Josh Cantwell: So, hey, guys, welcome back to Accelerated Real Estate Investor. Hey, it’s Josh Cantwell. I’m your host. Thanks for joining me. I wanted to jump on this quick recording because I just got off the phone with one of my coaching members, and his name is Joe. Joe operates out of Central Missouri. And Joe posed a very good question, which I thought I would share with all of you. This conversation just happened moments ago with Joe. And so, I figured I’d record this and pass along this coaching tip to all of you.

To give you some background here, what we’re trying to solve is dividing up responsibilities in the multifamily and apartment syndication game. You see, investing in commercial real estate, whether it’s a residential assisted living, like what Joe does, or mobile home parks, self-storage, or apartments, it’s really a team sport. Most of the successful operators and owners that I know usually have at least one, if not two partners. My business is set up with three partners. I’m the CEO and majority owner. Glenn Lytle is our Chief Strategy Officer and handles our CapEx. And Tyler handles all of our asset management and finding deals.

And so, I’m going to talk a little bit more about our responsibilities, but what I want to do in this is kind of talk to the concept of dividing up responsibility and the fact that commercial real estate deals, apartments are so much larger that there’s so much more of the pie to split up. So, would you rather have, like, a little slice of the pie all to yourself 100%? Or would you rather have a huge pumpkin pie where you divide it up three ways? You still get to maybe eat half the pie, it’s much more. So, the idea here is dividing up these responsibilities allows you to grow and scale and ultimately be worth more money, do more deals, have more credibility, have more leverage with banks and brokers because you’ve done larger deals. And by doing that, you’ve also divided up the responsibilities. You still don’t have to do everything yourself.

So, the question that Joe posed to me just a few moments ago was Joe says, “Hey, I’m buying this residential assisted living. I’m buying the land. I’ve got the loan set up. I’m partnering with a couple of guys to syndicate the deal, to raise all the capital, but I’ve got to underwrite it. I’ve got to raise the money. I’ve got to get the permits, the zoning. I’ve got to go to all the meetings. I’ve got to get the property management agreement in place, get the contracts in place, the legal. It’s like I just need some help.” And so, I said, “Joe, well, let me explain a little bit more about my business and how I divide up,” because he’s like, Josh, you own over 3,000 units of apartments and you seem to still have a life, which I do. I still coach volleyball. I still coach my son in two football leagues. I pretty much coach every night and every Saturday and Sunday. The only day I don’t coach is usually Friday night because the kids don’t have a practice or a game on Fridays. I still get to spend time with my wife. I still get to go to the gym because I’ve realized that business and apartment syndications is all about the dream team. It’s all about dividing up the responsibility. It’s all about making this a team sport.

So, Joe says, “How do you do it?” I said, well, Joe, it comes down to this. Look, at the beginning when you’re buying apartments and you’re building your portfolio, you have to divide up responsibilities. If you look at most businesses, if you look at most successful companies, there’s a guy at the front of the business and there’s a guy in the back of the business. There’s a guy that focuses on customer acquisition and there’s somebody that focuses on customer retention. There’s somebody that focuses on finding deals and somebody that focuses on operating the deals. There’s somebody that’s focused on all the marketing and all the sales and then there’s somebody responsible for all the fulfillment. All the successful partnerships that I’ve had, and I’ve had money, they’ve all worked out that way. Somebody was at the front of the business and somebody was in the back. Typically, I’m in the front of the business where I’m in marketing, I’m in sales, I’m in acquisitions, I’m dealing with people, I’m convincing investors or banks or sellers to work with me. I’ve been in the back of the business, though.

When I first got started in my real estate business back in 2004, 2005, my partner Greg was super outgoing. He had a super big personality. I’m still good friends with Greg today, and he was the front of the business, and I handled operations. Over time I realized that Greg and I were both fit to be at the front of the business. That’s why ultimately, we bought each other out because we both knew that we were both set up to be CEOs. We’re both set up to be great at the front of the business. And we didn’t need two guys at the front of the business. So, we decided to sell the companies to each other, we split that up. You have to have some sort of recognition to understand how you’re built, how you’re made. What are you good at? Are you at the front of the business or the back?

