Jonathan Tonks’s background is in the automotive industry. He began his studies as a mechanical engineer with the goal of following in his family’s footsteps. However, after purchasing and house hacking his first duplex, Jonathan was immediately hooked on real estate. He decided to pursue his passion through mentorship and coaching and quickly found himself on the route to commercial real estate syndications.
Today, Jonathan is the managing partner at Provision Space, which specializes in multifamily syndications and raising capital. He also works full-time as a continuous improvement engineer at Magna International.
In this episode, he shares his biggest learning curve as a sponsor, the most valuable skill he’s developed as an apartment syndicator, and how he approaches and builds relationships with potential investors.
Jonathan Tonks | Real Estate Background
- Managing partner at Provision Space, which specializes in multifamily syndications and raising capital.
- Portfolio: GP of 297 units
- Works full-time as a continuous improvement engineer at Magna International.
- Based in: Holland, MI
- Say hi to him at:
- Best Ever Book: Who Not How by Dan Sullivan & Benjamin Hardy
- Greatest Lesson: Ask and you shall receive. There have been so many lessons wrapped around this concept, but this is the greatest one I've learned.
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TRANSCRIPT
Slocomb Reed: Best Ever listeners, welcome to the best real estate investing advice ever show. I'm Slocomb Reed and I'm here with Jonathan Tonks. Jonathan is joining us from Holland, Michigan. He's the managing partner at Provision Space, which specializes in multifamily syndications and raising capital. Currently GP of 297 units. Jonathan, can you start us off with a little bit more about your background and what you're currently focused on?
Jonathan Tonks: Absolutely. My background that comes from the automotive industry. I started my studies as a mechanical engineer, and it came from just the fact that I wanted to follow the footsteps of my family, follow that trajectory. I come from an engineering family, and I grew up in that world, so that's why I started. But when I moved out to Holland, Michigan a few years back, that's when I first was introduced into real estate by purchasing my first duplex. I started by house-hacking that, living in one unit, renting out the other. And from that moment I got hooked. It was just the confirmation of all of what I'd been learning from reading books, Best Ever books, Robert Kiyosaki books, just all the education that had been going on beforehand came in that one moment. And that's when I decided to start pursuing something a little bit larger, a little bit faster. And through some mentorship, through coaching, and through [unintelligible 00:02:31.19] studies and trying to get involved as much as I could, that's when I started on to the commercial route, and partnering with a few managing partners and syndicators around the country, I was able to quickly grow the portfolio through multifamily assets as an alternative investment for passive investors.
So where we're at today - and that's just really quick highlight, but where we're at today is, again, partnering with people who want to have a passive income stream; we invest in assets all over the country, but primarily Midwest and Southeast, that's where my partners are located at, we have boots on the ground, so we focus on those markets. So we're talking the Carolinas, Georgia, Florida, we have places in Nebraska, Pennsylvania, as well... So we're looking to grow that portfolio.
So high net worth investors, institutions, other financial institutions, as well... And we're going to scale to a billion in assets in next five years. So that's where we started and where we're going.
Slocomb Reed: Nice. You're just under 300 doors; that's a lot of states that you just mentioned. What property size are you targeting?
Jonathan Tonks: Right now we're targeting 100+ units. The first two assets were 60 and 66, but as I started getting traction moving forward, the last one I closed was a 171-unit in Nebraska, so we're sticking with the 100+ units.
Slocomb Reed: Gotcha. That makes sense. Within your general partnerships, Jonathan, do you have a specialization or a focus?
Jonathan Tonks: Mine is primarily on investor relations. I love meeting with people, educating on what's possible with the avenues that we do. My other partners are focused primarily on the acquisition side, and the asset management.
Slocomb Reed: When did your first general partnership acquisition close?
Jonathan Tonks: That was New Year's Eve of 2021. So technically, at the beginning of this year. The easy way to say is January 1st of 2022.
Slocomb Reed: Gotcha. And how many acquisitions have you guys done so far this year?
Jonathan Tonks: This year we've done three.
Slocomb Reed: Three, gotcha. Cool. So I am an apartment owner-operator in Cincinnati, Ohio, not too far from the Grand Rapids area, if you consider Holland, the Grand Rapids area. the passive investors who are coming to you for your deals right now - I want to ask where they're coming from. I see that as two different questions. First, how is it that you are meeting people who are interested in investing in your deals? And what is the typical background of someone who's interested in deals that you're sponsoring?
Jonathan Tonks: That's a great question. So there's the first part, how do I meet them... I have an in-person meetup once a month that I host in Grand Rapids. So it's a place where we can connect, meet new people... It comes from all different industries, so I have people driving in from multiple different cities, with multiple different backgrounds; some not even in real estate, some just curious, but then also some who have experience in real estate, and specifically commercial and multifamily. So we have a place where we can meet in person, and shake hands, and get to know people. So that's one way.
