Welcome to The Accelerated Investor Podcast with Josh Cantwell, if you love entrepreneurship and investing in real estate then you are in the right place. Josh is the CEO of Freeland Ventures Real Estate Private Equity and has personally invested in well over 500 properties all across the country. He’s also made hundreds of private lender loans and owns over 1,000 units of apartments. Josh is an expert at raising private money for deals and he prides himself on never having had a boss in his entire adult life. Josh and his team also mentor investors and entrepreneurs from all over the world. He doesn’t dream about doing deals, he actually does them and so do his listeners and students. Now sit back, listen, learn, and accelerate your business, your life, and you’re investing with The Accelerated Investor Podcast.

Josh: So hey, welcome back to the Accelerated Investor podcast. I’m so excited that you’re part of the family, that you’re part of the community and that you’re engaging with us today and today. I have a special treat for you guys. You know, this podcast selfishly is really just about me meeting with and talking with amazing people that I want to get to know better that I want to get to know their entrepreneurial journey, their strategy, what they’re doing and you know, selfishly, so I can learn more about them, whether I can joint venture with them whether, I can, you know, do an affiliate deal with them, whether they can help me along my journey. And so far my audience seems to love the fact that I’m just bringing on amazing people to talk to, telling you all about my entrepreneurial journey and people seem to really be engaging with it.

Josh: So we appreciate all the love we’ve gotten on social media. We appreciate all the likes and comments that you’ve been given to us. And today I have an amazing treat for you guys. Many of you are probably thinking about how do I create more passive cashflow? How do I buy apartments or multifamily deals or single-family properties and just how do I, you know, transition from my current job into real estate? And maybe do real estate as a side hustle. Do real estate as a side gig until you make enough money from real estate that you can quit your day job. And that’s the exact story. That’s the exact path that my guests have been on. So they’re widely known throughout the social media world and through their websites is Jake and Gino. They’re multifamily investors. They own over 1400 units of apartments.

Josh: So I want to welcome Jake Stenziano and Gino Barbaro to our podcast today. Guys, thanks for hopping on I’m really excited to touch base with you and get to know more about your journey.

Jake: Thanks for having us, Josh.

Josh: Absolutely.

Jake: A pleasure to be here.

Josh: You bet, Jake, thanks a lot. Thanks a lot. I’m really excited that you’re both available today. I know it took us about a month and a half or two months just to get this scheduled up with your busy calendar. So guys, I love to talk about the real estate as a side hustle, right? And I understand both of you guys at other jobs. Gino, owned a restaurant. Jake was a drug sales rep and you guys were doing those kinds of things and then you started investing in multifamily properties. Your first investment was a 25 unit and you jumped right into multifamily.

Josh: So, you know, I don’t know who would like to go first as far as kind of telling me about their journey. I guess, Jake, why don’t we start with you. Just tell us a little bit about what you were doing, what your mindset was, what your thought process was when you still had your day job and you started looking at real estate as a side hustle. Why did you pick multifamily and apartments and what was it like when you were in that transition phase from doing your regular job and investing in real estate at the same time?

Gino: This is, you know, I will answer that. I’ll start off by answering that question. You know, I met Jake working in the restaurant and it was really funny, Josh, we had spoken a little while ago and you said you look like that pizza guy, right? You can’t get away with it. So I like to start off by telling everybody life is not fair, okay? It’s not fair because I’ve been surrounded by pizza and Italian food with my whole life. I got to stay away from it.

Josh: What’s not fair about that? Everybody loves pizza and Italian food.

Gino: I can’t eat. I can’t eat it. I’ll weigh 220 pounds if I do. So can you imagine? My wife’s an amazing cook, so I can’t even eat this stuff, right. I’ve been surrounded by it for 20 years plus. So what I wanted to do was I really didn’t want another job. That’s why I already had my mind set on multifamily.

Gino: I had gotten into a mobile home park deal. It was terrible. I had gotten into a strip mall, multi used property that was terrible. And I said to myself, I need to get educated. I mean hold the brakes, pull the brakes. I want to be in the multifamily. I want to start by scaling up. And my idea Josh was just to buy, you know, a couple of units at a time, make a few hundred bucks in passive income. I’ve got six children. I need to feed them, I need to send them to college. That’s what I wanted to do. I didn’t want to fix and flip because I already had a job. I didn’t see that as my way out. Unfortunately in my market of New York, it was hard for me to do that. So I needed to start investing out of market.

Gino: So I went to Rochester, New York and got a property management company. Let them do it for me. I couldn’t scale up. I was buying little duplexes at a time. It didn’t feel like I was getting anywhere. I met Jake around 2009, 2010 he was doing catering out of my restaurant. So I said, Jake, when you move to Knoxville, because he was moving to Knoxville, I said, give me a call. Let’s look at some deals down there. Let’s see what’s going on. And this was in 2011 when the economy was stagnate. There were no jobs. Rents were low, there was not much interest. There’s not much money falling to multifamily. Everything was flowing, it seemed like to the stock market to commodities, it wasn’t coming into multifamily and everything was depressed. So when he got down there, we started looking. It took us about 18 months to find our first deal.

