JF2285: Working Two Full-time Jobs With Jimmy Johner

Jimmy has been investing for 5 years and currently owns and operates a marine infrastructure company. He is also working full-time with a commercial general contractor and developer with the purpose of continued growth. 

Jimmy Johner Real Estate Background:  

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Best Ever Tweet:

“Networking is the most important thing you can focus on to help grow your business” – Jimmy Johner

TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners, and welcome to the Best Real Estate Investing Advice Ever Show. I’m Theo Hicks and today we’ll be speaking with Jimmy Johner.  Jimmy, how are you doing today?

Jimmy Johner: Doing great, Theo. Thanks for having me on board.

Theo Hicks: Absolutely. Thanks for joining us. So a little bit about Jimmy— he is the owner and operator of a marine infrastructure company, and he also works full-time with a commercial general contractor and developer. He has five years of real estate investing experience and his portfolio consists of 66 units, as well as a 9-unit salon suite development. He is based in Beaufort, North Carolina, and you can say hi to him at his LinkedIn profile, so his name is Jimmy Johner. And if you’re watching the video, when you look him up, you’ll see his face and know that it is his profile.

So Jimmy, do you mind telling us some more about your background and what you’re focused on today?

Jimmy Johner: Yeah, absolutely. And thanks for the description of my last name there, spelling it out, people tend to botch that up quite a bit. So as you said, I own a marine infrastructure company. I’m kind of all things business and kind of have been an entrepreneur bone for the majority of my life. The marine infrastructure company consumes quite a bit of my time right now, and then I obviously do as much real estate investing as I can. We try to pull as much money into the real estate as we can from the other businesses.

I guess looking into my background, I went to a Maritime Academy after high school, and just dove into the shipping industry, traveled all over the world and got the travel bug out. I still do quite a bit of it now… And just always wanted more and real estate was kind of the path I decided to take to continue to grow.

So right now our main focus is multifamily. We try to find some value-add deals in the Eastern part of North Carolina around the Raleigh market in the East, and we’ve got a couple deals under contract right now, another 46 unit property right outside of Raleigh that we’re hoping to close on late October, and steady hunting some more down south. So I’m actually in Louisiana right now, outside of New Orleans on a self-storage project that we’re under development on. So all over the place, wide open.

Theo Hicks: Awesome. So you said that you spend a lot of your time with the marine infrastructure company. So right now while we’re interviewing, you’re doing something for your real estate business, right? Or are you doing something for your marine’s infrastructure?

Jimmy Johner: For the general contractor that I work for. So I work full-time for a pretty good-sized commercial developer/contractor. We work all over the country, doing new development deals. I mainly do storage, so we do Class A Self Storage developments. So from the ground up, three to five-story, 120,000 square foot buildings. Yeah, so right now I’m actually out of town for the company that I work for full-time.

Theo Hicks: Got it. So when do you work on your real estate business? Is it on the weekends, at night, in the morning?

Jimmy Johner: Well, all the time. My partner in crime [unintelligible [00:05:46].05] His name’s Alan. We kind of tag-team a lot of stuff, a lot of late nights and mainly weekend work, and with the power of the cell phone, we’re able to do quite a bit remotely. And given today’s climate with remote working, it’s kind of a no-brainer that we’re able to hunt deals and delegate different things to different people on our team, and continue to find deals and place capital.

Theo Hicks: So you have 66 units right now… What’s the breakdown of that? Is it just one building? Is it 66 single families, or somewhere in-between?

Jimmy Johner: No, 66 apartment units. So we own two different properties. One’s an 18-unit and the other ones is 48, consisting of seven different buildings, but it’s two different properties.

Theo Hicks: Perfect. And then how did you fund those deals?

Jimmy Johner: We raised, you know, OPM (Other People’s Money); raised money for the first one just through connections and networking with people that I know that that had some liquidity and were interested in the real estate realm. A lot of them were kind of neck-deep in single-family homes and we’ve tried to transition some of their focus, because they do have the capital available to get on board with us with multifamily, and kind of leverage our knowledge with that sector of the real estate industry and their capital and make it a win-win partnership or a no-lose, no-lose, as I like to say it.

Theo Hicks: So that was for the 18 unit, it was people that you already knew that invested?