Also just joining as many online Zoom webinars, networking meetups as possible, getting my face out there and making friends through social media. LinkedIn is a great place as well, just connecting there, producing good content on those platforms... A big one as well, this year I've been dedicated to going to as many conferences as I could; again, meeting people with like-minded abilities and aspirations. So going to conferences, for me, it's been a once a month this year; either real estate specific, but also other financial institutional backgrounds, different industries that may be collaborative in the multifamily space. So it's getting out there in-person to those different avenues.
But then to answer your second question, what type of individuals are the ones investing with me - the big one that I have noticed is people who are experts or well established in their current careers; either they're business owners or they're executives, or they're managers of their business... Someone who's dedicated to their job, but wants the additional income stream, wants the flexibility and the tax benefits that the multifamily opportunities provide. Those are the ones that I find most synergizes to what we do. And then also some of the hobbies and activities that I do on the side - I have a pilot's license, I have a few different things, and I'm able to connect with different people on those ends. And so it creates an area of conversation, and then an opportunity to share.
Slocomb Reed: Yeah, I know pilots are a fairly insular community, and very heavily networked. Another question here, same topic... We're recording in August of 2022. There are some interesting things happening with inflation and interest rates, and rent growth, and with deal flow, frankly, in a lot of MSAs and for a lot of operators. Are you currently raising more capital from new investors, people who are new to apartment syndication? Or is it primarily people who are already invested with other sponsors, or people who are looking to deploy funds from recent sales, with deals where they were LPs and the deal went full cycle?
Jonathan Tonks: Yeah, it's definitely the latter. It's people who have either currently or previously invested in other real estate opportunities, who understand what we're going through and understand the expectations moving forward. And I think the main reason for that is really just comfortability and understanding of what's to come. But in addition to that, I would say, definitely people who are exiting their current opportunities, their current assets, either through 1031 exchanges, or just to get into the next opportunity. But deal flow has definitely slowed down a bit, and not from the standpoint of that there aren't good deals out there, but we're being extra conscious of what we choose to partner on and choose to acquire. So we're making sure we get the best opportunity back to our investors.
Slocomb Reed: Jonathan, thus far, what's been your biggest learning curve, sponsoring apartments indications?
Jonathan Tonks: I've had a lot of lessons that I've learned along the way; thankfully, my partners have been gracious enough to let me learn as I've been doing. The biggest one, when it comes to what I do, specifically in raising capital, I would say my first opportunity to raise capital I was extremely optimistic that I could raise as much as was needed for closing. And of course, I reached out to everyone, I'd been texting everyone, calling people, sending emails, just pestering everyone as much as I could; not because I was desperate, which I partially was, but also because I knew how good of an opportunity was and I just wanted to share it with everybody.
But the biggest lesson came from not just the initial rejection from so many people on my first opportunity, but the cycle that we went through - extremely optimistic, faced with a little bit of rejection, and then got some more momentum going, more rejection, and just this whole back and forth of getting comfortable and getting acquainted with the fact that everyone's not going to be as excited as you are about your deal, or they're not looking for that at that certain time. I had multiple investors who were just at a season of life where they could invest in another opportunity with us. And that's difficult at first, but it's something to get used to. But I would say curbing my emotions in those moments, and getting a little realistic with reality was a big learning lesson. And it's helped us create systems on how to move forward and be better able to predict what we're able to raise and what we're able to close on.
Break: [00:10:00.06] to [00:11:58.14]
Slocomb Reed: Coming from an automotive background, particularly an engineering background, and now being professionally much more people-facing and raising capital for apartments indications, I imagine there are some new skills that you've been working on developing the last year. What's the most valuable skill that you've developed now that you are in apartment syndication?
Jonathan Tonks: Great question. That's one I haven't been asked before, but I would say the best thing I've had to learn is courage; I can't say it other than that. It's just developing the courage muscle. One, to get up every day and add value in some capacity, but then also meeting people and going face-to-face... When you're at a conference and there's hundreds and hundreds of people dressed real nicely, and they all seem to have more experience than you, being able to walk into a group, stick up your hand, shake other people's hands and introduce yourself... Just getting used to that is a big skill.
Same with asking for the close. For anyone wants to be an investor, I look at this perspective of what I'm giving to you is an opportunity that myself and my partners are investing in. It's something we believe in. and it's something that we want you to be a part of with us. So I wouldn't be presenting it to you if I didn't believe in it. But being comfortable and being courageous enough to ask someone, "Would you part with the hard-earned money that you've been saving, or that you've been investing on the side? Would you part with that to invest with us and grow your net worth?" And that's not an easy ask, by any means, especially coming from a background where I've never asked anyone for money before. But just developing the courage muscle of making friends, building relationships, putting yourself out there, being on podcasts like this with yourself, it takes courage muscle, for sure.
