May 4, 2018

JF1340: Can Your First Investment Be An Apartment Community?

Joe and Theo are back with weekly updates, what they learned, and how the lessons learned can apply to us. We also have a listener question asking about jumping straight into large multifamily. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.

We’re doing Facebook Live, but that’s not the word I was looking for… We’re doing Follow Along Friday, for everyone who is watching us now via Facebook Live, hello. Feel free to comment below. And if you’re listening to us on the podcast, then hello as well. Today we’re gonna be talking about things that we’ve learned since the last time we did Follow Along Friday – approximately a week ago – and how those lessons can be applied to what you’re doing, Best Ever listeners.

So how do we wanna approach this, Theo?

Theo Hicks: Before we dive into our business updates, we had a really good question come to us from a Best Ever listener named Mike. He actually started off by praising your podcast, multiple paragraphs doing that, so I thought that was cool; we appreciate that, Mike. And his question was what your thoughts are on starting out as a single-family investor, or if you’re able to jump straight into larger apartments?

I’ll read his exact question first, and then I figure we could have a conversation around it and get your thoughts on this question. So Mike says “I was wondering your opinion on real estate investing – if you could go back, would you have gone into multifamily investing sooner, or do you think it was a good idea that you had a few single-family residences under your belt first? It just seems like all the successful investors end up in large multifamily eventually.”

Joe Fairless: Cool. Well, I’d say I think how you paraphrased it initially is slightly different, but the slightly part is important, from what he asked. I think how you’ve paraphrased it was “Should people start in multifamily or single-family?” but what he asked was “If I had to go back, what would I do?” and most times when you ask someone “If you could go back and do XYZ differently, would you?”, unless they murdered someone, they’re probably not going to say “I’d like to do it differently”, because they’re probably gonna follow up with “Because if I did do it differently, then I wouldn’t be where I’m at today…”, unless just Armageddon happened in their business and/or personal life, and then that’s another thing. But for the most part, if you ask someone “Would you do it differently?” you’re gonna get an answer “Well, but then this XYZ wouldn’t happen. I wouldn’t have met my wife”, or “I wouldn’t have my child” or in my case, “I wouldn’t have the portfolio that I have with our partners, because I didn’t follow the same process.”

So for the gentleman who asked the question, I’ll answer your intention behind the question, but just a comment about the way that was phrased. So now to really how you paraphrased it, I think that’s more relevant… Because I wouldn’t change what I did, for the reasons I’ve just said.

So is it better to start with single-families versus multifamilies, or is it better to start with multifamilies over single-families? The answer is yes, and I answered yes to both… [laughs] I don’t think it matters. I really don’t, because I’ve gotten to where I’m at starting with single-families. I think it’s  a tactical question, and really it is side-stepping the core of what sets us up for success as investors, and that is improving ourselves on an ongoing basis, learning from what we’re doing, and continuing to grow and expand. I know that sounds not vague, but esoteric, but it’s just how it is. And if that’s not the answer that you’re looking for, then sorry. That’s just what it is.

I can tell you I’ve gotten to this place — yeah, I started out with single-family homes, but I was also teaching others after I bought a couple in New York City, who were asking me “How the heck are you doing this while having a full-time job?” So I started teaching others and I started learning through teaching. Everyone learns more, it reinforces the content whenever we tell others about it.

Then I grew from there, and I got this podcast – a daily podcast – learned a whole lot… Yesterday was my interview day – holy cow! Full transparency, sometimes I get annoyed and worn down on interview day. I mean, I interview 8 or 9 people a day on my interview day, but yesterday in particular I just got phenomenal lessons interview after interview.

I interviewed someone who got a 10-unit off-market through a direct mail campaign; he went through how he did that. I interviewed someone who is in Louisville and his company builds multifamily developments using tax credits. I interviewed someone who went bankrupt and now is doing over 15 million dollars worth of development, he’s doing a 200+ bedroom community for student housing in Upstate New York… Tons of interviews.

