June 5, 2022
Joe Fairless

JF2833: Establish Your CRE Niche & Build a Community ft. Bobby Jones


Retired nurse and anesthetist Bobby Jones is an apartment syndication investor on a mission to spread the word about real estate investing to other healthcare professionals. Today, he is the founder of On Call Capital, which matches these professionals up with reputable operators in the real estate and alternative investing space. In this episode, Bobby shares how he discovered apartment syndications, what influenced him to move beyond passively investing to become a GP, and how he uses commonality to build his network.

 

Bobby Jones | Real Estate Background

  • Owner of Yellow Hammer Properties Inc, which helps others achieve financial freedom through real estate investments. He focuses on residential flips and multifamily investments.
  • Portfolio:
    • GP of 234 units in Texas
    • LP of 68 units in Alabama
  • 20 years of real estate experience
  • Based in: Birmingham, AL
  • Say hi to him at:

 

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TRANSCRIPT

Ash Patel: Hello Best Ever listeners. Welcome to the Best Real Estate Investing Advice Ever Show. I'm Ash Patel and I'm with today's guest, Bobby Jones. Bobby is joining us from Winston-Salem, North Carolina. He is the founder of On Call Capital, which matches up healthcare professionals and aspiring investors with reputable operators in the real estate and alternative investing space. Bobby's portfolio consists of being a GP on 370 units and an LP on over 500 units. Bobby, thank you for joining us and how are you today?

Bobby Jones: I'm doing great. Thanks for having me here.

Ash Patel: It's our pleasure. Bobby, before we get started, can you give the Best Ever listeners a little bit more about your background and what you're focused on now?

Bobby Jones: Sure. Well, the reason I'm focused on healthcare professionals and getting them the education that they need when it comes to real estate and alternative investing is because I am myself a retired nurse anesthetist. So a little over two and a half years ago, I took the big step of taking money out of my retirement accounts, paying the penalties, but putting them into apartment syndications in order to produce income for my family. And while I certainly have not replaced my anesthetist income, I've replaced enough income so that I have time freedom, which is a big deal to me. I have three kids, I love being flexible and able to visit them at school, and be there for all their activities, so it's great for me.

Ash Patel: Did you call your company On Call Capital because that's what you hear a lot in the medical field?

Bobby Jones: Oh, yes. Yes. The on-call is the tip of the cap to the healthcare community, because we're always on call and always needed for whatever ends up coming in the door.

Ash Patel: Bobby, how did you find out that apartment syndications was a thing?

Bobby Jones: Well, I was working 1099 as a CRNA. And at that time, anybody who works in the 1099 world knows that it can kind of be feast or famine; and I was in one of those famine periods where I was only working about three to five days a month. And what I learned there was that I really didn't need this high, high income in order for us to be okay. And I also realized I enjoyed my time. So I started going to Podcast University, and trying to learn as much as I could about alternative ways to make an income. Because I thought, "Well, if I can do this from a passive standpoint, then I can have all the time I need. I can have this on a regular basis."

So I started listening to BiggerPockets. That led me to the Michael Blank podcast, which led me to meeting up with a great operator in Ryan McKenna, with McKenna Capital. He has partnered on numerous deals, so I reached out to him and I said, "I'd like to learn more about investing with you." From there, it took off. I invested in several deals with him, and a few more on the outside of his company, and of course, I've done some of my own. So it's been an adventure from there.

Ash Patel: Alright, so what made you go beyond passive investing, to now you've got a podcast and you're a GP... I thought you enjoyed your time and didn't want to work a whole lot? What happened?

Bobby Jones: Well, and that's a great point that you bring up, because I do enjoy my time. And the truth of it is that I don't spend all day working. I have time that I can spend on myself, on self-reflection, and on mindset things. I can go for runs and I can exercise in the mornings when my kids are at school, and when my wife is at work. I have all these options available to me. I have a very flexible schedule, a very flexible lifestyle, so that's part of it. But what ultimately made me want to go in and create my own company was because I knew that this wasn't something that was being talked about in healthcare circles.

And I worked alongside so many people... And this is pre-pandemic, but you could tell that they were suffering through burnout. And the problem that I saw was that they just didn't have a way out. They saw no way out of this situation that they were in. I discovered a way out, so I wanted to shout it from the rooftops, and let people know that this was an option for them. So that's what I started doing, and that was the whole impetus for starting this company, was to get the word out to healthcare professionals about the opportunities in alternative investing. So that's really why I did it.

And the reason the podcast came about was because I decided to start my business a month before the pandemic. My initial idea was I was going to have booths at conferences and interact with people in-person and have these conversations. Well, the pandemic changed all that, and we turned into the Zoom lifestyle here. So what I had to do was adjust my business plan, and that included doing things a little bit differently than I had planned. So that involved me starting a meetup, and that involved starting a podcast to give myself a platform, but also to give a platform to other healthcare professionals who were doing things on the side and finding success. It's been a bit of a rollercoaster ride, but it's been well worth it so far.

