s meetups in cincinnati
07:28
met a few folks there listened to so
07:31
many podcasts
07:32
read a bunch bunch of books um and just
07:35
again met the right people so i think
07:37
that’s super important so if you’re
07:39
wanting to start somewhere um start
07:42
you guys are all here obviously you’re
07:44
doing the right first step to meet
07:45
people and make those connections
07:47
and then just once you start learning
07:49
more just take action
07:51
and for us it was defining what that
07:53
magic number was so
07:55
what did we want for financial freedom
07:57
and that was
07:58
a set amount of passive income coming in
08:01
every month
08:02
and so once once you know i reached that
08:04
point i quit my job actually
08:07
and um it’s been great ever since
08:10
and in fact i just drove back i told
08:12
garrison and ferris i’m like
08:14
guys i’m driving back from san diego
08:16
today i literally just landed back here
08:17
in orange county about an hour ago
08:20
and i was able to do that because i
08:22
passively invest
08:23
um and so i hope that that sparks a
08:26
little bit of urgency for all of you to
08:28
go out and learn more and do the same
08:30
awesome and so the recap right i mean
08:32
you you invested in multiple deals you
08:34
kept passive investing until you kind of
08:36
hit your number
08:37
right to where you were comfortable with
08:38
you just basically hey i’m gonna go full
08:40
time in this business right and either
08:42
continue to do passive or certificate it
08:43
sounds like more on the active side is
08:45
that right
08:45
you got it and it’s and i think it’s
08:47
okay to do both right like many of you
08:48
guys also do both
08:50
and my primary strategy is i invest
08:52
obviously
08:54
as a gp to um you know that’s that’s my
08:57
full-time job now and i enjoy it i love
08:59
it
08:59
but i still do the passive side as well
09:02
because i want to continue to learn from
09:04
other people
09:05
from other markets um so that i become
09:07
the best operator possible
09:09
and so that’s why i still choose to do
09:11
both
09:12
all right awesome awesome and so i guess
09:15
on that same note i mean
09:17
you’re maybe the answer for yours is a
09:18
little bit easier but i was going to ask
09:19
how’s it been
09:20
right you know has it been what you
09:22
expected i mean has it been fruitful
09:24
right are you glad you hopped in
09:26
on the passive side before you went into
09:28
the active side that’s probably the
09:29
i think that’s the question that most
09:31
people tend to want to know right once
09:33
people get in there
09:34
hey is it worth it or not right yeah
09:36
yeah and that’s you know that’s a great
09:38
question that a lot of my
09:39
friends and family ask me they’re
09:42
starting to see what i’m doing they’re
09:43
like hmm
09:44
jenny you you’re on to something like
09:46
should i you know
09:47
start just go past the route first or
09:50
should i just jump head straight into
09:51
being a general partner i saw a question
09:53
gp stands for general partner
09:55
and my answer them is look you if you
09:57
still have a full-time job
09:59
um it is okay to say you know what i’m
10:02
just gonna invest passively in a first
10:03
deal
10:05
learn what they’re doing um so that i
10:08
can quickly get up to speed you can
10:09
quickly get up to speed and then decide
10:11
okay is this something i want to keep
10:12
doing or do i want to
10:13
you know burn bridges and jump over to
10:15
the gp side right away
10:16
so it’s always a good idea to passively
10:19
invest one to learn what other sponsors
10:21
are doing but then get a sense for how
10:23
it
10:23
actually works soup to nuts yeah and
10:26
and so your answer is it’s gone
10:29
fantastic and super glad and kind of
10:31
pull the trigger oh sorry
10:32
wasn’t that clear no it wasn’t clear
10:33
it’s going awesome um
10:35
it’s uh you know and you guys are all
10:37
here you know that real estate is a good
10:39
investment it’s stable it’s something
10:41
you can touch
10:42
feel and see for yourselves uh so far
10:45
all the passive ones are doing fairly
10:46
well
10:47
and in despite kovid right happening all
10:50
last year
10:51
they’re all cash flowing occupancy is
10:53
fabulous
10:54
um and so it has proven out to be a very
10:56
successful model
10:58
all righty awesome so mark kind of same
11:01
question to you right really the
11:02
question just ultimately
11:04
you know how’s it been going right is it
11:05
what you expected more work than
11:07
expected less work than expected and
11:09
you know you’re kind of happy you got
11:10
into it yeah the passive side’s pretty
11:12
simple
11:13
um you know either checks come in or
11:15
they don’t so you don’t really have to
11:17
worry about it a lot whether it’s
11:19
quarterly or monthly
11:20
that kind of thing i got my first this
11:23
year i got my first deduction
11:25
uh the ability to um have a tax
11:28
write-off because i’m passively invested
11:31
in a
11:32
project uh so that was that was nice had
11:35
a good year
11:36
and uh the tax deduction i got last uh
11:39
surprised
11:40
on last week actually was was sizable
11:43
and very happy about that so generally
11:46
speaking i want to not work every day
11:47
for sure
11:48
but if i do uh want to work if i do work
11:50
every day or
11:51
any time period working at and doing
11:54
multi-family
11:56
i’m good with that i enjoy that um i’m
11:59