One of my favorite employees I’ve ever had is a guy named Jason Schlegel. Jason knew that he was the back of the business guy. He respected me for being the front of the business guy, and I respected him for being the back of the business guy. Jason wasn’t a partner. He was an employee, was our Chief Operating Officer, and he killed it, he crushed it because he was really good at the back of the business. So, customer fulfillment, customer retention, live events, dealing with investors, he was really good at it.

So, my conversation with Joe centered around, look, if you want to get really big, you want to scale, you want to do more deals, you’ve got to start dividing up the responsibility. And the beautiful thing about having a partner is, and a partner works for equity. They’re working to build the portfolio. They’re working for equity. They’re not working for fees. There’s no overhead. There’s no salary. There’s no W-2. They’re working to build their balance sheet. They’re working to build their cash flow the same way that you are.

And so, a partner might cost you 20% of your deals, might cost you 30% of your deals, might cost you 50% of the deals, might cost you 70% of the deals, I don’t know what the number is, but for me, I was able to retain majority ownership and control, give up around 50% of the business to my partners and still maintain control. They came in and handled asset management, property management, that’s what Tyler does, and capital improvements, which is what Glenn does. And I was able to bring in two really smart, really intelligent, really hard workers, guys that were full of integrity, guys that were full of motivation, and not have to pay them. Well, I’m not paying myself either. So, it’s fair, right? But the three of us decided we were going to work for equity, we were going to work for cash flow. We’re not going to take a W-2 income. The only thing that the business needed to pay for essentially was our health insurance.

So, that was the difference. So, I talked to Joe this morning. I’m like, Joe, here’s what you need to do. You need to go back. He’s in central Missouri. I said, “Joe, go back to Central Missouri. Go back to your church. Go back to your organizations. Go back to wherever you spend your time and find and locate another man of integrity, find and locate somebody that is in real estate, commercial real estate, development, residential assisted living.” That’s Joe’s niche. And I said, “You’ve got to bring in a partner. You’ve got to bring in somebody who’s willing to work for maybe 15% to 20% to 25% to 30% of the transaction and not take any money up front, okay? And oh, by the way, Joe, when you do partner with this guy, this is on a one deal at a time basis. You don’t have to get in bed with them on every deal that you do. You do this deal, you partner. Then if you decide that that’s a good thing, you go to the next deal and you partner, and then if that’s a good thing and that works out well and you respect and love each other and you’re working hard and you honor each other, then do the next deal, then the next one.” So, most of these commercial deals are on a one-off basis. They’re not in a fund like a Rietz is a fund. So, if you’re on a one-off basis, you won’t have to get married forever, just get married on a deal-by-deal basis. Once you’re in that deal, you’re married forever on that deal, but you don’t have to do the next deal and the next deal and the next deal with the same people.

So, what I started to get into, started telling Joe a little bit about how my business is divided up. And that’s what I want to tell you about. Here’s how my business is divided up and the responsibilities and the dream team that we’ve built that’s able to handle all these apartment buildings. So, I’ll start with me. My job as a CEO is, first of all, underwriting. The most important thing I can do is underwrite and approve the best deals for us to buy. I also look at acquisitions, broker relationships, relationships with wholesalers, relationships with the market, relationships with lenders that can help us get more deal flow, so underwriting and acquisitions at the front end of the business.

My main responsibility that I really love and enjoy is actually raising capital. I love to meet new people. I met a guy last week who is an amazing guy. I can tell he’s full of integrity. He’s full of faith. He’s full of family. He lives in California. He’s actually an immigrant from Vietnam. I met him through a referral. The guy is absolutely killing it with his dental practice. He’s not a dentist, but he owns a dental practice. I love meeting new guys like that that can possibly I can create relationships with, and they can also ultimately invest in our syndications. So, me raising capital is my sweet spot, it’s my superpower.

I also work on investor management. So, I’ve got, to every quarter, do our investor updates for my investors so they know what’s going on. What does our P&L look like? What does our CapEx look like? How much money are we raising? Are we hitting pro formas? And I also look and evaluate our books with our CFO and with my partner Glenn. Every Friday, we look at all the financials, we look at leasing, evictions, maintenance tickets, CapEx. What do we collect that week, where we at with our percentage of collections occupancy? We look at these numbers. We get to pull a lot of that data out of our property manager and out of our Appfolio account. So, the first thing I do is acquisition and underwriting, that’s number 1. Number 2 is cap raise and investor management, number 2. And number 3 is the books and the financials so I can see the blind spots. I could see what’s wrong, what’s working, what’s not working. That’s what I do.

