Commercial Real Estate Investing With Jarred Elmar Of The Geneva Group

The REI Diamonds Show - Daniel Breslin | Jarred Elmar | Commercial Real Estate

 

Jarred Elmar of The Geneva Group has learned so much in his journey from investing in single-family home to building a diverse commercial real estate portfolio. He joins host Dan Breslin in this enlightening conversation about the most valuable lessons and takeaways from his career experiences. Together, they explore the importance of “buying right” and adhering to fundamental investment principles. They also discuss the current state of the multifamily market, noting the potential for distressed assets to emerge due to expiring loan terms and overbuilding in certain areas.

 

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Jarred Elmar & I Discuss Commercial Real Estate Investing:

  • Transition From Residential To Commercial (00:01:21)
    Jarred Elmar transitioned from residential to commercial real estate after an unsolicited offer for his single-family homes in 2007. This move allowed him to capitalize on the REO market and scale more efficiently with multifamily properties.
  • Lessons From First Multifamily Deal – “Buying Right” (00:04:05)
    His first multifamily deal in Atlanta in 2011, purchased at $9,700 per door and sold for $18,000, taught him the critical importance of “buying right” at market lows, as this saved the deal despite numerous challenges.
  • Luck Vs. Skill & Delusional Optimism (00:06:50)
    Jarred emphasizes that while luck plays a role, especially with good market timing, relying solely on momentum is dangerous. He highlights the need for “delusional optimism” to take risks, but warns against confusing luck with true skill.
  • Focusing On Primary Markets (00:12:52)
    The Geneva Group’s strategy focuses on primary markets (e.g., Atlanta, Fort Lauderdale) because they are more resilient during economic downturns, being the last to fall and the first to recover.
  • Impending Multifamily Opportunities (00:15:38)
    Jarred foresees significant opportunities in the multifamily market due to maturing loans, past overbuilding, and rising expenses, which will likely lead to many quality assets becoming available.
  • Fund Structure Vs. Individual Deal Capital Raises (00:18:03)
    The Geneva Group raises capital for individual deals rather than through a fund. This avoids pressure to deploy capital, allowing for more selective and disciplined investments, thus safeguarding investor returns.
  • Identifying The Right Timing (00:24:21)
    Jarred acknowledges that market timing can be tricky, as seen in a recent multifamily deal in Atlanta where they were “a little bit early” due to bank reluctance to purge bad loans and market oversupply. He anticipates rent increases in 9-12 months.
  • Information: The Most Critical Piece (00:27:20)
    Beyond a low purchase price, superior information is paramount for successful commercial real estate deals. This includes thorough due diligence on municipal projects and identifying potential tenants to enhance value.
  • Phone Book And Gym Subscriptions (00:34:05)
    Jarred’s early sales experience cold-calling from a phone book for gym memberships honed his salesmanship and proactive approach, a philosophy he applied to later real estate ventures.
  • A Review Of Jarred’s Numbers (00:43:06)
    The Geneva Group’s portfolio boasts 1.5 million square feet and over 60 transactions in 13 years, with an average 33% annualized return for investors. This success is attributed to strict discipline and selectivity, with about four deals closed annually from numerous offers.
  • Jarred’s Book Recommendations And Contact Info (00:48:04)
    Jarred recommends his book, “Built From Nothing,” and classics like “Think and Grow Rich.” He can be found via Google or his company website, Genevagp.com.
  • Getting The Right Motivation (00:50:20)
    Jarred credits his mentor, Ben, an “industrial king,” whose unselfish guidance on his first industrial deal was a career catalyst. This act of kindness reinforced Jarred’s belief in the abundance that comes from giving back.

 

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Commercial Real Estate Investing With Jarred Elmar Of The Geneva Group

Mr. Jarred Elmar, welcome to the show. How are you doing?

I’m doing good. How are you doing?

I’m doing well. I’m recording from Chicago, and you are recording from?

I’m currently in Deerfield Beach, Florida, Fort Lauderdale, Florida.

Why don’t we start? I know you. I know many of the people on our newsletter, podcast readers know you as well from our mutual group, I guess, but why don’t you start with, like, who is The Geneva Group? What do you focus on, and then the abbreviated version of how you arrived at this moment in your business?

 

The REI Diamonds Show - Daniel Breslin | Jarred Elmar | Commercial Real Estate

 

Transition From Residential To Commercial

You and many other listeners, we buy value-added commercial real estate. Our portfolio runs the gamut through between multifamily, office, retail, and industrial. I would say 60% of our portfolio is industrial in nature, specifically small bay industrial, that’s a bread and butter. I started in residential, like many people listening, bought houses on the courthouse steps at auctions and tax sales, and did that natural evolution from residential to commercial.

When I got solicited for an unsolicited offer to buy the bulk of my single-family homes, at the right time, which happened to be in 2007. Obviously, I had no idea what was coming up in 2008. The timing was good for me to be in a good position to take advantage of REOs that started flushing through the system in 2009. I got into multifamily, which is the easy progression or natural progression from residential single-family homes to multifamily. I got into an apartment complex.

From there, I wanted to divest and figure out where I could best scale a business, and started getting into retail, office, and industrial. Over the years, we built a well-balanced portfolio, and we still have that quandary, whether we want to get laser-focused on one product type or simply be opportunistic and continue to buy different product types and have that many more at-bats. That’s my 30,000-foot view of how we got started. Geneva Group was originally set out to buy single-family homes at the auctions.

I had a good system in place on bidding and pull entitle on 100-plus homes each month. It evolved. I realized that was me being a rogue investor, and it was going to be very difficult to scale a business with residential homes. There are a lot of inconsistencies, and you’re driving from one unit to another. It’s very different than when you consolidate to one place and have all kinds of consistent units, fixtures. It was easier than most people think to make that jump.

From single-family to multi-family, I guess that was in Atlanta Region 1. What was that around 2011, somewhere in there?

Lessons From First Multifamily Deal – “Buying Right”

Yeah, in 2011 we bought 156 units. Look, what gave me the confidence is that I had single-family homes scattered throughout Atlanta. I knew the good pockets from the bad pockets. I knew those markets. I knew that the apartment complex I bought was not in the best area. It was hood, but it was on the good side of hood. It wasn’t much crime. I only knew that because I had these houses all scattered. The efficiency that came along with buying an apartment complex and selling off the houses, the revenue jumped that much more, with half the work.

I know the answer because I read your book, but the price per door on the way in price per door on the way out.

We paid $9,700 a door in 2011. We sold it for $18,000 a door. You’ve heard this story many times. I told you many times. Everything could have went wrong in this deal went wrong. I had fires, I had a murder. I had cars going through a building. I had strong-arm robberies, all theft. Still, sixteen months later, we were able to turn this thing around and deliver a great return to our investors. That wasn’t because I’m so good. That was my first commercial deal. I only knew so much. I was learning on the job, that scale, but I bought it at the lowest point, arguably. This has been one of the greatest bull runs of real estate in history. We bought in 2011. Buying at the right price at the right time bailed me out of a bad deal because today, I would never buy that deal. If there was a deal for $10,000 a door in Atlanta, I’m not buying it. I won’t even look at it.

I’m sure that one is selling what would look like a screaming deal to today’s investors. It’s probably like $55,000 a door for that same.

That’s probably right. $55,000 to $60,000 a door. That sounds about right. The thing is, the guys who bought it from us were a bunch of, I met them, and again, a little chip on my shoulder. They seem like a bunch of Ivy Leaguers from Southern California. They had delusions of grandeur. They were coming in. They were a non-renewal for everybody.

They were going to upgrade the units and make this thing look like the Taj Mahal. They thought that they were going to get rents commensurate with the high caliber of the finishes that they were going to do. They put way too much money in that deal. They technically overpaid at that time, and they got stuck. They got stuck for years. They couldn’t get out without losing money. They had to wait.

Luck Vs. Skill & Delusional Optimism

They needed time in the market to bail them out, and that was still a good time in the market. I think they wound up selling in 2015. The next guy who bought it in 2015 had a triple homicide with three 15-year-olds over a video game. That guy’s still holding the deal. He cannot get out. There’s such a stigma about that deal. I’m very jaded when it comes to class C apartments. I think there are a lot of easier ways to make money in commercial real estate than buying Class C multifamily.

As you were talking, I was thinking about one of the themes. Have you ever read Thinking in Bets by Annie Duke?

Yes.

There’s a lot in there about luck and making good decisions, and having a good process. When you’re met with what I talk about with my team, a lot of luck in the market, things go tremendously well. Real estate is a tricky business, Jarred, because people can not have a good process. Make all the mistakes in the world, and get lucky and make a bunch of money.

In my opinion, that’s the most dangerous thing that could happen to someone early in their career because they think it’s just like they put too much allocation on their skill, and they think they’ve got the process mastered, and didn’t recognize the amount of luck that occurred there. All that said, if you’re not going to get in the game and you’re not going to put some risk on, you’re not going to put some money in a deal, you’re not going to pull the trigger and buy something, fix it up, flip it.

You’re not going to step up and do a commercial deal. You’re never going to put yourself in a position to get lucky. I wrote an article, which I sent out to the newsletter, I don’t know, 5 or 6 months ago, and the title was Delusional Optimism. My delusional optimism is that I want to know where I can get lucky a little bit in this deal if things go my way. I’m not underwriting it, and I need that optimism in order for things to make the deal pencil out. If I’m going to go in on a deal, I want there to be some small chance that we’re going to get lucky in the market.

I say this all the time. This business allows you to get very lucky. I didn’t necessarily do things right on the apartment deal, but I did the right thing. For me, in that moment, the right thing was not putting traditional debt on a deal that I didn’t know what I was getting into. I didn’t have experience with that scale. I didn’t put on any traditional debt. Thank God I didn’t because we wouldn’t have been able to cover debt service for the first 6, 7 months. It was not cash-flowing.

The good news is I was able to get lucky even though I didn’t know what the hell I was doing. I’ll be the first to say it. My skill set and my superpower at the time were being too ignorant to realize that I could lose on that deal. I agree with you. The last thing I want to be, Keith Cunningham talks about, you don’t want to be running enthusiastically in the wrong direction. That happens so much with people that we even know very closely, Dan.

You mentioned this earlier, the idea of getting lucky, and people don’t realize and it’s probably the most dangerous thing to happen is that somebody gets lucky. You need timing skills and balls in this business. If you have balls at the right time, you don’t necessarily need skills. That’s happened so many times with people that we know that just hit the market right.

They bought in tertiary markets, they bought deep value add deals. They bought crazy asset classes that nobody wants to touch, but they caught the right time in the market. That’s a momentum play. We’re fundamental and we’ll always be fundamental. We’re 20 miles from Miami. I would love to own. I was born and raised in Miami. Miami is the new New York and LA. The values are up there now with New York and LA.

I won’t buy because, in my opinion, I do believe there are some fundamentals, but Miami, more than, by and large is a momentum play and we’re just not momentum investors. We’ve seen that so many times with people that we know that they’re just going with the momentum, and that is a dangerous game. At some point, the music stops, and you’re left without the chair.

There’s a lot of money to be made in a momentum play if you catch it right, but the risk, I think, people are unaware of, maybe the level of risk they take on all the way through that entire momentum play. It’s a give and take. I entered the Atlanta market on a momentum play mindset. When you sold in 2007, those prices went down in some of those houses, like 60%, 70%?

 

People often just go with the momentum, which is a dangerous game. The music will stop at some point and you will be left without a chair.

 

Yes.

We came in 2016, we started buying houses, and you look at the public record, you see what they bought it for in 2011, 2010, 2009, etc. I’m like, “Man.” You see what they traded for even in ‘07, ‘06, ‘05. It’s like, these were brand new construction homes in 2005 that sold for whatever, $130,000, and they were bought for like $26,000 like five years later.

It’s an unbelievable time.

Yeah. But, but then on the flip side of that and coming back, I feel like the fundamentals have been pretty strong over the last 15 to 20 years in Atlanta in terms of population growth and a business-friendly environment.

Great content.

It’s the ACK structure, so we went in in 2016. When I first looked, it’s like, “All these prices are all over inflated. There’s no way this bubble could continue,” but it was a momentum play where we put our flag down and we’ve had a hell of a decade now I guess, since 2016 in the atlanta markets. It’s a little bit soft but I think that still enough fundamentals where if the price discounts calm maybe it’s 10% or 20% over the next 36 months of value drop and we’ve already seen 10% in some of the areas, but there’s a lot of areas there that simply are unwilling to move based on the desirability of the school districts and things of that nature.

Focusing On Primary Markets

If not, my style of investing personally to be a momentum player. One thing you touched on there, and I think I want to do a double click on is I’ve never seen you pitching a deal that’s not in a market where I’m like, “Holy shit.” The fundamentals, the growth, the dynamics of this Florida deal, or this Kennesaw deal, or the Tucker, Georgia deal. I know these markets, and they’re not like, “Wait, what’s that town I’ve never heard of?” I have to Google the population. Have you intentionally focused on more, I mean, these are primary markets?

In the beginning, we’re looking for value add deals. We took a flyer in maybe tertiary markets. In Florida, Lakeland, which has some decent demographics and has quite a bit of drivers for a small city with 100,000 people. Its tertiaries can be. We bought an office building. Thank God we sold that office building. We did well on it, but we sold it. The guy who bought it from us paid too much, and he cannot get out.

That is what happens when the market turns. The tertiary markets are not where you want to be when there’s a sense that the economy might slow down. Those are the markets that get hit the soonest and come back later. Whereas the major markets, the primary markets like Atlanta, even Fort Lauderdale, those markets, they’re the last to fall and they’re the first to come back. That’s just a fundamental principle that we have is that we want to stay focused on primary markets.

Now, we’re buying a deal in Asheville, North Carolina. Asheville historically is tertiary, but the drivers that I’m seeing in the small market and the supply constraints and the cost of construction in that area, because the topography is very different. Besides just the storms rolling through, and you’ve got the contractors that are crazy busy, we’re looking at industrial in that market. There’s a very low supply of industrial, quality industrial in that market. That’s a market that we see uptrend.

Nashville, Tennessee, was another one. In 2014, we got involved in Nashville. Nashville would not have been considered a primary market at that time. Now they’ve never seen a boom like they’ve seen before. We’re trying to figure out where the puck is landing before we pulled the trigger on it on the market. Again, it’s what keeps us out of the abyss. It helps me sleep at night knowing that if all else fails, I bought in a good market, I bought a quality asset, and all the fundamentals behind it made sense at the time of the purchase.

Impending Multifamily Opportunities

We’re buying right. If we’re buying with the idea that the market’s going to give us 10% rent growth every single year, that’s momentum-driven. That’s what’s happened, especially in multifamily. I don’t mean to keep picking on multifamily, but that’s exactly what’s happened and why the opportunities are starting to present themselves in that asset class to get the small guy all the way to the big guy. Everybody was buying based on momentum.

Everybody had floating debt. Everybody thought that good times would last and rents would continue to go up, and nobody thought expenses were going to blow out like they did. It is a perfect storm for a lot of these assets, quality assets to flush through the system and give all of us an at-back. The bigger institutions are going to pounce all over multifamily.

Everybody’s got dry powder for multifamily, the larger guy all down to the smaller guy, but we’re going to get our tregs. We’re going to get our 500, 800 units. You will too. A lot of your readers will also, because there’s going to be that much good inventory that’s going to be hitting the market in the next 6 to 12 months. It has to happen. There are way too many bad loans on the bank’s books, specifically with multifamily.

We’re here. It’s like the 0% interest era started in March or April or whatever it was of 2020. We’re at 2025, so like that five-year term that is so popular with many banks and many loans on the low end, and you got a 7, maybe a 10-year term. Those resets are happening now. That’s for the people who are disciplined enough to even get a more traditional structure.

With the boom over the last fifteen years in the apartment multifamily space, there’s so much exotic financing. It’s almost like the Ninja loans in single-family that happened in 2000 to 2006, where you didn’t have to put any money down. The level of creativity that these loan providers put out there in multifamily.

I found out about it afterwards, looking back, and I’m like, “Man, no wonder we had the bubble.” It was lower and lower, down payments and larger interest-only periods. Sometimes, construction money included, no payments. The level of lending that occurred in multifamily, yeah, it has to come to roost now. That’s why I think what I saw was like 10% to 20% value gone since 2022, dollar per dollar.