The point is that if we don’t have a podcast, then it’s still learning. So coming full circle, to answer the question directly – either one. I don’t think it matters, as long as you’re learning the whole time and you’re improving each step of the way. Because here’s the thing – I think the reason why this question is asked – and I understand the question, why we would ask it… It’s “Hey, I want to get farther faster”, but the reason why it’s asked is because “Is it gonna take me too long if I start at single-families to make a whole lot of money with larger stuff?” That’s basically another way to rephrase the question. “Am I losing out? Is there an opportunity cost with me buying single-family homes when I could have started larger and made more money in a shorter period of time?” That’s the question. And I don’t think there is a disadvantage because of what I’ve done starting with the single-families (four single-families and no large multifamily). So those are my thoughts.

Theo Hicks: I agree. I think when I was looking at this question, I think at least from my perspective the key point is kind of where you’re at right now in your life is gonna tell you — not what you should do or you can do, but what would be the most effective. If you just learned about real estate yesterday, then you’re probably not gonna be buying an apartment as your first deal, if you wanna do a deal very soon.

But if you’ve been listening to podcasts for months or for years, if you’ve been involved in real estate in some other capacity, whether you’re a broker or if you’re raising money for someone else… Like, the guy that hopefully you buy an apartment with, his first deal is gonna be an apartment, but that’s because he’s educating himself on apartments, he has a podcast about apartments, he’s raised money for apartments before… So yeah, I guess technically you can say he’s done a deal before because he raised money for apartments, but my point is it kind of depends on where you’re at.

For me, I didn’t know anything about real estate at all when I bought my first building, and everything at the time went very poorly, and I’m really glad that it happened on a small building, not a 400-unit apartment building.

And of course, I’m not necessarily sure if he’s asking about doing an actual syndication deal or using his own money to buy an apartment, but that’s also another issue. If you’ve never heard about apartments before but you’re a multimillionaire through other reasons, then an apartment could be something that’s on your plate, but if you’ve never heard of it before and you’re in college and you have no money, obviously you could potentially raise money from someone else, but that takes time to build up your pipeline of investors and your credibility in general.

I think it’s important, as you said, where you’re at education-wise, experience-wise and money-wise, to determine what would be the best bet… Because at the end of the day – at least this is how it was for me, but my first deal went so poorly I was afraid of doing another deal for a year or two, because of how bad it went… Because I jumped right in, and it’s not necessarily that I went above my capabilities… It was just kind of a shock, because I was not expecting it, because I had unrealistic expectations going on. So that’s kind of my thoughts.

Of course, your first deal could be a large apartment, but it’s probably not gonna be a large apartment if you’ve just heard about real estate yesterday and you have no experience and you don’t really know anyone.

Joe Fairless: Yeah, I’m gonna assume this individual didn’t hear about it yesterday. Most people who listen to the podcast didn’t just hear about real estate yesterday… But I’m gonna assume they have some baseline knowledge, but they haven’t pulled the trigger on anything, but they’re fairly intelligent about the lay of the land…

I’d say I agree with you on the experience, money and — I forget what was the third thing you said.

Theo Hicks: Credibility I think is what I said.

Joe Fairless: Credibility, yeah. I think most important – and this gets into the esoteric thing that I talked about earlier – is your psychology; where are you at from a psychological standpoint? How tough are you? How tough is your mind? How do you handle adversity and how have you handled it in the past? Are you really ready for it? Because I guarantee you that if you are starting larger, that’s fine, but the problems that you’re gonna come across from a mindset standpoint will be proportionately larger than if you started with a single-family, because you’ve got more money at stake, and there’s different components that are needing to be addressed. Management is more of an issue, maintenance, you’ve got more people under your roof… So be self-aware with yourself on how you are psychologically, because Tony Robbins talks about it’s 80% psychology, 20% skill. I agree with that. It might even be 90% psychology, 10% skill. Somewhere in between, or somewhere around that range.

And first off, if you’re asking a question via this podcast, then you’re well on your way, because you’re already elevating yourself above the crowd because you’re listening to this podcast. It’s not because you and I say anything novel, it’s just you’re conditioning your mind to learn more, and that’s great. So it’s likely you do that in other things in your life as well, that’s my hypothesis.

