Apartment Building Investing with Michael Blank Podcast

One of the big real estate rookie mistakes is to turn into a Walmart shopper as you build your team. It is easy to see a coach, lawyer, or property manager as an expense and choose to go with someone less experienced—or even elect to do the job yourself. But today’s guest can attest to the fact that a quality team is an investment that can save you millions in the long run.

Damion Lupo is a serial entrepreneur with a ‘think big’ mentality. In the last 25 years, he’s founded more than 30 companies in a number of industries including insurance, precious metals, venture capital, financial consulting and real estate. Damion is also a black belt in three different disciplines and the architect of Yokido, his very own martial art.

Damion’s personal philosophy centers around self-responsibility and a conviction that candor, growth and a big vision provide the only path to freedom. His commitment to these values led to the creation of Total Control Financial, a FinTech that seeks to reinvent financial control and empower Main Street with the tools of financial transformation. Today Damion discusses his first multifamily deal, a 119-unit property in Memphis that resulted in a $2M loss, and the lessons he learned from the experience. He shares the transformational power of failure, the importance of building a team you can trust, and the extraordinary value of a mentor. Learn how Damion’s shift from consumer to contributor had a revolutionary impact on his life.

Key Takeaways

 [4:03] How Damion got into real estate

  • ‘Tripped’ into it
  • Read Rich Dad, Poor Dad
  • Attended seminar for additional resources
  • Attracted to big-time cashflow potential
  • Quit insurance to pursue real estate

[5:44] Damion’s first steps in real estate

  • Bought house with Visa card
  • Planned to sell on payments after remodel
  • Strategies in place to pursue more properties, but wasn’t taking action
  • Failure to return phone calls almost led to bankruptcy

[7:18] How Damion was able to avoid bankruptcy

  • Gained momentum by purchasing eight houses in month
  • Purchased another 50 houses over next year (AZ, AL)

 [7:58] How Damion got stretched too thin early in his real estate career

  • Despite success, decided to try something different
  • Started high-end rehabs all over country
  • No team in place to help
  • Lost track of projects
  • Not paying attention to numbers
  • Let ego take over (want more and more)

[9:35] The lessons Damion learned from his first multifamily deal (119-unit in Memphis)

  • If you can’t be there, send team member with ‘massive integrity’
  • Listen to the numbers, get out if necessary
  • Stress test your team before going all-in
  • Don’t delegate too much, too soon

[14:31] What Damion could have done differently on the Memphis deal

  • Choose experienced partner
  • Move to site or have partner on-site
  • Invest in an experienced team, especially project manager
  • Leverage experience of mentors (make new mistakes)

[19:50] The value of a coach/ mentor

  • Damion lost $5M over two years after firing coach
  • Powerful to have people ‘call you on your shit’
  • Don’t let ego get in the way of listening
  • Helps you be methodical (rather than emotional)
  • Offers perspective, intuition to pass on bad deals

[24:48] Damion’s advice around leading a team

  • Clarify expectations up front
  • Have team share back what was heard in own words

[25:52] How Damion reinvented himself after hitting rock bottom

  • Equated net worth with self-worth (identity tied to money)
  • Learned that impact must be driver, wealth as side effect
  • Spent two years making shift from consumer to contributor
  • Teaching (martial arts, financial literacy) allows him to give, be present
  • People with contributing mentality happier, more successful
  • Can’t think your way to your Om, must do

[32:45] How dark times set you up for success and fulfillment

  • Must experience trauma to learn you are not in control
  • Recognize difference between success and fulfillment
  • Damion finds fulfillment in seeing people get out of ‘financial bondage’

Connect with Damion Lupo

DamionLupo.com

Damion’s Books

Reinvented Life Workbook

Resources

Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! by Robert T. Kiyosaki

The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich by Tim Ferriss

Financial Freedom Summit Wait List

Free eBook: The Secret to Raising Money to Buy Your First Apartment Building

Review the Podcast on iTunes


‘That’s just the way I’m built: Nothing’s going to stop me.’

Joseph Gozlan’s story defines the word GRIT. Once he decided that multi-family was the route he wanted to take, Joseph continued to drive through every challenge, getting creative and doing whatever it took to secure his first deal despite the roadblocks and frustrations. Three years later, he is the proud owner of two apartment buildings, and he has five properties in the pipeline. Joseph’s living expenses are covered, and he is considering a transition into full-time real estate in the very near future.

Joseph got his start in real estate back in 2005 when he and his new wife realized that their new five-bedroom home was too big for just the two of them, so they chose to stay in an apartment and rent the property. Two years later, they moved to the United States from Israel and recognized the opportunity provided by the market collapse. The Gozlans secured their real estate licenses and began actively hunting for deals, purchasing a duplex and several single-family homes.