Fund Structure Vs. Individual Deal Capital Raises

Most of our industry is a zero-sum game. The good news with that is it’s like, I’m in South Florida, so I deal with hurricanes every once in a while. We’ve got a whole week to prepare for a possible storm. There’s no reason to have lost lives in a hurricane because you have so much time to prepare for it. There was so much time to prepare for the idea that rates are not going to stay at 3%, 3.5%. Yet everybody sat and just watched the storm come at them. I don’t want to say nobody, but even the most seasoned and sophisticated higher-end institutions floated debt to meet some degree of yield for their investors.

They were buying at 3 caps, 3.5 caps, and they were borrowing at 3.5 floating debt, and all of a sudden, their three and a half is now 6% debt. Their loan is coming due, and expenses are higher, and rents flatten out. What do you think’s going to happen? These are very smart investors. They needed to deploy capital. That’s the one reason not to shift gears, but it’s why we raise our money, our capital, from our investors, on an individual basis.

Every deal is compartmentalized with a different tranche of investors, and every deal has to stand on their own. There’s no co-mingling of funds and rents. It’s all separate. With a fund, you’re raising the money first, and you’re going to find the deal second. That means you’ve got a gun to your head to deploy capital. We just don’t want to be in that position because a lot of the guys that are in trouble at the moment and they’re trying to rebalance their portfolio by selling off deals that might’ve had all the equity wiped out of it to support their quality deals that are still above water. We just don’t want to be a statistic. We don’t want to be in that position. I’ve seen it way too many times.

I think one of the things, at least I’ve observed from the outside, is, and maybe this is part of the progression of your career, maybe this is intentional, but it’s the size of each deal. The deals that you’re putting together are not a $5.5 million, 97-unit property that you’re raising a million bucks on. Compare that contrast it with somebody who goes out, raises a $10 million fund, and now they’re out there searching for whatever 4 to 7 of them, depending on how exotic their financing stack is.

Your last deal was somewhere in the $17 million to $18 million range, and I’ve seen a few of them in the past that were in that range. A cap raises a five to $8 million on each individual deal. I feel like it’s a safer, more strategic method, not just saying, “I fund each deal individually,” but combining that with the size of the deal. I mean, you’re right up there, if I had to guess, competing with what would have been or what is out there in the market, the institutional REIT buyers are potentially other buyers for the same deal that you’re picking up.

It does happen. We try to stay under the institutional radar. We’re usually buying under 25 million. A lot of these private equity or even family offices don’t want to deploy less than $5 million to $10 million in equity. When we’re buying a deal, we’ll need $3 million to $5 million. That’s definitely the smaller to mid-level guys chasing those deals. We’re not going head-to-head with institutions that have such low cost of capital. We stay right there.

 

You only have a finite amount of capital. Although every real estate deal is not a bullseye, it has to be on the board.

 

The stakes are going up. The deals are getting more valuable, especially in the markets that we’re shopping in. That’s really been our model as to find the value add deals. We’ve to roll up our sleeves. We’re buying the deal at pretty much the worst scenario that it’s been in in twenty years. Whereas, a lot of this multifamily stuff that was purchased was priced to perfection. Everything was great. The proforma was where we thought rent growth was going to go. Everything looked great.

You bought it at the peak of where it could be. It only had one place to go, which was down. That happens with retail, where the leases are ten years long, and you’re clipping a coupon, you’re buying the center at its most valuable moment. Now, you can argue that certain market rents are just going to keep going up.

Again, most of your readers, including myself, we only have a finite amount of capital. Every deal has to be, maybe not a bullseye, but it’s got to be on the board. We cannot get it wrong. We’re only as good as our last deal. If I have investors that aren’t making returns that they’ve been used to, they’re going to forget me very quickly. We’re super selective, which is why we don’t need a fund at this time.

Now, if we wind up having one of those RTC moments where there are deals that come in left and right at $0.20 on a dollar, then we’ll reevaluate. Maybe we even go institutional and take a thinner promote. For now, there’s just not that robust value add inventory out there yet. I think it’s coming. Our pipeline is getting more full, but I don’t think it’s going to be enough for us to warrant doing a fund.

I think you’re right. It’s like, are they going to make the same mistake as RTC in the ‘80s, ‘90s? Probably not. The government looks back and everyone who was involved and probably wishes that it would have been handled differently. 2007, 20087, 2009, 2010, 2011, 2012, I don’t think it happened at the level of the RTC.

Looking back at the actual numbers, yeah, there were some deals that came through, but it was not like a wholesale liquidation like occurred when the savings and loan crisis happened during the RTC. Resolution Trust Corporation, if anyone wants to Google that. Now this time around, it was like all the loans got frozen during COVID. Who would have saw that coming?

Now banking regulations are a little bit different that aren’t forcing the asset sale quite as quickly as they may have had to do in the past. We have this procrastination technique, which maybe stop the flood, but we do see some periodic letting of the floodwaters out so the dam doesn’t break over time. I think that periodic letting out of the deals is where we might have our opportunity to pick off.

Identifying The Right Timing

I agree. I’m sure you saw the big short. You read the book. One of the things that they talk about is the timing of when the rating agencies decided to lower the ratings on the bonds. They were buying all the credit default swaps, and the rating agencies weren’t reducing the rating on the bonds. Like, “What the hell’s going on?” Everything’s turned into crap, but it’s still a triple A rating. This is what’s happening right now with multifamily.

We bought a 240-unit deal in Atlanta, and it was a situational deal. The loan was coming due, same with everything we talked about, floating debt. These guys got over their skis, and they sold it at a $6.5 million loss to what they bought it for two years prior. All their equity was wiped out. We bought the deal last year, and our basis is right. I’m confident that the market’s right, but it has been a very heavy lift. It’s been very tough to cash flow, and it’s because we’re a little bit early. We wouldn’t have been early if the market, if the land loans, if the bank started purging a lot of that multifamily. That hasn’t happened yet.

Are you a little bit early on that because maybe the rental market softened a bit too? Is it just like a little bit of a tougher push to try to get more rents up? Like, clearly, any deal we look at in commercial space, if you can raise the rents, that’s one path to making the deal better.

The main issue, and I know Atlanta. Atlanta was one of the major metros in the country that overbuilt. They tend to do that all the time. South Florida does it too. They overbuilt, and there are so many new units coming online, new products coming online. What happens is if we have a 1970s vintage apartment deal and a good market, a merchant builder down the street is building brand new, and they just have to lease up.

They got to get out from under the property. They’re carrying debt. The construction costs were higher than they anticipated in the beginning. The timing they were delayed because of nuances in the market. Now, all of a sudden, they just want to get out from under it, make their profit, and move on to the next deal. They’re renting those one bedrooms at the same rate that we’re renting our one bedrooms for.

Until those units and all those merchant builders, those units get absorbed, we’re not going to see rent increases in Atlanta. Now, the good news is there’s been a year and a half lag now on anything coming out of the ground in Atlanta. Once these units get absorbed, we’re now going to have this lag in construction. At that time, you’re going to see, I think, a major spike in rental growth in the Atlanta market. I think we’re probably about nine months to a year away from starting to see upticks in rent. Rent will remain flattened now.

Information: The Most Critical Piece

What would you say is the most critical piece of making a successful commercial real estate deal?

What was the first one?

Driver piece, consideration. I mean, if there was one thing, maybe that’s a different answer on the front end when you’re buying it, it’s buying right, and that simple. Maybe a better way to point this question would be you own it now. What is the thing that the novice is missing, or doesn’t acknowledge, or put enough emphasis on once they own that property?

I could address both sides. Obviously, everybody’s going to say basis. You make your money on the buy. That’s our cliche. The reality is we make the money on the information, and the information goes beyond just the basis, which is why we’re so diligent in our process of evaluating a deal through tenant interviews, dissecting, you going to the CRA, going to the municipality to figure out what projects are coming up.

We’ve had deals where we were looking at it, and because of our due diligence, we realized that this is the best the property is ever going to get because a flyover is being built in front of the shopping center we were looking at. Nobody was about to divulge that to us. Forget about the six years of construction that’s about to occur in front of the center.

Once the flyover goes in, the traffic patterns change. That’s all the bits and pieces of information that determine whether you go in a deal or not go in a deal. Another one is a deal in Fort Lauderdale that we had. We knew we were buying it at the right price per foot, but the minute we had the tenant in tow during our due diligence, it was a home run.

Even if we could have paid a million dollars more for that property because we had the tenant in tow. If you’re lucky enough to have that tenant to fill any vacant space, you can pay more than the average guy, and you’ll still make plenty of money on it because that is the secret. That’s the ultimate arbitrage play when you have a tenant. It really is the information more than just the buy on the basis of the nice.

What about after you own it? Maybe that is having the tenant in place. Maybe there’s a level of tenacity in getting tenants that one entrepreneurial investor like yourself might have, whereas the capital preservation guy sitting in Vail, Colorado, skiing all day. Maybe he doesn’t have that tenacity. How would you go with the second half there?

You took the words out on that. Marketing is so important. Enhancing the curb appeal, very important, but the marketing of it. We all, as guys that can only do so much in the course of a day, rely

on third parties, third party management, third party leasing brokers. A lot of times, they think the buck stops there. Those that just allow the leasing brokers to run it and with the expectation that in a year, 2 years, 3 years, the leasing broker is going to turn the deal around, is just short-sighted. That’s the type of people that we want to buy from.

 

Do not rely heavily on third parties when closing real estate deals. Use them as a tool, not as the end.

 

We’re not going to be that guy. We’re going to be breathing over the leasing broker’s shoulder. We’ve got a perfect example. We have the apartment deal, and we have third-party management, and they’re ultimately our third-party leasing. We have calls every single week with them. We’ve had the property for a year, and we have the biggest sign on the main road. It’s the marquee sign on the road. You can see that there’s an apartment complex as you drive by, but something so simple like having it under new ownership, leasing specials, flags, and the little men that blow all around.

Those things attract attention on if you drive up and down the street all the time, you’re desensitized to a large sign that says, “The apartment complex is here.” When you start seeing yellow signs and flags and things that attract attention, even if you’re not looking for an apartment unit, that catches your eye. You recognize that. That’s something that if we didn’t have these calls and ask those probing questions and go on site on a regular basis to figure out where we can enhance value and enhance marketing, they would have never done it.

They’re a higher gun. They don’t have ownership. They’re not looking at it with the same eyes as an owner. Especially if an owner is raising capital, it is their fiduciary responsibility to breathe over the shoulder of their third parties. That’s the main way that we force value is that we don’t rely so heavily on third parties. We’ll use them, but we’re using them as a tool, not as the end-all be-all, turning this property around.

It’s interesting that you say that putting the flags up in the way the guy in the balloons vacancy is available out there by the apartment sign. I’m in Chicago, and a lot of the buildings when I walk the dog around the city here have like a static sign studios 1 bed, 2 bed, and have the phone number of the manager.

I think it’s required by law for them to put the property manager’s phone number on the outside of the building. That’s why they do it. I’m not looking for an apartment myself, but I always assume that all those units are full. If I drove by your place in Tucker, Georgia, I think it is, and I just see like, the marquee apartments, and there’s a phone number, I’m like, “Clearly, they’re all filled up.”

Whereas if you have like, vacant units ready to move or something like that, and you’re like looking from a timing thing like, “Dude, I’m a lazy consumer. I don’t want to waste my time dialing nine numbers on the phone, going through some prompts on to get to the person, leaving a voicemail, then having to take this person’s call back later just to find out if they have a vacant unit or not.” It seems obvious, I guess, but maybe it’s just not to everyone out there in the market.

The best part about commercial is that a lot of these key principles translate to different product types. Retail is the same thing. When I first bought my first retail center, I went grassroots prospecting. I started knocking on doors at other retail centers in the area and tried to sell them on the idea. I was essentially poaching them from other buildings. “Our access is better. Our parking ratios are better. Our visibility is better. We just have a nicer-looking building. You may want to consider moving over.”

Those are the things that your traditional leasing broker is not going to do. That’s the hard stuff. Hopefully, that leasing broker has a team of young guys who are hustlers and they’re knocking on doors and driving potential leads. One thing is for sure. I know we’re doing it. We personally are doing that. We’re not relying on just the leasing brokers to have that team in place.

Phone Book And Gym Subscriptions

I feel like I found the foundation of that idea in your life when I read your book, Built From Nothing. I sent it out to the newsletter a few weeks ago. It’s on Audible. Jarred reads it himself. It’s enjoyable. It’s not a how-to commercial real estate, it’s a little bit more of the story. I get a lot more from biographies of successful people than I get from how-to books, typically, because it elaborates on the decisions in the context of this person as they went from zero to something a lot higher than zero a lot of times.

You can find that in Steve Jobs’ book, Elon Musk, and the whole list, but yours is also that way. Yours is in a space that most of us listening to the REI Diamond show are interested in, real estate. I’m to let you tell the story that involves a phone book and Jim’s subscriptions early on in your career. Would you mind giving us that one?

Looking back on it, it’s funny when you’re young, the younger you are, the more you absorb. I remember my grandfather taught me how to memorize all the presidents in order when I was nine years old. I haven’t said it in years, and I can still recite every single president’s first name and last name because it’s so ingrained in my brain when my brain was being developed. Just the same, when I got into the job force, when I was just trying to find my bearings and figure out how I’m going to support myself, because I’d been on my own since I was seventeen.

I was trying to figure out a way to be a little bit different in whatever I was doing. I got hired by Bally Total Fitness as a membership sales. I did it because I was going to get a free membership, and I was into working out. That appealed to me. The guys that were smooth and were seasoned and were aggressive, they were getting all the leads, and they were closing the deals.

I was trying to figure out a way not to just rely on random walk-ins, and I’m like, “I don’t think anybody’s just cold called out of the phone book.” I’ve pulled up all the names under a specific zip code close by the gym. I just said, “I got approval to get a week’s free pass for anybody that I bring in.” I would say, “So-and-so and membership sales at Bally’s. I want to invite you and your significant other end to work out for a week, get to know the gym. No pressure, no catch. Just come in and I’ll hand you the pass. This way, I just get to meet you.”

You would be shocked how many people said, “We have a meeting to come in. We’ll come in.” I’m bringing them in and then having the volume of people that I got in gave me so many times to recite my spiel, the pitch, on how to actually convert that to an actual gym sale. Over 3 or 4 months of doing that, I started to get pretty good at closing on the sales. In the first three months, it wasn’t that difficult to bring people in that were smooth and articulate and knew how to close on a gym membership. We just split the commissions.

I’ll bring in the lead, you close it, and I’ll watch, I’ll observe. That’s something my grandfather taught me when I was very young. Find something you love to do and then go work for somebody that’s doing it for free and learn everything you can because that is your college education. Not paying for your college education, maybe most people are looking at saying, “I don’t want to work for free.”

You’re getting an education for free. You’re not having to pay. They might not be paying you, but you’re not paying them. You’re learning so much. That helped me take that philosophy into the gym and bring guys in that can close the deals, so I can observe and watch a closer go to work. That helped me throughout the process of initially starting to cold call my own building owners, finding value add deals.

I started calling the building owners and find the motivation and try to make a deal. We started buying deals that way. Finally, as it evolves, now I train our guys, and we have an internship program where we train our interns on how to pound the phones, how to manage the letter campaign,s and have a whole rebuttal script lined up. It was this progression that all started with selling memberships at a gym for $60 a shot.

How old were you? Was that like 17, 18 when you were doing that?

Yeah, I was 18.

This might be quite for me one of the most valuable pieces of the book. There’s a lot of value in there other than this, but the story about the president at nine years old illustrates how powerful laying down the foundation for someone while they’re really young can be. Trying to teach yourself cold call at 45, 50, 60 years old. You can do it, and you probably have more stick-to-it-iveness and confidence than you would at 18 years old, but the benefit of laying down that brain map at 9 or 18 years old.

I’m doing this with my daughter. She just graduated from Temple Criminal Justice, and in her whole job role she’s handling some lead management stuff. I’m like, “You’re cold calling, like get into the mojo dialer and you’re just going to call. This is your number of calls you have to make per week, and like figure out how to like test the script and say that.” “I don’t know how long we’re going to do that for, but one of the reasons I’m doing it is to get that resilience built early.”