So do a check on your psychology, perhaps do the Perry Marshall exercise in the book 80/20 that Perry Marshall wrote. That exercise is where you ask those who are around you your unique skillset, and then they’ll tell you what your uniquely good at. And if they don’t mention “Hey, you do what it takes, you’re resourceful, I can count on you to get things done”, if it’s something else like “A really nice guy/gal, really good with numbers’ – that’s good stuff, but if they don’t mention something that is at the core of “Hey, you’re just gonna get things done”, then maybe start out with the smaller stuff, or maybe work on yourself first before you buy anything.

Theo Hicks: I think that’s a very good point. As you say, it’s kind of hard to measure how well you handle adversity, but I like how you said “How have you handled it in the past?” Because I can say right now that “Oh yeah, I’m great at handling adversity”, but you’d say “Well, how do you know that, Theo?” and if I don’t have any evidence in my past of me going through it, then you really don’t know what’s gonna happen when you face challenges.

If you would have asked me before I bought my first property how I’d face adversity, I’d be like “Oh, dude, I played sports back in school, and worked out and didn’t stop”, things like that; I would have been like “Oh, I faced adversity really well”, and I would have been tricking myself, because once I faced real adversity at my real estate when money was on the line… I guess that’s key, too – how do you face adversity when there’s actually your own money on the line? How do you react to that? For me, I reacted very poorly.

Now, I went through that, I’ve kind of reflected on it, and now I’m self-aware of what I can handle, which is why I’m going to make sure that I’m just outside my reach for not extending so far that I have some sort of psychological meltdown… But what you said I think is very important, and I think it’s hard to measure, and a good way is, yes, ask other people. Don’t say “How do you think I’d handle adversity?” because they’re probably gonna say “Oh, you know, you’ll handle adversity great”, because they’re your friend… You’ve gotta ask them, as you’ve said, “What are my strengths?”, so they’ll be more honest.

And then also evaluating your past and see how you handled adversity in general, but also how you handled adversity when you’ve had money on the line in some form or fashion.

Joe Fairless: You texted me a couple days ago – we won’t go into details, but you texted me and you said “Hey, I need some help with some stuff.” We got on a call, and my main message was “Anything that comes up that is seemingly negative, the question we always ask ourselves is how can I use this?” How can I use this so that I am better off because it happened?

One of two approaches there – one is you use it so that you truly are able to leverage that experience and it was actually a really good thing that it happened, because it took you on a different direction or you’re building on it, or another thing – it kind of sucks that it happened, but you learn from it, and now you know how to mitigate it from happening again as much as possible, and that sets you up for success in the long run, because then you attempt to not repeat the same things that transpired. If we have that mindset when stuff goes down, then that’s setting us up for success and that’s the approach that I always take when adversity hits.

Theo Hicks: Yeah, and in that particular situation you were talking about when I asked you for advice — my point is when something happens, like you have some type of negative event happen in your life, the root of it is most likely not the thing that actually triggered it; it probably goes back a couple of months, a couple of years, even maybe for this particular situation there were decisions I made months or years ago, kind of like led up to the point I’m at now… So once you kind of resolve that problem, you fix all those problems from the past year, now you know like “Okay, identify where this all began… Now I’m moving forward, and if that occurs again, instead of doing it the way I did it before, I can do it differently and if nip that problem in the butt now, so that in a year from now I’m not facing the exact same problem.”

I know that’s very vague, because I’m not necessarily giving a specific example, but that’s kind of what I did, I’m reflecting on the situation that I had [unintelligible [00:15:47].27] It was just about some relationship issues with a real estate agent and another real estate investor. But now it worked out perfectly, the issue is resolved now, and if we can transition into our updates now and I can talk about the direct mailer and things like that, if you want…

Joe Fairless: Yeah, last point and then let’s move on… The decisions that were made a couple of years ago or whatever, that you decided to change – you did it in an instant, right? Tony Robbins always talks about that; you can make all these decisions years ago, and then that’s led you to all this stuff that you’re doing now, but you make a change  in an instant; he always snaps his finger to make that point. And when you make that change in an instant, then it changed your whole trajectory.