Gino: It doesn’t happen overnight. You got Stenziano and Barbaro in East Tennessee, you know, yelling and doing business down here. That’s what I’m saying. Life is not fair. I hope everyone understands that it’s not fair. The only time you will understand that becomes fair or equitable when you take responsibility for your situation. I mean, hey, I’ve got six kids, I’ve got to feed them. It’s my responsibility to do that. Now I can complain that things are expensive, their braces are four grand a piece. I’ve got all these bills. But that’s part of life, right? That’s part of being responsible and saying to yourself, you’ve got to go out and make it happen. So my goal was just to start out by a couple little properties with Jake and you know what? Make a few bucks here and with the restaurant pull along. But then as you started buying more properties and started adding on, I said to myself, this is doable because I had the idea and the mindset what everyone else does with multifamily, you need a lot of money.

Gino: You know, it’s just really hard to get into. You’re going to have to really, how are you going to manage 25 units? You can’t even do a fourplex or a little stupid mobile home park. How are you going to do that? Well, as you learn and as you commit and as you grow, multifamily allows you the opportunity to start hiring people, which is the difference between single-family homes and a lot of other niches in real estate. So, I mean, that’s how we started out. We started out a little 25 unit property with that momentum, three months later we bought a 36 unit and then six months after that we had acquired 136 units. And it was all our own money. It was, you know, our strategy was refined role. So the first thousand units that we acquired was all our own money. We were able to refinance up till now in the last five years, nine and a half million dollars of proceeds, no Ferrari’s, no Lamborghinis, all that money goes back into the business, which is really important.

Gino: You can enjoy yourself, but when you’re refi that money out, it’s not what you make it’s what you keep. It’s really basically the loan. So you’re not paying any taxes on that until you sell. You couple that with cost segregation, you couple that we being responsible, you know, following our three step framework of buy right, manage right and finance rate. Because we’re vertically integrated, we handle all aspects of the business. We’re able to grow. Now, Josh, should we have syndicated sooner? Probably. We weren’t ready. We weren’t mentally prepared at the time. So I wish we had done that, but that was the growing pain for us because we were actually doing this stuff ourselves, building out our own property management company, having an education company. We started a syndication company. We’re doing mortgages. So we’re multifaceted. So maybe if we had done syndication we would’ve been able to grow these other arms of the business. So Mr. Stenziano, that was a long answer. I’m sorry to cut you off there, but go ahead bro.

Jake: No, you weren’t cutting me off. I had a, I think I had internet issue over here. Can you guys hear me?

Gino: Yes.

Josh: Yeah we gotcha. We gotcha Jake, your good.

Jake: So back in the saddle. I just wanted to clarify one thing. This was legal drug sales, okay.

Josh: Legal drug sales.

Jake: I was going to doctor’s offices. We were not there. You know, we wore backpacks of cannabis here. This was the super illegal stuff.

Josh: There’s a difference between drug rep and drug dealer, right? I did call you a drug rep, right? I think I did that’s right. The legal stuff.

Jake: Ethically they are on the same page. I don’t know that’s for another day.

Josh: I’ve heard some drug dealers have business cards, who knows?

Jake: That’s right. I think the big thing for me, here, you know, that Gino touched on a lot is the mindset. Many people look at multifamily as a pie in the sky. They look at investing in real estate as something they want to do, but they’ll quit very early on. It took Gino and I was two years to get our first deal. And I still think to this day, the best thing that either of us did was we stayed pesky, we stayed hungry and we stayed engaged. If you don’t stay in the game, it will happen eventually. Getting your first deal, whether it’s 25 units or 250 unit, we’ve done, you know, like I said, we’ve done it 25 we’ve done it 300 units. So it’s just hanging in there and being pesky enough and believing, continuing to educate yourself and take action day in and day out, making the calls, making the broker relationships and staying in there with that long view is bar none the best thing that we’ve done.

Josh: That’s fantastic. So you guys connected through the, just the relationship at the restaurant. So help me understand like one of the things I’m curious about in your relationship, your partnership. I’ve had many partnerships and I’ve studied very successful businesses. Very, you know, big fortune 500 businesses. A lot of them are partnerships and a lot of times you find one guy sort of like the visionary, the guy that’s out, he’s casting vision, he’s talking to audiences. You know, you see it even with fortune 500 companies, a lot of times you have maybe the CEO that’s out on like MSN or Fox News or CNN.

Josh: He’s out selling the company, but didn’t, you’ve got another guy who’s in the back of the house essentially running a lot of the day to day operations. That’s how my private equity fund works today. I’m out doing podcasts and having fun and making relationships and my partner Glen Lidell is kind of taking care of the back of the house. So I’m curious, how does the relationship work with you guys? Does one of you guys try to find deals, one of you guys focus on management? How does it work just with your structuring your business?

Gino: So when we first started out, Jake was self-managing the properties. So we fell into property management by default. So managing the properties, he was able, it was able for him to retire from his job or fire his boss at a Taco Bell a lot sooner, right. About a year quicker, right. So while he’s doing that, he’s scaling up. We have the bright idea of starting a podcast and I don’t know who’s the visionary, because I think we fall into both those roles. I mean, listen, I’ve got a partner there who wants to write a book. Let’s write a book. Now we’ve got four podcasts a week. I don’t know how that happened, but it’s when you have a partner who pushes you and who says, let’s do it. So I think we’ve fallen into both of those, but basically Jake was doing the property management and then we started the podcast and the education piece of Jake and Gino.

