Most of this episode was inspired by someone who wrote Joe asking to intern. If you want to work for someone operating at a high level, listen to Joe’s tips on how to reach out to them. They also discuss other ways someone can get into syndication with little to no experience. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Joe Fairless: How are you doing, Best Ever listeners? 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’ve got Follow Along Friday today, a whole lot going on, and we’ve got a listener question that we’re going to address and spend some time on, because I think it will be helpful for a lot of you all.
We’ve got Theo Hicks with us on Friday, as usual. How are you doing, my friend?
Theo Hicks: I’m doing great, Joe. How are you doing?
Joe Fairless: I’m doing great, too. You have the vacation glow already, even though you are not quite yet on vacation. Real quick, where are you headed tomorrow?
Theo Hicks: We’re going to Nice, France tomorrow for 10 days in Europe. We’re going to Nice, Rome and Amalfi Coast. I’m super-excited about that, it’s gonna be a good time.
Joe Fairless: Lots of wine and lasagna.
Theo Hicks: Seriously… [laughs]
Joe Fairless: I literally ate lasagna every single meal when I was in Italy for our honeymoon. Every single meal — well, not breakfast, but lunch and dinner, lasagna…
Theo Hicks: The next Follow Along Friday my face will probably be a little bit bigger from all the carbs that I’m gonna eat.
Joe Fairless: Well, enjoy yourself. We’ve got an episode today where we’re gonna be talking about listener questions… What have we got going on?
Theo Hicks: So the question was submitted by Elijah, and it’s a great question; it’s very applicable to anyone who is interested in becoming an apartment syndicator at any point in their investment career.
Just a quick background on him – he’s a senior, in Texas…
Joe Fairless: What school?
Theo Hicks: At Texas A&M.
Joe Fairless: Oh, Texas A&M…?! Never mind, we don’t wanna answer his question. Just kidding. [laughter]
Theo Hicks: He’s already gotten his real estate license, and he read and listened to all the books and podcasts and seminars, or at least a lot of them, in regards to real estate investing… So his question in particular is two parts; I think we’ll address both of them. First, he wanted just some general advice on what distinguishes a good versus a bad investor… But I think the better part of his question was when he said “Additionally, if there is any type of task or work that you need done, I would like to offer up my assistance. Though I may be young and have little experience, I will work hard. I’m constantly looking for opportunity to get into the industry and prove myself, and I’ll do just about anything that I can do to further my knowledge and begin building my real estate investing skills.”
So he wants to become a real estate investor, and for this conversation I think we should talk specifically about apartment syndications, because he’s wanting to work for you, he’s wanting to work in an apartment syndication business… And he’s asking, essentially, how he can get started in the business, and his answer is to intern with an experienced investor.
So I think what we wanna talk about today is all the different ways that someone could get started or break into the apartment syndication industry, with one of those being what Elijah is attempting to do, which is intern, shadow-work for an experienced investor.
Do you wanna provide your thoughts on that? And specifically, I know you wanted to explain what you usually do when someone reaches out to you, asking to intern for you.
Joe Fairless: Sure. So that’s a whole lot of stuff… Let’s break it down for my own purposes. First question was “What’s the difference between a good and bad investor”, is that correct?
Theo Hicks: Yes.
Joe Fairless: Okay, three things. One is focus on capital preservation. Two is optimizing your approach on a consistent basis. And three is having a vision for the future. That is what successful or good investors do, and the opposite is what bad investors… Don’t do that. Let me elaborate.
One – good investors focus on capital preservation. Good investors know that it’s a lot harder to be financially independent and financially abundant if you lose money on transactions, compared to trying to make money. So if we focus on capital preservation first, preserving the money that we have earned, and then growing it, that’s gonna be a more effective approach… And it’s not just talking about it, it’s about how it’s practically implemented in your underwriting, in your management, in the market selection, in the submarket selection, in the team that you surround yourself with… It’s all those different things that make a deal vulnerable to losing money; being aware of all those different touch points or vulnerabilities for how you could lose money is necessary in order to be focused on capital preservation.
So there is an awareness that must be present for all the different ways you could lose money, and there’s a conscious effort to preserve your capital and mitigate the risks in each of those areas, and we’ve talked about the different areas on previous calls in other formats, blogs etc. and that’s not really the purpose of this episode. But capital preservation, number one.