That’s something to keep in mind for all of us, myself included. We are programmed  just to go through life in certain capacities, in certain areas of our life, but if we really stop and think about “Hey, when did I decide to act this way? When did I decide to think this thing?”, then when we are conscious about it, we can change it in an instant. Alright, sweet. Let’s roll.

Theo Hicks: Alright, so [unintelligible [00:16:53].16] The advice I had for you was on the direct mailing, and I’m going to continue to use the agent where I’m gonna give her the go-ahead today to start preparations for the second mailer. Something that I learned from evaluating these deals, and I’m actually not sure why I wasn’t doing this before, but there was one deal that I was looking at that if I had done my underwriting in a way that was doing like a five-year projection or a ten-year projection, I probably would have bought the deal… But for some reason, when I was underwriting the deals, I was just looking at it as if “Will it meet my return expectations from day one?”, which obviously is not what you wanna do.

Joe Fairless: Ow…!

Theo Hicks: I’m looking at deals and I’m just like “Well, this is a 2% cash-on-cash return at this purchase price and at these rents.” Now, it is true that this particular property I don’t think that the rents could be raised that much, but if they were raised, it would have made a little bit more sense. I think my point is I should have done further investigations. The deal is gone now, so it is what it is, but moving forward when I get these deals, I’m gonna use a new cashflow calculator, and input information so that I have obviously the day one, year one cashflow, which is what it is when I’m buying it, and then have a plan of — whatever my business plan is, and then inputting that in there as well.

For some reason, there’s a disconnect, because when I’m underwriting apartment deals – obviously, this is what I do, but there just was a disconnect between that and these smaller buildings, for some reason, in my mind… And I just realized when I was taking my dog for a walk this morning, I was like “Wait, what? What are you doing, Theo? You shouldn’t be doing this.” So I’m glad I learned that lesson and I’m going to apply that moving forward.

Joe Fairless: People ask about the cap rates that we’re buying properties at, which is a relevant question, but the more relevant question is “What’s your business plan with the properties that you’re buying? Can you tell me about the business plan?” Because cap rates just show what cashflow you would get if you were to buy it all cash, based on existing financials, but it does not show the business plan results whenever it’s implemented, and that’s really the question.

I mentioned this at the Philadelphia conference, Dave Van Horn’s conference – phenomenal conference, by the way – where I did the keynote, and I used this example where I’ve got an investor who invests in Manhattan, and the group he invests with there buys buildings at two caps. At first, he’s like “What the heck? Two cap? I don’t think so, buddy. I’m not investing with you!” But then this group has a way to generate really good returns because of the business plan, and basically the business plan is renovating units, like we do, but they purchase rent stabilized properties and [unintelligible [00:19:42].16] at the property where the rent-stabilized tenant is giving his/her lease to someone else. I think there’s some type of electronic key card and some other stuff… I’m not familiar with this business model as much, but the point is that a group in New York – and I’m sure there are many groups – buying at two caps, but generating pretty healthy returns, and it’s because of the business plan.

The same with your example – and you know this, but just kind of summarizing – if you’re looking at what it will generate right out of the gate, well, it’s necessary to know, but if we’re long-term investors, and even if we’re not, if we’re buying for like five years, I still think we should 1031 from that… It’s more important what’s the annualized projected return over those five years.

Theo Hicks: Exactly. So I’m gonna take my existing cashflow calculator that’s just one year, very basic, simple model, and I might just put a 30-year and have a snapshot around the 5-year, because what I was doing before made zero sense. And as you said, as investors, we’re adding value to these buildings and that’s kind of how we’re rewarded with these rents, and if you’re not taking that into account, you’re gonna have a hard time finding a deal that’s meeting your return expectations from day one, if your return expectations are based off of adding value. So yeah, I’m glad I figured that out when I was taking my dog for a walk this morning.