Now, my partner, Glenn, is very similar to me, but from a slightly different cloth, Glenn oversees our capital improvements. So, we have about a $3 million budget right now of everything that we’re working on. This is just our portfolio in Northeast Ohio. This does not include what we’re doing in Houston, does not include what we’re doing in Atlanta, does not include what we’re doing in Oklahoma, does not include what we’re doing in Indianapolis. This is just our Northeast Ohio portfolio. Glenn is working with our VP of construction. His name is Dave. So, Glenn oversees Dave, and the two of them together are managing all the budgets for capital improvements, all the large projects like dog parks, roofs, sidewalks, concrete, and doing also all of the unit turns. We’re doing hard turns of units, that all fall under Glenn’s swim lane.

So, Glenn sits on top, then Dave sits below Glenn, and then all the contractors sit below Dave. So, Glenn, Dave, the contractors, okay. That’s Glenn’s responsibility, that’s his superpower. He’s also, number 2, works with me in cap raise and investor management on a small scale. He’s got relationships with certain investors that I don’t have. And third, he also works on the books with me, the finances, looking for blind spots, looking for, are we hitting pro forma? Are we not? So, Glenn’s got kind of a three-headed monster for him, CapEx, cap raise, and the books.

Then Tyler, we brought him on as an employee about three years ago when we had our lending company and our fund, and then now, he’s focused on acquisitions. He’s an owner in our business. And Tyler also has sort of three main responsibilities. Tyler’s main responsibility is asset management. So, when we own the asset, he sits above the property managers and he deals with the day-t-day maintenance, leasing, he deals with putting together scopes of work on units that we’re going to turn and hands those off to Glenn, the asset management of evictions and cash flow and collections, new move-ins, new move-outs. Our property manager handles all that. Tyler sits above the property manager. So, it goes Tyler, property manager, and then below the property manager, all of their employees, all of their leasing agents, all of their maintenance guys.

So, Tyler is that main responsibility, but a second responsibility is also acquisition, so he’s constantly meeting with brokers, going in to look at deals, acquisitions, and underwriting. Tyler’s third main responsibility is primarily closings. So, he’s working with our securities attorney to get the PPM done, the operating agreement done, the property management agreement done, then we’re buying a building or selling a building. Tyler’s working with the title company to make sure that all of our documents and that whole checklist to close the deal happens. So, Tyler is really front-end of the business, acquisitions and underwriting, closings number 2, and asset management number 3.

So, those are the three owners in our business. I said, “Joe, look, if you’re going to build a business and be able to scale if you give up 20% to 30% to 40% of your business and these other professionals, these other guys are doing these things, you’re still going to own 50% of the business or maybe 60% of the business and you’re still maintaining control and you’ve brought in a lot of horsepowers to help you, still a lot of leftover apple pie, pumpkin pie for you. Even though you gave up a couple of slices, you still got the rest of it for yourself.

Now, we get into some of our team that sits underneath us. So, underneath me is Jen Pennington. Jen is our Director of Operations and also our director of cap raise and investor management. So, Jen has two jobs, investor management. So, she helps me raise capital, get all the money in the house. I work with investors to get them committed, then she handles a lot of the logistics, the forms, the paperwork, and the wires to get the wires in. And she also handles operations, operations for my coaching business because we do coach and mentor. And she handles some back-office operations for some of my single-family homes that I still own, and some special projects including podcasting. So, Jen, investor management, number 1, operations number 2, and podcast bookings, number 3. She’s got three main jobs.

Notice the theme here, everybody kind of has three main roles. Now, also, I work with on a regular basis, our CFO, Roberdo. Roberdo’s been with me now almost 15 years. He’s been my CFO for over 10 years. Roberdo oversees all of our books, all of our accounting or tax returns. He basically works with our property manager to export all the data out of their AppFolio account, review it all, package it all, make sure we get ready for our monthly leadership meetings and our weekly finance and accounting meetings, and our quarterly investor updates for those investors. Roberdo, he’s the CFO so he has everything to do with finance and accounting. So, he does everything from helping us secure loans for buildings to all the books, tax returns, where are we hitting pro formas with collections versus uncollectibles, everything to do with finance and accounting. So, those are the people that I work with.