Ash Patel: How did you leverage the power of your fellow healthcare workers?

Bobby Jones: Oh, goodness. Well, leverage is such a strong word, and it can have a little bit of a negative connotation when it's put that way. But I think it's just a matter of getting the word out, and letting the word spread. I've had plenty of people that have come to me and wanted to learn more about investing, and I've taught them things, and then they go off and they invest in things on their own. That's great. I want people to just do something. So that's my whole goal, is to get more options out there to people, so that they can make good decisions for their own situations, because if there's anything I've learned, everybody has a different situation and everybody has a different idea of what their dream is. So if I can help them to realize some of those things along the way, that's my goal.

Now, I will say, having a niche group that I cater to has helped and I have a lot of contacts within the CRNA community. So that is something that I have been able to use to my advantage when it comes to my podcast because I interview CRNAs and healthcare professionals there. It's hard to just shout out to people, "Hey, I'd love you to be on a podcast." If they've never listened to a podcast and they've never been on one, they don't know anything about podcasting, it can be a very nerve-wracking experience. So it helps that I have my own background and that camaraderie with them. I know what they're going through, so I'm not just somebody randomly coming to them and asking for them to put themselves out there. They're talking to somebody who's been through what they've been through. So I guess that would be the answer to the question.

Ash Patel: Yeah. And there was not a negative connotation to the question. It was more of how do you use that commonality to build that network. So if there's a probation officer, if there's a farmer, if there's a pediatrist, how do they leverage that community, the commonality amongst other people in that profession, to follow in your footsteps?

Bobby Jones: Yeah, I think the way to do it - you have this common bond with people. Networking is such a big part of this business, and people don't always realize that. I have family that's into farming, and they know farmers, they know all of the tricks and tips for managing finances with a farm. And when I was introduced to that, it blew my mind. I had no idea that all of these things were out there for farmers.

That's something where somebody in that community can obviously speak their language. You already speak their language, so why not use that to build that community? And that's really what I've taken away from it. I believe in narrowing down into a niche, as long as it's big enough and broad enough, obviously. But, I mean, there are 55,000 CRNAs across the country, so I have plenty of people that I can talk to and choose from. And I would say that the same bears true for many other professions out there... So yes, speaking the language is a big deal.

Ash Patel: So Bobby, how did you go from the passive side back into the active side? What was that one thing that clicked and you're like, "Alright, I'm doing this"?

Bobby Jones: Well, okay... So part of it was what I had already mentioned, that I wanted to share that message with other people. The other part of it is I ran out of my own money to invest. Plain and simple, that's what happened. So I wanted to still be a part of these deals in some form or fashion, and I wanted to learn more about the business. I was so curious about what it looked like to go through the operations aspect of all of these things.

I'm not really a deal guy, I'm not out there finding a bunch of deals and doing that kind of thing, I'm not exactly a number cruncher. That's just not my thing. But when it comes to operations and carrying out a business plan, that is more of what I would say my skill set would lend itself to. So that's where I'm looking on the GPs that I'm a part of... I'm really trying to learn more about that side of things. And that way, I can apply it to future offerings as well.

Ash Patel: When you're a GP on a deal, do you raise capital for them? Is that how you get on the GP side?

Bobby Jones: Yes, that's generally what I've done. Now, of course, you have to do other things in the GP in order to do that. You can't just bring capital to a deal, unless you're operating on a fund model, which one of my deals is. So in that sense, I can just sit back and monitor and watch. But another one of my deals - I am more heavily involved with that one because I am a GP on the actual deal itself, not just a fund manager. So that's generally how I get into deals is, as you mentioned, leveraging the amount of capital that I can raise to bring into the deal.

Ash Patel: Let's dive into that. Explain that to our Best Ever listeners, if you would. You cannot be a GP simply by raising funds. Why is that?

Bobby Jones: Yes. Well, because it's against the law. It is against the SEC regulations, for 506(b) and 506(c) deals. You can't just come to a deal and say, "Hey, I've got a bunch of money and I want to be a part of this." You have to have a more active part of the GP. So either you're the one bringing the deal to the table, or you're the one doing underwriting. And a lot of people will use investor relations to bridge that gap a little bit.

I obviously have relations with my own investors, but investor relations on a GP level is a lot more all-encompassing, where you would be crafting emails and communication between your GP and the entire limited partner group. So that's something that you can do. And then, again, working on the operation side, developing relationships with banks. Whatever the case may be, those are some different ways that you can be a better part of the general partnership and satisfy those SEC regulations.

Ash Patel: Bobby, you mentioned the fund model where you are allowed to take investor capital and essentially invest it. Can you explain that as well?