selling real estate and stuff i’m kind
12:00
of uh
12:02
kind of the position now where i’m about
12:03
done uh working on that i just i would
12:05
rather
12:06
do passive and invest a lot and
12:09
vacation a lot so passively will let me
12:11
do that
12:14
i was very happy about that yeah well
12:17
yeah
12:17
being a passive investor vacationing is
12:19
definitely uh
12:20
the life right so i mean i tell people
12:22
like you know being an uh being active
12:24
in this business is also a ton of work
12:25
right like it’s a
12:26
it’s just there’s a lot that goes into
12:28
it and so the real
12:30
perfect world is where you can just go
12:32
passive in a bunch of different deals
12:33
and just kind of sit back
12:35
and let someone else do the hard work so
12:37
um
12:38
so question i guess mark so i’m on that
12:40
same vein right
12:42
you know what what do you look for right
12:44
whenever you’re kind of vetting both the
12:45
deal and an operator and jenny this
12:47
could be the same question to you so
12:48
let’s see if you can come up with
12:49
something that mark doesn’t think of
12:52
that’ll be easy so what do i look for
12:55
why
12:55
why did i invest with uh with uh kingly
12:58
and on the let’s say our two deals that
13:00
we have in atlanta
13:02
uh was was basically um
13:05
you know i i’m pretty trusting and i’m
13:07
i’m real estate oriented and you know as
13:10
as a rule so it doesn’t it’s not hard
13:12
for me to trust
13:14
in the actual uh concept of investing
13:17
into an apartment building and getting
13:19
some money from it so that
13:20
that part of it doesn’t seem risky at
13:22
all to me so the next part of it is
13:24
you know do i do i know like and trust
13:26
the people i’m going to work with
13:28
i’m in grant’s case i don’t know grant
13:31
my son does and uh knows his family in a
13:34
little bit
13:35
but i don’t but that was my first jump
13:38
because he’s got a pretty well
13:39
national you know pretty strong national
13:41
name and then the next one was getting
13:43
to know someone more on a local level so
13:45
i could really get involved and knee
13:46
deep in it and getting to know ferris
13:48
and ben
13:49
and ronnie and uh getting to know you
13:52
guys making sure that
13:53
you know if you guys say something that
13:55
what you’re saying to me
13:57
is real it’s it’s purposeful and it’s
14:00
um trustworthy and if i ask a question
14:03
you’re going to answer the phone and ask
14:06
and you know and answer the question uh
14:08
no questions too small or too big really
14:10
and um there’s definitely a high high
14:13
level of trust and part of that is going
14:15
to be
14:16
your experience level you know investing
14:18
i’m probably going to invest on someone
14:20
else’s first deal
14:21
this coming week i’m going to say next
14:23
week on
14:25
a smaller project from a guy i met at
14:28
one of the um
14:29
at one of the events at your event
14:30
actually and uh
14:32
at mfin in houston uh i’m probably gonna
14:35
invest with him this coming week and uh
14:37
being number five passively and uh he’ll
14:40
be someone i would be
14:41
glad to partner with ultimately and you
14:43
guys as well
14:44
someone that i could meet trust like and
14:46
and know that i’m willing to give them
14:48
my money
14:49
and that they’re willing to do what
14:52
whatever it takes i guess to earn that
14:54
trust
14:54
and we become a friend ultimately and um
14:58
that’s what i’m looking for so that’s
14:59
that’s what we’re able to find and
15:01
working with you guys
15:03
yeah and so so so mark let me ask you
15:04
this is it for you
15:06
you you vet the operator more than
15:08
you’ve had any specific deal
15:10
i i would say probably eighty percent
15:13
true on that
15:14
you know if i if i can’t trust the
15:15
operator or someone i don’t know
15:17
someone i’ve never met uh someone i for
15:20
whatever reason i don’t
15:22
i don’t know if you wanna use the word
15:23
vibe right with or something like that i
15:25
don’t i don’t mesh well with
15:27
uh they’re not going to get my money no
15:28
matter how big the deal is because if i
15:30
can’t
15:31
if i can’t sleep at night after i wrote
15:32
a six-figure check
15:34
um there’s no there’s no deal worth that
15:37
got it and then maybe on the so it
15:39
sounds like for for vetting the operator
15:41
it’s more about
15:43
social soft skills right you know how
15:46
did you mess with them did you talk to
15:47
them did they feel
15:49
good did they communicate well et cetera
15:51
all right what about the deal i mean do
15:53
you
15:53
what what do you do for vetting the deal
15:55
itself
15:56
and do you begin much on the deal or is
15:58
it more hey you’re betting on the
16:00
operator and you know you trust
16:02
by trusting the operator you trust that
16:04
they’ve vetted the deal they’ve done the
16:05
numbers etc
16:07
yeah mostly mostly what you started off
16:09
with i trust the operator you know and
16:11
i’m looking at the deal and i’ve
16:13
i’ve seen several now many of them now
16:15
and they all very frequently look very
16:17
similar on paper
16:19
uh so you know am i gonna get uh the the
16:21
preferred return that i was promised uh
16:24
uh like in the other my first investment
16:26
the preferred return was at six
16:28
um because he’s got the national
16:30
audience i think ultimately he’s able to
16:32
do that
16:32
um but partly i wanted to get more into
16:35
um