The third person that I work with is Marisa. Marisa is our Director of Marketing. Marisa handles everything to do with marketing, so all of our podcast marketing, email marketing, social media marketing, all of our webinars that we do, all of our Zoom calls that we do. We have tens of thousands of email subscribers. We send out about 80,000 emails a day. Well, probably four times a week, five times a week, 80,000 emails go out. Marisa handles that. So, Marisa is responsible for bringing in new mastermind members, coaching students, and student partners into our forever passive income mentorship and mastermind program. And she’s responsible for helping me with marketing to bring in and market for new passive investors.

So, I’ve got kind of three people that report to me, Marisa, Jen, Roberdo. Notice the theme here of three. I have three responsibilities, I’ve got three people that report to me. Now, underneath Marisa, who’s the Director of Marketing, Marisa has two or three people under her. She’s got Remy, who’s our Director of Audio/Video, handles all of our podcast recordings, all of our editing, all of our webinars, all of our YouTube videos. We’ve got millions of views on YouTube. We’ve got over 400 videos on YouTube. We’ve got over 300 podcast episodes. Remy’s been with me for over 10 years and he does an amazing job of all the audio setup, all the video setup, all of our live events setup, all of our YouTube podcasts and Spotify, all of our YouTube and video and podcast syndication, handles all of that. He is basically sitting under Marisa, who’s our Director of Marketing.

Also, under Marisa is my wife, Lisa, who handles all of our social media marketing. She works with HubSpot, LinkedIn, Pinterest, Instagram, Facebook, all of our Facebook groups, all of that stuff. We get hundreds of thousands, millions of views. We’ve got, I mean, tens of thousands of followers and subscribers and friends. And Lisa handles all of that. So, she works under Marisa. Also, under Marissa is our virtual assistant, Julie. Julie lives in the Philippines and she’s worked for us for probably seven or eight years, and she actually does a lot of our metrics and a lot of our email marketing. So, she actually wants Marisa to get the email from me. I write the copy to send out to you guys. She then reviews it, gives it to Julie in the Philippines, who then actually loads it into our email broadcasting service and sends it out. We use Infusionsoft and we also use a program called MailerLite. So, Julie, Remy, Lisa are going to Marisa.

Now, also under Marisa is Tim. Tim is our Director of Technology. Tim is not full-time with us. I don’t have enough work to give Tim full time, but Tim works for us about 5 to 15 hours a week and handles all of our technology setup, webinar setup, new websites that we build, those kind of things. Also, under Marisa, part-time, we have a consultant that helps us build new websites. His name is Joe Laviano. He owns his own company called OCRON Systems, and he works under Marisa but part-time. So, Marisa, again, has three full-time employees and then a couple of part-time vendors that help execute the marketing. Notice the theme of three.

Now, in addition to that, let’s move over to Sheila. Sheila is our Director of Customer Service and director of basically all things inbound. You can imagine with 80,000 emails going out, social media going out, all the stuff, we get hundreds and hundreds of inquiries a week into our business that all come into our operations and customer service platform. We use a program called Zendesk. Sheila manages all the inbound calls, all the inbound chats, all the inbound emails, all the outbound emails, all that stuff. So, Sheila technically works under Jen. Jen’s our Director of Operations. Customer service is an operational function. She works under Jen, but her and Jen are like buddies. I don’t necessarily think that one’s like really a boss and the other one’s like, works underneath, her and Jen are tight. They’ve been with me, Sheila 14 years and Jennifer eight, and they’ve just done a phenomenal job of working together as kind of a partnership. So, Sheila handles that. So, I don’t talk to Sheila a ton, but I value Sheila’s contribution because I know she’s hustling her face off to take care of all of you guys every day. Sheila also works with Roberdo on a lot of finance and accounting items in depositing checks, going to the bank, going to get the mail, those kind of things, doing some running for Roberdo.

Okay, so all of that kind of falls under me as the CEO, but it really starts with my kind of three-headed monster, which is Jen, Marisa, and Roberdo, and then they have people under them. Roberdo’s got Sheila, Jen has Sheila, and then Marissa has the largest team because she’s in marketing. Now, let’s talk about Glenn for a minute. Under Glenn, and again, remember, Glenn’s working for equity. He’s working for cash flow, he’s working for profits. He’s not working for a W-2. Under Glenn, because Glenn handles, again, CapEx, cap raise, and then again reviewing the books, underneath Glenn, you have Dave. And underneath Dave, you have all of our contractors.