Jimmy Johner: Well, and as well for the 48. So we actually have the same equity partner on both of those deals and it’s kind of been a dream come true, for lack of a better word. It kind of came easy. Once we put the work in place and he felt comfortable with what we were doing, it was actually pretty simple to raise the money, to be honest with you. It wasn’t too much effort on our part. And just finding it and putting it all together and making it work was the real task.

Theo Hicks: So you have one guy that invested in the 18 unit and the same person invested in the 48 unit for all of it?

Jimmy Johner: All of it.

Theo Hicks: Alright. Do you mind telling us some background on that? Who is this person? Maybe not their name, but how did you meet them? How long did you know them? How did you bring up the concept of him investing in your deals, and things like that?

Jimmy Johner: Great question. Yeah, I’ll leave them somewhat private, because that’s how he tends to stay. But it’s all to the power of networking. So my partner and I know people all over the country through the construction industry that we work in, and we’ve known this guy for a long time, probably five or six years or so. I knew he was interested in real estate, he owns a ton of single-family homes, and we just bounced it off of him and asked him if he knew anybody that might be interested in it. He raised his hand.

So it’s kind of a typical approach, asking somebody that you know, that’s got the liquidity, if they happen to know anybody that might be interested, hoping that they’re the ones that say, “Yes, I’m interested.” And from there, we just continued to leverage that relationship is really all it comes down to. And he trusts us and we trust him and we were able to make the deal work. So my partner and I have come pretty little out of pocket; we put all the upfront effort and all operational stuff in play, which again, makes it a great partnership, because we can’t do without him and he can’t do it without us. So that makes a great partnership.

Theo Hicks: So this conversation happened, and then he invested in the 18 unit and he’s invested in the 48 unit. Are those the only two apartment deals you’ve done? Was the 18 unit the first deal you and him have done yourself personally, or had you done deals in the past before it?

Jimmy Johner: I’ve done a few duplex developments and stuff in the past, and we’ve done a salon suites development in the past, but the 18 units was the first apartment building that we bought. So that was the first time that the partnership was born with the three guys that are in it now. The other stuff was just me personally.

Theo Hicks: So [unintelligible [00:09:00].03] talking about this to someone else; if someone asked you, how beneficial has your full-time job with this commercial general contractor and developer, being full-time in real estate, how beneficial has that been towards your investing business? Not at all or completely invaluable? Without it you wouldn’t be able to do what you were doing, or somewhere in between?

Jimmy Johner: I don’t know that I’d call it I wouldn’t be able to do it without it, but it has definitely been transformational from a networking standpoint and a knowledge basis and a literacy concept of how everything works with real estate, from land acquisition to building it, to renovating it, to everything. It’s just made a tremendous difference. And again, the network. I mean, I can’t emphasize that enough. The network that I’ve developed over the last five years has just been incredible. I know people all over the country that are neck-deep in real estate every single day that I could call and bounce questions off of, and so on and so forth. So it’s been invaluable for sure.

Theo Hicks: And is that how you met your business partner?

Jimmy Johner: No, we actually grew up together. He’s one of my best friends, so I’ve known him since I was 10.

Theo Hicks: Huh, interesting. So a lot of people, they’ll give advice and say that you shouldn’t partner up with a family member or a friend that you already know, that you already have a pre-existing relationship with; maybe walk us through your advice for anyone—it is probably the easiest to partner up with someone that you already know, but they say that eventually things might get difficult. So—

Jimmy Johner: Yeah, no, I—

Theo Hicks: Would you let us know or give us some of your advice on what people need to do in order to set themselves up for success when partnering with someone they have a pre-existing relationship with?

Jimmy Johner: I’m a big fan of partnerships. You can spread the risk and also spread the amount of work that it takes upfront and on the backend, take massive action on getting stuff done, which is a huge part of getting stuff done… It’s just taking action, quit thinking about it and just do it.

But I would say that in any good partnerships, you both have to have one another. If it’s one-sided where you don’t really have to have the other person to do one thing or another, and it’s not a no-lose/no-lose situation… I think that’s key. And you do have to be careful with friends and family, especially when it comes to money, with any type of partnership. But upfront, we put together an operating agreement with an LLC, just like you would with anybody, and I trust him with my bank account and he trusts me with his, and I can’t do without him and he can’t do it without me. So again, that’s the value of an awesome partnership, is not being able to do without the other person… And knowing your boundaries with them and knowing what they’re comfortable with and knowing that they’re not comfortable with and having an open dialogue with that is really the key, I think, to moving forward with it.