Number two is optimizing as you progress, and basically what I mean by that is when you mess up, learn from it and then fix it moving forward. When we learn from our mistakes as they come, which they will come in varying degrees, then we’re not repeating the same ones and we continue to progress and get better and better, and get stronger and stronger, and get bigger and bigger.
The third is having a vision for the future, and that comes into play by listening to podcasts like this one, learning from the guests that I interview… I’ve learned so much from the guests that I interview; it’s incredible. That helps me and Ashcroft (my company) achieve greater and greater results, because I’m learning a lot from all the people I’m interviewing, and fortunately we’re recording those interviews, so everyone who’s listening can learn from the people, and then apply certain things from interviews into our business and help with that vision for the future… Because regardless of where we’re at in our real estate journey, there’s always something we can aspire to, and there’s always someone we can model, whether or not it’s just from a pure portfolio value standpoint… You might be at the top of the world if you have the largest portfolio, but perhaps I interview a wholesaler and you don’t even do wholesaling. Perhaps I interview a wholesaler who has a system set up with their team, or they have a way to find off-market deals that can be applied to what you’re doing to enhance your portfolio. So continuing to learn and having that vision for the future is necessary.
So those are the three things. One, capital preservation being the focus. Two, optimizing, and then three, having a vision for the future. That’s what good investors, and not to split hairs here, but “good” isn’t good enough in today’s world; you’ve gotta be outstanding. And again, I don’t wanna get into semantics here, but I do wanna make the point that good isn’t good enough now, because of the competition… And I live in a world of abundance, so when I say competition I’m not talking about cutthroat stuff, but I am talking about there is competition, and because of competition, because of the world that we live in, with constantly being inundated with different things – social media, all sorts of different things – we have to stand out, and in order to stand out, we have to be outstanding. So those are my thoughts on it.
Theo Hicks: Basically, those three things – capital preservation, basically not making the same mistake twice… Those things are what you would need to do at the very least to not be a bad investor. And then kind of the theme of this podcast is we always talk about things that you can do to go above and beyond that, or to be an outstanding investor.
A lot of what you said too also kind of dovetails with what we’re gonna talk about next, in particular when you’re talking about the vision. An example you gave of that was the podcast… So just kind of transitioning into the next part of this question, which is about how you can break into the industry, one of those is starting some sort of thought leadership platform. But before we get into that, I know you wanted to mention the five things to ask when someone reaches out to you to be some sort of intern or shadow you.
Joe Fairless: Sure. I get that request fairly regularly… And by fairly regularly – once a week I get a “Joe, I love what you’re doing. I’d love to intern for you. What can I do?” I connect them with my assistant, and my assistant – she’s more than assistant, she’s like operations queen… But we’ve got six things that we tell them they can do as a test to see what they’ve got.
Those six things – one is we need Amazon book reviews for the books that we have, so read the book, get your friends to read the book and then leave a genuine review about the book, and then send us screenshots of the reviews. Two is iTunes reviews of the podcast – same thing there, leave genuine, authentic reviews of the podcast after listening to it, and then have others do the same who you know.
Three is we have a conference in Denver, Colorado every year, at BestEverConference.com – attract attendees to the conference, tell us who you signed up.
Four is book purchases – buy the books. All the profits go to Junior Achievement in Cincinnati; I don’t make a penny on it, but it helps with the Amazon ranking of the book, which then encourages other people to buy the book, because it’s ranked higher and it’s shown more prominently.
Five is advertising sponsors for the podcast. Right now that’s not necessarily a need, because we’re booked out with sponsors, but that is another way – if they have a sponsor, then great. Samantha will connect with that sponsor, and if they are responsible for signing up a sponsor, then that’s very valuable.
And then six is finding an off-market deal – this is a taller task – 150+ units, value-add, in a large city, built between 1980 and 2005. Much taller task right there, but that’s the sixth.
99% of the time we don’t hear back from them. We don’t hear back from anyone after we say “Oh, you wanna intern? Great. Here’s a test. Go do one of these six things and take massive action with it, send us the results, and then we’ll have a conversation.” We do it as a filter.