So, we use a company called Paradigm for all of our landscaping, all of our landscape architecture, our dog parks, our pavilions, the pavers, the gravel, the landscaping, and the mulch. Paradigm works under Dave, that’s a vendor. Also, under Dave, Dave has basically kind of an assistant/runner. His name is Kenny. And Kenny, he knows a lot of plumbing for us and accepts deliveries and also handles some kind of– he lives on one of our buildings, lives on-site, so he’s at the property every day working on that property.

So, then under Dave, you have all the contractors turning units. We’ve got four or five different groups of guys that are all turning units. They’re doing demo, they’re doing kitchens, bathrooms, carpet, paint, LVP flooring, trim, cabinets, countertops, you name it, they’re all under Dave. In addition, under Dave, you have some third-party vendors. They’ve put new security doors in some of our buildings. They had to put new awnings on some of the buildings, new windows, new roofs, those kind of hard capital improvements all go under Dave. So, Glenn manages Dave. Dave manages the actual day-to-day.

Also, Glenn, like I talked about, he does works in cap raise with me. So, obviously, he does some work with Jen as well. Then you move to Tyler, three-headed monster, me, Glenn, and Tyler, underneath Tyler, Tyler primarily is again looking for acquisitions, looking for deals and underwriting, and also doing the asset management and then closings. So, asset management under Tyler, we have multiple property managers, but in Northeast Ohio in that portfolio, we’ve got a property manager called REM. Underneath REM, they have a bunch of their own employees. They have property managers. They have leasing agents. They have maintenance guys. Notice again the kind of rule of thumb of three. So, this kind of rule of thumb, three, three, three, over and over and over. Now, also under Tyler, Tyler does work in helping bring in more contractors for CapEx, but when he brings in a contractor, he hands it off to Dave and Glenn. And Tyler is the one that’s kind of on-site on a regular basis, working with our property managers to make sure that the trash is handled with the trash service, the snow, the landscaping, all that kind of stuff is done, three-headed monster again. So, really, really important stuff that this is the structure.

So, when I was talking to Joe, I’m like, “Joe, everything I just described, you’re doing by yourself.” And he said, “Yeah, pretty much.” I said, “Wow, that sounds like a lot of work.” He said, “Yeah, it is. It’s a lot of work.” So, the point here is to kind of peel back the onion, be transparent to show my entire audience and all of our friends and followers, this is what it takes to build a real business. Now, my other portfolios, the one in Atlanta, the one down in Houston, have very similar structures, but just different people. You have somebody different responsible for CapEx down in Houston, somebody different responsible for CapEx down in Atlanta. So, similar layout, similar footprint, but different groups.

And so, my coaching, my takeaway for Joe and for all of you is that, first of all, in commercial deals, so apartments, apartment syndications, multifamily, mobile home parks, self-storage, etc., there’s enough of a pie that you can give up a slice and still gorge yourself on profit. Okay, pumpkin profit pie, I guess we can call it. There’s enough of the pie, there’s enough profit left for you to have a huge slice of the pie by still giving up a couple of slices. So, I’d encourage Joe to go find someone to give up a couple of slices too. He’s still going to maintain a significant piece of that equity for himself.

And for all the rest of our audience, I hope you’ve enjoyed kind of seeing and peeling back the onion a little bit about what this Northeast Ohio-Cleveland portfolio looks like, who the employees are, what they do. And finally, I would say, look, if you’re interested in having me help you build this, becoming a part of our coaching and mastermind and student partnering program, go to JoshCantwellCoaching.com, go in, and fill out the application. There, we’ll go through a one-on-one call with you to see if you’re a fit for the program and explain the details. There is an investment in that, but trust me, it’s way, way, way, way less than what you’re going to make on one apartment deal. So, check out JoshCantwellCoaching.com for more information on that. If you’d like me to jump in and help you build this kind of dream team in your business, go and check it out, JoshCantwellCoaching.com.

And finally, before I leave, don’t forget to hit the subscribe button. Subscribe button. Hit the subscribe button so you never miss another episode. I hope you guys enjoyed this. A little bit on the dream team, divide up the responsibilities. Teamwork makes the dream work. We’ll see you next time. Take care.

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