The Fastest Way To Build A Six Or Even… Seven Figure Real Estate EMPIRE!
Anything is possible with the proper mindset and work ethic. And it’s no surprise that in just 3½ years, today’s guest went from purchasing a handful of properties to managing over 1,900 units at a value of $180 million.
I’m thrilled to welcome Pili Yarusi back to the podcast and share her journey with you. Pili is the Co-Founder and Investor Education and Relations Director for Yarusi Holdings.
The last time we spoke, we talked about how she and her husband, Jason, had just refinanced one of their newest acquisitions–a property called Norbrook Arms. Soon after, they sold it–and achieved a 23% internal rate of return for their investors–which set them on a path that has seen them achieve huge growth in record time.
In this conversation, Pili walks me through how she and Jason did it. You’ll find out how they scaled their very first deals to where they are today, what sets great operators/syndicators apart from the newbies, and how they’ve created a seven-figure multifamily coaching program.
Key Takeaways with Pili Yarusi
- How early successes with Norbrook Arms helped Pili and Jason kickstart their hockey stick growth.
- What Pili and Jason did as asset managers to take responsibility for and contribute to their communities.
- How Pili and Jason pivoted their business in 2020 to rein in their expenses while taking their performance to the next level.
- How talking to investors changes after you experience substantial growth–and why it’s time to start talking to people about raising capital.
- Why now is the time for crypto investors to diversify their holdings.
Pili Yarusi Tweetables
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Click Here to Read the Transcript with Pili Yarusi
Josh Cantwell: So, hey, everybody. Welcome back to Accelerated Real Estate Investor with Josh Cantwell. I’m your host. And today I am so excited because I’ve asked Pili Yarusi to jump back on the podcast. We had her on the show, her and her husband, Jason, about three-and-a-half years ago. And back then we really had just discussed one of their first acquisitions. It was called Northbrook Arms. And Jason and I were just talking on that podcast about how they had just recently refinanced it. They pushed the value up through their value-add program, and they had refinanced it and returned 75% of that investor’s equity. Well, about a year later they sold that property creating over 23% internal rate of return for their investors. And today, as we regroup on the podcast, they now have over $180 million in assets under management, over 1,900 units closed. And we’re going to talk about their growth trajectory. So, Pili, welcome back to Accelerated Real Estate Investor.
Pili Yarusi: It is such an honor to be back here. Just hearing you talk about our growth, it makes me kind of giggle because while you’re in the grind of growth and of growing, you look back barely enough to recognize your mistakes but then you keep on growing. So, just hearing you say the massive growth we’ve had since Norbrook Arms, it’s kind of astounding.
Josh Cantwell: Yeah. It is very astounding. It’s fantastic. We’ve grown a lot as well. So, let’s just peel back the onion, Pili, on the hockey stick growth and some of the maybe key things that’s made that happen. So, let’s just go back real quick to Norbrook Arms. And that deal was one of the first deals, I believe it was then around Louisville, Kentucky area. I have a really good memory.
Pili Yarusi: You do.
Josh Cantwell: I do, yeah. And so, it was around Kentucky and you guys just refinanced it. So, just tell me kind of what happened from there, not only on that deal but with your business as a whole. What happens from there three-and-a-half years ago that now puts you guys at over $100 million? So, let’s just go kind of step by step, very linear. If you remember, what were some of the things that happened shortly after that last interview?
Pili Yarusi: Okay. So, we’re going back. How much time do we have? So, Norbrook Arms, that was number one. That was our first large multifamily syndication. We had taken that down at the time when we’re talking about, bought it with you. We had done the refinance 75% of the cash flow or of our investor’s initial return, went back to them. The great thing is, I mean, if anybody’s listening to this doesn’t realize this, once we returned the capital back to our investors, they still stay in our deal for the same amount that they invested. So, we had a lot of, because they were first-time investors with us as well, so a lot of them were just so surprised at what they could do with the multifamily, with a multifamily syndication. So, just before COVID, we actually ended up selling that asset. That was our first exit. And we were really, really happy because all of a sudden it wasn’t so much that we had taken down our first asset and we took down a few more after that before this first sale. It was being able to do a complete acquisition to exit and having that within our portfolio, having that within our talk track.