Gino: It’s been a grind for the last three to four years, writing articles, getting on Bigger Pockets podcast and doing our own podcast weekly. That has been a lot of work. So I do the education day to day. Then we had the bright idea of starting the syndication company about a year ago, and you have 500 or 600 investors on a database from your live events and all you need to reach out to them. We can’t do that so we brought on another partner to do that. So now the list is up to over 900 investors. We’ve done two syndications, so have that business. And then, you know, Jake had the great idea of saying let’s start doing mortgages. So the mortgage is great. And Josh, what’s amazing about all these different businesses is where we’re heading all of them. But they’re also symbiotic because our Jake and Gino students want invest with us, their learning and syndication process.

Gino: What better way than become an LP investor on the deal? We hold monthly webinars and then we’re transparent. If students need education on a mortgage, they can go to our capital company. If they need, you know, educational, how to structure the on syndication or how to send out emails, they go to our syndication company. The property management is doing day to day when we can teach our investors and students how to manage a property. So we started out really small. I mean that’s what the thing is that it’s only been six years since we’ve been doing this. So really being focused on your main mission, that’s what’s great about multifamily and you can do this in the residential space. You start out with a single 25 unit property and you start expanding and you can start creating what we call is multiple layers or multiple streams of income.

Gino: We call multifaceted and multifamily. We’re your starting to grow and now all of a sudden you can get into other factors where you have vendors helping you out. You have captive insurance if you want to get into it. There’s so many different revenue sources in multifamily, but one thing that doesn’t have to get lost upon people is it’s a lot of hard work. It’s you work hard but you can work smart and people say now, yeah I work smart, but you need to work hard and smart together at the same time.

Gino: And that’s one thing that the restaurant taught me is, hey, there’s going a lot of 12 hour days, there’s going to be a lot of phone calls and a lot of rejections is going to be a lot of bedbugs, there’s a lot of people passing, you know, passing away in your apartments. There’s going to be a lot of fires in the apartments and meet a lot of leaks, a lot of mold, a lot of bad stuff happening. But as you go through it and you grow in your process, you become such a stronger person and these problems wanting to become problems anymore and you’ll be able to scale up and like you said, previously, implement systems and start growing the business.

Jake: Yeah. Just to touch on that a little bit too, I think in the beginning it came down to attitude and ethics. You know, the same way we basically hire on our core values is, you know, Gino and I have an extremely hard work ethic, both of us, we call it blue collar work ethic, and we share a similar moral compass. I think anytime someone’s going into a partnership, make sure that you’re aligned. And then to your point, you’re saying, well, kind of focus on your strengths. Well, the interesting thing is because we’re so vertically integrated, Gino was touching about, he handles the back end of Jake and Gino on the education. I handle the back end of the property management. We have other partners that handle the syndication and the rent capital. So for us, we wear many hats. We will be the face of the business, but we also have our respective duties day to day. And it’s just, it’s worked out for us like that.

Gino: And Jake, don’t forget the sniff test. We have the sniff test now that I’ve implemented. It’s called the Gino sniff test. If we don’t like you, we’re not going to hire you and we’re not going to work with you. That’s the bottom line.

Jake: No it’s if Gino likes you or not, I’m more open.

Gino: It’s come down to it. That’s what happened with my restaurant. That’s one of the reasons why I left. I was working with people and hiring people that they performed. They were not bad people. I just didn’t like them. There was something that was off of them. I didn’t have a relationship, I couldn’t build report them and it just sucked…

Jake: Core values, baby.

Gino: Yeah, they suck the life out of you, they suck the energy out of you. So you just start not liking to go to work. And I don’t want our company to be surrounded or have people like that. And I think our group of core people that we have right now are all amazing people and I love to work with them. Because listen, we’re going to spend multiple hours a week coaching them, being on the call with them, being on the phone with them, having multiple problems coming up daily, having our daily huddles every morning. If I’ve got to see this person five times a week and I’m like, I don’t want to see this person. How do you think that, how do you think that calls going, Jake?

Jake: Bro I’m so getting you a Gino sniff test shirt from now on you’re going to have to wear it.

Josh: I want one. Make sure you send me one. I want the Gino sniff test, a big nose on the front of my chest, love that. In my company we call that the no dipshit policy. So years ago we started the no dipshit policy, which was, you know, whether it was an event we were doing, whether it was an attendee, whether it was an investor, I don’t care how much money you have, if you’re going to invest with us, if you’re a dipshit, if you don’t pass that, I don’t care if how much money you have, you’re not going to invest with us if you’re an employee or staff member. It’s to stressful, absolutely.

Gino: I love that. That’s great. That is excellent.

Josh: You have a sniff test and then that could be the front of the shirt and the no dipshit policy on the back. I like that. We’ve got to have somebody make these tee shirts for us.

Jake: Put that in the handbook.