Her life is obviously a lot different than my life when I was 22 years old, just with the resources that are available in our household compared to what we had. When I was at that age, I’m really trying to do something like you were hungry at that age. I was hungry at that age. Those are the things we would do out of hunger, and I’m trying to make sure I incentivize her to do that difficult work, like raise your hand in the audience.

If you just love cold calling, there are probably two people out of the 10,000 or so who are going to listen to it, who are interested in doing that and enjoy it. Most people don’t. I think the younger you are in the earlier you could start. I feel like it’s just reps in the gym. You and I both like enjoy weight training to this day.

 

The ability to adapt, be open-minded, and have strong opinions are key aspects in business and in life.

 

You have to do them when you’re weak, and you have to get better at them, and you have to track them, and you have to have this evolution. You have to keep on doing that. To me, it’s like she’s training for this triathlon of a lifelong need to be resilient and persistent and handle rejection. I cannot think of any better way than sitting her down on the mojo dialer, making 6, 7, 800 calls a week to do that.

My daughter inherited that salesmanship and that high EQ from me. She’s using it for evil as a teenage girl would. She tends to manipulate a little bit, but all the things, all the traits that I see in her are going to serve her very well later in life. She’ll start using it for good. I will put emotional intelligence over standard academia all day, every day.

There’s just no comparison to be truly observant, to be truly aware and intuitive on human emotions. There’s a part of my book that we talk about, essentially the born loser theory. I know it’s mean to talk like that, but there’s a reason why there’s a dark cloud that’s over certain people’s heads their entire life. It comes down to how they work with different personalities.

If you’re one of those people that have are true to your principles and you’re opinionated and you’re not willing to listen, especially with this political turmoil, how many people, how many friends did you lose because you don’t necessarily agree with their stance in politics? The ability to adapt and to be open-minded, and to have strong opinions loosely held, is key in business and in life. You go around thinking everybody’s wrong and you’re right. You’re not going to get the opportunities that those that are willing to be open-minded get. Unfortunately, in many ways, that means having to bend a little bit on your principles.

A Review Of Jarred’s Numbers

A 100%. I know we’re getting to the top of our time here. Can we take a moment to do a little bit of, if you’re willing to, some of the results you’ve gotten, maybe for investors, a little bit of a resume of the deal sheet numbers that might be relevant to someone if they were thinking about picking the phone up and giving you a call after they hear this episode.

I appreciate it, Dan. We currently have 1.5 million square feet in our portfolio. We’ve sold quite a bit over the last couple of years. We’ve done just over 60 transactions over 13 years. I’m proud to say that over those 13 years and 60 transactions, we’ve netted our investors approximately a 33% annualized return over that time span on average. Again, I mentioned this early in the show, we’ve been the beneficiary of a hell of a real estate bull run.

I don’t anticipate being able to deliver those returns over the next 13 years. We’ve never projected higher than eighteen annualized on any deal that we’ve done. Here we are, average 33. We’ve never gone below a twelve percent annualized return on any one deal. I don’t say that to impress anybody. I say that to make sure it’s understood. It’s not that we’re so great. It’s that we’re so disciplined. It’s that we’re so selective. We’re not just going to buy a deal because we have capital to deploy. It has to check all the boxes.

We offer on 2 to 3 deals a week. We go under contract about 6 to 7 times a year, and we close on about four deals a year. That’s a lot of volume, and it’s a complete numbers game, and it shows how much of a sniper we really are. We’re not just going to buy a deal to buy a deal because we have some costs. We have investors clamoring. It happens a lot, but we’re not going to deviate from our buying box. That’s what delivers the type of returns.

The investors are clamoring for those type of returns, not for you to do some horseshit deal just to do the deal.

That’s right. I said this before, we’re only as good as our last deal. If we start delivering lackluster returns, we’re losing our investor base. I had a chapter, your tenants and your investors or your kings and your queens, and you need to treat them like that. Their money is more important than your money. Thank God we had the crash because though I sold the houses at the right time, I bought condos at the wrong time.

As you said, the values on those condo units in South Florida dropped 80%. I had to float those deals for eight years before I then still had to come to the closing table with money to get out from under them. Thank God that all happened prior to me ever syndicating a deal or bringing in an investor, because it made me much more astute. It made me much more disciplined.

I hear your conservative underwriting, and that’s like my role. I don’t know. We’ve done like 105 deals this year, and we did 259 last year, and we have about 170 of them in process as we speak.

Crazy numbers.

Thank you. Blessed to have a strong team, good executive bench here across the company, but where I was going is like, I’m the conservative underwriting guy and people our age, yours and mine, Jarred, who actually were in the business through that period of time, 8, 9, 10, 11, 6 even longer than that. Who knows what it’s hitting for.

A lot of the people who are younger than that, that’s one of my first underwriting questions. It’s like, “When did you start?” I’m like, “2015.” I’m like, “No, there’s no way I’m going to put a in your hands.” You don’t know what’s about to hit the fan right now. Anything that you’ve underwritten may have nothing but delusional optimism in it.

I digress, and maybe there’s going to be a crop of young guys eventually who I’ll be handing to. I guess I handed the checks, but that guy was actually in there through that period of time and started at like twenty-something years old. There’s a push-pull. There’s a conservative underwriting, and then sometimes the partners have to convince me of the value, if you will. A lot of the deals turn out a lot better than I would think about on the front end, but I’ll attribute that to luck.

I’ll say, “That’s what the delusional optimism was in the back of my mind, but I’m not pricing that in day one.” I want nothing more than to eat my foot. When I say it’s going to sell for 500, and it sells for 600. I love the taste of my foot in my mouth when that happens. I would not, and it’s happened before to where I think it’s 6 and then sells for 5, and it’s like, “What did we do?” That’s a terrible situation to be in.

A 100%. He’s going over deliver.

Jarred’s Book Recommendations And Contact Info

Book recommendations here.

I’ve got to be a little biased. Built From Nothing is my book, available on Amazon, not on Audible. Look, the best books I have ever read and continue to read over and over again. Think and Grow Rich is your number one Bible. Napoleon Hill. Is it the 46 Laws of Power?

Yeah, I think it is 48, yeah.

The 48 Laws of Power. Amazing book. Amazing book. It’s a long audible. I probably listened to that about ten times. It’s been so good. I always go back to it. Lately, maybe it’s a little bit of marketing, and I cannot deny our president being a good marketer. I’m reading The Art of the Deal, probably for the fifth time. The first time I read was twelve years old. My grandfather stuck it in my hand.

To try and get a sense of with the negotiations with the tariffs, all kinds of geopolitical issues, how his mind is thinking. It’s pretty much documented what he does, and he’s very consistent. Regardless of political leanings, you don’t have to guess what he’s doing. It’s very consistent. Now, whether it’s the right decision, I guess to be determined, we’ll post game it in a year from now, but there’s no guesswork. I know we know exactly what he’s doing. It’s well documented. He’s done his entire career.

 

Spend some time doing charity. It will come back to you six-fold.

 

Before I ask you my final question here, I’ll give you a chance to plug some contact information if you want people to go to a website, something like that.

Our website is GenevaGP.com. I’m pretty easy to find. I’m the only Jarred Elmar on the entire planet. It’s pretty easy to Google and find our company name and be able to get access to the book in any other way that we can help your listener.

Jarred is spelled with two R’s, Jarred.

I always say my mom misspelled it. Everybody else spells it right, but not me.

Getting The Right Motivation

That’ll help limit those Google results you’re talking about. My final question, Jarred, what is the kindest thing that anyone has ever done for you?

My now partner in many of our best deals. He was my mentor. His name is Ben. When he barely knew me. He met me through a charity event, and he didn’t know who I was. He knew my name. I called him. I got his number from somebody else, and he’s the industrial king in South Florida. I had an industrial deal. My first industrial deal, I think it was 2012. I was buying it for $29 a foot, a major thoroughfare in Pompano Beach, Florida.

I knew it was a great price. I just didn’t know what I had. I didn’t know what to do. I called him and I said, “Listen, I have this deal, I think it’s a good deal, but I don’t know what I’m doing on this.” He says, “I’ll be there in an hour.” He barely knew who I was, he’s running his own empire, and he came to meet me on site, and he looked at it. He says, “How much are you paying for this?” He walked through some of the units.

Said, “You need to close your eyes and close on this deal because if you don’t, I will. This is a steal, and you’ll figure it out once you close.” It was my largest deal at the time. That was the nicest thing anybody could have done for me to drop everything they’re doing for somebody he barely knows and push me in and motivate me and give me some degree of confidence from a seasoned guy to say, “Go ahead and close this. You’re going to be okay.”

You had it under contract at the time?

I had it under contract. Yep. That led to a compounding effect with confidence in doing the next deal. He was a catalyst to the career.

Do you think Ben had done that for dozens, hundreds of people before that, or do you think it was unique? Why do you think he chose to do that in that example?

I’m lucky enough where the guy is so charitably inclined and he does want to help. I don’t know how many times he’s done quite that exactly, but he’s one of the most philanthropic guys I know. I do believe that he feels that the opportunities come to him organically when he puts it out there. That’s why I’m so big into charity. I do believe that it comes back to you 5, 6 fold. It doesn’t have to be altruistic. It’s a lot of self-serving reasons why I donate to organizations. At the end of the day, you’re still helping somebody regardless of what your motives were. I continue to do it, and it’s amazing how it all comes back. It’s an abundance.

I’d probably highlight on there with Ben, there’s some level of like having the interests aligned that’s important for anyone reading, they’re thinking of who you’re going to call. I don’t know that the cold call to the guy without having a deal and asking him a bunch of questions that are not even relevant about theoretical deals that may come down the pike. I don’t think that’s a great use of your one shot at the apple.

Anytime you can find a way to have aligned interests with someone who’s going to partner or give you insight. I think that’s important. The guy who has a bunch of money may be the partner at some point down the line. Maybe you need that person, and you’re not Jarred, and you couldn’t close it yourself for $29. The guy’s thinking, “There might be some chance that the kid needs a way to get it to the settlement.”

Having a line of interest is the most powerful way to cement long-term partnerships. Anytime the interests get out of whack, it starts to break down, it starts to fall apart. I think Ben was like, “The kid has the deal under contract,” probably knows the building by memory or something like that. That was a shining, you know, those parking lot lights that like shoot up into the dark, you see them for miles when they used to have the grand openings back in the day. It’s like a beacon.

It’s like the bat symbol. “The guy has the deal locked up.” That’s way further down the field and totally will kick the door open. How that’s relevant to the reader, I’m not sure. Whoever’s reading will have to figure out like, “How do I get the deal started and bring something of value to the table for me, Jarred? I had no money. I had no skills.” I was like, “I’m to be the number one source of real estate deals.

No one in the fucking whole world is going to bring more deals to the table than Dan Breslin.” The guys with the money who are fixing and flipping, and I want to land and all that. They’re all going to take my call because I have a deal to talk about. I noticed they didn’t like to take my call when I didn’t have a deal to talk about. “I had a deal to talk about.” It was like, drop everything, hold the presses, we’re on the phone within ten minutes.

Listen, what the reader can take away from this is, I’m sure you get it. I get probably 4 to 5 calls a day from platforms that you and I know very well. A lot of them are very “Let me pick your brain.” I hate that term. Let me pick your brain, and they don’t have anything tangible. They just want to pump you for information, and I want to help people. I really do. Please don’t waste my time.

Let me know what your ideas are. Let me know what your solutions are. We can evaluate which one makes the most sense, but don’t just throw your monkey on my back and want me to come up with a solution for you. I have no vested interest whatsoever because I barely know you. You’re not inviting me into the deal.

Have it under contract, have a game plan of what you intend on doing, and then go to somebody’s season and say, “Here’s what I intend on doing, what do you think?” It’s going to take less of my time, and you’re going to get a seasoned investor to give you their point of view with all the facts. That’s the biggest thing. Just, I guess, make sure you have all the facts before you present it to somebody that you’re looking for advice from.

Yeah, 100%. Jarred, we’ve reached the end of our time. I really appreciate you carving out. I got like three pages of notes here, and I enjoyed the conversation. I appreciate you coming on the show.

You, too, Dan. I appreciate you having me.

 

Important Links

 

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About Jarred Elmar

The REI Diamonds Show - Daniel Breslin | Jarred Elmar | Commercial Real EstateJarred Elmar is the Managing Partner of The Geneva Group.

Jarred E. Elmar is the Managing Partner of The Geneva Group. Since 1999 Mr. Elmar and his partners have been acquiring and managing residential and commercial real estate for their own portfolio with over 1.8 million square feet of retail, multi-family, industrial and residential acquisitions to date. The Geneva Group focuses primarily on neighborhood retail centers, light industrial and small bay warehouse complexes, office buildings and multi-family apartment complexes.

Mr. Elmar began his real estate career in the Atlanta Georgia Metro area, where he began purchasing single family homes on the courthouse steps right after high school. After acquiring dozens of rental homes, he sold the residential portfolio and began investing in apartment communities in 2010 while at the same time acquiring value-add office buildings and retail shopping centers. Until recently, Mr. Elmar hosted a financial radio show on WSBR radio 5 days a week for 7 years strong. He has been featured on several radio talk shows to discuss how money works rather than how one particular investment or asset class may perform. His financial aptitude has allowed him to creatively purchase assets, buy out existing leases from national credit tenants and find higher and better uses to reposition blighted properties.

Mr. Elmar is a self-educated entrepreneur. He has created an impressive real estate portfolio.

 

ATX Acquisitions Partner Dan French on $2B in Closed Deals

 

ATX Acquisitions Partner Dan French on $2B in Closed Deals

 

Guest: Dan French is a seasoned real estate investor and entrepreneur with over 20 years of experience, known for his deep insights into long-term goal-setting and capital allocation. With a successful real estate portfolio built through strategic decisions in deal underwriting and market timing, Dan has navigated multiple real estate cycles. In this episode of the REI Diamonds Show, he joins Dan Breslin to share his journey, the importance of mindset in achieving success, and his forward-thinking approach to entrepreneurial goals.

 

Big Idea: In this episode, Dan French emphasizes the critical distinction between short-term and long-term goals, arguing that entrepreneurs often overestimate what they can achieve quickly while underestimating their potential over a decade. He advocates for a high-aiming approach to long-term objectives, highlighting the need to balance growth with life priorities, such as family and personal well-being. Drawing from his extensive real estate journey, French illustrates how yesterday’s goals can impede progress and underscores the necessity of a mindset shift for sustained success. He also delves into the nuances of capital allocation, stressing the importance of avoiding overpaying during market peaks and the wisdom in strategically selling non-core assets during overheated markets. Through disciplined underwriting, conservative deal-making, and a keen understanding of replacement cost metrics, French lays out a blueprint for achieving long-term success in real estate investing.

 

 

    

 

Dan Breslin: Yeah, for sure. I I’m sure some of the listeners probably know your name or the company names and some of your history, and we’re going to get into an intro and pull on the threads there a little bit about that. But I thought we would start with a quote that I saw you post on Twitter recently, and and I quote yesterday’s goals drag us down into the pits of the nether world.

Dan French: Okay. Yeah.

Dan Breslin: How so? How so? And why.

Dan French: Yeah, I I think what I what I meant there was. You know, we have a tendency to get stuck in the past. And when you, when your mind share is is taken up by by what you should have achieved yesterday. You, you don’t focus on the future and what you’re in control of today. So it it’s kind of like a demon, you know. If you, if you look at the Michelangelo painting on the Sistine Chapel that’s called the Last Judgment, and the bottom of the painting is a bunch of demons pulling people down into the the netherworld like hell. And that’s what I was equating yesterday’s goals. So so basically, like, it’s, it’s just a pivoting mindset of having an entrepreneurial you know, fortitude or intestinal fortitude to just say, Hey, you know what? Yesterday’s goals? They don’t matter anymore. Today, like, what are, what are we achieving today? And how are we doing things better today. So that’s what that meant.

