First Deal Episode with Josh Ferrari

Episode 125 of the Diary of an Apartment Investor Podcast with Josh Ferrari, hosted by Brian Briscoe. Transcript by – please forgive any errors.

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Brian Briscoe 0:00

What advice would you give an aspiring investor who's six to 12 months behind you?

Josh Ferrari 0:04

Just start doing something first of all, I guess figure out what it is you're even wanting like why real estate? You know, you asked me what is my What is my firing? Why earlier? If you don't have a why you're gonna get burned out in this industry almost immediately. So figuring out why and where you want ahead and then just getting started. I think one big myth is that you can go out and you can take massive action immediately. How many people do you really know that go out have no experience in real estate, no money, no nothing and buy 1000 unit property their first deal? Just them? It doesn't happen. You know, you take you take baby steps.

Brian Briscoe 0:51

Welcome to the Diary of an Apartment Investor Podcast with your host Brian Briscoe. In this podcast we bring some of the top professionals in the apartment investment field to discuss various aspects of the apartment investing journey, with the sole purpose of educating listeners to make wise investment decisions. The Diary of an Apartment Investor podcast is sponsored by Four Oaks Capital bringing you high yield returns through apartment complex investing. Welcome to the Diary of an Apartment Investor Podcast. I'm your host, Brian Briscoe, with Four Oaks Capital. I'm very excited for today's show. It's one of our first deal series. And we're talking with a guy who seems to be absolutely on fire right now, Josh Ferrari. And he recently closed on a 42 unit apartment complex in Mobile, Alabama, for a purchase price of 1.85 million. And we'll be talking about that today with him. So, Josh, welcome to the show.

Josh Ferrari 1:39

Thank you for having me, Brian. I know we've been struggling to try to get to try to you know, work this out someday we'll make it happen.

Brian Briscoe 1:46

You know, we were trying just for everybody else's benefit we were trying to get you on as an aspiring investor. Right. And have you asked a question to, you know, an experienced investor, but you went ahead and closed on a 42 unit. And now a 34 unit? What was the second property? Yeah. Okay. 34 unit, and you have one other under contract right now, too. So, yeah, I kind of felt that. All right, you know, you're kind of past that aspiring thing. So let's, you kind of disqualified yourself from the pod from that part of the podcast. So here we go. first deal episode. This is awesome. But congratulations on your success. And just for everyone else's sake. You know, we talked a couple of times. And incidentally, I've been on his podcast. Let's start with that. Talk a little bit about your podcast, tell everybody what your podcast is about?

Josh Ferrari 2:32

Yeah, so my podcast is called creative capital. It's primarily based around when I was creating it, you know, everyone wants to be different. But and I didn't want to make it around one specific niche real estate, like I didn't want to just be multifamily or single family or talk about one specific like industry inside of the, of the overall industry of real estate. So I titled The creative capital with the idea to bring on folks, individuals inside of the business that are professionals in all different aspects. But discuss any creative strategy out there possible to either preserve or you know, grow your wealth inside a real estate investing.

Brian Briscoe 3:13

Nice, nice, nice. How's that? How's that gone? for you so far?

Josh Ferrari 3:18

It's, you know, the thing I love the most about it is that I learned something new. Every time I have someone on, you know, we're talking about capital raising one day, then we're talking about someone buying $5,000 in one transaction, the next the next day, I'm talking about a guy that's telling me I can create a trust and not have to pay capital gains or property taxes, and I'm like, Alright, yeah,

Brian Briscoe 3:39

yeah, you know, it. That's one thing that I've noticed with the podcast myself, I mean, I started this podcast a year ago, we closed on our third deal. We're just about to close on deal number four, you know, and being able to talk to people who were, you know, lightyears ahead of me, you know, is really helped me out as well. And I've been able to solidify a lot of the things that, you know, I may have been shaky on early on just by hearing many, many experienced operators over and over talk about the same fundamentals. So, you know, podcasting. It's, it's a good way to meet people, and it's a good way to learn a lot. I think that's, that's probably one of those intangible things that it's really hard to quantify. But that's, that's been my favourite thing about podcasting. So, but cool. So that said, Why don't you give us a little bit of background in history. Tell us a little bit about you. And what got you into apartment investing?