Bobby Jones: Sure. So there are many, many different structures to funds. So I don't know that we're going to necessarily get into all that, but on a just basic level, I can set up a fund, and that fund is set up to invest in a particular apartment offering. So that's how the structure works. So the fund is actually investing in another business. And by that route, as a fund manager -- my job is to be a fund manager. So I manage my investors and I manage the fund, and the different tax forms and things are filtered through the fund, to the investors. So it's a way that many capital raisers now, with more and more SEC scrutiny coming along, many capital raisers are looking to this method as a way to get out of that responsibility, because it is a responsibility being on a GP, and being a more active partner.

Whereas with the fund model, you can strictly say, "Hey, I just want to bring $500,000, I want to bring $1 million to your deal," whatever amount of capital you can raise, and that's really the end of the story; that's all you have to do. Because there are many capital raisers out there who are in numerous, numerous deals with several different operators. So it's practically impossible to be super active with huge numbers of deals, and that's why that fund model is a great one.

Break: [00:14:14] - [00:16:01]

Ash Patel: How does the fund manager make money?

Bobby Jones: So there are a couple of different ways. There's the traditional way that a fund manager can charge fees to the investors. Now, the key is to make sure that it's not necessarily taking away from investor profits, so you want to make sure that you're teasing out those numbers properly. Basically, you've got administrative fees, acquisition fees, all those kinds of things that are in a regular standard apartment syndication, but you're allowed to charge on top of some of those fees with the fund, because you are operating the fund. You're doing active work within this fund, so you deserve to be compensated in some form or fashion. So just like with a mutual fund, there might be a 1% expense ratio, or a 2% expense ratio. That's what you can do on a fund model to make sure you're being compensated as a fund manager.

Ash Patel: Are you allowed to share in the upside of deals as well?

Bobby Jones: Yes, you are. And you can still be a part of a GP, from a certain perspective, and share a percentage of that ownership and participate in the upside, depending on the amount of capital that you do end up bringing to the table, and the terms that you work out with that general partnership. It's all so deal-specific and there are so many different ways to write it up. So just having an idea that there are a myriad of ways to do it can help you out, because you can say, "Well, maybe this isn't working. But this isn't exactly what you want, but maybe this will work, and we can make it work some other way."

Ash Patel: Bobby, when you acquire significant capital from your investors, and you approach a GP, what is that conversation like? Let's say you have a GP that has a great deal, you feel good about putting your investor capital in it... Do you also get to benefit from the dealmaker side?

Bobby Jones: Yeah. Basically, if you're coming into a deal and you're offering investors to these operators, you can get a slice of the GP based on the percentage of the capital raised that you're bringing. And those numbers vary wildly. Some deals you come into and they only want to share about 20% of the GP. Some deals are closer to 30% of GP that they're willing to share with a capital raiser. And again, let's say you've got a $2 million cap raise, you raise $500,000 - well, you'll get a quarter of whatever percentage that GP has set aside for capital raisers. So it varies based on how much capital in a deal that you're bringing to the table. But that's generally speaking how you can participate in the upside as a capital raiser.

Ash Patel: In terms of investor communication, is that from the GP or is that your responsibility?

Bobby Jones: I take it on as both. I think that the GP does have a responsibility to investors to provide them with the documents and all of the monthly statements and reports. But at the same time, it's my role is to make sure that my investors understand what they're looking at. So making sure that I'm available to answer questions, putting the information out there to them, and taking feedback based on that. That's a big part of what I do. And honestly, I'm still pretty new in this space, so it's something that I'm working on actively to try and figure out how can I improve my approach with my investors. How can I provide them with the most value and make them feel good about their investment. Because it's one thing to just get those regular GP reports, it's another to be in contact with a person such as myself who can really bridge that gap in knowledge.

Ash Patel: Yeah, Bobby, when I think of funds, I think of diversity. Are you able to take investor capital and invest it how you see fit in multiple deals?

Bobby Jones: So you can do that. Generally speaking, it's called a Fund of Funds model. So you can take a fund, and just like a mutual fund invests in many stocks, you can take a fund and invest in many different apartment indications, many different self-storage facilities. You can mix and match however you'd like, and offer that type of a fund to investors. And I'm exploring the flexibility of that right now, because that's where I'd like to take my business, is into that fund model. But figuring out exactly how those things work; I'm still in a lot of the learning phases of that.

Ash Patel: Alright, Bobby, you went from retiring from probably working a lot of hours to passively investing, now starting a fund, being on the GP side of deals. Are you looking at taking down your own deals at some point?

Bobby Jones: Well, we'll see... [laughs] It's something where I just like being that communicator; the middle person who can bridge that gap between the investors and the GP. Because a lot of times, the folks that I talked to in healthcare, many times this is the first time they've ever hearing of these kinds of options. So there's a real education gap that I need to start working on bridging.