 

This Episode of The REI Diamonds Show is Sponsored by the Deal Machine. This Software Enables Real Estate Investors to Develop a Reliable & Low Cost Source of Off Market Deals. For a Limited Time, You Get Free Access at http://REIDealMachine.com/

 

This Episode is Also Sponsored by the Lending Home. Lending Home Offers Reliable & Low Cost Fix & Flip Loans with Interest Rates as Low as 9.25%.  Buy & Hold Loans Offered Even Lower.  Get a FREE IPad when you Close Your First Deal by Registering Now at  http://REILineOfCredit.com

 

Resources mentioned in this episode:

https://www.ATXacquisitions.com/

 

For Access to Real Estate Deals You Can Buy & Sell for Profit:

https://AccessOffMarketDeals.com/podcast/

Dan French & I Discuss Closing $2B Deals:

  • (00:03:29) The 10-year vision: How entrepreneurs can expand their thinking and aim for massive success.
  • (00:10:46) Dan’s early career in real estate:
  • From small multifamily deals to growing a larger real estate portfolio.
  • (00:19:48) Strategic Capital Allocation: The importance of conservative underwriting and aligning capital allocation with market cycles.
  • (00:20:24) The Role of Replacement Cost: Why buying above replacement cost signals a potential market danger and how it influenced their investment strategy.
  • (00:24:18) Post-Great Financial Crisis Lessons: The impact of the 2007–2008 financial crisis on current real estate investment strategies.
  • (00:42:13) Syndication and General Partner Funds in Real Estate: Dan explains how his company leveraged syndication deals and created a General Partner fund to scale their business, detailing the pros and cons of capital structure.

 


    

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The transcript of this episode can be found here.
Transcripts of all episodes can be found here.

Avoid Property Insurance Nightmares With Public Adjuster Andy Gurczak

The REI Diamonds Show - Daniel Breslin | Andy Gurczak | Property Insurance

 

Guest: Andy Gurczak is a seasoned real estate investor and public insurance adjuster. Starting with a humble duplex, Andy has strategically expanded his portfolio to include a variety of commercial properties. He leverages his construction background and keen market insight to navigate the complexities of real estate and insurance claims, making him a valuable resource for both novice and experienced investors.

 

Big Idea: Andy Gurczak delves into the intricacies of insurance claims for property investors, emphasizing the importance of strategic decision-making and a thorough understanding of the process to avoid pitfalls. He also shares his journey from residential to commercial real estate investing, highlighting the lessons learned and strategies for success in the commercial sector.

This episode of The REI Diamonds Show is sponsored by the Deal Machine. This software enables real estate investors to develop a reliable & low-cost source of off-market deals. For a limited time, you get free access here.

This episode is also sponsored by Lending Home. Lending Home offers reliable & low-cost fix & flip loans with interest rates as low as 9.25%. Buy & hold loans offered even lower. Get a FREE iPad when you close your first deal by registering here now.

 

Resources mentioned in this episode:

AllCity Adjusting

 

Andy Gurczak & I Discuss Avoiding Property Insurance Nightmares with Public Adjuster:

  • 5:50 – Details of a 1031 Exchange: Insights into executing a 1031 exchange successfully and the lessons learned from the process.
  • 10:01 – Acquiring a Seven-Unit Commercial Property: The story behind acquiring a prime commercial building and its financial implications.
  • 15:40 – Financing Strategies: How leveraging relationships with local banks facilitated property acquisitions.
  • 18:30 – Property Management and Tenant Relations: Managing properties personally and dealing with tenant issues directly.
  • 27:35 – Critical Timing in Claim Filing: Brother Elijah’s experience highlights the importance of acting swiftly and seeking expert advice to maximize claim value.
  • 29:19 – Settlement Offers and Pitfalls: Andy shares insights into deciphering settlement offers and avoiding potential traps.
  • 35:52 – Commercial vs. Residential Claims: Understanding the dynamics between commercial and residential claims can influence strategy and approach.

 

Relevant Episodes: (200+ Content-Packed Interviews in Total)

Watch the episode here

 

Listen to the podcast here

 

Avoid Property Insurance Nightmares With Public Adjuster Andy Gurczak

Andy Gurczak, welcome to the show. How you doing?

Dan, thank you so much for having me on. It’s a pleasure.

Yeah, for sure. We’ve been trying to link up here for a little while to get you on the show. Main topic’s going to be insurance claims, and I think it’s valuable for the readers to hang in there, whether they’re single-family investors, whether they’re commercial investors, nobody wants to have an insurance claim ever, but when you do, you can really, in my experience, get screwed up by doing it wrong or maybe even choosing to make the claim in some instances.

Andy Gurczak’s Investing Journey And Business Focus

I know that’s been my issue, claiming something too small, but we’ll get into all the problems and the solutions and what you do as an adjuster and why that’s something valuable here shortly. Before we do that, Andy, do you want to give us a background on maybe some of your investing career and then also how you got into and what your adjusting business is now?

Yeah, so when it comes to the investing, Dan, me and my wife bought our first duplex. This was when we got married. We bought our first duplex. We lived on one side and rented the other side. We basically lived for free. We had a little bit of income, even left over. I was able to scale the business, not pull any money, didn’t need to even make money at that point. I was able to reinvest everything. My wife worked where it brought enough for groceries into small stuff. That was under FHA. I think we bought that actually before we got married. Right before we got married, I think we bought that under my name. Two years later, we ended up buying another FHA under her name.

It was another duplex, so we ended up doing only 3.5% down, which was nice. It was a small investment out of our pocket to have two properties that were cashflowing really nice. From then, we bought a townhouse that was a foreclosure. We ended up buying a building that’s in downtown Crown Point where we live that we converted into a commercial. There are three tenants in there, actually.

In 2023, we did our first 1031 where we sold one of the duplexes, took the money and then bought a seven-unit building. It’s a commercial building. There are seven suites, about 15,000 square feet. I think that’s it. I know we have a lot. We’re building a home right now. Real estate has been something that we’re always interested in. We’re always looking to buy something different.

Before we get into the insurance topic, could we pull on the thread of the commercial deals? I think a lot of the readers, including myself, you flip, you start out maybe wholesale a couple of houses, flip a couple, do the house hack, like you did. I know there’s a lot of investors who will start by flipping houses, holding a few rentals. We all have this pool toward commercial real estate.

 

The REI Diamonds Show - Daniel Breslin | Andy Gurczak | Property Insurance

 

“I’m going to do commercial real estate someday. I want to get into commercial real estate someday.” That’s where I’m at. Over the last few years, I bought into a shopping center. We’re developing fourteen self-storage buildings. I have a 30,000 square foot warehouse that we’re just going to flip that one here coming up shortly. It’s been cool. It’s been a cool transition for me in the last couple of years. It is exciting to be able to put a little more capital to work when later in your career you have more capital to put to work. Would you mind touching on that first Crown Point commercial deal, maybe the purchase price, what your plan was?

Just so you know, all the properties we have were commercial. It happens because of the business. The business grew, so we needed more space. As a business grew, we’re like, “Let’s look.” The landlord actually that I was in renting from at that time, I always asked him. I knew he was a big developer. I said, “Do you know a lot of people in this area? If you were ever to sell anything or have something else, please let me know.”

It turns out he had a deal. The grandma, I don’t know if she passed away or something happened. The kids knew my landlord since he was little so they offered the house to him. He called me and said, “I don’t want this. We’re focusing on different stuff now. Would you want to take this off me?” I met him and I knew it’s in a perfect location. Location is everything. The price he gave us was so good. We could have probably turned around and doubled it right away. We took the first floor. We cut it in half. We did two offices. I took the back office, my business, we rented the front. The upstairs is a just a residential tenant.

That one made sense. It was cheap. You could have sold it for more immediately. There’s probably no hesitation there.

No. That one I knew right away. We bought that for I think $220,000. That one’s probably worth around $500,000, $600,000 at this point. The location is perfect.

Navigating A 1031 Exchange In Real Estate

Now you have the seven unit and the 1031 exchange. I think the 1031 exchange, I did one. I don’t know of a whole lot of interest in doing anymore. I probably would try them, but I remember the pressure and the stars having to align to make that deal work for me when I did it. It’s a great tool. I think it’s good. I think there’s a lot of readers who are like, “Yeah, I would like to do that someday too.” Would you mind walking us through the 1031 deal, Andy?

Same thing with this building. Our business has grown. We had more people, we needed a bigger space. We were looking to rent because there was nothing on the market. Everything’s pretty expensive. We found the building and there was a unit available. I contacted the realtor. We looked at it. I’m like, “That’s too big for what we need.” I explained to him that we’re always looking to buy. He said, “The owner is getting older. He is actually looking to sell.” I said, “Ask him how much he liked.” He came down with the price, which was really good. We bought it. I’m like, “Okay, we’re buying it.” I told my wife, “Let’s see if we could do a 1031.”

We ended up listing our duplex that we had another one and got offers on that right away. The 1031 process for us was super easy because we had the property already identified. For us, tactically it was different. Most people do no sell, then they have to identify the property within, what is it, 60 or 90 days? Whereas we already had the property. We knew a could sell really quick. To us, it was a no brainer. Everything made sense. The only mistake we made then that I wasn’t aware of, that property we had, the duplex was in mine and my wife’s name. When we bought this commercial, we wanted to buy that under our new LLC. When you do a 1031, you have to name it.

If you’re selling them your names, then you have to buy the property, the new one, in the same way you’ve sold the other one. If I knew that, I would’ve had retitled that duplex under the new LLC so then the closing, it would’ve been easy because then you’re selling as an LLC and you’re going into LLC, the same name. You can’t switch names. It follows the person that sells the building. If that makes sense, meaning if for anyone that ever does a 1031, make sure whatever you’re selling, that’s where you’re going to have the new building titled at, whether it’s your name or a different LLC.

Nice pro tip. How many square feet is this seven-unit commercial building?

15,000 square feet.

Nice size. One of the cool things I have to underline for the readers, because it’s just such a powerful way to find commercial property, is you stumbled upon this one, it sounds like. You call the agent for the vacant unit. There’s a lot of buildings out there with a similar type of circumstance where someone’s like, “I could just keep renting it. I could sell it. I’m not really trying to put it on the market.”

You have that perfect timing with a low amount of competition in the event that you overturned that stone, which you did hear on calling on the vacant unit and now it just so happens to be for sale. That’s like one of the expert strategies. I know quite a few people who have done that successfully and found phenomenal deals here, just like you did.

They always say there’s no good or bad. There’s no perfect market. Even now, people are like, “There’s no deals.” There’s deals. If I was 100% in real estate, I would be calling. I would find all our deals. Even the duplexes, we found those on our own with my wife. We didn’t even call an agent. By the time the agent told us this property’s for sale, we’re like, “Yeah, we’ve already told another agent. We’re already under contract.” Agents are just so slow sometimes. We find our own properties. The townhouse we bought that was foreclosure. We contacted the agent. By the time he contacted the seller, it was under contract. We’re like, “He was so slow about it.”

 

There’s no perfect market, but there are always deals. You just have to look and find them yourself.

 

A couple of weeks later, we’re looking online and the property’s back on the market. We called a different agent and made an offer. That guy, we were literally under closing, he calls. He’s like, “Huys, this property’s back on the market.” I’m like, “Yeah.” There’s always deals. You just have to look and find it yourself. The way we did this one, even speaking with that other developer, again, if you just talk to people and you get in networks you’ll find deals. There are deals out there.

Acquiring A Seven-Unit Commercial Property

What was the current net operating income on that when you bought it? Did you know that number and what was the purchase price?

The purchase price of the new building was $860,000. We bought it at $860,000. I want to say around $12,000 gross was what it was bringing in per month or more. Right now, it’s grossing around $15,000 something with me obviously not paying that much because I’m taking one of the main suites.

What are you paying in taxes?

We’re netting about $10,000 a month.

Okay. You’re at about $120,000. Even at an 8.5% cap, that’s got to put you at what?

I never do cap numbers. I don’t make real estate confusing, I make it very simple. What is our monthly expenses, our mortgage, our taxes, what is the income, what’s left over? I know what I still have to have for, if anything breaks. I know I can look at a building and know what needs to be remodeled or updated in the next years. To us, the numbers made so much sense. After all our expenses, snowplow and grass cutting in the summer, everything else you are left with a little bit over $10,000 a month.

You have space in there. I guess you’re paying yourself a little bit in a sense from the business.

It should probably be another $2,000, $3,000 netting in there if I was to pay the regular. Remember, the duplex we sold, we netted around $200,000. We took $200,000. Basically, the whole down payment was from that duplex. That duplex doubled in value. We took all that money put into this one. Technically, we only finance like $600,000

This thing would appraise no problem right now at like $1.4 million. I don’t know how anxious the banks are when there’s an owner occupant with the space. There are rules sometimes of certain percentage the owner occupies. They may treat it like owner occupied versus certain percentage is tenant-based. You have more investment value. $1.4 million, even at like 65% loan to value, which you could probably geta cash out refi and something like that would be around like $900,000. It would make complete sense to do that deal if you weren’t even going into that deal. You bought it for $860,000, you got it tenant in and then you pulled your cash back out. Did you guys have to put se serious capital improvements at all?

Nothing. I was in construction so I could inspect the building. I had to do my own inspections. I inspect my own buildings. No, I looked at this building, I knew that there’s seven air handlers on the rooftop units. I knew three of them are old. I knew that it was a matter of time and I could budget $7,000 or $10,000 grand for each one that’s going to break. One did go out. One of my employees, her husband actually owns a HVAC company. He got the unit for me for half the price. Had a friend put it in. I saved like half the month. I knew that was going to go out. Everything else, the building is all brick. Everything is fine. No maintenance.

It’s a smoking deal and I really appreciate you being candid here on the show about it because I think it’s a great. If someone’s flipping houses and they’ve got 10, 20 rentals, 40 rentals, a deal like this would be a great stepping stone into the commercial arena versus like buying a 100,000 square foot shopping center. I don’t know, I think you’d better off maybe learning on the $860,000 purchase.

I wouldn’t be ready to go into a shopping center. This was our first, and then that other commercial property that we turned right into a commercial, our little commercial on the square that we call it on a little downtown area. We took that single home, took it into the two offices and the tenant upstairs. We don’t really consider this commercial. This is really a true commercial unit, a true commercial building. I always told my wife like, “If we’re going to try it, let’s try it.”

We went from netting around $1,000 a month to taking the money from that property into this one and netting over $10,000. We’re going to lose a tenant right now that we were aware we’re going to lose. We’re going to lose about maybe 25% of income because they’re moving out. However, because this area is by the hospital and it’s a really good area, even if it takes longer, we’re fine. We could lose half our tenants and we’d still be even. All that stuff, we take into account. When it comes to numbers and cap numbers, to me, I always protect. If we lose half the tenants or if we lose how much do we have, how much do we have left over everything, worst case scenario?

Structuring Financing For Real Estate Deals

Yeah, and I like it. It’s a building that’s yours. There are not investors. A lot of people who are doing commercial deals are like raising the money from 10, 15 different people. There’s something to be said for owning the asset 100% with the wife, whatever the case is. There’s something to be said for that control long-term, especially to mitigate the risk of like, rent increases in space that your company might need. There’s a ton of reasons why this deal would make sense. How did you put the financing together? Was it like a local bank and you have to refinance?

Yeah, let me tell you. This was super great. I don’t know how much can I indulge into this, but we’re building a house. We’re building a house not far from here. We had a lot and because I’m GC-ing it myself, it was very hard to find a loan because not many banks want a loan to someone that’s GC-ing a project themselves.

There’s a local bank here that’s got two branches and they’re great. They ended up loaning the entire project, the entire build with me GC-ing. It turns out then my neighbors actually know the president of the bank. He’s also the underwriter. It turns out he’s great. He loves small businesses. As soon as we had this property, we found out. I contacted them.

I said, “We have this property. Would you guys want to look at it?” He was like, “Yeah, send me the numbers.” Next day, he was like, “Yeah, this is great.” That’s it. In a month, we were closed. That’s how it should be. It was working with them even for this construction loan now for anything. Now I’m like, “I will never go to another bank. They will get all my money. I will do every deal with them because it’s the most simplest process.” It was great. In my business, we banked with the Chases, like all the big branches and the servers just don’t care, I guess, unless you’re doing millions with them. You had to go through like ten people to just get an answer on some of the simplest stuff.

Understanding Market Rent And Price Per Square Foot

I feel like it must be hundreds of millions you have to do with them to get their attention. They’re trying a little bit, but their hands are always tied at the local level. There’s only so much they can do. Those local banks are fantastic. Do you know what your price per square foot is for the rent on any of the tenants? What’s your market rent?