Josh: Put that in the handbook. Absolutely. So guys, let’s talk a little bit more about the refi and roll journey, right? So you guys covered it. You guys went up to a thousand units. Just tell me about some of the successes along the way, maybe certain buildings or certain properties or ways you acquired properties along the way or maybe refinances that happened where you guys had big windfalls. You know, tell me just about the journey and then we’ll talk a little bit more about your pivot from refi and roll to syndication. So just tell us a little bit more about that, you know, that four or five year period where it was all, you know, buy, stabilize, refi and roll. Tell me about that. What were some of the wins? What were some of the challenges?

Gino: So Josh, that’s a great question. What happened was we had started buying and relatively good part of the cycle, right? So we were able to refi and roll now at different parts. You know, real estate is very local. Some areas might be more difficult to refi and roll. We’ve just bought a property in December that we’re going to refi and roll because we bought at such a great number. We’ve got another property bought about a year and a half ago. That’s going to be refi and roll also. But on our first deal, basic 25 year property, we didn’t know what the heck refi and roll was. We just coined the term and we’re like, you know what? I honestly, Jake was buying these properties just for yield cashflow and I had the bigger picture, Jake we can pull our money out, we can put it in. He just like, I don’t know what you’re talking about. Let’s just get this.

Gino: Let’s just get the income come up and going. You get cash and he’d come home, put cash on his nightstand and go, these people are paying me. He got the entrepreneurial bug. When people start paying you, that’s a total mind shift where you’re used to being a employee waiting for money, but when you go out to a property at 25 units and you start collecting that cash and you have weekly renters and you go through the struggle with the bedbugs and you go through the struggle of changing them over to monthly renters and the mail lady says, you know what? It’s finally nice to come to this property 18 months later. We’re able to refi that property and pull out $180,000 on that property. We are able to put some of that money back into cap ex, but that $180,000 allowed us to go into another deal.

Gino: Now that was community financing. So we went with community bank and that deal was small enough where we still went and refinance it into another community bank on the terms on that first deal were terrible because we had owner financing. But listen, we had a 6% interest rate. We refi it four and a quarter. Can you imagine that? 20 year am went to 25 year am and we had a five year term, which went to a seven year term. So I mean basically the payment stayed the same. I mean and income was up so alright, LTV was great. Same thing with our second, third and fourth deal. The first four deals we hit, all bought with community banks. We had got great financing. We got 15% down. But you know what? They had accelerated, appreciated so much that we went and refinanced them to agency.

Gino: So we’re able to really pull out a lot of money. We’re able to get interest only for three years. We went from 25 year amortizations to 30 year ams we’re able to say with Jake likes to say is we actually got locked up 10 year longterm financing. So we’re able to get that financing off the table and it was all our money. It was just me, Jake, and my partner Mike. So that was the amazing part about it, you get all this capital and you’re able to refinance and buy into the next deal. And the bottom line is you really need to be focused on buying your assets, right? Because once you get the buy right done and you’re able to finance it, right? Like we did, you take those two off the table. What’s left is to manage, right? Is Day to day, is starting to grow the operations and starting to put in systems and start to hire the right people.

Gino: So I think the first seven meals we were able to refinance a lot of our properties twice actually. So that’s why the number is nine and a half million dollars. So it’s been great. Then we just decided to pivot into this syndication because we’re like, we want to go bigger. So the idea was let’s start with a small syndication. So back in November we had a $6 million deal. We could have probably bought it internally, but I’m like to Jake, we need the rip off the Band-Aid, we need to try this and see if this works for us. So it was a small, it was a small raises, two and a half million dollars for us. We were able to do it in two days. We had the list, we were already talking to the investors. We’d already warmed up. It was a typical Jake when he walked into the garage, he saw the tractor there, he saw the mom and pop. He’s like this is our deal, right. You just know when you know when you know it’s a deal.

Jake: It took 30 seconds, you just know man. I knew we were buying that like the minute we pulled up.

Gino: It was a matter of the numbers, you know…

Josh: We passed the sniff test.

Jake: It smelled bad, but it smells so good at the same time.

Josh: Nice.

Gino: I mean, that’s what it came down to. So we bought our first deal in November on syndication. We learned the process, and then we got into a second syndication. We closed in April. But really start small, prove your concept, and then you’re just going to continue to learn a little bit and just continue to add on. Don’t think about starting buying a hundred units. Start small. I mean, you want a proof of concept, you want to have some kind of experience, some kind of a win. And then from there you’ll learn and then you’ll start growing and start implementing stuff.

Jake: Yeah also. No, I was just going to say it’s about having a diverse tool belt because there’s deals right now, like December we went and we bought a very hairy deal. I didn’t necessarily want to syndicate that deal. We have, you know, our entire renovation team on it right now. It’s leaking every day. It’s just a complete disaster. It’s in a great area. It was just run into the ground and we bought it for probably 26 a door the, thing’s probably going to be worth 60 a door at some point. That, you know, putting investor money at risk in that I didn’t necessarily feel comfortable with. But you know, there’s deals that really make a lot of sense where we can get great IRR’s that are good, you know, syndication deals. So it just depends on what is the best way to take this deal down.