Joe Fairless: Because there’s an art to underwriting, and a lot of investors don’t recognize that. There is an art to how you see value and what you can create in an apartment community. I think that’s one area that my company excels at – identifying where value is, and having the right team to execute on it.

If we were to just do those year one numbers – and I’m not beating a dead horse; or maybe I am, but I’m just kind of illustrating a slightly different point, but on the same subject… If we were running the numbers just on year one, then we’re competing against all the other investors who are running the numbers on year one, and we’re basically all arriving – or most of us arriving – at the same point… Whereas if we see a different vision for the property, then we can arrive at a slightly different location with terms and price, and make probably more money than those who were running the numbers the other way, because we’ve actually got a business plan that we’re gonna execute.

Theo Hicks: Exactly.

Joe Fairless: Sweet.

Theo Hicks: And then another update – I’ve got my next meetup group tonight, and I’m really excited about that.

Joe Fairless: Alright. Is that a local town hall thing, or what?

Theo Hicks: No, it’s actually funny… I made another mistake, because my last meetup I changed it to a brewery, and I mentioned how I didn’t confirm with them the night before that they would be there, and so I show up and I have all these pizzas, and the doors are locked… And I basically mentioned the person, like “Hey, I’m here. What’s going on?” and I don’t get a response for like ten minutes and I’m just sitting there, freaking out… But of course, she ends up messaging me saying “Hey, he’s inside. He’s preparing, and will be there…”

Joe Fairless: Who’s he? Are you talking about the person at the…

Theo Hicks: Yeah, the person that owns the brewery, yeah.

Joe Fairless: Okay, got it.

Theo Hicks: So at the end of the meetup I confirm for the next month, “Okay, we’re gonna do it again on this day, and it’d be cool for you to come.” They’re like “Yeah, sure. It’s so nice that you’re doing this.” So I go to confirm last night, which I should have confirmed last week or multiple weeks ago… But they’re not in town for the meetup, so the venue basically canceled. And I’m sitting there, I’m like “Well, this is kind of annoying”, but fortunately I did my first meetup at a restaurant, so I had a backup plan automatically and kind of changed the venue, but… Again, that was just kind of an example of — probably a couple years ago I would run around the house in circles, but I just sat there…

Joe Fairless: A brewery is not open on a Wednesday night?

Theo Hicks: Yeah, so they’re actually only open on Thursdays through Saturdays, just [unintelligible [00:23:41].25] So they weren’t even open on Wednesdays; they planned on coming just for us… But they just happened to be out of town. I think it was just miscommunication.

Joe Fairless: Alright, got it.

Theo Hicks: But yeah, I messaged them and just like “Oh, no…! Of course!” So I’ve got 14 people signed up, we’re gonna meet at a restaurant, and it’s gonna go great and I’m looking forward to seeing everyone again tonight. It’s just a real estate meetup, it’s very similar to the one that you host in Cincinnati.

Joe Fairless: And for anyone who has not attended, which is the majority of the people who are listening, high-level what’s the structure?

Theo Hicks: You show up, if it’s your first time, you give an introduction, explain what you do… For both of my meetups, everyone’s brand new, so it happened both times. Then you explain what your outcome is for attending this meetup; I got that question from you and I really liked it, because I want the meetup to be very outcome-oriented.

Then we’ll go over any needs or wants, so if someone has a question on a deal they have, if they have a general question of “How should I get started?”, we can do that, we talk about that as a group. Then if you came the previous week and you set a goal, I have a Facebook group that you’re gonna post it to, and you’ll give an update on your goal, and then if you have any questions or need advice on that, you can do that.

The goal is to have that be the first 15-20 minutes of the meetup, that way everyone knows exactly what everyone else does, so when we break apart into just kind of freestyle networking, people know who to go to, that they have similar interests, they’re doing similar things… And that seems to work our and result in – basically, from my past two experiences – the best and most fruitful conversations… And afterwards, everyone’s like “Oh, Theo, thanks for putting this together. I really appreciate it. I’m learning so much.”