I’m not sure. My wife has all the numbers in terms of square foot and what we’re renting each unit for. I know where they were rented for like fair amount compared to everyone else because she did the math when we compared it to other one. She would have those numbers. She runs more of the numbers. She collects the rents. Of course she collects the rent. She does the leases. I handle all the problems. The worst part is I’m in this building with the other six tenants. When there’s an issue, they just come and knock on my window.

It’s the only drawback.

My original plan was don’t tell anyone that I’m the landlord, but I like talk to people. As soon as we moved in, I’m the new landlord. All of a sudden, now I got people knocking on my window. We might have someone knock while we’re sitting here.

You must have all kinds of problems then.

Not many. Honestly, the only issues we’ve had besides the AC is the lights going out, the light bulbs. Now we’ve been converting them to LED. As soon as we have an issue, we have a method to convert them to LED and then we call it a day.

It’s a good deal. $57 a square foot on the purchase. I’m throwing a dart, but if I had to guess, probably like $8 to $11 a foot, something like that as the rent. I can see why the president was like, “Yeah, this one makes sense,” because when you do it on the cap rate and the investor math, it’s a good deal. Congrats on that find.

The agent asked us like, “What would you want to pay?” I said, “No. What does he want? I want him to make us an offer.” I think he said $890,000, and then we came down and we met at $860,000. The city appraised it for $1.1 million.

Was that just for taxes?

Yeah, and the city’s appraised low always. We knew if the city’s appraising it $1.1 million, we’re getting it. The math just made sense.

The Role Of An Insurance Adjuster In Real Estate

Let’s switch gears and dive into the insurance adjuster. What is an insurance adjuster and why should a real estate investor care?

There’s different adjusters. There’s a staff adjuster that works for the insurance company. You’re going to have the independent adjuster who works for the insurance company and then there are public adjusters. Sometimes they say private adjusters, but a public adjuster as known. The license it holds is an adjuster that works only for the insured. We can only represent the insured on their own claim.

When we explain to clients, it’s like, “The insurance company has their own adjusters, their own attorneys, their own contractors, their own team. Everyone works for the insurance company, so they’re all looking out on behalf of the insurance. They can’t they can’t be representing the insurance company and then coming out and looking on your behalf. It’s like an attorney representing two parties.” As a public adjuster, we represent the policy holder and advocate only for the policy holder.

Small little delineation there, but I’m just thinking back to when I first bought insurance, and I think I had a claim for a car accident when I was in my twenties. They came out and gave me a check. This is great. The adjuster just came right out. It was easy peasy. Through real estate, I’ve learned that they don’t necessarily pay out on every claim and they try to minimize the amount on certain claims. That would be the staff insurance adjuster or an independent adjuster working for the insurance company versus a public adjuster, which the insurance company’s not going to tell you that you should find or use a public adjuster, right?

That’s correct. They’re never going to tell you, you can hire a public adjuster. They’re not going to say hire an attorney. They’re going to keep pushing their own people, whether it’s, “We have our own vendor. Would you like to use our contractor? Would you like to use our own this?” They want to control the claim. We’re in this industry, so when I had an accident years ago and I got an estimate for my truck, we don’t work car claims, vehicle claims, but I remember going through the estimate line by line item, just like we do with buildings.

I remember there was $3,000 missing in that estimate because he had quoted lower parts that the truck actually had because it was like a better model. I was able to find $3,000, never worked in car loans. Just knowing the industry. If I was just a regular consumer, I would’ve got the check and be like, “Great. He cut me a check. This is all nice.”

What was the total amount of that claim? You found $3,000 extra in a claim.

It was $5,000 they gave me for my truck, and then I ended up finding another $3,000 there that they owed me. It was a $8,000 claim total.

We’re not talking an insignificant percentage of fine. That’s what the car insurance companies do. How much worse does it get in real estate?

We’re talking about huge numbers.

That’s right. Maybe we could talk about an example on a claim where they issued a certain amount of money and then you got involved and you found what, and then the total claim ended up being how much?

Yeah, the best one, we finished there’s probably a video with the insured. Brother Elijah, his claim, it was a church they purchased. They have a church, but they also do schooling. They were going to convert this old church into a school. They had a fire like a couple months after they purchased it. The adjuster came out and I think his initial estimate was like $800,000. That claim settled for like $3.1 million, I think, or $3.21 million.

It’s so significant, right? You could say, “Andy, that’s just your winners.” We’re always like, if we take a claim, we’re always going to significantly raise and get our clients every penny. That one’s a really big one. I’ll tell you, we had a sixteen-unit building that burnt down. He had a $550,000 policy and had a total loss. The adjuster came and wrote damages for like $580,000, but then he took depreciation. There’s a difference between ACB policy and ARCB policy. That insured only had an actual cash value policy, meaning that once the depreciation was taken away, that’s all he would get. He would not be able to claim the depreciation.

That adjuster gave him the $330,000 check. He actually called us because his investor-mentor recommended us. We looked at the building and I looked at the claim and I said, “You could tell that the adjuster start stopped writing his estimate because he got to like $580,000.” It was like right over the limit. When we got a hold of this job, the adjuster actually reached out to us and said, “Why is he hiring you guys?” I said, “What do you mean?” “I already paid him limits.”

I’m like, “We didn’t pay him limits. You wrote limits, but because the depreciation is so high, you’re only getting him $330,000. That’s all he could claim because he’s got an ACV policy only.” We ended up writing that estimate that damages were over $800,000. Even after you took out all the depreciation, he got a full settlement of $550,000 plus there was an endorsement for debris removal, so he had another $25,000 plus 5% of I forgot what other endorsement. He ended up getting an extra, I think, $300,000 that he wouldn’t have got.

Impressive. You breezed past ACV and ARCB.

Yeah, sorry, I didn’t want to stop right there. We just had an insured, same thing. They had a fire their investors out of Mexico actually, and their policy was an actual cash value policy too. A lot of people don’t know that. It’s scary. When the claim is settled, it’s always settled on a replacement cost value. When we calculate it, we’re going to say it’s going to cost $100,000 to replace this home. We’re going to say it’s twenty years old, all the material. Now we’re going to depreciate the material and, in some states, labor by 20%.

 

A lot of people don’t realize their insurance policy is actual cash value, not replacement cost. It makes a huge difference in a claim settlement.

 

If we’re going to take $100,000 depreciated by 20%, that’s $20,000. You take $20,000, that’s the depreciation, and now the insured gets the actual cash value, which is the $80,000, that’s your actual cash value, what’s left after the depreciation. Now if you have an actual cash value only policy, you are only getting that $80,000. Most policies are replacement cost value, meaning you get that depreciation amount once the repairs are complete.

The replacement cash value is the one that readers would want to make sure they bought.

A hundred percent. You always want a replacement cost policy.

Is that like the insurance broker should normally pick that up as they’re placing your policy, which brokers are shoving people into actual cash value policies?

I’m wondering the same thing because if I’m a broker and you come to me. I get a lot of the consumers maybe want to have the lowest premium. I don’t care. If I’m a good broker, I’m going to explain to you, “You’re going to save $1,000 or $2,000 a year, but understand that if you have a fire, you have a major disaster, you’re going to get half the money and that’s it.”

I don’t know how as an agent, you’re not explaining that well enough for the client to spend a little bit more or get them in it with a different carrier so they can actually be covered for the full amount. It’s a scary thing because if you know fires, again, no one ever thinks something’s going to happen to them. That’s the call we always get. “I always had insurance. I never thought this was going to happen to me.”

Everyone reading the show right now, that’s what we’re all thinking. “Nothing’s ever going to happen.”

I was on a podcast and the host, a really nice gentleman, and I won’t say his name, but a month after he reached out to me, he had a fire a month after we were on the podcast that he had me on. It never happened to him.

I’m assuming it worked out and you were able to perform?

Yeah. He was super happy. He was grateful.

Critical Timing In Claim Filing

Let’s go back to Brother Elijah’s deal. They offered $800,000, you got him $3.1 million. What a time period, and like what were the interactions? Maybe what we’re trying to pick out in this example, Andy, is could Brother Elijah have made a mistake by signing a document or cashing the check of $800,000 or something he could have done that would’ve like jeopardized the position? Do they have to call the adjuster within some certain timeframe? Where at in the process would you fit in there?

Yeah, Brother Elijah was very smart. They cut him the first check. I don’t know if he right away knew something was wrong. Actually, when we talked, he purchased the building for $700,000-something. When they told him it was $800,000, he thought it was pretty fair. When he got a contractor in there and the contractor told him, “There’s a lot of damage here. You might want to call, get a second opinion,” is when he reached out to us.

When I initially walked through that building, in my eyes, I’m like, “This is around $2 million and up.” Having a construction background, I know what it takes to put stuff back. I know the material price and labor price of stuff. In my head, right away, I could calculate everything. Even if he cashed the check, unless the check is a settlement, meaning it says settlement amount that you’re settling a claim with them, it doesn’t do anything. It’s an old myth. If they give you money, you take that money and you deposit as quickly as possible. Take that money, that’s your money. Whether you hire a public adjuster like us or you don’t, you want to take that money and keep fighting the claim.

Will they try to put a document in front of you at some point that says, “We’re accepting this as a full settlement,” or is there laws against that?

They wouldn’t put a document in. There’s claims we settled to where they say, “This is where we’re at. Would you guys want to accept the settlement offer at this?” The settlement offer says, “You guys are going to get a check and it says it’s a final settlement offer.”

That’s what you want to look out for then?

As long as the check doesn’t say settlement or you’ve signed something, but most checks that you get those first checks are those actual cash value checks. Brother Elijah, that $800,000, I think, his actual cash value was $400,000 like $500,000. That was his first check, the $500,000. If he was to deposit that check, it doesn’t hurt the claim or doesn’t do anything with the claim, that’s his money.

How Insurance Claims Are Paid Out Over Time

Does a normal insurance claim pay out 2, 3, 4 different checks? I’m curious, if I’m the insurance company and I want to operate in an unscrupulous fashion, why wouldn’t I have him sign off on the $500,000 when I’m sending the $500,000? It seems like they would attempt that, but they’re not attempting that all the time.

Most people won’t hire a PA. I think it’s said there are only 5% or 6% of insureds that actually hire a public adjuster or get help. They know most people won’t get help. They’re not going to look out to an attorney or reach out anywhere. They’re just going to they’re going to do their thing, they’re going to settle the claim, have a contractor go and do the repairs. Most of the time, when they want to hire a peer or want to hire someone, it’s too late.

 

Most people won’t hire a public adjuster. They’ll settle the claim, hire a contractor, and by the time they realize they need help, it’s too late.

 

Yeah. You have to get in there quick. Did Elijah hire you very early in the process? You may have just mentioned that

Very early. He got the offer and as soon as he got the offer, he had a contractor go in there and then a couple days after he contacted us. It was pretty early.

It sounds like one of the critical step steps is hiring the public adjuster immediately.

Yeah. If he hired us from the beginning, as we always recommend with most investors, like we’re Brother Elijah now, he had another fire actually at another building that he rents out to his parishioners for free. Actually, he doesn’t rent it out. If parishioners are going through a hard time, he lets them stay at this house. This guy’s great. This house actually caught on fire and so he called us right away. The best step is, again, even with that church, if he called us right away, it probably would’ve been more than $3.1 million. It probably would’ve been settled in half the time.

What was the timeline it took to settle that one?

Once we got hired, I think within 90 days, that was settled. That one was very quick. Depending on the claim, depending on the insurance company, depending on where we come in the claim process,

What would be the long end someone could expect. Let’s say single-family. We talked a little bit about commercial. Owner occupant, even. We run into this a lot. We buy these houses in Philadelphia, Chicago, around the country, and occasionally we’re getting the fire damaged. They’re calling because they had a fire a few months ago. One of the things the sellers are often mentioning to us, Andy, is, “We’re fighting with the insurance company. Let us settle this out, then we can deal with the sale.” I’m wondering if there might be a synergy there for us to introduce the adjuster or make sure they have the adjuster. I’m also curious, what’s that timeline for them on the long end to sort that out?

Yeah, with a fire, it should go pretty quick. Once we get hired on a fire, fire claims go pretty quick. That’s our specialty. Majority of our claims that we handle at all city is fires. We’ll do large water claims. We actually do in a couple tornado claims in Ohio. Large losses is our specialty. When it comes to a fire in like Chicago, those go pretty quick. If you have State Farm, again, I don’t want to shoot out one insurance company, but I just said it. With State Farm, they’re just so behind their adjusters that even if we give them our estimate and give them everything, it still takes like two months to go through like five managers just to issue a check.

You got to wonder if that’s because they’re behind or it’s a great strategy.

I’m going to tell you right now, this claim here in Ohio is a fire, it’s an investment group. There’s four investors. They just called us and we just did this Ohio claim and we met with the adjuster. I’ll tell you how long it’s taken because this is a large loss. This is going to be about $500,000. Since the fire happened, 21 days. We already wrote our estimate. We inspected it, we already prepared all our documents. We already met with the adjuster. He’s already got our estimate. We should have their initial offer. If it’s good, it’ll be their initial offer or their final within 10 days, 30 days. If there’s stuff missing, then we’ll have to go back and negotiate it. Within 60 days, we should have that claim wrapped up.

Let’s say they get an offer and they hire us. Now we have to go and recreate the whole story like, “Dan, what happened in the last five months of this claim?” “I gave them this paperwork and I told them this and this happened.” Now, not only do we have to present the amount of damage, but we have to say, “Go overturn everything you’ve already told and or you’ve already said.” It’s a little bit more work and it takes more time.

Do you operate nationally, Andy?

Yes. I think it’s close to 40 states now.

Okay, so not quite nationally. Are there any states, maybe the no state list if someone was reading versus all three?

The reason I say all states, because some states don’t, like Alabama doesn’t have public adjusters. There’s states that don’t have public adjuster designations.

Okay. They’re not legal, it’s not written into the insurance.

Pretty much every state, major state. I don’t think we’re in like Montana, the Dakotas, I don’t think we were in. That’s pretty much it. If you called us now and said, “We had a fire in Montana,” we’d reciprocate our license within two weeks, we’d have a license and work claim out there. It wouldn’t be an issue. That’s how we grew our business actually, originally. When we had our first original investors here in Chicago, Indiana, as they grew their portfolios, we grew with them. They would grow to Ohio. We’d get our license there, get an office and grow with them. That’s how we got into so many states and grew nationally.

What makes up your business in a percentage commercial versus single-family residential?

I would say 70% is commercial whether it’s a single-family commercial or like single-family investors. 30% would be residential homeowners.

Is there a low end of the property value that you simply can’t get involved? I don’t know. They have a $100,000 insurance policy or something.

Our claim, we stick to $100,000 claims and up. That’s where we like to like to be at, where it makes sense for us.

That’s typically going to be the large losses, like you mentioned, the fires, tornadoes and I guess a frozen pipe on the third-floor flat?

Frozen pipes and third floors are the greatest. We do them all the time. Again, not great for everyone, but we do them a lot. If someone calls us, “I had a frozen pipe in my basement,” probably not much in a basement, 2,000 square feet. It might be a $40,000, $50,000 claim. Not much we can help. We just recommend someone or say, “Here’s someone we know.”

It’s not about money and stuff. More or less it’s large loss because we have the team to handle it. We’ve built the company around handling large loss and bringing in the right people. Our main estimator spent twenty years with farmers handling large loss. He was in charge of million dollar claims and up in all of California and some others, so that’s how we’ve built the company.

Yeah. He’s going to have to fly out to Georgia or wherever the claim is.

We fly out everywhere. In Galveston, Texas, a home right on the beach had a fire. From Galveston, we’re going to Ohio for a tornado. We’re everywhere.

How do you get paid? Is this like paying you by the hour contingency fee? What does the client expect?

Whatever state we work at, whatever claim, it’s 10% contingent on what we recover. If we get hired right from the beginning, it’s 10% of the final settlement. If the final settlement is $300,000, it’s 10%.

Does that normally get paid like straight to you? Does it go to the client?

No, the insured. The insured pays us once we settle the claim. Either they’ll get a check or we get a check, we’ll endorse it, and then they send us a check or we’ll write a check to them minus the fee, and they’ll endorse the insurance check. The getting paid part is like us getting paid in the final is pretty easy. It’s just making sure we get the client paid.