16:36
into more but i like the c-class model
16:39
then you know we’re getting into
16:40
properties that need some work and we
16:41
need to go in and
16:43
you know rehab some stuff and increase
16:45
rents i enjoy that and i like that model
16:47
so i’m going to be more likely to go
16:49
that way anyway
16:50
and that’s what you guys do so that
16:52
works out well
16:53
and then the deal itself how much am i
16:55
going to make on the preferred return
16:57
and then
16:57
ultimately when you sell it what will i
16:59
expect to make
17:01
those for sure come into play because
17:03
you know if you said three percent
17:04
then i’m not going to have a
17:05
conversation with you no matter how much
17:07
i like you
17:08
so morning mark i i got a good deal it’s
17:10
four percent all right that’s
17:11
30 better than what you’re expecting all
17:13
right so exactly exactly
17:15
so i’m going to be careful there i want
17:17
to have a certain amount of income but i
17:18
also want to be able to sleep at night
17:20
knowing that
17:21
that um that you guys aren’t in the in
17:23
the background there where that’s really
17:25
used
17:25
on a martini there or something a nice
17:27
tropical drink
17:28
and uh with my money and no property
17:32
looks like that’s where ferris is right
17:33
now i’m saying all right
17:36
i’m using operations from a beach as
17:38
well so that’s the background i normally
17:40
use i had to go something different
17:41
today
17:42
so perfect well thank you mark so jenny
17:45
same questions
17:46
yeah i 100 agree with what mark says so
17:49
you know the numbers are the numbers and
17:52
they are very very consistent
17:54
really across any sponsorship team you
17:56
look at today right they’re very
17:58
you know cash flow seven to nine ten
18:01
percent eight to ten percent
18:02
total returns you know one point seven
18:04
to two that’s a very normal range so
18:06
what you’re really investing in
18:08
is the team and the location that you
18:11
believe in
18:12
and so so i’ll just separate that first
18:14
thing so
18:15
on the deal you obviously should do your
18:18
diligence
18:18
yourself on top of what the the team is
18:21
telling you
18:22
what what does the market look like what
18:24
is the population growth
18:26
what is the job growth what is the crime
18:28
rate so all of that is
18:29
a given any time you choose to give
18:32
somebody else your money
18:33
um that is an expectation that you
18:35
should be doing your own diligence and
18:36
so there’s
18:37
the whole list of things that you should
18:38
be looking for which i you know i won’t
18:39
go into a ton of that right now
18:41
um so that’s that part and then from a
18:43
team vetting standpoint
18:45
obviously a track record right dude as
18:48
marx mentioned you someone you know like
18:50
and trust
18:52
i also though don’t have a problem
18:54
investing with people
18:56
should it be their first deal either if
18:58
they don’t have a track
18:59
record if they’re newer um because they
19:02
are typically more hungry
19:04
they will have something to prove they
19:05
will actually you know triple down
19:07
on vetting the property because they
19:09
have their reputation and their their
19:11
brand on the line
19:13
um but from the investors side you know
19:15
i
19:16
you know now that i’ve been in a few you
19:17
know handful of passive deals i can
19:20
instantly tell who is someone i want to
19:23
invest
19:24
in based on your conversations with them
19:26
this is you know people forget this is a
19:28
people first
19:29
business and so how you interact with
19:31
them how they treat their investors
19:34
um how they treat their property
19:35
management team is very telling
19:38
on what they will do with the property
19:39
and how successful they will be so
19:42
i guess an example i can share is you
19:44
know when you choose to invest with
19:46
somebody you typically have that first
19:47
phone call
19:48
right with with that sponsor or that
19:50
team to to
19:52
you know hey what’s your name and you
19:53
know to share their goals
19:55
if the call is only 15 minutes that kind
19:58
of kills it for me
20:00
because i’m like you’re supposed to get
20:02
to know your investors how much are you
20:03
going to learn about them in 15 minutes
20:06
and to me that just means you know as an
20:07
investor i’m just a number
20:09
i am just you know they’re just checking
20:11
the box to make sure they said yep i
20:13
connected with jenny and now i can put
20:14
her in my database and in my email list
20:17
no i i want to know about your family
20:20
you know where are you living what are
20:22
your goals what’d you do last weekend
20:23
would you do for fun
20:25
um and then get into like okay what are
20:27
your investment goals
20:28
um so that we make sure we’re a right
20:30
fit with each other so if someone’s
20:32
taking the time with me
20:33
to get to know me then that says a lot
20:37
and then do i have access to them so i
20:39
want to be able to just either text or
20:41
pick up the phone and call or email
20:43
and they should be able to respond back
20:44
to me um pretty quickly you know with
20:47
the with the response because you know
20:49
you’re dropping 50
20:50
75 100 grand that’s not that’s not small
20:53
change so you should be able to
20:54
have your questions answered relatively
20:56
quickly
20:58
all right so it sounds like you’re
20:59