We were able to show our investors that we didn’t only have the strength to take down an asset. We didn’t only have the strength to manage it correctly, to asset manage it correctly, and to take it full circle, and to provide our tenants with the best place to live, to uplift the community that we have a duty towards but we are also able to return our investors back their capital plus the gains and then some that we had stipulated from the very beginning. So, we were able to take that Norbrook Arms. I will always have sweet memories of that asset because it was our first. We were able to take that full circle. So, that was huge for us.
Josh Cantwell: With the growth process, that first full cycle deal, you mentioned talk track. How does it change the talk track now when you’re dealing with brokers, investors, vendors, your own team? Help me understand the difference in your confidence, in the way that you’re able to project yourself and the talk track you mentioned. And how does that allow you to then start this hockey stick growth?
Pili Yarusi: It’s called success.
Josh Cantwell: Yeah.
Pili Yarusi: Plain and simple. It’s being successful at taking an asset full circle, full cycle. And you don’t realize that until it happens to you for the first time. Now, we’ve exited. I believe it’s eight assets now. And it feels amazing with each cycle because we’re able to say, “We’ve successfully returned your capital. We’ve successfully given you X amount of return. We have successfully done this now eight times with that first one.” Taking down the asset and acquiring it was the first big success but you know it doesn’t stop there. It’s the in-between that’s the hard work. And then when we were able to exit it successfully again with the word, it changed our talk track dramatically because all of a sudden, we took down and took full cycle this first success that we were able to tell people we did this. This is the first one we’ve done and we’ve taken one full cycle. Now, I almost felt like we went from beginner syndicators/multifamily operators to successful syndicators/multifamily operators because we were able to prove our business plan. We were able to prove ourselves not only to ourselves but to our investors and the world that we were within that we were here to stay.
Josh Cantwell: Yeah. Love it. So, peeling back the onion a little bit more, there’s high level, the high-level word “success,” the high-level word “we went full cycle.” Tell us about what you guys were actually doing in the dirt, like on the day-to-day asset management. What were some things you did to do the value-add program on rents, increase the value. What were some of the things you guys had to execute on from a management, asset management, and CapEx perspective to force the value to get that 23% return?
Pili Yarusi: So, we did a lot. I think one of the biggest things that I want to focus on is what we did for our community. We were able to not only uplift our building but we were able to uplift the entire community at one point. And it’s a very interesting neighborhood. The street that we were on was I would say a solid B-class area but across the way, there was a building that had had some crime happening. There was shootings. There were lots of bad things. We happened to have a free, not free, but we had an open apartment. So, Jason, this is why I think that not only because he’s my husband but I think he’s one of the best asset managers. He made it a point to keep on calling the police department in the area until he got a hold of the person he needed to speak to, to clean up this neighborhood. And he’s told the detective he was like, “I will offer you up one of my apartments I can see this building from. And you can come and use this apartment for as long as you need to, to make sure that you take down whoever it is you need to take down in this other apartment building that is making my tenants feel unsafe. And the great thing is…
Josh Cantwell: That’s right. That’s really in the dirt.
Pili Yarusi: We really got down deep into the dirt.
Josh Cantwell: We’re asset management. Like seeing a problem, accepting responsibility for it, not waiting for the police or someone else or some detective or some other neighbor to handle the problem, offering up your unit, making the phone calls, giving them the space to look out the window, whatever they need to do to identify the problem, the culprit, whatever you want to call it, to truly solve the problem. And I think that, Pili, one of the things that sticks out to me is the difference in that approach versus what I know a lot of other operators have done because apartments have just gone up, up, up, up, up in value. They’ve been such lax operators. They’ve let the market and the property manager do all the work for them and then those buildings are not going full cycle or they’re not appraising out at the price they should or they’re not getting the rent bumps that they should, or they’re actually seeing some cash bleed in some of their deals because they thought, “Hey, the exciting part was buying the asset for you and Jason.” The exciting part was the asset management and the exit, right? So, I think the lesson here for our audience is you didn’t succeed because you bought a building. You didn’t succeed. You just bought a headache is what you bought, right?