Jake: So if we want to refi and roll, look, I love holding these deals long term. I look at these as generational wealth, we’ll buy them, we’ll sit on them and let them cashflow forever. This also deals that fit the syndication model really well. So we didn’t want to limit ourselves. Gino was talking about ripping the Band-Aid off. We were talking about doing a syndication for years. It’s just, it was like I would just kept buying it with our own cash and we were enjoying doing that. But eventually we just broke down, said we’re either going to shit or get off the pot. So it’s finally time to pull the trigger and we did it and now they’re starting to come. We’ve got a deal in the hopper right now we’re about to take our third one down. So it’s, it’s been good and I think it makes us more diverse and it opens the doors up for more people and we can serve more people as well.

Josh: Yeah. When we were talking earlier today, I talked about the concept of, you know, if you really believe in something, your moral compass is right. It’s aligned the right way. You really believe in what you’re doing and you feel like your offer or your opportunity can really impact and benefit other people. A friend of mine, his name was Francis Biloela told me, we were talking about this concept. He said, you have a moral obligation to sell it to them because if it’s going to help them to the point, if you don’t offer it to them, if you don’t offer them that opportunity, it’s actually hurting their life. It’s hurting their future. And that really changed my mindset around money and syndication.

Josh: So guys, you know, we’re not making this audience an offer, so I just want to make that quick disclosure. This isn’t an offer, but tell me how you guys structure your deals when you do a syndication. Like are you guys paying certain pref returns? Are you guys giving up a certain percentage of the deal? Give me some insight into what your thoughts are around syndication. What works for you guys?

Jake: Yeah, it’s typically, it’s a 70, 30 split tip, typically with a 15% IRR. You know, we’re going in with these things from agency debt from day one. I think one of the big things that we look for is that we talk about the buyer right mandate and finance rate strategy. I feel we’re buying them right on the front end and we’re financing them with non recourse, longterm fixed rate financing for the financing piece and then manage them in house to keep expenses down. We again, we’re vertically integrated so we don’t charge any, you know, construction management fees and we don’t, we charge a very reasonable asset management fee and a very reasonable property management fee. And this allows us to really get those expenses down and drive as much NOI value out of the properties as possible.

Gino: And we offer 80% preferred rate of return. Yeah, I mean that’s what we’re offering right now, but I think it’s just the kind of deals looking at, we look at a lot of deals, we on the right, I mean that our coaches will say the magic number is 80, the race to 80. So if you go look at 80 deals on random, you’re going to find one that works. And for us, we’re looking right now and this type of this type of the cycle of the market, we’re looking for assets that are BB areas. So you’re going to have to go through a lot of those assets. And it typically seems like they’re on the six, six and a half cap market. We’re looking for possibly a 10% cash on cash from day one. We don’t want these heavy lists right now. We want more momentum. We want to be able to add value raising rents. A lot of these assets don’t have all their income in place, whether they’re missing, some kind of storage fees or application, or we come in with nonrefundable moving fees.

Gino: Their expenses are sometimes a little bit skewed. They have a little bit of bloating in them. So and we’re also looking in the southeast, that’s where we’re looking. We’re looking within three to four hours of Knoxville. Because we are vertically integrated and you know, we like the area down here, we like the job growth. We like the population growth. We liked the fact that when the economy does slow down we’re going to have people still renting and we still going to have people, you know, the flight from New York to flight from California, they’re all coming out to the southeast.

Jake: The economic deserters. And we’re probably doing one heavy lift at a time, to Gino’s point, you know, because we are controlling everything in order to keep costs down. We’re doing probably one heavy lift at time while everything else is more stabilized and we’re identifying ways that we can make management plays and really drive NOI and force appreciation in the future, so.

Josh: I love it. So tell me a little bit about, I know some guys that are doing apartments and they’re doing a lot of joint venture deals. They’re doing a lot of affiliate deals or JV deals and they’re partnering with other people and they’re buying units and units and units and units. You guys seem to have a more methodical approach. Very in my opinion, conservative approach, which I really like where you guys are actually like buying it, right? Like you said, managing it right. You’re managing it internally. You’re not, you know, just buying, buying, buying, buying, buying. You’re buying to stabilize the asset and make sure it starts producing income. So help me understand that.

Josh: Just the mindset, what’s your thought around? I like the idea that you’re talking about self-managing because you can create a lot of efficiencies and drive the income. Why that route? What was your philosophy? What were your thoughts on that route versus, you know, adding third party managers, adding third party construction because you could probably grow faster, do more deals that way instead of doing self-management. And there’s obviously you know, benefits to both, but what was your philosophy? Why did you guys go that route?

Jake: I think it’s hard enough to make a deal work really well the way it is. So when you start adding in layers, you’re adding in costs and therefore it’s going to be a struggle. You can go faster. We had an event this weekend and we had a, we went up to that deal that I talked about December where we’re literally having our entire tap ex crew on there renovating it and they’re saying, well you know, you could basically go in and get more people on this. If you went with a sub and you could get it done quicker. I said, that’s fine, but we’re going to at least double our costs. And then if you added a third party management and you’re going to then increase additional costs there. So we’re going to do really well on this. It may take us slightly longer, but this is, we’re holding this thing in perpetuity.