Is there ever a time where it’s contingent so if no resolution comes, there’s no fee. Is there ever a time where you guys try and there is no fee?

In ten years, we’ve had two claims that didn’t go to an attorney claims that were just not denied, but just didn’t get paid. Technically, in ten years, I think there’s two claims that I could remember that we didn’t get paid. There was contingency and there’s just nothing else we could do. We came in too late, the client was already setting up. There were too many parties involved.

How To Avoid Bad Public Adjusters

Are there bad adjusters out there, Andy? Are there people who bungle the situation that we need to be on the lookout for?

Yeah, 100%. You have to do your due diligence when you’re looking for a PA and especially when you’re doing your due diligence, let’s say you had a fire, you had a large loss. Every public adjuster is going to say, “We do fires, we do water, we do everything.” Most public adjusters in like Florida only handle storm claims like wind, hail. They don’t really do fires. You have to make sure you actually specify that the public adjuster knows what they’re doing and they can handle a large loss or they know how to work with management companies or associations or investors or landlords.

 

You have to do your due diligence when choosing a public adjuster. You have to make sure they know what they are doing. Experience matters.

 

It’s different policies than homeowner’s policies. I can tell you for an investor, if you send us a policy, I already know you don’t have code coverage unless you actually paid extra for it. Whereas if it’s a homeowner’s claim, it’s mandatory. You always have it. When you purchase a home and you purchase insurance with State Farm, law and ordinance coverage is already included.

If you’re an investor and you purchase a landlord policy, that law and ordinance is not included. You actually have to buy that separately. Again, knowing that the public adjuster knows what type of claim, what type of scenario is probably the biggest thing you have to be aware of. A lot of pa firms are small. You have to remember, 80% if not more of PA firms are mom and pop, very small local. There’s only so many big companies, big PA firms that can actually handle large loss.

When Not To File An Insurance Claim

I have a question that may not be adjuster-related, but I’m looking at a building right now and the guy made a claim because I think his roof, I don’t know if it caved in or it was leaking, probably 80,000 square foot building if I remember correctly. It was a $500,000 claim. They dropped him and he’s got like 350,000 square feet that I’m trying to buy off of him right now. None of us can now get insurance because he made the claim.

I have quite a few people who are friends of mine, who won’t even make the claim. $60,000, $80,000, $100,000 repair on their commercial property. They know better than to make that claim because they’re going to get dropped. That next insurance premium might go from $60,000 a year to $110,000. You’re fine and you’re in the clear in two years by paying for it out of pocket in a sense. Do you have any insight around there’s time and place not to make an insurance claim?

That’s one of the tips we always give when I’m discussing claim process and adjusting area with people. For our company, something we love to do and we do for all our clients is we advise when to file a claim. There are always times when there’s not a right time to file a claim. When a client calls us, you call us and you say, “Andy, everyone in my neighborhood, all these businesses got new roofs. I should file a claim, I’m going to get a new roof.” No, that doesn’t work that way. If we look at 10 properties, everything’s identical. To that one property, let’s say 1 property, there’s 10 different claims, 10 different adjusters, 10 different insurance companies. Even if it’s the same insurance, ten different adjusters are going to adjust that claim differently.

 

Every insurance claim is different, and every adjuster will see it differently.

 

It doesn’t matter what your neighbors are, what the situation. What we do is we’ll come out, we’ll take a look, and unless we’re like positively that this is going to be a good outcome for the insured, we’ll say, “Do not file a claim because it’s not going to make sense.” I’ll give you an example. Again, most pas are smaller. If they get a call for a million-dollar property, they’re going to file a claim no matter. They’re just going to file because they hope it sticks.

In 2023, we had a call. It was 260 buildings. This is somewhere in Illinois. This was 260 buildings. You’re looking at this, it was 260 duplex senior living families, these buildings. They had a company out of New York come out and tell them they should file claims that there was damage everywhere. They sent them this whole presentation. I looked at this presentation, I’m like, “It looks like there’s a lot of hail damage.”

We pulled the weather data. There was no big hail or storm in the last years. They called us because they wanted someone local. We went against up some other PA firms. We ended up winning the job and we looked and inspected the building and I said, “When did you guys replace the gutters?” They said, “We replaced the gutters like three years ago.” There was damage on certain parts of the siding and these guys took pictures of those old siding where that’s been there for twenty years, so that damage was very old.

I’m like, “If you guys replaced the gutters in the last 3 years and you’re filing a claim that within the last 2 years you had a storm and none of the gutters or down spots have a lick of hail, there’s no damage here.” I met with the board and advised them to retract that claim back because not only did they have a good insurance, but if they would’ve filed a claim, the insurance company would come out and take photograph and then say, “Do you guys have old siding, old roof? We’re going to drop you. We’re not going to insure you anymore.”

Now it’s going to be hard because now every other insurance company is going to see that. They actually rechecked the claim. They still have that same insurance, still have that great premium. If storm ever happens, it happens. They’re insured for it. The insurance is not there to pay for old damage or cosmetic. That was a great question because there are right times. If you have a $50,000 deductible, Dan, and we go in and we say the damage only $60,000, why would you file a claim? It makes no sense. It’s got to make sense for the insured. Since I’m an investor, I always look at it from an investor side of myself, like, how would I be in that scenario? Am I going to come out better? It’s got to make sense.

It sounds like that would be a reason someone could reach out to you as well. It’s not just in the event that total loss. Obviously, if there was a fire, you have to make the insurance claim, but you have this other questionable situation that arises and you’re unsure. In my instance, Andy, I had like a fire next door to the house. The tenant had a little bit of like soot and I called a public adjuster and it was one of the little guys and he filed this claim he had like a $2,500 an hour deductible and it was like $4,500 in cleanup.

That never ended up getting done. We couldn’t schedule with the tenant. I had to evict the tenant. We didn’t even do the cleanup, but I got the check and then my insurance went up by 20%, 30% and I never knew that that was going to be a risk. I’m hoping readers who maybe didn’t know that filing the claim could be a risk as well. Especially now, we’re in an insurance market, I don’t know if bubble is the right word. It’s the opposite of a bubble where all the insurance premiums have gone up and there’s a lot of insurers who are simply backing out of markets and property types.

Your risk of being uninsurable in this market, it’s never been quite this tight, at least in my years of being in real estate. To circle back, that’s a service that you would offer readers if they’re thinking about a really large claim, but unsure whether that risk to their current policy is worth it. That’s something you’d be able to advise.

Right now, we’re going to be able to have like a yearly fee with investors that we look over all their policies, we inspect their buildings and then that fee, if they do ever have a claim, would get subtracted. We’re still working out the fine details of that. In the meantime, because we don’t, we inspect properties, we inspect policies, we look over interpret policies all the time. If you called me now and said, “Andy, I have a couple properties. Can you look at my insurance documents? Can you look at my buildings? A hundred percent all the time. That’s how we’ve built our reputation. When it comes to premiums, it’s illegal for them to fi raise your premium or drop you because you had a claim.

They’ll drop you, but they’ll never say it’s because of the claim. Technically, premiums go up every year. If I look at all the insurance premiums we have, they just keep going up every year. Some of the properties we never had a claim on. When it comes to claims, on our lake house, we had two storms that went through and we filed two claims. Now the whole house is basically brand new on the outside. I would think they would be more than happy to insure me now, because everything’s new, everything’s better. Now I had a hard time getting insurance because I had two claims on the same property.

The loss run history will follow that property, right?

Exactly. It’s that property. It’s not even just you, it’s that property because everything else is fine, all my other building, it’s just that property.

I bought a couple that had losses I didn’t know about before and they were j just nightmare to get insurance on them. I fixed the fire damage and it followed the property, not me, for sure. The yearly fee program to review insurance stocks is interesting because a lot of brokers will offer. I’m like shopping for insurance. “Let me make sure all your claims are in line.” Can I really trust the other insurance broker? He’s trying to sell me a policy like I don’t know the business.

We have a love and hate relationship with brokers for the fact that most of them think know everything when it comes to claims. They’ve never worked the claim or never seen the claim process because they sell policies, they think they know the claim process. The claim process and the claim handling is 100% different from selling policies. They’re selling a policy based on a premium. They’re trying to sell you something. They’re trying to say, “Dan, I got you covered here. It’s only $5,000 a year.” We’re looking at from a perspective of loss mitigation. If you have a fire or you have water damage, are you covered for this? If you have this, are you covered for this?

We look at all the little stuff because we see all of it. We also know which carriers pay claims better. When I say pay better, I mean pay faster. Work claims faster, are easier to work with, have more experienced adjusters. We know that aspect when there’s those brokers that sell it don’t know because they’ve never seen that side of the business.

We’re looking through a different lens and then we are looking through a lens of an investor as well. What are you paying? Is there another insurance that you could get the same coverage for less? We’ll advise you about that. The whole program that we’re trying to make here is to get investors prepared and prepare them for losses before they happen. They might never have a loss. Great. If they do, they’ll be prepared and they’ll just be in a much better scenario.

You’re a disinterested third party because you’re not going to get the commission from selling the policy, but you are an interested party and your interest will be in line with the insured if there is a loss later. In a sense, you’re on the right side of the table to make that make that evaluation.

The reason we wanted to do this, Dan, is we love working with investors. We love reading policies and seeing what’s there, what’s not covered and what’s in there. We look looking at buildings, but it’s to get involved before, like as soon as the claim happens because the problem is we get so many investors and landlords that call us when it’s too late, when they’ve already called the claim.

We’re just dealing with the claim and the investor and whoever called the claim said, “We had a tree root damage.” The actual cause of the damage was there was a clog in the pipe, which technically falls under the full policy limit, but the claim is now denied and we can’t overturn it. It’s got to go to an attorney because whoever called the claim said the wrong thing. We’re calling the claim and we’re inspecting it before they do anything, before they even call the insurance.

I think you touched on it before, but I’m feeling like the biggest underlined point for me is if I have the loss, even if it is a total loss and it’s a fire or a tornado or whatever the case is, it’s smart to call the public adjuster first before the insurance company.

A hundred percent because the first thing we’re going to do is look at the loss, make sure it’s covered. We look at the policy. These days, it’s not only maximizing the claim and getting every penny that you’re owed, it’s just getting the claim paid and making sure it’s not delayed or worse, denied because a lot of claims we’re getting is denied.

We have an insured that’s with legal right now. They were selling a building, so they had their primary residence. They put it up for sale and then they went to their son. They had another home across the street that they moved in with their son. They took all their furniture out because they were selling the home. The home caught on fire. That loss got denied because that home wasn’t their primary residence.

They lived there, it’s their primary home, but they weren’t living there when the fire happened because they were selling the house. They cleaned it out and they were living literally across the street with their son. It was their house. They were renting. It was their rental. Their home caught on fire. It got denied because they didn’t call it a primary residence. If we were involved, this would’ve never happened because I know that what to say and this. It’s not about lying, but when you’re too honest, you tell them too much, then the adjuster is like, “Okay, it’s not their primary. They’re not living there.” They checked all the boxes and they denied the claim.

I think conventional wisdom is called the insurance company first immediately when there’s a loss. That’s why I think it’s just 180 degrees, turn that conventional wisdom on its head and call a knowledgeable adjuster.

If you can have a private adjuster on your team before, like even maybe you never have a loss, but have one on your team to interview on and have them look at your policies and know what real estate portfolio you have, what properties you own, that’s the benefit. You want to have one before, because then if something small happens, maybe there’s a hailstorm, I would come up and say, “Dan, we looked at your properties. Everything looks good. No damage. You’re good to go. No reason to file a claim.”

As we get to the top of our episode here, before I switch gears, is there anything else I forgot to ask? Maybe just didn’t have the knowledge to ask that might be of interest to the readers?

No, I think you hit the main points. I think we went over all the main stuff.

Books And Podcasts That Inspired Andy

All right. You’re successful business owner, real estate investor. Do you have any books, other sources of inspiration, podcasts that you might want to share?

Of my own?

Meaning like in general, stuff that’s been impactful along the way.

Some of the books have been The Alchemist. Rich Dad, Poor Dad is still one of my favorites. There’s a book called The Slight Edge that had a huge impact on me. It’s a great book. It’s weird. It’s so simple to read. Sometimes I read it over and over again because it’s just so simple. It’s really well put together. Tony Robbins was a big factor. Jim Rohn. All the YouTube motivational, if you’re into that stuff. The one person that stood out always to me was Jim Rohn, soft-spoken. Tony Robbins is a little bit louder.

I got to see Tony live. Actually, when I got to see Tony live, I was pretty young, still, starting in business and then I was didn’t know what direction I’m going and I didn’t really have that much money. I really wanted to see him. I know the tickets to see him up front were like three times more. I don’t know how I got the money, but I got the money to sit up front.

I remember sitting next to all these business owners. The guy next to me, they’re like the biggest importer of produce from Mexico. I’m like, “All these guys have all this money. What am I doing here? I don’t even have money. If they have money and they’re here learning and trying to see, wow.” That was a big eyeopener for me at that time.

Advice Andy Would Give His Younger Self

The crown jewel of wisdom. Andy, if you could go back and share with yourself, let’s say just as you were buying that first duplex, knowing everything you know now, what would you go back and share with yourself then?

The only thing I would go back in real estate and wish I tell myself is buy more property. I wish we bought more. When it comes to business, I would say I didn’t know business that well and I learned business on the fly and I made a lot of mistakes. I would’ve slowed down and definitely watch how I spend money and on what.

Where can readers get more information? Do you have any resources, websites, things of that nature that you’d like to share?

Yeah, they could check us out on AllCityAdjusting.com. For your readers, I’ll leave them with my direct line. If any of your readers ever want to get ahold of me or have questions when it comes to real estate or public adjusting or help with their claims, they can reach me at, at (708) 655-4186.

The Kindest Thing Someone Has Done For Andy

My final question. Andy, what is the kindest thing anyone has ever done for you?

It’s hard. I was trying to think about that. I’m blanking. You got me on that one. I might have to skip on this one. I’m going to have to get back to you on this one because this one I might have to just share with you with an email because I can’t even think.

All right, we’ll take that for now.

I’ll have to get back to you on that one. Not that people haven’t done kind things. I was at Starbucks the and they wrote on my cup, like, “Have a great day,” with a smile. I thought that was pretty nice.

It’s funny. It can be hard to pick the kindest thing. Everyone who’s living life has had people do some kind things along the way. To put one in front of all the others might be unfair, perhaps, right?

There are kind things that happen to me. To pinpoint one, actually, I’m a big office guy and I remember for one of the Christmas, one of my employees got me a mug that says The Best Boss Ever in the Office, which was cool. Sometimes, it’s the little things. There’s so many of those I could pinpoint. If I ever think of one big one, I’ll definitely get back to you.

That’ll work. Andy, I appreciate you coming on the show. I got a couple of pages of notes here and I learned a lot and I’ve been doing business for a little bit of time here and consider myself okay at it. Call the adjuster before the insurance company. What a huge piece for me. In closing, I really appreciate you taking out the time and coming on the show.

Thank you so much for having me. Again, don’t forget to mention that picture you got in the back.

For the readers who are like not watching the video, there’s a dog behind me on the wall here.

Not a normal dog.

It’s a famous dog, actually. The most famous TikTok meme dog, I think it was, from 2023. It’s that guy right there on the wall that I just had to have. Actually, I put him up, Andy, because we had our dog pass away, I think October 2023, right before we headed to Florida. We’re back in Chicago. English Springer, he had brown liver spots on him. We have a new English Springer who we’re going to pick up. It’s at my fiancée’s aunt’s house and we’re like really excited. A little bit in celebration for the new dog. We have this guy here on the wall.

That’s awesome. I’m sorry about your other dog. Congrats on the new edition. That’s awesome.

Yeah, I appreciate it, Andy.

 

Important Link

 

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Empowering Wealth Creation: A Deep Dive into Real Estate with Wyatt Simon

 

Empowering Wealth Creation: A Deep Dive into Real Estate with Wyatt Simon

 

Guest: Wyatt Simon is a seasoned real estate investor renowned for his transformative approach to achieving financial freedom through strategic property investments. With a background rooted in leveraging the power of real estate assets, Wyatt has successfully built a remarkable portfolio, starting from humble beginnings. Through innovative strategies like the Burr method (Buy, Renovate, Rent, Refinance, Repeat), Wyatt has demonstrated a knack for maximizing returns while minimizing initial capital investment. His dedication to empowering others and sharing valuable insights has made him a sought-after figure in the world of real estate investing.