We have a higher threshold, and we don’t hear anything back, 99% of the time… And that’s okay. I’m fine with that, because it’s a screening process to screen out anyone who was up late at night, listened to the show, was sending an e-mail and then forgot about it when he/she woke up the next morning. It was a priority for them at that moment in time, but yet it’s not a consistent priority over a longer period of time. And isn’t that the case with some people, regardless of if they’re just starting out wanting to intern, just in general? It’s a priority at some period in time, but not a priority over a consistent period of time.
So those are the things I do… How that can be applied for any Best Ever listener is have a filtration process for how people intern with you, and that will screen out a lot of individuals, and that will help you be more efficient and effective with your time, because you’re now only working with those individuals who have put forth consistent effort to generate business results for you, and they’ve already proven their value, therefore it’s likely – although not guaranteed – that they will continue to prove that they are valuable to the business once they join.
Theo Hicks: If I was listening to this and I was on the other side… I wasn’t the person that was trying to hire interns, but I was someone who was attempting to become an intern, and I heard you just mention the six things that you ask an intern to do as like a test, I wouldn’t even reach out to you first and say “Hey Joe, what can I do for you?”, I would just do one of those things, or all of those things… Obviously, I couldn’t just find a deal out of the blue, but… I would do those things and then say “Hey Joe, I’ve read your book, I’ve listened to your podcast, I did all of these things, and then screenshot all of this”, and then ask you, “Hey, I’m interested in interning for you”, just so you kind of address that test upfront.
I know you’ve mentioned before that if you wanna intern for someone – let’s say you’re listening to a podcast of apartment syndication like this one, and the person brings up a problem they’re having in their business, or some sort of need that they have – just address it for them, do it, and then tell them you did it. [unintelligible [00:14:46].28] ask for anything, because from your perspective if someone does that for you, you’re like “Wow, this person is probably legit,” so if something happens to come up, you’ll remember that person over someone who kind of just sent you an e-mail asking “What help do you need?”
Joe Fairless: You are special, not like most people, but fortunately, the Best Ever listeners are also not like most people otherwise they wouldn’t be listening to a daily podcast… But people outside of our audience – it’s just not as typical… Because you did that; that’s how you and I got connected. You actually did some projects for me, crazy spreadsheets, and I was blown away… I was like, “I don’t know what this is, but it’s a lot of spreadsheet stuff, so that looks pretty legit. It looks like he knows what he’s doing.” That’s how you and I got introduced.
Theo Hicks: Exactly. At this point you were asking for essentially an intern, and I think you specifically asked for help with your podcast, and I was like “Alright”, so I did a bunch of research to figure out how people grow their podcasts… And then I was like “We should just do this, and I’ll do all of it for you.”
The spreadsheet you were talking about, I remember I was like “You know what I’m gonna do? I’m gonna log all of his reviews he’s ever gotten.” Right now there’s like almost 600 reviews; I think at that time it was maybe closer to like 300, because I wrote them all down and I categorized all of them based off of what people liked about the podcast, and I figured out how we could use that to get more of an audience.
That was the spreadsheet, and you were like “This isn’t exactly what I was looking for, but I really appreciate the effort.” [laughter]
Joe Fairless: It worked, it worked… And you know, whenever I was in advertising, my previous career, I would speak to individuals who wanted to get into the advertising agency world. They were college seniors, and they asked me the same question, “How do I get a job at an advertising agency?” and it’s the same answer. I said, “Well, you’re in college, you have access to your friends, and your age, your demographic is very attractive to brands. They want to reach college students, because then they’ll have a lifetime customer. So how about you research the clients that the advertising agencies have, and then do a focus group with your friends about those brands?”
For example, if Advertising A (we’ll just call it Advertising A) had a client that was Doritos, well wouldn’t Advertising A benefit by having a focus group with college students about Doritos, that they can then share with the Doritos point person? Yeah, of course! It’s cool! It might not lead to anything, but it’s still pretty cool.
So if the college student simply spends a Friday, or a Tuesday, has some friends at their dorm/apartment, eating Doritos and just talking about Doritos, and then proactively sends that to the advertising agency A person or HR Department, they’re gonna be blown away.
Proactively doing stuff, adding value and then starting the conversation. Same thing with real estate.