Pili Yarusi: Yes.
Josh Cantwell: The headache, though, you accept. And what I love about what you said about you and Jason is you accepted the responsibility to course correct the problem, which then made the asset worth more. And ultimately you profited and all your investors profited. So, first of all, like I have serious respect for that, for you and Jason, like serious, serious respect for that because I know a lot of guys and gals that are not asset managing like that. That’s fantastic stuff.
Pili Yarusi: I actually want to talk to you about one more that you said, though. I’m big on the power of words. You said responsibility and that word will carry an asset manager throughout any market. So, like you said, right now or lately, I don’t know how much longer this is going to go is that buildings have, just like real estate, have skyrocketed. You could buy something and exit within a couple of months and still make money. Now, I’m not so sure. But the thing is, no matter what, if you always accept this responsibility, if you always accept the responsibility that you took on this asset, you have the responsibility for tenants, people’s lives, you will carry through any market cycle.
Josh Cantwell: Right. And now this market cycle although, again, because we have a housing shortage in the single-family side, a lot of people still don’t have a house to buy. Even though Federal Reserve has pushed interest rates up, even though houses are still staying on the market longer. It’s still a seller’s market. There’s still more buyers than inventory. And that’s forcing people to move to apartments. And so, that’s going to continue to probably force the value of our apartments up because the rents are going up. That still is happening. It’s just the growth pace is slowing down a little bit. But if that continues and all of a sudden, we have more supply than demand in single-family, then we’re going to have less demand for apartments, right? And now it’s going to be all about the asset manager. A lot of people, I feel, have gotten lulled into the last five years of thinking they were successful because they bought an asset and they watched the market take it for a ride. It’s no different than what happened to crypto five years ago or whatever the stock market for the last ten years.
The difference though, and what you guys have done is the opportunity to actually create real value, can change the real value of the asset. Fantastic stuff. So, Pili, let’s go back then. So, that’s an example of asset management that forces the value for Norbrook Arms. Now, your talk track has changed. What starts to happen now with acquisitions that you guys start to take down more properties and that hockey stick growth, you start to see the curves start to make the bend a little bit. You’re not to the top yet like you are now but it’s starting to make the bend. So, what’s the next phase? What happens next in your growth path?
Pili Yarusi: It’s amazing because I don’t even think and we talked about this previously. I don’t even think I saw the bend as we were because Jason and I love to work. We met working, we met bartending, we met managing bars, creating restaurants, and we don’t know how not to. We love what we do. And that’s why during the bend period, yes, there was growth and there was grind, and then COVID happened. There was bumps in the road. But even throughout COVID, we still grew because we like to work, we like to figure things out, we like to make things work. So, our talk track changes. We’re seeing success. We are working towards that success. It doesn’t just happen. We’re working every single day but what’s happening is now our conversations with others players in this industry, brokers, property managers, we’re expanding into other markets. That’s changing. And we actually also moved from New Jersey to Tennessee, where we are now. So, last time we talked, we were still living in New Jersey. Now we’re in Tennessee. And we come closer to not only our assets but also to our team.
We create these amazing businesses out of the buildings that we acquire and then we also jumped into seven-figure multifamily, which is our coaching program. So, again, it comes back to working, making relationships, and then continuing to foster those relationships until you’re just kind of you’re on this journey with a bunch of really amazing people.
Josh Cantwell: Yeah. I love it. So, one of the things that happened to us, Pili, is when COVID hit, we decided to get really close to home and started testing the same thing. Tell me a little bit more about that. And how did that benefit you? Because there are so many investors, as you know, that live in Denver and are investing in Florida or they live in California, they’re investing in Texas or they live in Chicago and they’re investing in Charlotte. Or they live in New York, New Jersey, they’re investing in Ohio. But you, Jason, and I have a very similar approach that we’re really dialed in. We’re really committed to asset management, as are we, especially when COVID hit. We decided to stop doing so many JV deals or deals outside of our markets and really bring everything close to home. So, I guess you guys did the same.