Jake: So we went into this with a mindset that Gino talked about it early. We want yield, we’re going into basically free ourselves from our corporate jobs and do something that was actually going to produce cashflow. I think a lot of syndicators out there these days, they’re going and trying to buy stabilized deals. Their cashflow is very small and they’re trying to make up for on the back end when they sell these, we’re looking from this is the key to it and this is why we have to look at so many deals. We’re looking for cashflow on day one. We’re looking for strong cash on day one, at least 8% and then we will force appreciation for tomorrow through operational efficiency so that we’ll go in, we’ll analyze the management of it. We’re looking at a deal right now, you’re seeing a $50,000 construction management fee that they’re just, you know, stacking out to it.

Jake: We’re not going to charge that back to our investors. We’re not going to go in and add in all these layers of fees and we’re going to have a better hands on approach because we’re controlling the process. So I think it’s a matter of control throughout the entire process. And we do what we call weekly l tens. We touched an early about like top grading and systems and scale and using Rockefeller habits. We do weekly meetings, which is not like we’re having an employee do it. I have a weekly touch point with every single one of our managers where we’re taking a deep dive into the business, reviewing budgets, etc. And going over what goals need to be taking place. So it’s a very hands on approach with our vertically integrated structure and that’s just a big difference for us.

Gino: I think the difference with us also is we own our first thousand assets or so units, we don’t need to buy deals right now and we don’t need for acquisition fees, we don’t need asset management fees. So we want quality over quantity. So I mean, so we’re going to look at a deal and that’s probably one of my fears in the beginning of when my alluding police was taking money from investors and saying, you know what? I’ve got to give them 8% percent. What happens if Jake and I can’t make our money on our first thousand units? We say, listen to the septic feels crapped out. We’re not getting paid for the first quarter. It was hard for me to get over that hump to do that to investors. So our deals that we’re buying now, they’re more definitely momentum plays with that value add. So I think I’m looking more for quality over quantity and I want to grow the business sustained.

Gino: And you know what? There’s going to be cycles that we’re going to get back in the next two to three years. Where cap rates are going to go back up and property values going to come back down. Maybe that’s when you start buying those hairier deals and we start adding on a lot quicker. But I think, you know, I learned something from our Petra coaches and I love the quote it’s revenue is vanity, profit margin is sanity and cash is king. It doesn’t matter how much we’re grossing, it matters how much we’re actually keeping it. So we’ve got a look at our profit margins, we don’t look at our cash. I don’t care how much revenue we’re collecting monthly, that’s not the bottom line for us. We have to really maintain our expenses and we have to look, go look what’s going on with the cash.

Gino: And I think the systematic approach of trying to, you know, from 650 units with thousand units was a really big leap for us. We needed to get a regional manager, we need to get property management software. It was a lot of learning pains for us. So we’re at 1,500 now, so from 1,500 to 3,000 thousands there’ll be another leap for us. So I’d rather do it slow, systematic and buy right assets. Because once you buy wrong, you know, no deal is better than a bad deal. So I always still Jake, let’s not buy these bad deals because we’re going to be stuck with them longterm. They’re going to drag down the portfolio. So listen, we need to really vet all these deals out, make sure that they make sense.

Josh: That’s fantastic. So the buyer right, manage right, finance right. Strategy. I know we’ve talked a lot about that already over the last 20 to 30 minutes, but are there any additional things that you’d like to manage or mention to our audience about the buy right technique? Is there anything that, we know we’ve talked about certain deals and certain things already, but is there anything else that you teach your audience, your students that you’d like to pass along to our audience about specifics that you teach your audience about buy right?

Jake: Yeah, it comes down to parameters. And so I think w you really need to do is look at what parameters do you want to hit and then be disciplined enough to walk away from a deal. So if you, if you’re going in and saying, I’m not going to, if I’m going to buy something stable, I’m not going to buy anything less than a seven cap or I’m not going to buy anything less than a six and a half cap. Make sure though you’re going in and you understand the numbers because what you can do is like we’re going through a deal right now. Income looks good, but we’d understand based on the budget, because we’ve done this enough that there’s things missing from that budget. So we’re underwriting to our own [inaudible]. So make sure that you are doing the work on the front end, do a budget trust but verify and then derive a cap rate that you feel comfortable with that you know you can make money on.

Jake: So I think the thing is with any of these, it’s having parameters in place. This is the cap rate I’m willing to buy in this is the cash on cash I’m willing to buy it. This is the debt service coverage ratio that I’m willing to buy on and don’t waiver from those. So I think on the buy side that’s very important. On the financing side, you know if you’re going to go in and you’re going to have to do something through a bridge loan or a community bank, that’s fine. But I think one of the biggest risks, especially right now is longterm interest rate risks.

Jake: You’ve seen fluctuations in the 10 year and you’ve seen rates, you know, come up and go down. If we want these things to be solid for the long haul, we need longterm fixed rate financing and we want it to be non-recourse. You have to shed this stuff on your personal balance sheet if you’re going to hold these for the long term and then the only lever you have left, it comes back to management. And that’s why we’re so big on and you know, taking it in house and self managing because once you buy it, when you finance and fix it longterm, the only thing that’s left is the management. So that’s why you want to have that strong control there because that’s going to determine our fate.