 

Big Idea: In this podcast is the transformative power of real estate investing in achieving financial freedom. Wyatt Simon emphasizes the importance of aligning investments with personal goals and values, leveraging the right strategies, and adopting a growth mindset to succeed in the competitive real estate market.

 

 

    

Dan: Wyatt, one of the things I’ve also learned, observed, maybe it’s an opinion, but you got like West Coast real estate and you have East Coast real estate, we could say Sunbelt real estate, Sunbelt and West Coast seem to be boom and bust, right? For the last five years, everyone wanted everything in the Sunbelt. Florida, Austin, Texas, Dallas, Georgia, Atlanta, Georgia, all the way up in the Carolinas, Tennessee, et cetera. A lot of those markets have seen a tremendous amount of apartment development. There’s… I forget like 80,000. I don’t remember the number, but a ton of new units are coming online, and starting to hear people gripe and complain about, well, now the rents aren’t, they’re not growing like they were. In fact, they’re even falling as a lot of this inventory comes online and we probably have a pipeline of new construction apartment inventory for another, I don’t know, deliveries for another 12 to 24 months to maybe impress that market. The reputation that the Midwest would get, right? Chicago real estate. They did not put up the volume of apartment buildings that they did in the Atlanta, Georgia market or in Florida is that we don’t see that boom and bust. We don’t see the rapid growth, but we also don’t see the rapid decline. There may be a more subtle wave, if you will, wave function in the growth. Does Omaha operate like kind of the Midwest reputation of apartment real estate?

Wyatt: Absolutely. Yeah, I saw a crazy fact. I know you’re talking about apartments, but I’ll say this. I saw a crazy fact from 2006 to 2008, the Omaha housing market dropped 6%. You had Vegas, Phoenix, and other markets dropping 60%. But we’re very insulated. I would say we lag behind a lot of the curves. On that note, too, in quarter three and quarter four last year, I believe it was the quarter three last year when we were starting to see rent decline across the nation, Omaha was actually the number one for apartment rent growth in the nation in either quarter three or quarter four last year. We are lagging behind the nation on that front. Now, we do have some waves going on. I can tell you, during COVID, we didn’t build and I think a lot of the nation didn’t build, right? Then the year after COVID, we saw a lot of construction permitting taking place. Now, we’re seeing half of that has halted as interest rates have gone up. We’re still seeing our rent continue to go up, but it’s not going up as fast as they were. They’re not decreasing like the rest of the nation here.

This Episode of The REI Diamonds Show is Sponsored by the Deal Machine. This Software Enables Real Estate Investors to Develop a Reliable & Low Cost Source of Off Market Deals. For a Limited Time, You Get Free Access at http://REIDealMachine.com/

 

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https://fcequitypartners.com

 

For Access to Real Estate Deals You Can Buy & Sell for Profit:

https://AccessOffMarketDeals.com/podcast/

 

Wyatt Simon & I Discuss Empowering Wealth Creation:

  • Wyatt and I discuss Rental Market Trends, Growth, and Regional Market Conditions (7:13): Explore current rental market trends and factors, including interest rates, driving rent growth for strategic real estate investment decisions in the Sunbelt and Midwest regions.
  • The Importance of Resilience in Omaha’s Housing Market (00:11:39): Analyze the factors contributing to Omaha’s housing market resilience during economic downturns for insights into market stability.
  • The Direct-to-Seller Approach (00:17:55): Learn about strategies for building relationships with property owners and negotiating deals outside traditional market channels in real estate acquisitions.
  • House Hacking and FHA Loans (00:34:50): Explore how to leverage FHA loans for house hacking, a strategy for reducing living expenses through rental income.
  • Scaling to Multifamily Properties (00:35:21): Discover insights on transitioning from single-family homes to multifamily properties for increased scalability in real estate investments.
  • Tax Benefits and Depreciation (00:42:32): We delve into tax benefits and cost segregation in real estate deals, with approximately 35% of the purchase price returned to investors in depreciation in year one. Discuss the allocation of depreciation and alignment of interests between investors and operators.
  • Reflection and Wisdom (00:46:37): Wyatt reflects on personal growth and shares his wisdom, emphasizing the importance of avoiding absolutes and maintaining a positive mindset. Discuss the power of language in shaping beliefs and outcomes, drawing parallels to spiritual teachings and personal experiences.

    

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Skylines and Strategies: Navigating New York City Real Estate with Bob Knakal

 

Skylines and Strategies: Navigating New York City Real Estate with Bob Knakal

 

Guest: Join us in this episode as we sit down with Bob Knackal, Head of the New York Private Capital Group at JLL, a seasoned investment sales broker with a 40-year career in the dynamic New York City real estate market. Bob shares insights into his impressive journey, highlighting his role in transforming the skyline through strategic land deals and development projects.

 

Big Idea: Bob Knakal takes us on a journey through his four-decade-long career in the New York City real estate market. From the early days as an investment sales broker to leading the New York Private Capital Group at JLL, Bob shares key strategies for success, highlighting the importance of expertise, data-driven decision-making, and product specialization. The discussion delves into the nuances of the market, examining recent corrections, development opportunities, and the unique challenges and advantages of navigating the complex world of New York City real estate. Bob’s insights provide valuable lessons for both seasoned professionals and those looking to make their mark in the ever-evolving real estate landscape.

 

 

    

Dan Breslin: All right, Bob Knakal, welcome to the REI Diamond Show. How are you doing today?

Bob Knakal: Great, Dan, thanks so much for having me on.

Dan: Yeah, when the booking agents had gotten the request I said, “Oh, wow, this is cool.” Bob Knakal just applied to be on the show. We’re going to approve that one, and then they finally got our schedules to Massey, and here we are. So I was excited to have you on the show, but maybe for listeners who don’t know the name, Bob Knakal, you could give a Reader’s Digest version about who you are and the highlights of your career today.

Bob: Sure, absolutely. Well, Bob Knakal, I currently am the head of the New York Private Capital Group at JLL. I’ve been an investment sales broker in New York City for 40 years now. For 26 of those years, from 1988 to 2014, I owned and ran a company called Massey Knakal Realty Services. We were investment sales in New York. Co-Star started tracking the marketplace in 2001. And in 2001, we were surprised to see that we had sold more buildings than any other company. And from 2001 to 2014, the number two company in New York sold a little over 1300 buildings. Massey Knakal sold over 4000. So we lapped the field by more than three times. Sold the business to Cushman and Wakefield in 2014 for $100 million. And I was three and a half years at Cushman, five years now at JLL. I think Dan, the thing that I’m most proud about our firm was that number one, we focused on culture training servant leadership mentality. And that has very tangibly manifested itself. Today, in New York City, there are 29 investment sales brokerage companies or divisions of companies that are either owned by or run by people who learned the business at Massey Knakal. So the legacy is significant and something I’m very proud of. Last week, I closed transaction number 2321. It’s about $22 billion worth of sales. And fortunately, even though I’m in year 40, I still love this business as much today as I did the day I started. And that’s what keeps me going.

 

This Episode of The REI Diamonds Show is Sponsored by the Deal Machine. This Software Enables Real Estate Investors to Develop a Reliable & Low Cost Source of Off Market Deals. For a Limited Time, You Get Free Access at http://REIDealMachine.com/

 

This Episode is Also Sponsored by the Lending Home. Lending Home Offers Reliable & Low Cost Fix & Flip Loans with Interest Rates as Low as 9.25%.  Buy & Hold Loans Offered Even Lower.  Get a FREE IPad when you Close Your First Deal by Registering Now at  http://REILineOfCredit.com

 

Resources mentioned in this episode:

https://www.us.JLL.com/

 

For Access to Real Estate Deals You Can Buy & Sell for Profit:

https://AccessOffMarketDeals.com/podcast/

 

Bob Knakal & I Discuss New York Real Estate:

  • Expertise and Differentiation: Bob emphasizes the importance of becoming an expert in a specific niche of the market, using statistics rather than adjectives to answer key market questions.
  • The Map Room Advantage: Bob discusses the creation of the Map Room, a unique data set that tracks every building under construction and potential development site in New York City, providing a competitive advantage in selling land.
  • Product Specialization: Bob talks about the shift from geographic orientation to product specialization in recent years, focusing on specific property types such as land transactions and multifamily properties.
  • Market Correction Dynamics: Bob provides a detailed overview of the New York City real estate market’s recent corrections, emphasizing the autonomy of different product types and the changing behavior of lenders in response to market conditions.
  • Development Opportunities: Explores ongoing development opportunities in various sectors, including the challenges and prospects in the condo land market, the impact of rezoning projects, and the transformation of the hotel market.

    

Relevant Episodes: (There are 238 Content Packed Interviews in Total)

 

The transcript of this episode can be found here.
Transcripts of all episodes can be found here.

Insights from Crowdfunding Expert Adam Gower

 

Insights from Crowdfunding Expert Adam Gower

 

Guest: Adam Gower, a seasoned real estate crowdfunding and syndication expert hailing from Central Coast California, has embarked on an extraordinary journey in real estate finance. His diverse experiences, from dwelling in Beverly Hills to navigating the California Coast’s tumultuous waters, have uniquely sculpted his perspective on real estate investing. Within his captivating background lies an intriguing PhD thesis, delving into the historical intricacies of banks underwriting financing during the 1904-1905 Russo-Japanese war. Adam’s profound knowledge of financial history and its practical application to real estate investment is genuinely enlightening.

 

Big Idea: In this episode, Adam Gower, a real estate crowdfunding and syndication expert, discusses the evolving landscape of real estate financing, emphasizing the importance of risk management, adapting to changing market dynamics, and leveraging syndication and crowdfunding opportunities for real estate investors.

 

 

    

 

Dan: That’s right. So, Adam, we’re going to get into GowerCrowd, Crowdfunding as our main topic. But before we do it, I thought a cool place to start would be where we are talking about right before we hit record. You have this PhD in an interesting topic. Would you mind briefly describing that?

Adam: Sure. I wrote a thesis that examined how banks underwrote their financing of Japan during the 1904 and 1905 Russo-Japanese war. Oh my goodness, how obscure could that be? What I found interesting about it, why I ended up writing this thing was that when you look at, it’s called the historiography, when you look at how people have reported this particular period in American banking history. The way they reported it was that Kuhn Loeb was headed up by – oh they complete it with JP Morgan. And this was in the day of the railroad barons and the robber barons, they were called. And Jacob Schiff and Kuhn Loeb, and JP Morgan, all these guys, they were all part of that party. The historiography says that Kuhn Loeb took really huge unnecessary risks, and I just didn’t believe it.

When I got the idea to write this PhD, I was working for East West Bank. I was brought in during the global financial crisis, so 2007-2008. I just thought, no, banks don’t take risks like that. They don’t just randomly invest because, whatever, some kind of wacky political points of view, which is what everybody said Kuhn Loeb had done. So, I decided to dive into it. And so, what I did was, it was really cool actually, Dan, seriously, I mean, I was able to access all the telegrams that went back… It was a syndicate of banks, the finance Japan. I look to handwritten letters, telegrams that went back and forth, and contracts. They were all handwritten in those days. It was really, really cool. I read all of this stuff that they never anticipated. They never thought anyone will ever read this. I got into all of this stuff. I figured these guys, they were really, really diligent on not only underwriting the risk but making sure, a couple things, one, they made absolutely sure that their investors were going to get their money back. Even if whether Japan won or lost. If you read between the lines here, you can see how this applies to real estate investing. But they were very, very sure that their investors would get their money back because they had guarantees from the Japanese government. And number two, even more importantly, as bankers, and I”ll extend this to real estate sponsors today, they were also extremely careful in the way they structured their deals that they made money, didn’t really matter if anybody else did at the end of the day.

 

This Episode of The REI Diamonds Show is Sponsored by the Deal Machine. This Software Enables Real Estate Investors to Develop a Reliable & Low Cost Source of Off Market Deals. For a Limited Time, You Get Free Access at http://REIDealMachine.com/

 

This Episode is Also Sponsored by the Lending Home. Lending Home Offers Reliable & Low Cost Fix & Flip Loans with Interest Rates as Low as 9.25%.  Buy & Hold Loans Offered Even Lower.  Get a FREE IPad when you Close Your First Deal by Registering Now at  http://REILineOfCredit.com

 

Resources mentioned in this episode:

https://GowerCrowd.com/

 

For Access to Real Estate Deals You Can Buy & Sell for Profit:

https://AccessOffMarketDeals.com/podcast/

 

Adam Gower & I Discuss Crowdfunding:

  • Market Migration Trends: Exploring the migration of people from California to Florida and its potential impact on the real estate market.
  • Risk Management: Drawing lessons from historical financial practices to highlight the crucial role of risk management in modern real estate investing.
  • Changing Real Estate Dynamics: Understanding the impact of fluctuating interest rates, insurance costs, taxes, and other factors on real estate investments.
  • Principal-Agent Conflict: Emphasizing the importance of active management and hands-on involvement in real estate deals to maximize returns.
  • Syndication and Crowdfunding: Exploring the legal aspects and online visibility needed to attract investors through crowdfunding and syndication, along with strategies for scaling real estate businesses.

    

Relevant Episodes: (There are 231 Content Packed Interviews in Total)

 

The transcript of this episode can be found here.
Transcripts of all episodes can be found here.

Real Estate Insights and Opportunities From Chicago to Austin with Drew Breneman

 

Real Estate Insights and Opportunities From Chicago to Austin with Drew Breneman

 

Guest: Drew Breneman is a real estate investor based in Austin, Texas. He began his journey at a young age, starting an online business and saving his earnings. As he delved into investing, Drew explored various avenues, including stocks and mutual funds, but found his passion in real estate. Inspired by books on investing, he realized the potential of leveraging properties and their appreciation. Drew purchased his first duplex as a college freshman in Madison, Wisconsin, and continued to expand his real estate portfolio while completing his education. With a focus on multifamily properties, Drew combines his business mindset with investment strategies to create successful ventures in the real estate market.

 

Big Idea: Join hosts Drew and Dan in this inspiring real estate podcast episode as they discuss Drew’s journey from Chicago to Austin, his early entrepreneurial ventures, and his success in real estate investing. They delve into various topics, including the reasons for Drew’s relocation, real estate opportunities in Chicago, Drew’s entry into real estate investing, his early ventures, transitioning to multifamily and value-add deals, expanding into new markets, the importance of real estate education, holding properties for the long term, and the significance of preparedness. Gain valuable insights and strategies from two experienced real estate professionals.

 

 

    

 

Dan: Yes, I love Chicago personally for the rental apartments that I own. I think Chicago is understated in the national investment context when we talk about apartment buildings, although I don’t necessarily know if that would hold true when we get into the main topic here of the size of deal that you are focusing on now. I think it probably is a good market, and I’m not super familiar with, let’s say, 20 to 34 units and up in the city of Chicago. But one unique thing, we do deals in Atlanta, Chicago, Philly, around the country, Florida, a lot of other markets as well. And the one thing I found and love about the Chicago market specifically, Drew, is the abundance of two, three, and four-flat buildings. So like, I’ve found no other market, maybe Los Angeles or New York offers that kind of opportunity to call the entry-level investor to get the two or the three or the four-unit buildings and kind of do the house hacking.

So I’ve loved this city for that reason. And when I got here, moved here from Philadelphia in 2015 to Chicago, I was blown away by the high prices in areas where I came from. In Philly, we have very, very low prices comparatively. People making the same kind of money in Philadelphia can buy a much lower-cost house in the city. And then the prices were probably almost double in Chicago. So we have expensive real estate and high rents. And my investment philosophy, buying those apartment units over the past couple of years, has been to get into the expensive property and take out, I don’t want to overpay, but I want to take out a higher and higher mortgage with higher and higher rents on a per-unit basis because I’m paying down that at a higher velocity over time. And then the two and a half percent increases are larger dollars. So it allowed me to play a little bit bigger than I might have been able to play in the city of Philadelphia. And there’s just such an abundance of that type of inventory. Whereas in Philadelphia or a lot of other cities, Atlanta having a duplex or a triplex is like a unicorn. It’s a really rare event. But I digress on that. Why don’t we, for listeners, Drew, why don’t you kind of do our evolution of the business model and your origination story so we can get a picture of who you are and what your business looks like?