I’m not sure about your experience, but the majority of people that come to these things – at least starting out – there’s a couple of people that have a lot of experience, but most people haven’t done a deal yet, so I think it’s really cool to see that, because I see myself in a lot of those people when I was first starting… And I just explained to them, hey, you’re giving they advice that they just obviously don’t know, and it’s fun to do and I really enjoy it.

Joe Fairless: That’s cool. Well, congrats on that, and looking forward to hearing how it goes.

Theo Hicks: Awesome. And then this last quick update on the rentals, my three four-units. We have two units that are vacant right now; one of them we’ve almost secured  a tenant for… We’re just kind of going back and forth with the background checks, and stuff.

We’re having some issues renting the other one-bedroom unit, because we have it listed at $685, but there’s another unit that’s for rent – not on the same street, but close enough, for $575… And so we think that that might be one of the reasons why we’re having issues getting it rented, so we’re gonna lower the rent, lower the listing down to $625 to get it filled.

And there’s a couple other things why I don’t think it’s getting rented that I will have to address with my property manager, but we’re gonna be talking about that…

Joe Fairless: Real quick, can you…? Just real quick, what are they?

Theo Hicks: It’s another silly mistake on my end… The unit was occupied by a heavy smoker, and we refinished the hardwood, we repainted the walls, and I was told that the cabinetry and the toilet and the other objects in the unit were fine, they weren’t that dirty, and then when I looked at the listing and saw the pictures, they were all obviously–

Joe Fairless: Got the yellow?

Theo Hicks: They’ve got the yellow, so we need to repaint it or replace it, because no one’s gonna wanna live there with them like that. So I think that’s why it’s not being rented out. I just noticed that a couple days ago, so I’ve reached out to my property manager and we’re gonna get that addressed. It’s not gonna be anything too expensive. We’re not gonna have to replace the cabinets, we’re just gonna have to paint them… Because they’ve been painted before.

I don’t think it’s a smell issue, it’s just an aesthetic look issue, especially with the super pearly white walls that we just painted, and then you’ve got the contrast of the stained yellow cabinets, so…

Joe Fairless: [laughs] It’s gross.

Theo Hicks: It’s gross, yeah.

Joe Fairless: Yeah, you’ve gotta get that replaced or painted.

Theo Hicks: Alright, that’s what I’ve got. What about you, Joe?

Joe Fairless: And you have 12 units, right?

Theo Hicks: Technically 13 now, because of that single-family that we have.

Joe Fairless: Okay. That single-family aside, you’ve got 12 in a little cluster, and two of them are vacant, right?

Theo Hicks: Two units are vacant, yeah.

Joe Fairless: So you’re at 83% occupancy.

Theo Hicks: Yeah.

Joe Fairless: Are you concerned about that?

Theo Hicks: Not really…

Joe Fairless: How come?

Theo Hicks: Because I know they’re gonna get rented, and I’ve already raised the rents on other units, and they’re not necessarily making up for the loss in rent that I’m getting, but overall I’m still cashflow-positive, I’m not losing money. Of course, I’d prefer they were all rented, but it hasn’t even been a month yet, and I’m very confident that they’re gonna be rented by June 1st or probably by the next couple of weeks.

Joe Fairless: Cool. And you’re in the middle of the business plan too, because you acquired them less than a year ago, right?

Theo Hicks: Yeah.

Joe Fairless: Cool. Alright, what we’ve got going on – we’ve got (I had to do the math) 890 units under contract right now.

Theo Hicks: Wow…

Joe Fairless: One 564-unit and one 326-unit… All of them were off-market deals through either broker relationships, or relationships that we actually had with someone who found the deal and then wasn’t able to close on it, because they didn’t have the ability to. So we had that relationship with them, and now we have 890 units under contract, so I’m excited about that.