Pili Yarusi: We did exactly the same. So, when COVID happened, nobody knew it was going to happen. We actually lost on two different deals. One was one that we were acquiring ourselves but we couldn’t rightly tell our investors that we knew it was going to happen. Nobody did. So, we let go of that one. And then there was another one that we were going to partner up on. And I had to, unfortunately, back out of that one as well. When COVID hit, everyone came home, right? Jason and I had already talked about this and trust me, I’m coming full circle on your question. We already talked about this. So, we have family in business. He went totally business, I went totally falling out, that we didn’t jump into each other’s circles but for like two solid weeks we went into our separate like tunnels. Like, I started this whole homeschooling program for the kids. I made sure that they were taken care of. Jason uplifted me and helped me when I could. Jason went full like full force into the business. We shut down actually our outside office because we also had the construction company at the time. We shut down our construction company office. We brought in we like really were mindful of the funds. We really like home-centered everything and brought the office into the house, into the home.
Josh Cantwell: Love it.
Pili Yarusi: So, for a whole year, we did that in New Jersey. We started talking, though, and we realized that we wanted to be, like you, we wanted home to be a little different. Because now that we were just centered in the home, we realized we could take our home and really just live anywhere. And why not live closer to our friends in the business, our partners in the business, and closer to the assets that we were taking on? So, we had assets or we still have one asset in Kentucky still. We were taking down something in Tennessee. We have assets in Atlanta. We have assets in Arkansas. So, Tennessee seemed like a great fit. We actually moved here or I actually moved here, sight unseen, drove here from New Jersey, pulled up into the house so I may pre-see it, saw it. But I knew the thing is and I’m getting the fact that our mindsets are a lot of like home is wherever we want it to be. Home is wherever Jason is, wherever my children are. We will create a home but the thing is being able to be in the same area as my tenants, as people that live and breathe in this area, it just makes me feel closer to those people that I have a duty towards. So, we really just brought it all home, like you said.
Josh Cantwell: I love it. And then from an execution perspective, right? So, executing asset management, because I think you, I, and Jason could talk asset management for a long time.
Pili Yarusi: All day long.
Josh Cantwell: I love to get up in the morning. I take my one daughter to high school. I come home. I take my other kids to grade school. I come home. Actually, I don’t come home. I go right to the gym every day. Then from the gym, I will often go right to one of my buildings and secret shop the building. I’m like still sweaty. I still haven’t showered. I look like a tenant. It’s hilarious. A guy comes up to me yesterday. He’s like, “Do you work here? Like, are you in maintenance?” I’m like, man, one of the things I love to say is, “No, I don’t work in maintenance. I actually own the joint.” “So, wait, you own it?” Because I just totally look like a bum, right? Like, just all sweaty and no shower. But that leads me into asset management because I’m walking the building like a resident would. I’m walking the building like a property manager would. I’ve got keys to the buildings. I can let myself in any common I want. A lot of them have the master key for the deadbolts. I can let myself into units and I could see what’s going on without anybody knowing I’m on site.
And now you don’t have any of the property manager sort of kind of glazing over, right, of the ugly stuff or the things they get or the fact that they’re short-staffed. So, how have you guys done that? Like, that’s just one little thing that I do. That’s one of my secret sauces to do that on a weekly basis. Sounds like, again, because you guys are in love with asset management. I guess probably not. Especially now that you live closer in Tennessee, you probably do something similar. Tell me about your strategies. What works for you, guys?
Pili Yarusi: So, that is an amazing strategy and we do something similar. But what we like to do and we do this I would say at least twice a month, we take the kids on just a little we call it mommy and daddy’s road trip, and we go look at our assets here in Tennessee. And it gives us two things, though, because normally we’re probably just coming out of soccer or we just look like your normal just average family. We usually just dress in t-shirts. You’ve seen Jason. We’re very much a t-shirt and jeans type of family. So, we’ll go and take a look at the assets. We’ll park the car and we’re usually in our minivan. That’s nothing special. It has the usual like cracks and dings because I’m a soccer mom. So, I parked the minivan. We’ll just go and walk with the kids and we’ll look at everything like our four-year-old might trip on the sidewalk and I’ll make note of that. Or like, they’ll say things about the building, and I really want them to know what mommy and daddy do because there are times when they’re like, “Mommy, why don’t you just stay all day and play with me?” And I’m just like, “Well, Mommy and Daddy help people.” I want to let them know what we do.