Theo Hicks: What was the size of the deal you said you’re working on right now, you said a 42 unit?

Jimmy Johner: It’s a 46–

Theo Hicks: 46 unit?

Jimmy Johner: Yeah. I think it’s a one-three purchase price. So we’re getting a pretty deep discount, along with about almost a million dollar renovation on the backend. So about a two-year turnaround for our investors on money, and so forth. I can get into the weeds and that stuff if you want.

Theo Hicks: Yeah, so I wanted to ask how you found the deal. And then I’m assuming that the same individual who invested in the previous two deals is investing again… So maybe tell us about what that structure is going to be. It sounds like this is going to be a pretty heavy value-add deal.

Jimmy Johner: Yeah, pretty heavy value-add deal. The way we found it – it was an off-market deal, we found it through a pocket listing through a broker that I know; he brought it to us just because again, that network; he knew we could close. So he brought it to us, negotiated directly with the seller and the broker via Zoom, just like this, and it went under contract about a month ago on it. We’re just heading into the due diligence right now, and like I said, planning to close late this month, early October. And we’ll get some bridge debt in place for the acquisition, refi it after 24 months or so, getting some agency debt on it and pay our investors back, and roll all the refi proceeds into another deal that we hopefully will find between now and then.

Theo Hicks: So your investors will invest upfront… And then when you give them money back, are they still in the deal or are they just kind of putting that money upfront so you can stabilize it, and then they get their money back plus some sort of profit, and then they’re out?

Jimmy Johner: Great question. There’s a million different ways to skin a cat. That’s one of the first things people always ask me. So from an equity standpoint, the way we structure a partnership, we don’t like to label ourselves as syndicators, just because we really like the word partnership when it comes to SEC regulations and so on and so forth. So being an active partner makes a big difference. There’s less paperwork, there’s less soft costs upfront with security attorneys and so on and so forth.

But the way that it’s working on this one, we’ve got three partners – it’s myself, my partner, Alan, and then our other equity partner that’s going in on the deal. He’ll own 33% of the deal, just like he does on the other two, and we’re all raising the money together from within the three partners. We’re not raising it from anybody else outside of the partnerships. So all the money that’s coming in is ours, so at refi we’ll all get our money back, and then like I said, roll it over into another deal.

So we don’t take anything out of any of the properties right now. And that’s also the power of me trying to maintain a full-time job, along with my partners; they do the same thing. So we don’t rely on any of the money that our real estate makes right now, we’re just continuing to build the business, and we’ll continue to roll that money for as long as we can, until we can say peace out on everything else.

Theo Hicks: So you’ll buy the deal and then you’ll all invest. The money is coming from mostly the equity partner, but then you and your business partner also invest, and then you get bridge debt, stabilize it, refinance, all the investment money that went in there is paid back equally, you don’t get anything extra on top of that… And I’m assuming that extra equity that you get back from the refi plus all of the cash flow – does that just go into an account that’s then used to buy more deals? How does that work?

Jimmy Johner: That’s a great question as well. There’s a lot of tax stuff that you’ve got to watch out for… And again, that’s the power of having a team of people that know this stuff; they’re a heck of a lot smarter than I am when it comes to all the tax code. But we’ll refinance the deal, roll it over into the same entity, and then it’ll get distributed to the partners, quote on quote, but all it does is get rolled over into another bank account with a new entity that buys another deal. So it’s all kind of tax-deferred because we’re active partners and because we all do take a liability in the refi.

So again, there’s a lot of steps in the middle, but that’s kind of the basis of it, just what you said; we’ll shift the money around, move it from one account to another and then buy another deal with it as a down payment.

Theo Hicks: Alright, Jimmy, what is your best real estate investing advice ever?

Jimmy Johner: Networking. I’d say that’s the most important thing. In my short lifetime of doing this, it’s the power of networking. The more people you know and the more people you can bounce questions off of, the more things that tend to come to you… And just taking massive action towards that networking.

Theo Hicks: Alright, Jimmy, are you ready for the best ever lightning round?

Jimmy Johner: Sure.

Theo Hicks: Alright. First, a quick word from our Best Ever partner.