So I have a free educational email series that I send out to people, that breaks things down into more digestible bits and lets them really start learning more about what they can potentially be investing in. But from that standpoint, doing my own deals - I will never say never. There's certainly some potential there, I will say in the multifamily space in particular. I don't know if I'm going to go into that route, as much as I could see myself getting into some other types of things like self-storage, senior housing, things like that. Those are some deals that I'd really like to start being a more active part of.

Ash Patel: Bobby, what's the toughest lesson you've learned since you've ventured into this?

Bobby Jones: Oh, my goodness... Well, I would say it's just the constant evolution, the constant growth. Not just of trying to adjust my business plan to the reality around me, but also the growth of multifamily and the growth of alternative investing. Just in the last two to three years, it's just phenomenal. It's amazing to see how many more people are looking outside of the stock market to try and find great returns. And I do think you can put some of that on the Bitcoin stuff. People are getting into things that are not tied to the stock market so much. So when you start to really venture outside, the whole world opens up to you, and I think that's what people are starting to realize. So yeah...

Ash Patel: Out of curiosity, are you allowed to take your fund and invest part of it into crypto?

Bobby Jones: You can, you can do certain things, and there are actually Bitcoin mining funds out there that basically the fund can invest in the machines that mine crypto. And that way you can pay your investors in cryptocurrency; whatever cryptocurrency they're mining, you can pay them in that. And that's really appealing to a lot of people. Myself, I'm an advocate for true diversity, which means having some of my money in the stock market, some of my money in real estate and other alternative investments, some of my money in crypto... I'm all about finding that balance for yourself, and that to me is what true diversity means. So I'm not just a multifamily guy; I am looking at RV campgrounds and self-storage and senior housing and all those kinds of things out there, and Bitcoin as well.

Ash Patel: Bobby, what is your best real estate investing advice ever?

Bobby Jones: Oh, goodness... Well, education, man. Just do your due diligence, and learn, and take action. Analysis paralysis is real, and people are so afraid to take action that they just never ended up getting off the couch. And that's so hard -- when you're talking about investing large amounts of money, that can be a really challenging thing to spur yourself to do. But people are fine with shoveling money into the stock market, and don't think anything about putting $50,000 a year into the stock market, into their 401(k)s, and 403(b)s, but you tell them to put that into a multifamily deal, that's safer than the stock market, that will pay them more along the way, but it's outside of the realm of the norm.

And my advice is if you want to get where everybody else is going, then do what everybody else does; but if you want to be somewhere different, then you need to do something different. And I didn't want to work for 40 years of my life and miss the best years of my life. Now I have my time to myself. I can spend time with my family and friends, and that's because I did something different. So it takes knowing yourself, knowing what your risk levels are, but taking action in the end after you've educated yourself.

Ash Patel: Bobby, are you ready for the Best Ever lightning round?

Bobby Jones: Sure, buddy. Let's do it.

Ash Patel: Alright, Bobby. What's the Best Ever book you recently read?

Bobby Jones: The book that I'm currently reading - and it's a very short book - is Negative Self-Talk and How to Change It, by Shad Helmstetter, PhD. It is designed to be read in an hour, so it's very digestible. It's condensed and concise, it's great for people who are like me and live in your head a little bit. You get down on yourself sometimes. But it's got so much great advice for those of us who suffer from that negative self-talk.

Ash Patel: Bobby, what's the Best Ever way you like to give back?

Bobby Jones: You may have guessed it a little bit from my book choice, but I'm big on mental health. Everybody went through the pandemic... Mental health is being talked about more than ever. So ideally, what I want to do is find a way to give back in that form. Now, whether it's through being an active part of local meetup groups, or donating to local causes for mental health support - that's really where I'm looking to take my time and give back.

Ash Patel: Bobby, how can the Best Ever listeners reach out to you?

Bobby Jones: You can find me on LinkedIn under Bobby Jones. You can check out my podcast, which is called The Plan B CRNA Podcast, and you can find that anywhere you listen to podcasts. I interview healthcare professionals who are doing things on the side and finding success in different ways outside of their traditional career paths. And I also do rabbit hole episodes where I dive into different types of side hustles and side gigs, so be sure to check me out. And you can also just get a hold of me by going to my website. It's www.oncallinvestments.com.

Ash Patel: Very cool. Bobby, thank you so much for sharing your time with us today. Your journey from being a retired nurse anesthetist to an apartment syndication investor, to now setting up your own funds and teaching others and having others share what they're doing for side hustles. So thank you again for your time.

Bobby Jones: Thank you. I appreciate being here.

Ash Patel: Best Ever listeners, thank you for joining us. If you enjoyed this episode, please leave us a five-star review. Share the podcast with someone you think and benefit from it. Also, follow, subscribe, and have a Best Ever day.

 

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