In 2015, Joseph realized there was much more value in apartments than could be gained in scaling single-family homes, and he started extensive research into multi-family investment. Unfortunately, Joseph faced a number of hurdles along the way, and it took a full two years to secure his first 22-unit apartment complex. When many would-be multi-family investors would have given up, Joseph persevered, and today he shares his long road to successful apartment building investing with us. Listen in and get inspired as Joseph discusses why he chose real estate in the first place, the circumstances around his shift to multi-family, and how he has maintained his full-time job in IT while developing a lucrative real estate portfolio.

Key Takeaways

 [1:59] Joseph’s start in real estate

  • Read Rich Dad, Poor Dad in college
  • Got married, lived in small apartment
  • Purchased house, too big for couple
  • Chose to rent house, stay in apartment
  • Moved to US in 2007
  • Joseph and wife got real estate licenses
  • Actively hunted for deals after market collapse
  • Bought duplex in Plano, TX (paid $180K, invested $30K in renovations)
  • Purchased additional single-family homes until numbers changed in 2013

[4:34] Why Joseph chose real estate in the first place

  • Wants to write giant cardboard check for $1M to children’s hospital
  • Early retirement, comfortable living, won’t have to answer to boss
  • Tangible assets like real estate trump stock market
  • Realized could be wealth-building strategy, key to financial freedom

[6:26] Joseph’s definition of financial freedom

  • Do what you want
  • Work from anywhere
  • No worry re: bills
  • Kids won’t experience struggle (like he did)

 [7:22] The circumstances around Joseph’s shift to multi-family

  • Two and a half years ago, duplex had foundation issues
  • Big ticket damage to another property at same time
  • Spent $40K to fix, wiped out five years cashflow
  • Recognized advantages of multi-family (single location, risk spread across multiple units)
  • Began extensive research (books, podcasts, BiggerPockets)

[11:11] The long road to Joseph’s first deal

  • Reached out to brokers, no response
  • Decided to source deal himself, began marketing (postcards, letters, phone calls)
  • Built rapport with owner/custom-builder of 22-unit apartment
  • Owner agreed to seller financing
  • Refinanced duplex and another property to afford

[14:02] The results of Joseph’s first deal

  • 23 days from signed contract to keys
  • Brought in property management company
  • Added $600—$800K in value via operation efficiency
  • Spends one hour with management company/week to assure accountability

[15:58] How Joseph handled concurrently working full-time

  • Sacrifice necessary
  • Some sleepless nights
  • Spent weekends looking at property, took occasional days off
  • Difficult but doable

[16:53] How Joseph secured a second deal within six months

  • Brokers responsive now that ‘closer’
  • Lead through property management company on 102-unit in Lubbock, TX
  • Knew costs, rent and demographics (unfair advantage)
  • Tight underwriting, made win-win offer

[18:11] How Joseph financed his second deal

  • ‘Ignorance’ gave him the confidence to raise funds
  • Elected syndication to raise $1.4M
  • Had to adjust underwriting model
  • Learning curve around how to talk to investors
  • Learned to focus on benefits (no headache), returns, low risk
  • Did all himself in 45 stressful days
  • Once one investor signs, recommend friends

[22:31] How Joseph’s second deal is performing

  • Only three months in
  • Great so far, working on renovations
  • Compliments from competition, positive feedback from residents
  • Joseph’s living expenses now covered on paper
  • Anticipates feeling comfortable enough to quit job after second quarter

[24:33] How Joseph stuck with the multi-family plan despite his initial frustration

  • Went into contract on another property first
  • Realized much-deferred maintenance
  • Seller refused to negotiate
  • Had to back out since numbers didn’t work
  • Not in Joseph’s personality to give up

[26:30] The snowball effect of multi-family deals

  • Joseph already under contract on third deal for 28-unit
  • Only took three days to get LOI signed (motivated seller)
  • Five properties in pipeline now (off-market deals)

[28:17] Joseph’s plans for the future

  • Recently renewed real estate license
  • Sourcing deals himself (sent 1300 pieces of mail)
  • Continue to work acquisitions
  • Also transition to brokerage side
  • Enjoys ‘coaching’ property management company, contributing ideas to improve processes

[30:08] What Joseph would tell his younger self

  • Skip single-family, go straight to apartment buildings
  • Could have thousands of units by now

[30:51] Joseph’s advice for hesitant multi-family investors

  • Don’t go it alone
  • Partner or get mentor to establish realistic expectations
  • Offer value to mentor (i.e.: underwriting, boots on the ground)

Connect with Joseph Gozlan

EBG Acquisitions

Eureka Business Group on Twitter

Multifamily Investing for Financial Freedom on Facebook

Resources

Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! by Robert T. Kiyosaki

BiggerPockets

Michael’s Products

Free eBook: The Secret to Raising Money to Buy Your First Apartment Building

Review the Podcast on iTunes


Most of the time, careful planning is a good thing. It is smart to develop a strategy first, and then take action on your goals. But the one situation in which it might be better to just put the blinders on and jump in? Multi-family real estate investment.