Drew: Sounds great! And I’ve noticed the same thing about Chicago. If you wanted to get started in a two to four-unit, there might be more there than anywhere. I often give that advice to someone starting out, and one of the people I was talking to was in Phoenix, and he was like, “There’s no three units here. What are you talking about?” So I was like, “Well, you got to figure out where they are. I’m sure there’s some.” But anyway, yes. So I got started really young. So started from the Milwaukee area, and both my parents were teachers. I was living in the suburbs my whole childhood, and I started a business online just buying and selling items and video games. I didn’t make any huge money on any one sale, but I made five or $10 per sale, and I saved all the money.

 

This Episode of The REI Diamonds Show is Sponsored by the Deal Machine. This Software Enables Real Estate Investors to Develop a Reliable & Low Cost Source of Off Market Deals. For a Limited Time, You Get Free Access at http://REIDealMachine.com/

 

This Episode is Also Sponsored by the Lending Home. Lending Home Offers Reliable & Low Cost Fix & Flip Loans with Interest Rates as Low as 9.25%.  Buy & Hold Loans Offered Even Lower.  Get a FREE IPad when you Close Your First Deal by Registering Now at  http://REILineOfCredit.com

 

Resources mentioned in this episode:

https://www.Breneman.com/

 

For Access to Real Estate Deals You Can Buy & Sell for Profit:

https://AccessOffMarketDeals.com/podcast/

 

Drew Breneman & I Discuss Real Estate Insights and Opportunities From Chicago to Austin:

  • Reasons for Relocating: Seeking Safety and Lower Property Taxes
  • Real Estate Investing in Chicago: Abundance of Entry-Level Opportunities
  • Drew’s Early Entrepreneurial Journey: From Online Sales to Real Estate
  • Transitioning to Multifamily and Value-Add Deals: Maximizing Returns in Chicago
  • Expanding to New Markets: Venturing into Sunbelt Markets

    

Relevant Episodes: (There are 222 Content Packed Interviews in Total)

 

The transcript of this episode can be found here.
Transcripts of all episodes can be found here.

Unveiling Your Real Estate Edge: Insights from Jeremiah Boucher

 

Unveiling Your Real Estate Edge: Insights from Jeremiah Boucher

 

Guest: Jeremiah Boucher, a seasoned real estate investor, shares his transformative journey in the industry, from a challenging experience during the 2008 financial crisis to finding his competitive edge. With a focus on manufactured housing, self-storage, and small bay industrial properties, Jeremiah emphasizes the importance of continuous learning, building relationships, and honing communication and negotiation skills.

 

Big Idea: Jeremiah Boucher discusses his  journey of self-discovery and growth in the real estate industry. From overcoming adversity during the 2008 financial crisis to finding his niche in specialized asset classes, Jeremiah shares his insights on finding your competitive advantage, building trust, and the importance of continuous improvement. Get ready to gain valuable knowledge on deal sourcing, negotiation strategies, and the power of effective communication and presentation skills in real estate.

 

 

    

 

Boucher: Yeah. Similar to a lot of the listeners, I quit college and got into real estate. I bought a lot of houses. I lost everything in 08 with just like the big short, you know, and had some real challenges with tax liens and foreclosure and credit card debt and all of that whole deal. I didn’t have an edge, so I was doing what everyone else was doing in Vegas. You know, everybody was a realtor, everybody was a house flipper, learned the lesson. I knew something in my gut was wrong in that whole process, and I knew that wasn’t going to survive. I took the hit and had to rebuild, and then the next 10 years really were about building up a manufactured housing portfolio

I did that by just being young and naive and aggressive and reaching out to some guys that started a big mobile home park fund and helped them build that fund by sourcing deals and kind of putting together creative deals and managing and operating some of these deals and then had a nice swap with them in 2016 where I was able to take on my own assets and manufactured housing. That gave me some autonomy to take that cash flow and put it into my own management company. I ran that out of Vegas, a lot of the assets were in Vegas and up near Reno, and I was able to at that point, you know, kind of build up my resources and learn the ins and outs of the operational part of the business, which is rough when you’re dealing with some types of, you know, lower-income housing and, what revolves around that.

I saw at least the writing on the wall for me that I thought asset values were extremely high, and I really wasn’t prepared to grow or scale that type of business at that time, so I had a good exit in 2019 and wrote the book and then, you know, connected with I think you a couple of years later, but it was really through, you know, a bunch of different networks where I started to actually scale and start with some funds rather than doing individual syndications, and at this stage, I only operate out of raising money through funds. I’m a typical, you know, private equity syndicator, like a lot of guys on your show, and then at that stage, you know, my niche, my focus, you know, first was manufactured housing. We still look at it, but it’s not as heavy in the portfolio. Second is storage, you know, traditionally storage and tertiary secondary markets. A lot of them are up in the northeast. We remotely manage a lot of them, and we look for the rough ones and improve them.

Then lastly, my most recent kind of fun asset class is Small Bay industrial up in the Northeast, and I’m building a lot of it. I do construction as well. We can get into all that, but that’s trying to condense it as best I could for you, Dan.

 

This Episode of The REI Diamonds Show is Sponsored by the Deal Machine. This Software Enables Real Estate Investors to Develop a Reliable & Low Cost Source of Off Market Deals. For a Limited Time, You Get Free Access at http://REIDealMachine.com/

 

This Episode is Also Sponsored by the Lending Home. Lending Home Offers Reliable & Low Cost Fix & Flip Loans with Interest Rates as Low as 9.25%.  Buy & Hold Loans Offered Even Lower.  Get a FREE IPad when you Close Your First Deal by Registering Now at  http://REILineOfCredit.com

 

Resources mentioned in this episode:

www.PatriotHoldings.com

www.StorageBootcamp.com

 

For Access to Real Estate Deals You Can Buy & Sell for Profit:

https://AccessOffMarketDeals.com/podcast/

 

Jeremiah Boucher & I Discuss the Unveiling Your Real Estate Edge:

  • Finding Your Competitive Edge: Identify and leverage your unique value proposition to gain a competitive advantage in real estate by specializing in a specific asset class and continuously improving your skills.

  • Building Relationships and Trust: Learn how to build strong relationships and foster trust with sellers, partners, and investors, crucial for achieving success in real estate. Effective communication, active listening, and demonstrating credibility as a buyer are key elements discussed.

  • Understanding Different Asset Classes: Gain a comprehensive understanding of various real estate asset classes, including manufactured housing, self-storage, and small bay industrial properties. Explore the potential benefits and challenges of each asset class to make informed investment decisions.

  • Strategies for Deal Sourcing and Negotiation: Discover practical strategies for finding and evaluating real estate deals, along with effective negotiation techniques. Jeremiah shares insights on deal sourcing, market analysis, and structuring creative solutions that align with both buyer and seller goals.

  • Importance of Communication and Negotiation Skills: Recognize the significance of developing strong communication and negotiation skills in the real estate industry. Effective presentation, problem-solving, and active listening are essential for navigating complex transactions and building long-term relationships.


    

Relevant Episodes: (There are 221 Content Packed Interviews in Total)

 

The transcript of this episode can be found here.
Transcripts of all episodes can be found here.

Inside the Self-Storage Industry with Jacob Vanderslice of Van West Partners

 

Inside the Self-Storage Industry with Jacob Vanderslice of Van West Partners

 

Guest: Jacob Vanderslice is a real estate investor and entrepreneur with over 15 years of experience in the industry. He is the founder of Van West Partners, a real estate investment firm that specializes in self-storage facilities. Jacob has an extensive background in residential fix and flips, multifamily, adaptive reuse retail, and town-owned development, but his passion lies in the self-storage business. Jacob explains the reasoning behind his shift towards storage, the company’s investment philosophy, and how they create value in their facilities.

 

Big Idea:  Real estate investor and entrepreneur Jacob Vanderslice shares his expertise in self-storage investment. Jacob discusses his journey in real estate investing and how his company, Van West Partners, moved from single-family rentals to self-storage investments. He emphasizes the importance of creating value through income streams and optimizing unit mix for maximum revenue. Jacob also talks about his investment philosophy, which centers around value-add investments in growing markets.

 

 

    

 

Daniel: Okay, nice. Yeah, I’m in Chicago. As listeners probably know. Figure maybe we’ll start with the evolution or the reader’s digest version. Maybe a little bit about who Jacob is, but then also VanWest and kind of how your personal career and your business model evolved to the point where they’re at today in 2022.

Jacob: Certainly. Well, it’s all been accidental and I guess unintentional to a degree like most things are. We started investing real estate full-time in about 2006, and we cut our teeth doing lots and lots of residential fix and flips. We did a bunch of rentals. We did buy, fix and sell deals. We did almost probably 1200 of them over a fairly long period. We really started in 06 and kind of kept going in that business until about we had some overlap, but kind of started to quiet it down in about 19 as deal flow constricted and returns kind of went down. So that’s how we cut our teeth. Just buying residential homes at the auctions and fixing them up, making them better, and either running them out or selling them. We’ve also done a fair amount of multi-family adaptive reuse, retail, some for-sale townhome development, and we got in the storage business in 2015. And we looked at storage for a while, and we like the fact that it’s historically downside protected.

It’s got durable recurring revenue streams. It’s scalable, repeatable, defensible. So we researched it for a while and we kind of jumped in head first on our first deal. We did a ground-up development project here in Denver, and then we did a few other development projects locally, and then we opened up the Milwaukee market starting in about 2016 just north of you. We did a handful of deals out there. And over time, I mentioned accidental earlier. Over time, I just kind of evolved to becoming our main line of business. The residential business is great. Fixed and Flips is a great business. But one of the things we didn’t like about it is it was I guess overly transactional, meaning you’re buying, selling over and over and over again. And to make money, you constantly have to be buying a deal, making it better than selling it. And we wanted to shift to a business that was more cash flow focused versus a quick reversion focused. And that’s why we landed on storage. And through today, we’ve got 38 storage facilities, about 275 million in asset center management all over the country, Midwest, southeast, south, got some stuff in Denver, and we’re buying more and we’re building more.

 

This Episode of The REI Diamonds Show is Sponsored by the Deal Machine. This Software Enables Real Estate Investors to Develop a Reliable & Low Cost Source of Off Market Deals. For a Limited Time, You Get Free Access at http://REIDealMachine.com/

 

This Episode is Also Sponsored by the Lending Home. Lending Home Offers Reliable & Low Cost Fix & Flip Loans with Interest Rates as Low as 9.25%.  Buy & Hold Loans Offered Even Lower.  Get a FREE IPad when you Close Your First Deal by Registering Now at  http://REILineOfCredit.com

 

Resources mentioned in this episode:

www.VanWestPartners.com

 

For Access to Real Estate Deals You Can Buy & Sell for Profit:

https://AccessOffMarketDeals.com/podcast/

 

Jacob Vanderslice & I Discuss the Self-Storage Industry:

  • The evolution of Van West Partners’ investment strategy

  • The state of the US real estate market and the impact of COVID-19

  • The role of technology in the real estate industry

  • The potential impact of government policies on the market

  • The outlook for the real estate market in the near future


    

Relevant Episodes: (There are 219 Content Packed Interviews in Total)

 

The transcript of this episode can be found here.
Transcripts of all episodes can be found here.

Maximizing Asset Protection and Tax Savings with Scott Royal Smith

 

Maximizing Asset Protection and Tax Savings with Scott Royal Smith

 

Guest: Scott Royal Smith is a real estate investor, attorney, and founder of Royal Legal Solutions. He shares his background in real estate and law, and how he scaled his wealth through strategic planning and asset protection. He believes in educating people and forming relationships to help them leverage their assets to build wealth.

 

Big Idea: Scott Royal Smith shares his expertise on cost-effective legal structures for real estate investing and tax strategies for asset protection. He presents a practical system involving creating a series of LLCs and a Land Trust to hold assets, which provides effective asset protection and can help minimize maintenance costs. Scott’s insights offer valuable perspectives on how to reduce risk, minimize costs, and ultimately build wealth in real estate investing.

 

 

    

 

Dan: Nice. Scott, so for listeners, would you mind giving us maybe the reader’s digest version of the evolution of your business real estate and law career and then sort of what the business model is today?

Scott: Yeah and so my company is Royal legal Solutions but I got started in real estate when I was in law school. I bought a commercial property and auto repair and transmission repair shop for the back taxes. And I end up flipping the business in the building upon graduating to graduate from law school without any debt. And I thought that was going to be a hotshot litigation attorney. So I took a job suing insurance companies in a law firm. Turns out insurance company’s business model is collecting premiums and denying coverage, especially when things get expensive. And then that’s what attorneys does, they sue them whenever they do that. So, get first-hand experience about how does the whole game of insurance really work and how it’s important for us to have insurance, but also have additional protection in place.

But the whole time while I was working as an attorney there, I continued by real estate and I scaled my own real estate portfolio until I was making more money doing real estate and I was being an attorney. It took me about like a year and a half. I wasn’t sleeping a whole lot at those times in my life, and I didn’t need a lot of money, right? I wasn’t married, didn’t have kids and I was like, hey man, I’ve hit it. I’ve hit my financial freedom. I was like I’m golden, but then I ran into the problem and I think a lot of people run into which is like wait shouldn’t I be structuring this inside of like LLCs and should I be using any of trust to hold my assets and my company’s anonymously? And what should I be doing with all of my taxes and my estate planning, and my insurance? And why do I want to be doing all that? How’s that all suppose to work?

So, I did what everybody does and I was like, well, I’ll try to read the books and I’ll try to contact professionals. And so I did all of that, and I realized that nobody really have a complete system we’d put together. So I had to put one together for my own. So I built my own team of people because I was like, well, I want, I had the financial freedom but I wanted the time freedom. And the only way I can get there is if I built a team. If I studied for myself to understand how to do it for myself and then built a team of people that do it for me on basically managing my wealth for me.

It was great, I finally had everything that I wanted and I was traveling a ton and living a great life. And as I came back in living inside the states, a lot of my friends real estate Investors and asked me like hey man, how are you doing? What is he doing? How are you living this lifestyle? What is going on right now? And it’s like, well, here’s what I built. And this is how it all works. And they’re like, well, can I get in on that? Can you take on more people and help me build this thing? So I was just kind of helping people out, getting them into the things that I’d figured out for myself. And eventually when I was like, hey, you should go in this BiggerPockets podcast and go just share with people about asset protection. It’s one part of whether it’s some of the stuff you know. And I didn’t think anything was going to come of it. So I gave up my personal email and phone number into it.

And what happened was I was getting 30 to 40 phone calls a week from investors all over the country. They were like, hey man, I really need help on asset protection and how all these other pieces are supposed to put together. So then that’s where I realized that whatever you want to call, that higher power in life was really tapping me on the shoulder and says, hey, this isn’t all about just hanging out on the beaches and have a good time. You need to be of service to other people, help them be able to walk the path that you’ve walked and get them to that place of being secure and having the true freedom and protection in place for keeping what they’ve work so hard to be able to build. And that’s Royal legal Solutions is now turning and I, we serve all 50 states, we have over 2,000 clients that we’ve helped that are Real Estate Investors and we have about 30 people of attorneys, CPAs, paralegals and support staff.

 

This Episode is Also Sponsored by the Lending Home. Lending Home Offers Reliable & Low Cost Fix & Flip Loans with Interest Rates as Low as 9.25%.  Buy & Hold Loans Offered Even Lower.  Get a FREE IPad when you Close Your First Deal by Registering Now at  http://REILineOfCredit.com

 

Resources mentioned in this episode:

https://RoyalLegalSolutions.com/

 

For Access to Real Estate Deals You Can Buy & Sell for Profit:

https://AccessOffMarketDeals.com/podcast/

 

Scott & I Discuss:

  • Leveraging LLCs for asset protection

  • Land Trusts to hold assets

  • Private Foundations for tax savings

  • Strategic planning for building net worth


    

Relevant Episodes: (There are 220 Content Packed Interviews in Total)

 

The transcript of this episode can be found here.
Transcripts of all episodes can be found here.