vetting the uh the macroeconomics and
21:02
again going back to that social aspect
21:04
by getting to know that operator are
21:05
they available etc
21:07
what about the specifics of the deal are
21:09
you actually underwriting the deal
21:10
pulling up the t12
21:11
asking for it digging in and or are you
21:13
just asking them for their underwriting
21:15
and just validating that
21:16
or again is it just purely the operator
21:19
both so i am a number
21:20
i’m a geek so i like to just do the
21:23
analysis myself so
21:24
you know they’ll show you their numbers
21:26
on their webinar which is great
21:28
but it does not hurt to ask them for the
21:30
rent roll and the t12
21:32
for you to do your own underwriting uh
21:34
because you might want to try a
21:35
different
21:36
you know route of being conservative or
21:38
more aggressive
21:39
um it’s up to you um just trust
21:43
but verify is what i typically go by um
21:46
because again it’s your hard earned
21:47
money
21:47
right you want to make sure no not like
21:50
i’d like to tell people
21:52
most people don’t wire 50 75 100 200 000
21:56
of money to anything else besides a
21:58
house that they’re buying right
22:00
and so there’s absolutely that comfort
22:02
and you know people
22:03
just realizing that that’s a significant
22:05
chunk of money to most people right and
22:06
so
22:07
that’s where that comfort and that trust
22:08
factor comes in um
22:11
so another thing i know people are
22:12
talking about this in the chat that
22:14
neither of you really mentioned changes
22:16
do you guys dig into
22:18
their track record very much or is that
22:19
only for the in the case where you know
22:21
it’s a
22:22
a non-newer operator that you do dig in
22:24
and ask and kind of you know what do you
22:26
look for there as well
22:28
and either of you guys can answer that
22:30
one or both of you so yeah mark you want
22:32
to go
22:34
i i give a really short quick one i
22:36
think on that i i do check
22:37
um i’ve i’ve taken some other classes
22:39
and some other things as well and i kind
22:41
of follow
22:42
uh you know make sure that the the
22:44
cities are growing that there’s not a
22:45
population decrease
22:47
uh make sure the population is
22:49
increasing properly you know 15 to 25
22:51
percent window and then
22:53
that their income is going up like it
22:54
should be 30 or so in the last since the
22:56
last uh
22:58
you know uh uh census and that kind of
23:00
thing make sure that
23:01
property values are increasing uh then i
23:04
check to make sure what the um
23:06
what the rental income what the rental
23:08
income is versus what it costs to buy a
23:10
home in that area
23:11
i do check all that as well especially
23:13
in the one that i’m looking at now
23:15
that’s in new mexico
23:16
i’m looking more into that to make sure
23:18
that the city’s
23:20
you know in fact growing and there
23:21
there’s been a few deals that looked
23:23
amazing
23:24
and then i see that in the last 15 years
23:27
the population has decreased by
23:29
you know three percent or something i i
23:32
can’t i can’t be comfortable with that
23:34
unless
23:34
unless if it was in my own backyard i
23:37
might be
23:38
you know if i lived there maybe i could
23:39
be okay with that but uh
23:41
investing passively uh with with a new
23:43
operator
23:44
and a town that’s losing population um
23:47
that’s probably one of the first things
23:49
i’m going to i’m going to shy away from
23:50
that
23:51
from that off not the operator
23:53
necessarily they may think it’s a good
23:54
deal for whatever reason but
23:55
that particular deal that could prevent
23:57
me from jumping into that deal because
23:59
of the population
24:00
decline some areas have declined in
24:03
population for the last 25 years
24:05
straight so
24:06
you really don’t want to get mixed up
24:08
with something like that
24:11
all right did anything else add to that
24:13
yeah
24:14
i think one of the easiest things you
24:16
can do to vet an operator
24:18
or a team is just ask for references so
24:20
hey if it’s someone
24:21
new that you’ve never invested with
24:23
before just say can you can i have
24:25
you know two to three names of your
24:27
current investors um so i can call and
24:30
and just get their opinion
24:32
um and if they say no that’s a that’s a
24:35
red flag right if they’re not willing to
24:36
share any names of people that could say
24:38
good things about them
24:40
um and if they do call them and just ask
24:42
them hey how do they operate
24:44
you know again for me i ask things like
24:47
well how often do you communicate
24:49
is it a monthly or quarterly newsletter
24:51
i would expect a monthly
24:52
newsletter um because there’s so much
24:54
that can change in a quarter
24:56
do they share financials monthly or
24:58
quarterly um
25:00
you know how how is their platform set
25:02
up
25:03
and so just those different operational
25:05
styles could also make or break
25:08
um because i don’t want to have i’m busy
25:09
too i don’t want to have to chase down
25:11
my sponsor to
25:12
you know find reports or you know not
25:14
have that information easily for me
25:17
yeah and it’s funny you mentioned the
25:19
referral thing because i i think i know
25:21
i did that
25:21
up front not enough investors asked for
25:24
that right i’m
25:25
being on the operator’s side we’ve done
25:27
many many deals and honestly i don’t get
25:29
that question