Pili and Jason Yarusi have a background in running restaurants and bars as well as experience in the family construction business. So when they were starting a family of their own and wanted to get out of the grind, real estate investment seemed like the perfect fit. They started doing capital-intensive flips and had success with out-of-state duplexes, but soon realized that flipping was a job that would have to be repeated time and time again. If the Yarusis wanted to achieve cashflow, apartment building investing was the way to go.

After doing a lot of reading and reaching out to mentors with multi-family experience, Pili and Jason found a quality property management company in Kentucky, and made use of the firm’s expertise to find a deal that fit their criteria. The Yarusis sold investors on their background of success in other businesses, and raised the $800K necessary to close on a 94-unit property. Today they share how their willingness to jump in without a clearly defined strategy paid off in the end and how they overcame the mindset challenges around multi-family investing. Listen in for Pili and Jason’s advice about reaching out to mentors and learning as you go.

Key Takeaways

[1:39] The circumstances that motivated Pili and Jason to invest in real estate

  • Ran restaurants, bars
  • Family construction business ‘gratifying, but grueling’
  • Pili pregnant with first child

[4:25] Pili and Jason’s start in-house flipping

  • Capital-intensive flips
  • No strategy going in (let idea grow)
  • Also purchased two out-of-state duplexes on gut feeling
  • Gave footprint (right questions, team members and processes)

[7:40] Why Pili and Jason shifted to multi-family

  • Realization that one single-family vacancy = 100% vacancy
  • Five vacancies in building with 100 doors = 95% occupancy
  • Multi-family income means you can afford team (on-site manager, maintenance, etc.)
  • Experience with duplexes taught them to vet property management company

[10:49] How the Yarusis moved forward once the decision to do multi-family was made

  • Jason educated himself, sought mentors
  • Utilized resources like BiggerPockets
  • Looked for deals in favorable out-of-state markets

[12:50] The mindset challenges around multi-family

  • Numbers seem scary (large = hard)
  • Concerns about raising capital

[14:09] How to overcome mindset challenges

  • Surround yourself with team, mentors
  • Meet people at networking events, REIA meetings
  • Reach out to friends of friends, other investors
  • The more you talk, the more it seems doable

[16:28] The hurdle of raising capital

  • Challenging due to lack of experience
  • Sold people on background of success in other businesses

[18:24] How Pili and Jason chose the Kentucky market

  • Looking for population growth, job growth/diversity
  • Familiar with Kentucky (friends, sister there)
  • Found property management company to offer feedback
  • Discovered property that fit criteria

[21:58] The Yarusi’s outlook when it was time to sign the contract

  • ‘Game time’
  • Work toward closing
  • Remain conservative (ensure return for investors)

[23:36] How much capital Pili and Jason raised for their first multi-family deal

  • $800K
  • Verbal commitments prior to contract
  • Didn’t start due diligence period until written notice of records received (extra 30 days)
  • One investor pulled out 20 days before closing
  • Scrambled to fill in gap

[25:27] How the 94-unit property is performing

  • Very well, achieved rent increases
  • Modest increase for good tenants
  • Turnovers up to market price

[26:45] The lessons Pili and Jason learned in their first multi-family deal

  • Walk every unit on morning of closing
  • Talk to everyone (don’t leave out any high-level investors)

[28:34] What’s next for the Yarusis

  • 47- and 57-unit in Kentucky
  • Bigger CapEx than first property

[29:56] Pili and Jason’s advice for aspiring apartment building investors

  • If multi-family is your endgame, start now
  • Consider the advantages of multi-family
    • Easier to secure loan
    • Can afford team
    • Vacancies less debilitating

Connect with Pili and Jason Yarusi

The REI Foundation Podcast

Email Jason at jason@yarusiholdings.com

Email Pili at pili@yarusiholdings.com

Resources

BiggerPockets

Free eBook: The Secret to Raising Money to Buy Your First Apartment Building

Review the Podcast on iTunes


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