Theo Hicks: Yeah, this definitely applies universally. And again, you never know when the person you’re reaching out to is gonna need to hire a new employee. It could be a year from now, or it could be at that exact moment, and you just happen to be there at the right time, and they offer you a job.
I had no idea that I’d be doing what I’m doing now with you when I first went to your meetup group and I barely even knew who you were at all, and you just happened to be asking for someone at that time. So you never really know where these things are gonna lead.
On another note, if you’re also gonna do this approach, don’t expect the first person you reach out to to hire you. It’s possible, for sure, but I would say what’s more likely is there’s gonna be a process until you find someone that wants to hire you, and also that you want to intern for, and that they’re doing what you actually want to do, of course.
So one way to break into the industry for sure is to intern, and we just went over a bunch of different ways that you can approach that situation. Another one – this is going back to what you were talking about with a vision and the podcast – is to create your own thought leadership platform, whether that’s a podcast, or a meetup group, or you do a blog or a YouTube channel.
We have a blog post; if you just go on the Joe Fairless page and search “thought leadership platform”… In fact, we actually have a thought leadership category with 10-20 articles in there. But the reason why you wanna do that is because one of the things you need in order to break into the industry is education, and if you create a thought leadership platform, as Joe mentioned, you can basically create your own educational program by interviewing all the experts in the industry that you want to be a part of.
So if you want to become an apartment syndicator, then you can start an apartment syndication podcast, and you don’t have to know anything yourself — it’d be helpful if you did, but you don’t have to know anything yourself; you can just bring people on and interview them once a week.
Do that for six months to a year and just imagine how much knowledge you would have about apartments, but also imagine the relationships that you’ve made with the people you’ve interviewed, and then also the people that are listening to your podcast as well.
Joe Fairless: It’s proven, it works. It’s just a matter of doing it consistently over time.
Theo Hicks: We were talking about this a little bit yesterday and you called this your own MBA by creating your thought leadership platform… And do that for a year, and again, just imagine how much knowledge you would gain… And again, you don’t know where these relationships are gonna lead. You could find someone who’s willing to partner with you that has access to raising money, but you don’t have the experience – you can find someone that has the experience to partner with… You could find different team members, you could potentially find investors… The benefits of a thought leadership platform are really endless.
Joe Fairless: Tim Ferriss talks about his real-world MBA. He was gonna go at some Ivy League school, spend six figures on that, but then he decided to take that money and invest it in startups. If he lost it, he lost; it was gonna be a real-world education. I don’t think he ended up losing it; I think he ended up doing really well, and he learned, real-world style.
Same thing here, except he was doing it more in private, and this is more in public, so in addition to learning, you’ll also be creating relationships with the audience, and that is going to be incredibly valuable. I would imagine after listening to this podcast, if you’re a loyal Best Ever listener, you already know the value of a thought leadership platform, because we’ve talked about it many times before… So we won’t go into it too much more.
The URL is BestEverBlog.com, and when you go there, you can check out the Thought Leadership category.
Theo Hicks: Exactly. On a similar note to the thought leadership platform, you can proactively create relationships with people in your market, through a meetup group or just through reaching out to brokers or property management companies or mortgage lenders in your area, and meeting with them.
I know you interviewed – his name was T. – a real estate broker and he had really, really good strategies for how to build a relationship with a broker when you’ve never done a deal before. It involved things like – you could pay them, if you have money… But my favorite one that I liked the most is that you reach out to them and/or you find a list of the properties that they’ve recently sold, you actually go take a look at these properties, and then you write down what you like about it, what you don’t like about it, with the purpose of sending an e-mail or calling the broker, telling them what you liked about the property, what you didn’t like about the property, so that they know what type of deal you’re looking for.
Also, at the same time, it’s showing that you’re the real deal, because you’re actually getting out there and doing something… And as you mentioned, 99% of the time people don’t really do anything; I’m sure that applies to brokers, too – 99% of the people that reach out to them, they have the meeting and they’re super jacked up in that moment of doing a deal, and then they never hear from them again.
So not only are they hearing from you again, but you’re showing them that you’re actually doing something. So kind of take that same idea and apply that to a property management company, to a mortgage lender, and start building relationships that way.