Josh Ferrari 4:29

Yeah, so I initially got the bug or the itch you could say for real estate about it a little over three years ago, my dad called me up after I had just moved out of the house move states away. To start what I thought was going to be my long standing career as an aircraft technician. Well, then he calls me up one day tells me him and my mom are going to start flipping houses and I thought that was kind of weird. They said they were gonna, they're gonna pay $20,000 each to get one of those guru courses to tell them you know, everything that they needed to know, as I'm like, okay, we had this like four hour conversation. And that was what really piqued my interest inside of real estate. So then after that, I just actually read 40 books that year, and I was 21 at the time is more books I've ever read my entire, you know, 21 years of living. And I went to three different real estate meetups and I was listening to a bunch of different podcasts. I was extremely intrigued in the industry. So we've been getting into wholesaling initially did that for five to six months, close, no deals, just through a bunch of money away on marketing. Then I say, well, we want to get in the buy and hold anyway. So let's jump into into a house hack. So the best way that I wanted to house hack was not renting the rooms out and having people live inside the same walls as me, right. So I wanted to do a small multi. So I started doing research on multis, we ended up buying a four Plex house hacking it, quote, unquote syndicating it, I got my dad to pay for the down payment, and he got a piece of equity out of it. Yep. And that was that was kind of our entry to investing as a whole, but then also into what the powers of multifamily could really do. So then I started researching deeper and deeper into multifamily and what was possible then I ended up finding out about syndication, I ended up finding a mentor, fast forward to today, and now have two other business partners. And we've got about 90 units in our portfolio with another 148 under contract and another 88 we're getting ready to get under contract and another four to 500 units worth of ello eyes out right now.

Brian Briscoe 6:31

All right, so So one question for you that I hope, you know hits home with a lot of people. How old are you? I'm 24. Now, okay, 2490 units, and you're 24 years old. Okay, so I've heard a lot of people talk about you know, and honestly, I think being young is somewhat of a barrier to entry. But, I mean, you took that barrier and just grabbed your sledgehammer and you know, pushed right through it, I guess. But, you know, were there any difficulties because of your age getting into this industry?

Josh Ferrari 7:04

I'll tell you what, there were, from the sheer standpoint of getting investor interests of people wanting to give me money to two brokers taking me seriously for even giving me an opportunity, that would make sense. And the best way that I broke that barrier is actually name dropping. So it was kind of like my association, my network with folks. And so I was almost able to take immediate credibility from other people that were highly credible in the industry. And I remember one, one phone call, and specifically, I was talking to this broker. And it was gone, like, you know, I guess a regular broker call would go on your first typical, like, exchanging pleasantries and him asking me, you know, what type of properties I'm interested in, and it's the same thing everyone else is looking for, you know, BTC class. Yeah, we were like, yeah, 100 units, something along those lines. And he's like, you know, getting getting sleepy on the phone call, because he's telling me, he gets like, 100 of these calls a day. And then he's asking me what really made me stand apart. And I was trying to pitch myself and I got a lot of drive. You know, it's not something you can like teach people, you know, other people might be interested in this, but they're maybe not as hard working. And I was trying to pitch it, but he wasn't having it. You know, I wasn't able to, like prove anything. Yeah. So then towards the end of the call, I think the conversation kind of transitioned a little into some of the deals that he was doing currently, maybe some of the opportunities he had and whether or not something like that would be of interest to me. And he talked about one deal in particular. And I remember my my mentor was actually the one that had just just sold the deal. Like the deal that he was saying he was brokering He's like, yeah, we just saw this deal. I'm like, Oh, yeah, that I don't my mentor, actually, Jeremy, he had that. He was. Yeah, he was like, Wait a second, you know, Jeremy, you know, yeah, you know, Jeremy, and you could just like, yeah, I couldn't see his face, because the phone call but I could tell like his eyes lit up in his face scout squad. He was all into the conversation now, then we, you know, we ended up ending the combo. And what went from, you know, he was initially going to send me no deals, and it was going to be just another phone call that he had to then we got off the phone, and he sent me five deals in my inbox. And I was like, This guy had the five deals all along, it was just a matter of seeming credible so that I could get access to them.

Brian Briscoe 9:19

And I mean, in that brokers head, you know, the question he's trying to ask on that first call is, am I gonna waste my time with this guy, he gets 100 of those calls, you know, a week or a month, he gets a lot of calls like that. And his question is, am I gonna waste my time. And one thing that I think I see over and over on this podcast and just talking from other to other people, is you're able to borrow the credibility of people who are on your team, you know, and that really goes goes far in a lot of circles, you know, so if you're working with somebody who's established and you use their name, you use their obviously you have to have their permission to do it, but you borrow their credibility, and that'll get you into a lot of doors. Right? So, so good on you on that one. I think I think that's a that's a solid lesson learned for a lot of people. But all right, so let's let's let me ask you a question before we move into exactly what this first deal looked like, what is your big burning? Why? You know, what's your motivation for all this?