And then like you, we can let ourselves into the office. We can see who’s on site. We can look at what they’ve done to further our business plan. So, one of our assets, we could actually easily probably sell it right now but it’s cash flowing so well that we’re simply keeping it. So, the upkeep of this asset is really, really important to us because we want to make sure now that we have taken it to the point where it’s cash flowing, where it’s stabilized, that it stays that way. So, I don’t want to see and our property management team here in Tennessee is fantastic. But the thing is, we don’t know that unless we go and look and we can see where they’re very, very mindful about the upkeep of the place, of keeping tenants happy, of continuously upleveling the community service that we give to our tenants there. So, some of the things that we do.
Josh Cantwell: For sure and that’s so key like you listening to… You’re having an owner meeting between a property manager and an owner, it’s just a lot that could get lost in translation a lot. Numbers never lie. So, leases, collections, evictions, marketing leads, all that’s important. It’s really important. And you can do a lot of that virtually from almost anywhere in the world. But I’ve learned at a very young age you have to inspect what you expect.
Pili Yarusi: Yes.
Josh Cantwell: And if you inspect it, it’s not like some people just say, “I don’t trust anybody, so I’m going to go do it myself.” Like, that’s not me. Like we have a big business and I don’t have time to do everything myself. But I do like to have really good people, really good property managers, asset managers. They’ve got two incredible partners, really good construction company. But I still want to inspect what I expect. And it’s out of respect for the investor’s money.
Pili Yarusi: Yes.
Josh Cantwell: You don’t respect the investor’s money then you’re probably going to just take the property manager’s word for it and you’re not going to inspect it. So, respect turns into inspect, which turns into what you’ve expected. It goes up and down like that. And to me, that’s one of the philosophies for us is about respecting the investor’s dollars. So, Pili, let me ask you as a pivot to that. As you built up into these $180 million, 1,900 units, and all these syndications, how has your capital raising efforts changed along with the hockey stick growth? Obviously, you have to have hockey stick recruiting of capital, talking to investors. How did that change as your growth path changed?
Pili Yarusi: It’s very interesting because I don’t want to say we’re revising our strategy but we’re uplifting it, Jason. I actually just had this conversation. So, I have a talk track of relationships equal partnerships. You have to work on that relationship first. And I have a really funny thing that I do with any of my conferences that I attend. I always tell people, “Okay. So, look at your neighbor. You’re looking at them. Say hi. They say hi. Okay. Now, ask your neighbor for money. Can’t do that, right? You have to create the relationship first.” So, I take people throughout this entire process of creating their relationship, creating the talk track with people, fostering not even a sense but fostering that communication and trust that you need to have, that someone needs to have with you to simply give you like our third investment minimums are $50,000. That’s not change in your pocket. So, you have to foster this trust and you do this by the content that you put out on social media, the posts that you make all over social media, the way you present yourself at conferences, the way you have this talk track on podcasts and being very much you because you can be anyone else. Everyone else is taken. Just be you. So, that’s usually my talk track.
That talk track is getting tweaked a little bit, especially for our students. We’re actually hosting a small mastermind for our seven-figure students. Now, my talk track is, “Raise capital. You need to raise capital.” So, my previous track talk track was very soft. It was a soft entrance. It was the make the touch first. And there’s still time and place for that and there’s still very much investors that need that. But I’ve found, especially with a lot of the people that I’ve talked to, that they have a really hard time raising capital. I’ve talked to a lot of people that are just like, “Well, I’ll be on the acquisition side. I’ll bring the deal all out on the acquisition side,” and that’s great. That’s needed but you still need to fund the deal, right? So, on the capital raising side, I want people to understand that they are a capital raiser and that is okay because, again, you’re not asking for money. You kind of are but you’re not really. You’re providing an opportunity. So, coming with that mindset that, yes, you are a capital raiser, you don’t want to lie to people. You don’t want to just be their best friend and just let them think that that’s it. Be their best friend by providing them the opportunity that only you have that very few people in this world percentage-wise get to present this type of opportunity to anyone.