Gino: And Jake, just a couple of things to add on to that. I think for any new investor or any investor out there, do yourself a favor when you first start out, before even after you get educated, focus on one market. Don’t focus on 15 or 16 markets. Focus on that one market. Really learn it really well. I know the east side of Cleveland is not the greatest. I’d rather focus on the west side. I mean, you know, per unit doors in the eastside is great, but it’s more section eight it’s cap rates are higher. They might look more attractive, but learn the market, learn whatever market you’re in, focus on it. Start going out there and meet property managers start walking deals, property tours. The next thing I would tell everyone to do is to follow the market. Trying to, your not buying a caps in Jacksonville anymore. I mean, when I moved down there, I wish two years ago I had followed the market and I had purchased because now I’d be sitting pretty.

Gino: And then same thing with Jake and myself. There’s about an 18 month period where we were stubborn. We were not following the market. We were used to buying eight caps. And we were like, we’re not buying this to a 7.4 cap are you crazy? I wish we had done it. And then what happened was we had hurricane Irma here. I get in my car, I go back up to see Jake. I relocate for the week and me and him look at a deal, an 8. I can’t believe we didn’t buy it. We look at it and we’re like, you know what? We’ve got to take a chance on this. So follow the market. I mean, you’re not buying eight caps in a six cap market. Look for value. And I think the other thing is focus on what your exit strategy is. Know what you’re going to do when you buy.

Gino: It’s important. Are you going to get that longterm debt or are you going to get bridge financing? Are you going to get yield maintenance, step down, whatever the prepayment, what is your strategy longterm for these assets? For us, we know what we want to do on our first syndication. We couldn’t put a supplemental loan on that. So it seems like we’re going to be forced to sell, I think to actually catch up because we’re going to get a couple of million dollars of value on that property. So know what your exit strategy is in any investment vehicle that you do, whether it’s a single family home, whether it’s a stock, whether it’s a commodity, know what you’re going to do with the exit.

Josh: That’s fantastic guys. So a couple of final questions. First of all, I think everybody has a super power, right? I have a super power, Rami, my ab dude’s got several superpowers. You guys have super powers in your personal life outside of business. I’m just curious, what do you guys think your personal superpower is? Jake, let’s start with you.

Jake: I have just a God given, you know, natural ton of energy. And you know, I just am very fortunate because I like, you know, we’ve talked before, I get up very early in the morning and I can power through and work a very long day and then, you know, keep going. It’s, you know, in school they wanted to put me on medications and I really struggled in school and if you tried to sit me down for an hour or two and focus me, I’ll lose my mind. But I have a shit ton of energy and I can focus really hard for, you know, 30 minutes but then it’s onto the next task. And I think that’s why, you know, we’ve done really well with having multiple businesses and growing them. So it’s just a, you know, a ton of God given energy. I’m very fortunate and grateful to have that, so.

Gino: We better get the podcasts over because 30 minutes is almost up bro. If you can’t focus more than 30 minutes…

Josh: We’ve got to let him go.

Jake: Dude, we’re like two hours in now and it’s like you start to see, Gino said people who have had training sessions before and I just started glazing over and I started looking like, you know, drunk or something. Guys let’s go do something now, what are we talking about? You know, when you get down in the week it really start grinding through it kills me, but I like getting get to the point.

Josh: Nice.

Gino: And for me it’s no super power really. The only thing that I can excel at is working hard and you know, the other thing is I commit and figure it out. So if I have to launch an email or I’ve got to put up a website or going to the, I’ll just do it. I’ll probably make a ton of mistakes. I’ll look like an ass, but it’s okay because…

Jake: Our entire team is freaking out too. Like Gino just said another one. What is he doing?

Gino: Yeah. And I’ve realized one thing, I mean, one of our coaches told me, don’t think that everyone has it figured out because nobody’s got it figured out and we’re all winging it. And it took me a long time to realize that, that we’re all out there winging it. I mean, we started a podcast three years ago and I’ve never even heard of a podcast before. I just got a mike and Jake, we figured it out, we launched it, we put it on iTunes. Don’t even know how that happened. Still don’t know how that happens, but just commit to something, really want it, really desire it and then you’ll figure it out because you’re going to have a strong enough why. That’s my only superpower that I have.

Jake: We put it on the iTunes, whatever the hell that means.

Josh: Put it on the iTunes.

Jake: Literally Gino had no idea what a podcast was.

Josh: Into the interwebs. Next question guys, who do you think your favorite or most impactful mentor that you ever had was?

Gino: That’s a tough one.

Jake: I’ll hit this one quick. Yeah, sorry Gino, there’s a little delay here. You know, the two people that I’ve really followed as like heroes, if you will, is probably Ayn Rand to love the book atlas Shrugged and then also Ray Dalio Principles. I’ve gone through, you know, and both those books are like this, but what I will do is I will squat on a book on Audible and I may hit it like three or four times and it just, it helps me, you know, kind of get insights into what these people have gone through and I get the most value from that type of mentorship personally.

Josh: Nice.