Joe Fairless: That is really what sets good investors apart… I’m gonna add a point to Elijah’s question. When we’re at a conference and everyone’s pumped up, and everyone’s in the moment, and everyone’s connecting, and everyone’s gonna be best friends for life, and it’s great, it’s wonderful… But then fast-forward one week – how many people don’t follow up? How many people don’t continue that momentum?
I did gratitude training in December of last year and I spoke about — it was kind of a whacky experience; I forget what episode it was… But I thought it was a cult going into it, and coming out of it, it may or may not be, I’m not sure… But I got some lifelong lessons from it, so perhaps it was worth the time. But what I wanna mention about that experience is that I connected with a couple people, and one of them we’ve stayed in contact. Another one – she was a single mom in Charlotte, NC, worked for the government, I’m guessing made 35k or so a year… She was looking to buy a house for the first time, and we connected really well.
We had lunch one of the days, because I told her I was in real estate, and she was wanting to buy a typical house, white picket fence, that sort of thing… And I said, “Well, what about house-hacking?” I didn’t tell her house-hacking, but I told her the house-hacking thing, and… It blew her mind. She was like, “REALLY?”, I said “Yeah, why don’t you not pay a mortgage? Instead have someone else to pay your mortgage, and then you live rent-free. Or if you get a really good deal, you make ten bucks, or a hundred bucks a month, and you still don’t have to pay mortgage, and someone else is paying your mortgage. She was blown away, she loved it, she wanted it.
I followed up with her three weeks after – nothing. She didn’t reply to my Facebook message. I hate Facebook messages; I always do e-mail, I hate Facebook messages. But I cared about her so much I followed up with here, and she just faded to black. And I don’t know, it’s one example, but actually it’s a microcosm of just generally people’s approach.
At the Tony Robbins conference – same thing. So it’s not just this gratitude training where it was a little whacky, but the Tony Robbins conference, Unleash the Power Within; I went there in November. I met up with a group of 8 or 9 individuals. We all connected.
One of them had the idea of a Facebook group, where we have a private Facebook group. And immediately, when I think that, I think “Well, it’s great in the moment, but it’s not gonna last long-term.” I’m thinking this unless I lead it, because I will make sure that the community stays engaged. But he had the idea and he was a go-getter, so he led it. Fast-forward eight months later or so – crickets. Nothing.
Some of it is on me. If I really wanted to do it, I could get the group more engaged, but that’s just how we are as human beings. And the point of all of this is that if we consciously make the commitment to be in the moment, consistently, and follow up consistently, and do things consistently after everything is perfect in the moment, then that’s where we’re really gonna stand out and that’s where we’re gonna get the results. Because in those moments, at those conferences, I’m even-keeled, because I know exactly what’s gonna happen to 90% of the connections; nothing’s going to take place afterwards, because people just don’t follow up. But when we do, then we can stand out, and then we can truly become outstanding.
Theo Hicks: I’m in total agreement. I see the same thing. I also am a victim of this as well, but I know if I didn’t have systems in place, I would forget everything… So I always have a piece of paper next to me with everything I need to do for that week, and whenever someone tells me “Hey, Theo…” — even something as simple as “Call Verizon Wireless and change our phone to international”, I would completely forget… So I walk into my office, I write it down, I circle it – circle means it’s high-priority – and I make sure that at the end of the week I have X’s through everything.
Joe Fairless: You’re very good about that. Working with you for as long as we’ve worked together, you are very good with that.
Theo Hicks: And again, it doesn’t take that long, but this paper is — if you’re watching right now, it’s just big; it’s got a bunch of stuff on it… And you need to figure out why you’re not following up, and then figure out what system you can put in place to make sure that you are forcing yourself to follow up. And it takes time, and then you build momentum on it, and then eventually it should become second nature. But again, it’s just so important, because you don’t know where a simple follow-up can lead to.
Joe Fairless: Here’s my piece of paper, if you’re watching… I have highlights, and highlighters, and I just highlight it through… I’ve got a pen now that has a highlighter in the pen, so it’s fun to highlight a bunch of stuff.
Theo Hicks: Actually, I might do the highlighter instead, just because it’s a lot brighter.
Joe Fairless: Yeah, it’s cool. More of an accomplishment.