25:29
and as much as i would expect or as much
25:31
as i would even want right like i would
25:33
expect it more and
25:34
you know and i think it’s a great way
25:35
for people just to get to know let’s go
25:37
talk to someone that’s gone full cycle
25:38
right
25:39
yep and so yeah i mean i’m surprised not
25:41
enough not enough pass investors asked
25:43
that question so if you guys are looking
25:44
to pass invest
25:45
i think it’s a good question i think
25:46
it’s important right go talk to it you
25:48
know an opera
25:49
another investor candidly right
25:52
outside of the operator’s purview just
25:54
to kind of dig in and see
25:56
and you know and ask that person that
25:58
what’s the good and the bad right
25:59
because not every operator
26:01
no operator is perfect right there are
26:02
absolutely things that a
26:04
passive investor wishes they did
26:05
differently right and so um
26:07
yeah that’s i think that’s a good one
26:09
and then i think reading over some of
26:11
the chats um you know madeline hope
26:12
you’re doing well
26:13
she she said it right taking out a
26:15
property every month is not something
26:16
someone i want to do to invest with
26:18
right
26:19
especially you know because again it’s
26:20
easy to buy deals it’s hard to operate
26:22
and perform deals right and
26:23
in this business it’s about you know
26:26
under promising over delivery right set
26:27
the right application with the past
26:28
investors
26:29
and hit that right it’s better to say
26:31
look i’m going to give you a
26:32
average of you know eight instead of
26:34
eight and a half and actually hit the
26:35
eight
26:36
versus tell you eight and a half and
26:37
still give you the eight right well now
26:38
you miss set the expectation if people
26:40
are disappointed
26:41
um and then reading over a few of these
26:45
i mean
26:45
another comment that i saw that i
26:47
actually 100 agree with which is
26:48
it’s ultimately that a good a bad
26:51
operator can make a good deal bad
26:53
a good operator can you know maybe make
26:55
a deal okay
26:56
right and so i mean operations are key
26:58
and i’m a big believer that i think the
27:00
next decade is
27:01
it’s the it’s the decade of the operator
27:03
right i think operations are critical
27:05
and you know for us and we’re focusing a
27:06
lot of energy just on
27:08
you know building up that back office
27:09
doubling down the operations because
27:11
again
27:12
i think a lot of people have been able
27:13
to ride the wave right with rent you
27:15
know with rent growth and appreciation
27:17
you know it’s just you haven’t had to be
27:18
a tight operator whereas i think that’s
27:20
going to change just as
27:21
margins are getting tighter as deals are
27:23
getting tighter so yeah
27:25
and just to add to first so not only you
27:27
can don’t just vet the
27:29
team but also who’s their property
27:32
manager
27:33
right and so you can there’s i mean you
27:35
can just google anything on right now
27:37
and find an answer
27:38
find reviews go online check them out
27:40
how many properties do they manage
27:43
you know and um get a feel for how they
27:46
operate too because they i mean
27:48
you guys know property managers will
27:49
make or break your deal as well
27:51
and so you can have a great operator too
27:55
but a crappy property manager and that
27:58
can just delay your returns
27:59
as well so i think it goes both ways
28:01
there too yeah i would say the property
28:03
manager is is more important than the
28:05
operator in a lot of ways right
28:07
i mean ultimately like it’s a proper the
28:10
property management company is the
28:11
company that can kill a deal easily
28:13
right and you know ask me i know from
28:14
experience right we started our own
28:15
management company because
28:17
we saw just how poor most property
28:19
management companies are out there and
28:21
you know there’s no care in the world
28:23
around operating deals tightly and
28:24
effectively so
28:26
yeah the problem but i would say i’ll
28:27
disagree with you jenny i don’t think
28:28
you can google that information
28:30
it’s really hard to google figure out
28:32
what management companies are good and
28:34
bad
28:34
right because ultimately what are you
28:36
going to find right is it going to be
28:38
tenant reviews where the tenant are
28:39
disappointed because most of the time i
28:40
want to
28:41
disappoint attendance leave reviews and
28:42
it’s really to get that information you
28:44
got to talk to other operators and
28:45
figure out who has
28:47
you know really use that management
28:48
company just like you vet a operator
28:50
yeah go ahead and vet the management
28:51
company tell me you know give me three
28:53
of your referrals i want to talk to them
28:54
right
28:54
exactly yeah you know i just i just
28:57
thought of something i’ve never
28:58
done this before but maybe you could
29:00
could you um
29:01
you know secret shop an apartment that
29:04
that
29:04
property manager currently owns and see
29:06
how they interact
29:07
no absolutely i’ve done that right and
29:09
again but then it tells you
29:12
it just the problem is it’s it’s so so
29:14
dependent on the on-site person and yeah
29:16
i agree yeah that’s why i think most
29:19
managed companies fail that there’s not
29:20
really a good continuity of corporate to
29:23
that level so let’s see i’m looking
29:26
through a few more of these questions