Gino: And I guess just for me, it was probably my dad, hard worker immigrant, came over here. He did a job he hated for so many years, it sucked. He did it for his family and this is what it is. You just got to go on. And unfortunately things are different back then. So, you know, he didn’t have the opportunity that we all have now. Because like I said, talk about it on the other show, it’s about responsibility. I mean, we all have the choice to, you know, our fruits and our roots. And we have to look around and we make decisions where I am today has been my decisions for the last 49 years of my life. And if we can understand that and take that hold, we can really become responsible. We have a happy life. That’s what really comes down to having a happy life and being successful and giving back and contributing. That’s what my dad, you know, my dad taught me.

Josh: Fantastic. So last question, if somebody making the transition from maybe residential to multifamily or they’re going from small multifamily, let’s say 25 units to a 100, 150, 200 units and up, you guys have been through that whole journey, but you guys, you guys skipped the resi part but went right into multifamily. So what kind of advice would you pass along to somebody or kind of pay it forward to someone who’s making that journey now? You could look, you know, five, six years ago and say, I was there, here’s what I would do different or here’s some advice I’d pass back to those folks. What would you guys say to that?

Gino: I practice what I preach. I would definitely find a coaching program because that’s what I did after I crapped out on my first two deals. People don’t want to hear it. I spent tons of money. I went and became certified professional life coach. I did a real estate coaching training. Jake and I are doing petro scaling up right now. So it’s constantly learning. Because at different parts of your life, different things are going to resonate with you. Scaling up three years ago was inappropriate for us because we didn’t need it three years ago, but now we need it because we have multiple businesses going on. We’re trying to get one core value, one core theme. If you’re starting out, don’t be afraid to pay for your education because first of all, you’re going to get bought into it. And second of all, you’re going to take action.

Gino: And third only going to be accountable. Bigger Pockets is great. All these sites are great, the podcasts are great. But there’s not enough meat on the bone on those and you’re not holding yourself accountable. You’re not building a team out there and you’re not investing. You don’t have a invested interest because you can quit at any time. But if you have a coach or if you have a mentor or if you have a partner that’s pushing you there and holding them accountable and you’ve got skin in the game that’s going to, you know, unfortunately make you take more action more than if you’re by yourself on an island. That’s why I failed my first couple of ventures. I was by myself. I didn’t know what I was doing and I bought right but I bought wrong. So I ended up going and getting trained, getting coached and find out what my why was and partnering up with Jake and then my other partner Mike. And that’s what ultimately led to my success.

Josh: Fantastic. Jake, anything to add there?

Jake: Yeah, I think it’s all mindset at the end of the day and it’s hanging in there because you know, when people get into it, they, they think again that it’s this pie in the sky and they just don’t hang around long enough. So you have to, you have to be willing to commit and stay around long enough for it to happen and just literally say, I’m going to do this and stay there until it does happen. We, you know, we said it again, education times action equals results. Get yourself educated, take massive action and the results will come over time. But you have to plant your flag, be committed and not waiver from that. Then once you get that deal, it’s about systems and scale, as Gino touched on before.

Josh: That’s great. Now you guys have a fantastic website. You guys have a very, you know, very active podcast. Highly recommend you guys look it up and subscribe to their podcast, The Jake and Gino podcast, all about multifamily investing. You guys have amazing products and live events. We’re can some people from my audience and my community if they want to engage with you guys, where can they meet you guys? Where can they start? What kind of website? Where can they get some more information about you

Gino: So basically just go to JakeandGino.com. We have four podcasts weekly. We have a, I actually started a multifamily zone podcast with my wife, talking about spousal, you know, working with your spouse and incorporating your family into multifamily. We have The Jake and Gino WheelBarrow Profits podcast. We have a Movers and Shakers podcast where we highlight a student who’s done a deal. And then we have a syndication podcast, so they’re right there, you know, weekly dose of four shows. Our YouTube channel is great. Jake and Gino YouTube channel is awesome. We’re having a live event in October the 19th and 20th at the Gaylord Palms, there’s going to be 600 multifamily investors there. We’ve invest…

Josh: I’m going to be there for that.

Gino: It’s going to be awesome, dude. It’s going to be a lot of fun. We’re going to have our vendors out there. We’re going to have some really big speakers out there. It’s just like a family affair of Jake’s family’s out there, my family’s is out there. Epcot is five minutes away. So once the show is over, we’re all going to the parks together. So it’s going to be a lot of fun. And it’s basically buy right, manage right, finance right. We’re going to be teaching for two days our system. And it’s a great place like you said Josh, before to network to meet other people in the industry. If you’ve got money you need to raise, if you’ve got a deal, this is where you find people, you find people at these events because they’re all likeminded and they’re all focused on multifamily.

Josh: Awesome. Awesome stuff guys. Listen, thanks for taking time out of your time out of your busy schedule. I really appreciate the opportunity to engage and connect with you guys today and hopefully I’ll be at your event. We can connect there face to face and look forward to that.

Gino: Sounds great. Thanks Josh.

Josh: All right guys, have a fantastic day for all of our Accelerated investors. Thanks so much for joining us. Thanks so much for being part of our community. Thanks so much for being here. If you enjoyed the interview, let us know. Leave your questions, comments, ratings and we’ll see you soon. Be daring, go buy a property, go buy a building, go raise some capital, be wealthy. We’ll talk to you soon. Take Care.

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