Theo Hicks: So those three things that we’ve mentioned – the interning, the thought leadership platform, and then just kind of forming relationships and then following up – those are kind of the three main ways to break into the industry.
Let’s list up a couple of others that you can do. As Joe already mentioned, you can find them a deal, you can find the apartment syndicator a deal and bring it to them and get some sort of finder’s fee, or get a chunk of the GP, or just ask them “Hey, here’s this deal. Do you mind if I literally shadow you through this entire process? And I’ll just give you the deal and not take anything.” It’s depending on what you wanna do and what your outcome is.
I would probably be more in that latter camp, just because I want — assuming I didn’t know anything about apartment syndication, that’s what I would do, because I wanna learn what’s going on.
Another good way to learn about it is to passively invest in a deal. Again, you need money for this, and you’re not gonna be able to control it, but just going through the process of the new investment call, and getting all the different updates that are provided by the syndicator after the deal has closed… You learn a lot more than you would otherwise by actually being involved in an actual deal, and kind of seeing what the week-to-week, month-to-month operations are like.
Then finally, the other thing I can think of, and Joe, correct me if this is something that you’re not allowed to do – raise money for a syndicator. If you don’t have any experience but you have access to private capital, you’ve got a network of high net worth individuals, you’ve got family money, whatever it happens to be, you can tell them that you’re interested in being an apartment syndicator and that if you find something that meets their investment goals, would they be interested?
Then reach out to a syndicator – again, correct me if you’re allowed to do this or not – and offer to raise money for their deals.
Joe Fairless: Episode 1054, “Getting paid to raise capital without being a broker” – I interview Amy Wan. She is a securities attorney, and we talk about how to do that legally… “We” meaning she, talks about how to do that legally. Episode 1054, “Getting paid to raise capital without being a broker.”
Theo Hicks: Great. So it is possible, and listen to that episode to learn exactly how to do that legally. And then get creative I guess is the last one. Figure out what you’re good at and then figure out how you could apply that to breaking into the industry. We’ve all got unique talents and completely different backgrounds, and so what we brought here today are kind of general ways to enter, but if you have another way based off of your background or your experience or wherever you are financially at the moment, do that, and tell us about it, so we can add it to our list.
Joe Fairless: We have an article, “Six ways to break into a multifamily syndication.” If you just search that, you’ll find it.
Theo Hicks: Yeah. Do you have anything else that you wanna add to this topic, or do you wanna move on?
Joe Fairless: I’m good, my friend.
Theo Hicks: Alright. On to some updates, besides me personally being super jacked up to go to Europe for the next ten days. From a business perspective, as everyone knows, I’ve got my three fourplexes, and we’re finally fully occupied. We’ve just signed the last lease yesterday, so we’ve got 12 units from there, and then also for our single-family house, they’re moving in in a week or two, actually. I’m not sure exactly when. Their lease technically started in April, so–
Joe Fairless: I was gonna say, they’ve been paying you for a while, because we’ve talked about that a while ago.
Theo Hicks: Yeah. They’ve been paying us since April, but they’re actually moving in in June. I’m very happy that we’re stabilized at our fourplexes, and we’re still in the process of raising the rents on one of the buildings; we’ve done it on two so far. We’re gonna raise the rents for the 2-beds from $750 to $825, and for the 1-bed, $580/$600 to I think between $650 and $685, depending on the unit.
Then for the second building two people left, and said no, so those are the ones that we had to fill, and then we’re working on the third building right now.
Joe Fairless: Any idea what your income level was across all 12 when you took over and what it is today?
Theo Hicks: It was about — I would say subtracting the major one-time maintenance expenses, and I’d consider those cap-ex, so I’ll take those out… Each property was property was probably cash-flowing between $500 and $750/month…
Joe Fairless: Each unit?
Theo Hicks: Each fourplex. So I guess that would be $200-$250/unit/month, and now we’re probably closer to $1,000. That also includes the other income from the laundry. We’re closer to $1,000 now per month, after I pay the mortgage, after I pay for the utilities, and then I save up some money for ongoing repairs.
Joe Fairless: So from $750 to $1,000/fourplex, did I hear you right?
Theo Hicks: Yeah.