29:27
look for jobs austin is a good choice
29:29
because if they still
29:32
let me ask uh hey jenny and mark let me
29:34
ask you two a question
29:35
have either of you experience any type
29:38
of
29:39
bad situation any type of bad investment
29:43
what’s your biggest headache or
29:44
nightmare that you’ve experienced so far
29:46
investing passively if any
29:51
yeah i the ones that i don’t
29:54
love are the ones to the point that the
29:57
the operating team does not do a good
30:00
job so i know
30:01
not we’re not perfect um but you have to
30:04
know how to handle a problem
30:06
and so yes if something goes wrong okay
30:10
it’s it’s hopefully it’s not your fault
30:12
if it is and even if it wasn’t
30:14
what is that plan to fix it and then are
30:17
you forthcoming so i would rather
30:20
you know you tell me in a report and
30:23
you know something broke or you know we
30:25
had 10
30:26
tenants that just up and left in the
30:28
middle of the night okay great
30:29
now what is the plan to fix it and what
30:32
is the timeline
30:33
it’s it’s a sucky situation but as long
30:35
as you tell me you have a plan in place
30:37
that’s okay versus not informing i think
30:40
the communication is probably the one
30:42
thing
30:42
i’ve seen some teams struggle with that
30:45
i wish
30:45
they would improve on um you know other
30:49
on the pro side where things are are bad
30:52
but
30:52
they show that they have a plan in place
30:54
so for example you know the texas freeze
30:56
happened
30:56
and so some of the properties i invested
30:58
in there were a lot of damage
31:01
um that happened because of the storm
31:03
well my expectation as a passive
31:05
investor would be okay we’ll
31:06
quickly assess we’ll check to make sure
31:09
your tenants are okay
31:10
uh then quickly assess the damage and
31:13
let us know what that looks like
31:15
versus one of them you know took maybe
31:18
two months before they even actually
31:20
came out to us i had to like say hey how
31:22
is the property doing
31:23
you know you have to be proactive and a
31:25
communication on things like that
31:27
are super critical so that could you
31:29
know you know would that deter me from
31:31
investing with them
31:32
again not yet but it could build
31:35
on some more if that continues right
31:38
absolutely and i think
31:40
communication is key right as an
31:41
operator there are some things you you
31:43
know there are some mistakes that you
31:44
may have made and there’s some mistakes
31:45
that
31:46
are out of control again it’s about
31:48
communicating it
31:50
setting that expectation and showing
31:51
that you have a plan to resolve it right
31:52
so ultimately i’m not disappointed as a
31:54
passive investor if that person
31:56
identified the issue put a plan in place
31:58
and you know nipped it right and now
31:59
things are going
32:00
forward versus kind of letting it really
32:03
you know you don’t want to let things
32:04
fester
32:04
right and so i think festering is the
32:06
the root of all evil so
32:08
be intelligent and kind of aware of that
32:10
and i think mark were you gonna add
32:11
something just now i’m just to say that
32:13
obviously with with covet hitting and
32:15
not getting distributions as expected is
32:17
painful
32:18
especially if i’m guessing that most
32:21
people that are giving the kind of money
32:22
that is required
32:23
they’re not really living off of that
32:25
but uh but
32:27
also you know when you’re expecting to
32:29
get four or five
32:30
six hundred or a thousand dollars a
32:32
month from a particular property
32:34
if it’s not coming in as expected you
32:36
know why not and again a good
32:38
explanation and you understand you know
32:40
there’s things that happen with with
32:41
cobit and whatnot
32:42
can’t get rid of bad tenants and
32:43
different things and there’s a certain
32:45
safety now you got to make sure you have
32:46
income
32:47
in case it really gets bad but at some
32:50
point
32:50
uh you know not getting that regular
32:52
check that can become a problem
32:54
so i i know i from talking to others and
32:58
hearing other conversation about that
33:00
that’s a that’s a significant concern i
33:03
think in the end
33:04
uh we’ll be fine all the properties will
33:06
be good but
33:08
not getting that check on a regular
33:09
basis as originally agreed
33:11
is not a it’s not a good day yeah and
33:14
just
33:15
one more ad so here’s another really
33:16
good example that i was really happy
33:18
about so covet started last year
33:20
and what did this team do instead of
33:23
monthly
33:24
they started sending weekly reports and
33:26
i’m like at first i was like wow this
33:28
is kind of overkill but then it was
33:30
great because
33:31
what is the first question people ask
33:32
when covets started well are people
33:34
gonna keep paying rent
33:35
right and so then they literally just
33:37
started sending weekly communication
33:39
just a quick update on
33:40
hey guys collections were x percent this
33:42
week it was better than
33:44
last year’s same week number by 10 so
33:47
we’re okay
33:48
we’ll continue to track and keep you
33:49
posted and then it tapered off obviously
33:51
a couple months later
33:52
because things were still you know were
33:53
actually better than expected so
33:55
just the initiative to do things above
33:57
and beyond
33:58
um means a lot yeah and i think it’s