Slocomb Reed: Given that most of the LPs that you're bringing on, Jonathan, already have some experience with apartment syndication and they've already gone full cycle on deals, I know you're looking at a load of markets - Southeastern, Midwestern... Are you finding that any of the LPs that you are newly in conversation with - are they picky about which markets they want to be invested in within the markets that you guys are currently analyzing? Or is it just wherever you have the right opportunity, whether it's in Nebraska or Florida, they'll pounce on it?
Jonathan Tonks: It depends on the investor. I've had quite a few who are more picky about the teams that they work with, and just the loyalty to their previous relationships than they are about the markets per se. But I will have quite a few people who come back and say, "Hey, I'd prefer to invest in these four or five markets. I have experienced with it, I have current assets already there, and I prefer to stick with those." But they present the opportunity that if we do have something in those markets, they'll be interested. At the same time, the other 50% of people are open to opportunities as they come, especially as challenging as the deal flow is coming at the moment. If it's available to them and they have funds liquid, they'll take a look.
Slocomb Reed: Nice. Well Jonathan, are you ready for the best ever lightning round?
Jonathan Tonks: Sure, let's do it.
Slocomb Reed: Awesome. What is the best ever book you've recently read?
Jonathan Tonks: Oh man, I've read a book a couple months ago that has changed how I structure my business. It's called Who, Not How, by Dan Sullivan. I love that book.
Slocomb Reed: Well, it's sort of by Dan Sullivan. Somebody else wrote it for him. [00:15:17.06] I can't remember the name of the actual author off the top of my head though.
Jonathan Tonks: Ben Hardy.
Slocomb Reed: Yes. Yeah, Benjamin Hardy, you're right. I feel like I say this once a week, but every time someone says that's the book that they recently read, I have to say, I've realized about myself that when I get too busy, off market lead generation is the first thing that falls by the wayside. So I finally picked up that book, knowing that I already agreed with the argument, but recognizing that I needed to process it and hear from the experts - Dan Sullivan and Ben Hardy - and while in the car, listening to that audio book, I came up with the idea to find someone who wanted to get into real estate and wanted to get into lead gen, train them on what I know how to do, but I'm not making enough time to do, and then give it to them to do it, and my most recent acquisition actually came from one of those people, who was looking for the opportunity to take action that I wasn't making the time for. And so I Who, Not How-ed them into that action for me, and just a few weeks ago, bought a smaller apartment building. But it wouldn't have even been on my radar. What is your best ever way to get back?
Jonathan Tonks: I love giving back through my church, I feel very passionate about giving back through either serving in general at the church, or recently, more challenging opportunities I've been blessed with; helping with middle school boys and just being a mentor/leader there. But then also kind of a sneak peek at what I'm doing with Provision Spaces. - I won't share all the details, but something my parents, my siblings and I had the opportunity when we were very young was we lived overseas a few times, had some exposure to different cultures, but then we also did a few mission trips overseas... So just getting back in those capacities; I want to make sure that my future family and myself are staying close to those mission-based organizations.
Slocomb Reed: I was a professional youth minister before I got into real estate full-time, and yeah, I used to lead those mission trips as well. And then middle school boys - you're doing good work, sure. Back on topic though, Jonathan - thus far in your commercial real estate investing career, what is the biggest mistake that you've made, and the best ever lesson that has resulted from it?
Jonathan Tonks: It would be the reminder, again, of the who, not how. Even though I've utilized some of the relationships I have in my life to continue scaling and growing, I still catch myself in moments of just getting bogged down by the details, and trying to take on everything myself. And I would say it led to the -- I wouldn't call it realization, but just the intentionality of asking people for help in certain situations, or asking people for advice or for recommendations.
One perfect example of that is being on this podcast. I asked a friend I said, "Hey, I'd love to get some more exposure through podcasts." He said "I was just on this podcast. Want me to recommend it to you?" I said "Absolutely." Everyone's got their own skill sets and things they naturally gravitate towards, so rather than emailing out everybody on "Hey, can I be on your podcast?" or whatever event it is, using those relationships to help grow each other.
Slocomb Reed: Nice. On that note, what is your best ever advice?
Jonathan Tonks: Right along those lines, ask and you shall receive. For me it was - whether it's asking for money, asking for help them... I always wanted to do it myself. I wanted to get into all the details, the underwriting, and figure out all the formulas, and how everything works, which is extremely important and it's helped me tremendously as I've relayed information to investors... But just asking others for opportunity, ask them for assistance, or whatever it is, just being open and willing to ask them, with the full expectation of [unintelligible 00:19:05.28]
Slocomb Reed: And where can people get in touch with you?
Jonathan Tonks: Best place - LinkedIn. I'm pretty active there. So just my name Jonathan Tonks. And my website, provisionspace.com has a plenty of educational content, best opportunities, a lot of great information there as well.
Slocomb Reed: Those links are available in the show notes. Jonathan, thank you. Best Ever listeners, thank you as well for tuning in. If you've gained value from this episode, please do subscribe to our show. Leave us a five star review and share this episode with a friend that you know is interested in capital raising for apartment indications. Thank you and have a best ever day.
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