Joe Fairless: So it’s about $250/fourplex increased cashflow.
Theo Hicks: Yes. So where would I be per unit – around $65/unit in rental increase. The 1-bedroom rents we increased a lot more than we increased the 2-bedrooms, just because the 2-bedrooms were already close enough to market rents, and… It’s amazing. That also accounts for the management too, as well. So I’m accounting for the management before too, because we didn’t have management before, so that $500-$750 is including the management fee, as well.
Joe Fairless: Awesome.
Theo Hicks: Yeah, so those are my updates on those properties, and if anything else happens, I’ll definitely bring it up. What about you, Joe?
Joe Fairless: Closing on a deal today, a 300+ unit apartment community in Dallas, and I’m excited about that. We’ll be sending out an e-mail to all of my investors in that deal once we officially close. So that’s the big thing for today.
Other than that, we are diligently focused on the performance of our portfolio, and that’s a primary focus. Secondarily, we’re looking for new opportunities; it’s challenging to find them, but we’re looking at a whole bunch and we’ll see what happens.
Theo Hicks: Fantastic. Alright, just to wrap up the episode, make sure you guys check out the Best Ever Community and join the Best Ever Community on Facebook. Go to BestEverCommunity.com and it’ll direct you to that page. Each week we post a question, and we’ve been getting a lot of great responses, a lot of great engagement lately, some good back and forth debates on the comments section below the questions, and it’s very interesting to read and hear different investors’ perspectives on the question.
I think this week we’ll have a lot of adventures as well based on this question, which is “What metrics do you use to qualify an investment?” These are things like do you use a specific cash-on-cash return factor, is it a specific IRR number you’re looking for, do you just use the 1% rule and buy based off of that, is it cashflow per door, are you looking for a certain percentage in appreciation, or anything else?
So go on there and tell us what you look for when you’re analyzing the returns, and then also make sure you put what you’re actually investing in, because it’s gonna be different for fix and flips versus apartment syndications.
Me personally, I look at cash-on-cash return if I’m looking at these fourplexes. I want at least a 10% cash-on-cash every year, projected, when I buy. 15% will be great, but 10% is a lot more realistic, and it’s what I’m looking for.
Joe Fairless: IRR is the primary metric we look at… At least a 22% IRR for the project, and then that’s five years; we might be looking at longer-term projects, 7-10 years in the future, and that IRR would go down, because you return the money to them not as fast, since it’s over a long period of time… But then the annualized cashflow will be more important during the hold period, and I want somewhere between 8% and 9% a year cashflow during the hold period, not including the profits from the sale, if it’s a longer-term play.
Theo Hicks: Yeah. When I’ll start doing apartment syndication deals, that’s what I’m gonna do, too.
Joe Fairless: Yeah. And when I say 8%-9%, that’s net to limited partners investors, not on the project level.
Theo Hicks: Exactly. And lastly, make sure you guys subscribe to the podcast —
Joe Fairless: And girls.
Theo Hicks: And girls, subscribe to the podcast on iTunes, and leave a review in order to help us understand how we can improve the podcast… And it’s also to let us know what we’re doing right. If you do, you’ll have the opportunity to be the review of the week, which we’ll read aloud at this point in the podcast.
This week’s review is from Seth Hering, and it’s titled “Actionable advice.” They say:
“I love the variety of topics covered, and Joe does an excellent job following up when guests mention something that isn’t initially clear. Most importantly, Joe is able to tease out actionable advice to incorporate into our investing activities. I hope you’re able to keep this going for the foreseeable future.”
Joe Fairless: Me too, my friend; that’s the plan. Thank you for taking time out of your day to write a review, and I’m grateful that you’re listening and I’m grateful that you’re getting value. Most importantly, I’m grateful that you’re getting value from the podcast.
Everyone, please write a review. That will help us continue to attract high-quality guests and continue to help you with your real estate endeavors. The more valuable guests that we have on the show, the more valuable the content will be to you. You can help with that by writing reviews, because that helps with the exposure of this show…
Thanks for that, thanks for spending time, and everyone, thank you for hanging out with us today. I hope you have a best ever day, we’ll talk to you tomorrow. Theo, enjoy Italy and everywhere else you travel overseas. Bye.