34:01
it’s easy as an operator to say look i
34:03
only committed to this i’m only doing
34:04
that but
34:05
you’re right i think you know again
34:06
things happen and just showing
34:08
you know people that that they’re you
34:11
know trying to communicate right
34:13
for us like you know i’ll be the first
34:14
to admit i mean we do we do
34:16
mid-month updates still and they’re a
34:19
pain i’m not gonna lie right as an opera
34:20
it’s a lot of work right to do
34:22
you know these updates for every deal
34:24
and kind of work through it but i think
34:25
it’s important and
34:26
investors appreciate that so if you’re
34:27
an operator again communication with
34:29
your investors i think is key
34:31
um so i want to shift gears a little bit
34:33
before we wrap up because i know we’re
34:35
not too far from time but you know
34:38
we’re talking about multi-family right
34:40
have either of you guys invested in
34:42
anything else outside of that
34:43
right for the past investing side
34:46
possibly no getting ready to i’m going
34:50
to be this week actually
34:52
what are you investing into this week
34:54
mark uh it’s a
34:56
uh a hotel that’s going to be built in
34:59
playa del carmen
35:00
uh it’s gonna be a marriott there on the
35:02
beach and um
35:04
through some series of connections i’ve
35:07
met with the people that are doing that
35:08
project they’re they’re gonna be
35:09
building that starting construction
35:11
inside the next
35:12
i’m gonna say 90 days maybe 60 days once
35:15
their financing is in place so
35:17
they’ll drop tractors and start grading
35:18
and doing what needs to be done
35:20
i i found out about it a good time
35:22
because
35:23
they’ve been working on it for two years
35:25
already trying to get all the approvals
35:26
and the entitlements and stuff
35:28
uh from mexico and from the from the
35:30
different entities they have to get
35:31
there
35:32
and that’s all in place and so now it’s
35:34
time for them to get going so
35:36
i’m going to give that a shot it’s going
35:37
to be an interesting fact first i want
35:38
to talk with you about it at another
35:39
time with more detail
35:41
because there’s some things there that
35:42
they’ve implemented that i think could
35:44
cross over into the multi-family
35:46
yeah always happy for new ideas so
35:49
wonder what that construction
35:50
cost looks the difference between day
35:53
one and day now
35:54
looks like with uh the increased
35:56
expenses due to covert
35:58
originally it was helping because you
35:59
know the the the peso
36:01
versus dollar uh thing was really
36:04
helping them actually because the
36:05
dollar when they started the project was
36:08
uh was not as strong
36:09
against the peso at that time and so
36:11
their construction costs i haven’t
36:13
talked to them in the last three weeks
36:14
about that particular thing which is a
36:16
great question
36:17
but uh prior to that they were actually
36:19
very happy because of the
36:20
the spread and the in the currency so
36:23
they were actually going to be able to
36:24
get like a 10
36:26
um improved construction costs over
36:29
what they were thinking it was going to
36:30
be originally very interesting
36:34
so any other asset classes
36:38
yeah you know right now i am tripling
36:40
down on multi-family
36:41
um but i will be open i am open to and
36:45
passively investing in um other units so
36:50
self storage mobile home parks i’ve even
36:53
sat on a webinar on atm machines so
36:56
um i think you know i 110 believe in
37:00
real estate i don’t know enough yet
37:02
which is why i’m open to learning more
37:04
about some of these other asset classes
37:05
because i don’t
37:07
want to be left behind i think you
37:09
should always be learning more and more
37:10
and more
37:11
um to see what else is out there let’s
37:14
let’s buy a laundromat
37:15
i always wanted to buy a laundromat cash
37:17
business
37:22
me too for the for the mobile home parks
37:24
i’ve listened to all of uh
37:26
many many probably 80 or 90 mobile home
37:28
park podcasts and
37:30
and uh self storage as well i come i
37:32
almost bought uh i had an opportunity to
37:34
buy a mobile
37:35
park or a uh self storage recently
37:37
relatively small it was 71 units
37:40
it was cash but it was in an area i
37:41
couldn’t get enough feedback on and it
37:43
sold the same day that i
37:44
found out about it so i couldn’t jump
37:47
into that but i would have been
37:48
i would have been a general partner on
37:49
that one but i i’m certainly open to
37:51
investing in
37:52
those two things as a passive fantastic
37:55
hey
37:56
so then maybe you know the drum roll
37:59
question right is
38:00
anything else out there that we haven’t
38:03
discussed they think it’s important for
38:04
past investors to to know
38:06
whether they’re new or experienced
38:10
good jenny
38:12
[Laughter]
38:14
um no i mean we hit on the big one so do
38:17
your homework
38:18
right on this on the team and the deal
38:21
um
38:22
i think and i maybe i mentioned a little
38:25
bit this early but it really
38:27
is taking action so as
38:30
you can spend the next month year
38:33
you know two years humming and hawing
38:35
and then collecting all this
38:36
these resources and knowledge that
38:38
you’re doing right now but it does it
38:39
means absolutely nothing
38:41
until you actually take action so that’s
38:43
something i really encourage