Break: [00:15:15] to [00:15:57]

Theo Hicks: Okay, Jimmy, what is the best ever book you’ve recently read?

Jimmy Johner: So I do a lot of reading, I’ll have to say — I don’t know if it’s the most recent one, but Seven Habits of Highly Effective People. I know I said like 10 times in these 20 minutes about taking massive action, but that’s probably my number one book I’ve ever read; just an overall mindset, and so on and so forth. And a close second would be, you know, Carnegie’s How to Win Friends and Influence People, of course.

Theo Hicks: If your businesses were to collapse today – your marine business, you lost your commercial real estate job and then your multifamily business were to somehow collapse, what would you do next?

Jimmy Johner: I would do it all over again.

Theo Hicks: Start from scratch. Okay.

Jimmy Johner: Start from scratch. I know how to do it now, so it’ll be a heck of a lot easier to do it again.

Theo Hicks: Out of all the deals you’ve done, what has been the best ever deal?

Jimmy Johner: I’ll say that first 18 unit… And not necessarily so financially speaking, but just from a learning curve perspective. That’s probably the best deal. I mean, it’s what kick-started my multifamily mindset on getting rocking and rolling with apartments and finding the value in them. We’re actually getting ready to refi that deal right now and it’s helping buy the 46 unit. So it works. I’d say that deal is probably my best one.

Theo Hicks: If you’ve lost money on a deal before, how much did you lose and what lesson did you learn?

Jimmy Johner: Knock on wood, I haven’t lost money on a deal in real estate. I’ve broken-even and come close, but haven’t lost money. Now, I have elsewhere on jobs, and so on and so forth. And it’s just — knowing your numbers is the most important thing, and not faking a proforma. Whether it’s real estate or any business, just not faking your proformas and making the numbers work, but actually writing a real proforma and making sure that you know every little detail.

Theo Hicks: What is the best ever way you like to give back?

Jimmy Johner: I like to employ people. That’s my number one thing. I know that kind of sounds like not really giving back, but… There’s no free lunch, I’d like to say that, and I thoroughly enjoy keeping people employed and providing them a place to come to work every day, and with a positive environment, and having ownership in what they’re doing every day, and enjoying where they work. So that’s my form of giving back.

Theo Hicks: Then lastly, what is the best ever place to reach you?

Jimmy Johner: I’d say through LinkedIn, it’s probably the quickest and easiest way to get a hold of me. I’m also on Facebook and Instagram, all my handles are the same, it’s James Johner or Jimmy Johner.

Theo Hicks: Perfect, Jimmy. Well, thanks for joining us and walking us through your real estate journey, as well as your best ever advice. Some of the big takeaways that I got was number one — and you talk about this a lot, is that a really good way to get started in real estate if you don’t have the money to buy deals yourself is to just get a full-time job in real estate, because of the massive benefits you’ll get, as you mentioned, from networking and then from knowledge.

So for your business, you were able to find your equity partner through this networking, and then the knowledge and the literacy that comes from working in real estate gives you a leg up when you’re first getting started, and lets you skip a lot of the minor mistakes that people usually make because they don’t know/they’ve never done it before. So it allows you to do it without having your own skin in the game, in a sense.

And the other thing was your strategy. I also really liked that too, where you’ve got your equity partner, you don’t do syndication, you do the joint ventures, so everyone’s active… And then you’ll invest, you’ll do value-add deals, the three business partners will invest money in the deal, and then once the deal is stabilized, you refinance, rather than each of you cashing out and taking the cash and doing whatever you want to with it. You said there’s some processes you need to follow, but high-level, the money is rolled into another deal. So all the cash flow, all the refinance proceeds, all of that stuff goes to you and then goes into an account that’s used by other deals.

And then you are living off of your full-time income, and ultimately the goal is to do enough of these deals where you have enough cash flow coming in, so that that replaces your full-time income. So a more longer term perspective and I really like that strategy, so thank you for sharing that.

One thing I forgot to mention with that networking part – not only did it allow you to find your equity partner, the knowledge, but you also got the deal you’re working on now from a broker who knows that you’re able to close on deals, that you got through that network.

So Jimmy, thank you for joining us, I really appreciate it. Best Ever listeners, as always, thank you for listening, have a best ever day and we will talk to you tomorrow.

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