So, you have a duty toward to the world. I have a duty to the world to let people know about what we do. So, I actually entered… We’ve been in the crypto space for since 2017. We’ve seen the highs and lows since then and we got into the NFT space as well. So, I started to see this trend of people not really knowing how to invest. So, I started just talking to people about what I do. And with this latest crypto winter and the downturn of crypto, it’s happened a couple of times, so I’m not sure why so many people were so surprised but it’s happened. So many people that I know were completely invested in crypto. No other investments. It made me really, really sad because that means I wasn’t doing my job. So many of my friends in the industry lost a lot of money and did not have another form of investing that they could lean on. And that me, again, I was very angry at myself for many months because I wasn’t being loud enough. So, for any of my crypto and NFT friends who are listening to this podcast and I’m going to put it out to all of you.
Josh Cantwell: Yes, please do.
Pili Yarusi: Invest in something else now. So, I want you to if you’re listening to this podcast and you’re only investing in one thing, even if you’re only investing in real estate, I want you to diversify and get yourself out there. So, if you’re a capital raiser, make sure you’re being loud because if you’re not loud enough, you are doing a disservice to your friends and family by not letting them know what you are doing.
Josh Cantwell: I love the passion pouring out of you.
Pili Yarusi: I was really angry at myself, so I want to let everybody know what we do.
Josh Cantwell: You’re very mad at yourself. I can tell. So, I had a friend of mine, Pili, Francis who you may know. He’s a great digital marketer from Mexico, Florida. And about ten years ago, Francis told me, he said, “Josh, if you have something that can benefit somebody else, benefit their lives, impact their lives in a positive way, you have a moral obligation to sell it to them.” And I have lived by that for over ten years. And what you just said is along those same lines, that you felt bad that you didn’t educate more people, that you weren’t louder because, and just put in a different word, you felt like you had a moral obligation that in your own words, maybe you didn’t fulfill as hard as you wished.
Pili Yarusi: Oh, I failed. In a lot of ways, I failed.
Josh Cantwell: I wasn’t going to say you failed.
Pili Yarusi: No. I’m going to be honest, and these are people that I know and I’ve done it before. I tell this story about my friend, Andy, who is a very high net worth individual in the flipping industry. This is many years ago. And Jason had just taken down Norbrook Arms. So, we’re so excited. We want to tell our flipper friends. So, at this mastermind, we told them all about what we’re doing. And Andy looks at me. He’s like, “Pili, why didn’t you call me?”
Josh Cantwell: Yeah.
Pili Yarusi: I was like, “Oh, my heart.” And then I did it again. So, for any capital raisers out there and if you’re listening to this, you should be raising capital. Be louder. If you’re second-guessing yourself on that content that you’re putting out there, stop. Just put the content out. You have no business telling yourself not to do that because there’s somebody out there that needs you who needs this. And even if they don’t have the capital right now, who are you to say that in a month, a year, five years from now, that person won’t. Who are you to say that? So, get it out there whoever you are, wherever you are. Wherever you are in your business, let people know about what you are doing. Like you said, you have a moral obligation to let people know that they have this opportunity.
Josh Cantwell: Oh, my God. I love it. Pili, listen, we have to stop with that because that’s the lesson. Like, that’s just that one lesson that you want to push out to the audience, your audience, my audience, and just let it sink in. So, I feel like if we kept talking, we would do that point a disservice. I have to have you back. You, Jason, we can have an additional conversation about the remaining hockey stick growth because you’ve taken down 18 other assets, an amazing amount of growth on top of what we talked about. But that part of the conversation needs to sit by itself and let that resonate with our audience. So, listen, guys, if you’re interested in connecting with Pili and Jason, which you absolutely should be, go to YarusiHoldings.com. That’s their core website. You can learn everything about them there from their investment opportunities, their portfolio, their mastermind. Everything about them, you can learn at YarusiHoldings.com. So, Pili, I just want to say thanks. This is a fantastic interview. Thanks for making some time.
Pili Yarusi: Thank you so much. It’s been an honor.