38:45
everybody to do is just continue to
38:47
learn and find sponsors and deals
38:49
but if you don’t do anything it it just
38:52
it’s
38:52
it’s gonna be a waste of your time so
38:54
just do one deal
38:56
learn from it pivot if you need to and
38:58
then just keep going
39:00
right um and then you’ll you’ll just say
39:02
the same thing i always say gosh i wish
39:03
somebody
39:04
told me to get my butt moving 10 years
39:06
ago
39:08
i take action i mean i go to events and
39:09
i sometimes you go
39:11
for a year and two years you see the
39:13
same person they’re still kind of
39:15
wanting to continue to learn but at some
39:17
point you just have to bite the
39:17
bulldozer so i will absolutely resonate
39:19
with you yeah set a goal you know put
39:22
your goals out
39:23
there i’ll learn all i can up until
39:24
august and august i’m i’m going to act
39:26
on any option that makes sense right
39:27
something like that so
39:30
mark anything else no similar uh
39:33
just that i i would say if you’re
39:34
nervous about something in particular
39:36
a particular either you know idea or
39:40
concept of investing possibly
39:42
like that attend some of the events go
39:44
and meet the people in person there’s
39:45
plenty of events right now you can go to
39:47
like i said rod’s event or one of
39:48
ferris’s events or
39:50
um you know meet kenny wolf or something
39:53
i mean go to something
39:54
and you can find out a lot about the
39:56
people that are sponsors at those events
39:58
from the other people
39:59
so you can kind of get that whole you
40:01
know experience level and hey what do
40:02
you think
40:03
are you invested with these guys and you
40:04
find that you know i’ll talk to 10 or 15
40:07
different people
40:08
at one of those events and seven of them
40:10
are already invested in projects some of
40:12
them are my partners it turns out
40:14
you know they’ve invested in the same
40:15
projects that i’ve invested in so it
40:16
turns out oh
40:17
then we right away have um a
40:22
focused purpose you know we already know
40:23
we’re in one deal together
40:25
why not partner maybe on another deal
40:26
ourselves or jump into or they’ll tell
40:28
me about another project they’re
40:30
investing in
40:31
so you really get to know the people
40:32
very well doing in that way
40:35
i agree and that’s part of why we put
40:36
them on right so you know it’s it’s
40:38
funny because yeah i had another
40:40
operator say why would you do these
40:41
events if you basically invite all your
40:43
passive investors
40:44
to these events so i can get to meet
40:45
them right there’s another operator
40:47
and i’m like hey you know they don’t
40:48
invest with me just because right you
40:50
know the track record or whatever
40:52
this is is uh something that you can’t
40:55
you know kind of
40:56
repurpose or take so awesome guys well
40:59
definitely appreciate you both taking
41:00
the time out of the day for this you
41:02
might you guys mind leaving or maybe go
41:04
ahead and just have a recording
41:06
how can someone get a hold of you if
41:07
they want to get ahold of you i can uh
41:09
throw my information here in the chat
41:11
uh if it’s recorded i don’t know but i
41:13
can do that but um
41:14
mark markchapel.com is my email
41:18
yeah and i just plugged mine down there
41:19
as well so jenny vertical
41:21
streetventures.com
41:23
you can also visit my website
41:25
verticalstreetventures.com to learn more
41:27
um and happy to connect i love talking
41:30
about if you guys can’t talk
41:31
so come find me and i’ll say this most
41:34
most
41:35
operators or people that are on the
41:37
operating side or
41:38
active passive investors lots of talk
41:39
about real estate so i’m sure you know
41:42
it’s uh
41:42
you’ll see for those that are new in
41:44
this business you’ll continue to see
41:45
that right we are happy to kind of talk
41:46
about it answer questions etc
41:48
but guys thank you both very much it’s
41:50
definitely a pleasure getting to talk
41:51
with you all
41:52
hopefully you know people enjoyed this
41:53
right really just kind of a casual
41:55
conversation around the good
41:57
the good the bad but i enjoyed it thank
41:59
you guys very much
42:00
um with that said we’re going to go
42:02
ahead and shift over to breakout room so
42:03
what we’re going to do
42:04
and hopefully our awesome speakers will
42:06
stick around for it right
42:08
we’ll break the audience up into you
42:09
know groups of about seven people
42:11
right garrison you want to go ahead and
42:12
set it up for seven people you know and
42:14
go ahead and knock out the breakout
42:16
rooms and just to give you guys a heads
42:18
up we’ll keep this channel
42:19
open afterwards and we let the
42:21
networking continue
42:22
long after we’re gone sometimes this
42:24
lasts an hour or two afterwards
42:26
yeah absolutely so you know really like
42:28
we like to say right
42:30
multifamily in real estate is just team
42:32
sport get out there get to know somebody
42:33
go talk about something people don’t
42:35
know what to talk about
42:36
tell them about what you did this past
42:37
weekend right nice easy topic just
42:39
there that’s true that’s y’all’s little
42:40
warm-up conversation and you know let’s
42:42
get out there go talk to somebody and
42:44
we’ll see you guys back here soon since
42:45
garrison’s already opened it up so
42:47
see you guys
43:08
you