We’re closing — we’re in May now, so we’re closing next month. As you can imagine, that’s taking up my primary focus. For all those deals, all the equity is spoken for. It’s actually been a little — shocking and surprising aren’t the right words, but those are the first two that came to mind, how quickly it was spoken for, the equity… I don’t know if my business has reached a tipping point with investors based on our track record and this podcast growing and other things, but for both of them — and combined it’s 24 million in equity, and it took in total for that 24 million… Seven days total for 24 million dollars in equity. So I’m not sure if that’s a sign of things to come, or if it was just pent-up demand, or… We did some refinances on one of our deals in particular recently, and that was a pretty good one, so we got a lot of investors rolling that into these deals, but it’s a far cry from when I first got started, or even not when I first, but early days after the first deal, when I was messaging people on LinkedIn who lived in Houston, who I hadn’t spoken to in ten years, that I have an apartment building, I’d love to connect with them again and talk to them about what they’re up to, and “Oh, by the way, I’ve got a deal…” [laughs] And that didn’t work at all, by the way, so don’t do that. That was not effective. I literally did not get one investor from that, although they should have… They definitely should have; that project has turned out really well.

So it’s gratifying to be in that position now. Again, I don’t know if that’s a sign of things to come for future deals, or if these deals were unique, or what, but I certainly have a lot of gratitude towards where we’re at right now.

Theo Hicks: Do you have a general number, or if you can be specific – that 24 million dollars in equity was raised across how many investors?

Joe Fairless: On average I’d say investors invest $200,000 or so, whatever that is. I’d have to use a calculator, it’s not my Microsoft calculator on my — so what is it, 24 million divided by 200k?

Theo Hicks: 120.

Joe Fairless: Yeah, so approximately 120 investors.

Theo Hicks: And in your first deal, how many investors did you have?

Joe Fairless: 12.

Theo Hicks: That’s awesome.

Joe Fairless: And they are part of that 120. All of them didn’t invest on these last two deals, but certainly a large percent have on these last two, so it’s been great.

Theo Hicks: Then you mentioned that one of the deals you got through a broker relationship obviously, but the other one you said you got it through someone who couldn’t close themselves… Was that another investor, and how did they find you? How did you find them?

Joe Fairless: It was through Frank’s friend. She knows someone. So follow the breadcrumbs a little bit… But Frank’s friend, who he knows through (I believe) his time at Bucknell; he was a civil engineer major, and I think he knows her through that… Or maybe it’s their alumni network, I can’t quite remember. But anyway, she knew someone who got this property under contract, and tied it up at a ridiculous price per unit, and wasn’t able to follow through on it… So we said, “Yes, please. We can do that”, and ended up putting ourselves in the position that now we’ve got it, and moving forward.

Theo Hicks: And actually really how important it is to let people know what you do… I can’t remember exactly the context that this came up. We were talking maybe on last week’s Follow Along Friday about letting people know that you raise money for apartments or that you invest in apartments or that you’re in apartments or in real estate – that way a year from now or a month from now or tomorrow or that exact same day someone has some sort of person or deal for you, he’ll bring it up, and if they don’t know, then you don’t know how many opportunities you’re missing out on.

Joe Fairless: Yup, absolutely.

Theo Hicks: What else have you got going on, Joe?

Joe Fairless: That’s it.

Theo Hicks: Awesome.

Joe Fairless: That’s my primary focus.

Theo Hicks: Well, congratulations – that’s 800+ units under contract; that’s impressive. Alright, so just to wrap up, make sure you guys join the Best Ever community on Facebook ( We have some really great questions on there, and we got a lot of great responses, and we use those responses to create a blog post, obviously to add value to other people’s lives, but also to include some of you guys on the Best Ever Blog and kind of get your name out there.

The question we have this week is “Is it better as real estate investors to focus on one strategy, or more than one?” So if you go to, it won’t be pinned to the top, but it’ll be relatively close to the top of the page. You can go on there and read the comments, and then post there if you want to be featured in a blog post next week.

Joe Fairless: Yeah, really some thought-provoking stuff. I love that question, because I know some investors who focused on one market, but multiple strategies within the market, whereas my company primarily focuses on Dallas-Fort Worth, and we’ve got some in Houston too, but Dallas-Fort Worth has been our focus… And we only do apartments, and we only do apartment investing.

