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