And then the others who are just value-add investors – I’ve interviewed value-add investors who just buy commercial, office, retail, apartments, single-family homes, larger ones, they do Airbnb…

I believe in the power of focus for sure, but after being educated and exposed to all these investors and their approaches, I believe the power of focus can be concentrated in different ways, or defined differently. I personally focused on apartment investing, that’s my power of focus… And I know someone else who focuses on Charleston, South Carolina. That’s his power of focus, and he does all different stuff within Charleston. Or some investors – this gets a little bit outside of the power of focus in my opinion, but others are just value-add commercial real estate investors, and they are just incredibly smart with underwriting different types of deals, and they just find value-added deals, which I believe gets a little away from focusing, but still, they’ve got one area that they always focus on, and that’s adding value to some type of property.

Theo Hicks: I’m looking forward to reading all the responses and seeing what people are having success with, especially if they’re doing multiple things. I would imagine that if they’re doing — not necessarily completely different strategies, but if they are expanding their focus, it’s probably because they got really good at one thing, and then that’s kind of like on autopilot, and then they’re adding in something else just to expand.

So tomorrow we will be doing the first ever Best Ever debate that’s not between me and Joe. It’s gonna be me versus somebody else about short-term rentals versus long-term rentals. I’m really excited about that conversation…

Joe Fairless: Which side do you have?

Theo Hicks: Long-term rentals.

Joe Fairless: Oh, that’s gonna be tough on the cashflow. I think you’ve got some good points…

Theo Hicks: Oh, yeah. I don’t wanna give anything away right now.

Joe Fairless: Yeah, that’s fine, that’s fine.

Theo Hicks: I don’t want my competition to hear what I have to say [unintelligible [00:36:09].11]

Joe Fairless: You might get destroyed with the short-term cashflow; if they go in talking about short-term cashflow, I hope you’ve got some good rebuttals.

Theo Hicks: I do.

Joe Fairless: [laughs]

Theo Hicks: That’s tomorrow at 4 PM, and if you’re watching live on Facebook now, it’ll be in this exact same spot, on the Joe Fairless Facebook page. If you’re listening on the podcast, then you can go to the Joe Fairless Facebook page to listen to the replay… But if you wanna listen to it live tomorrow, it will be at So regardless of how you’re gonna listen to it, that is where it will be, and again, that’s tomorrow, which is Thursday the 3rd, at 4 PM.

And then to finish off, make sure you guys go to the podcast on iTunes and leave a review. It really helps us out to learn how we’re doing. And if you do, you’ll have the opportunity to be the Review of the Week and have the review read live on the podcast.

This week we’ve got HenryLL. He says:

“I listen to a ton of podcasts across many genres, and this is one of my favorites. Joe provides consistently high-quality content by covering a broad range of real estate strategies, whether you want to fix and flip, buy and hold single-family homes, buy notes, or syndicate apartment buildings

I also love how the Skillset Sunday discusses skills applicable to other parts of your life, like persuasion and developing great relationships.” End of review.

Joe Fairless: Thank you. [laughs] End quote. Hey, Henry, thank you so much, and thanks for mentioning the Skillset Sunday episodes, too. They’re actually the least listened to episodes. So we’ve got regular episodes, and we’ve got Situation Saturday and Skillet Sunday episodes – those basically have the lowest amount of listens, and I’ve always wondered, is it because they’re on the weekend? Because not a lot of people listen as often on the weekend versus during the week, so it’s good to hear your feedback on the Skillset Sundays, because I like them; I like that they’re very specific about a particular skill that’s relevant to us as real estate investors and entrepreneurs. So I appreciate the review, and also quite frankly the vote of confidence in that type of segment.
Everyone else, if you can leave a review — well, you can, you’re physically able to, so if you may… Is that even right, “If you may leave a review…”? Please leave a review; that will help us build the community, get better guests, or continue to get high-quality guests and have the best content possible for you.

So thanks everyone for spending some time with us, I’m grateful for that. I’m looking forward to talking to you again tomorrow.

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