Josh Ferrari 10:20

I like that question. My big burning why's got to be I guess what most people's is, which is just family. I want to create generational wealth I want to spend, we don't have any kids yet. But we're now in the process of trying to have kids and I want to start preparing my financial life preparing my my physical life, my time to be utterly and completely available. Like I want to have a business that can be almost self sustaining to where I don't ever want to like not work. I'm 24 years old. I'm not like dying down. Now. You know, I'm ready for retirement. I'm ready to start going up. Yeah, right. But I want to work, I want to work smart, I want to work calculated, and I want that to produce enough income and just have the lifestyle to where I can go to all the soccer practices, the ballets, the swimming, you know, I don't know what they're gonna be interested in, or if they're gonna be interested in any of that, but I want to be totally involved in my, my kid's life. And just with my family, we want to travel more. I've got a burning fire, passion for aviation. I don't know if you've written the video for here, but I'm actually wearing an aeroplane shirt right now. So I won't I've always I'm an aircraft technician by day. But I'm getting out of that to transition full time into this business. Because I want to be a pilot. I want to be a pilot for fun. Not you know, for for money. No, not a commercial airline aeroplane. Yeah, yeah. So I don't know, that's gonna take time. I know, that's gonna take more money. And so that's, it all kind of ties together for families, the big Why?

Brian Briscoe 11:57

Well being being several years ahead of you. I mean, I've got five kids. I'm about 20 years older than you, but I have five kids, I can tell you what, there have been times in my lives where I have not been able to do that I have not been able to be at the Games, I have not been able to do what I've wanted to do. And it's really had an impact. You know, it's it's part of my why to, you know, wanting to be there for my kids. But I'm just happy for you that you've realised that you know, H 24. And you're already working on it, you know, I was working on it, just, you know, kind of took a different path that took me a lot longer to get there. But Alright, so let's let's hop in, let's start talking about, you know, first deal this, this 42 unit in mobiele. So, my understanding is we probably should start talking first about how you met your mentor.

Josh Ferrari 12:48

Yeah, so you know, we talked a little bit off screen that actually found the deal through my mentors, his deal that he was selling. So the way I found him when I back when we had just the four Plex, and we were doing that, and I was still learning about multifamily. And briefly knowing about what syndication was, there was a meetup that was happening at one of the three local meetups that I was going to. And there was a guest speaker coming over from Pensacola with me down here in Mobile, Alabama. And the topic was going to be multifamily syndication. And I had already been a little interested in it, but I didn't know a whole lot about it didn't know what was possible. And I was like, This dude knows what he's talking about, you know, the email had like, the bio of this guy. This guy's killing it, you know, he knows what he's doing. So I was like, I gotta go, I gotta go to this meetup and learn everything that I can. So I went, he talked about multifamily syndication, the meeting basically solidified everything that I thought that I knew, plus a tonne more, you know, all these new opportunities and ideas and things that you could do inside of multifamily syndication. Like this is it you know, this is what I need to do. This is the path I'm going to take. And so I talked to him afterwards, the speaker found out we both had aviation in common, he's actually a helicopter pilot in the Navy night. So that was kind of how we clicked. And then after that, he agreed to allow me to take him out to lunch that next week, took him out to lunch found out that I was completely ignorant to anything multifamily syndication anything I'm not I knew I didn't know, which was good. You know, he kind of put me in my place, let me know what I still needed to learn things like the right direction to go to. And then from there, he just kind of became my mentor. So it wasn't a mentor that paid for it wasn't a programme, it's very organic relationship. And it was also a different kind of relationship in terms of what a lot of people think of a mentor. They think of someone that's going to give them, give them deals, give them investors, introduce them to all these brokers, bring them money, do all these awesome things for them. And in a way he was a lot different than that. I can't say he never brought me to do this. He brought me that our first deal yet. He never actually brought us like like an outside deal. You could say from a different broker or a deal that he would he never let me like partner on a deal that he was doing. He never brought me alongside. He didn't introduce Me to any of his investors. He just, he was basically there for q&a. So anytime I had any possible question that you could fathom instead of real estate, investing multifamily, whatever, he had the answer and the route that he took, and the route that he thinks would be good for me to take based on what he knew about me as an individual. And so that was huge for me, you know, even though he wasn't introducing me to all these folks, and giving me all this money, I knew the direction I needed to take. And so that was that's kind of a relationship,

Brian Briscoe 15:26

you know, and that's probably the best way to go about it. And then just a natural, you know, mentorship relationship. You know, a lot of people I had a hard time with that, you know, I tried and went to a lot of meetups, and it couldn't quite find that that one person for me, so I paid for mentorship, you know, there's different ways to do it. I think, ideally, yours is probably the best way to do it to find that natural mentor. But you know, once again, it's difficult, but I will point out that, you know, it took out you are you're taking action, and that's, that's what really helped you're going to the meetups, after the meetup, you talk to the speaker, you know, that's key, you know, I've been to a lot of meetups where, you know, maybe one or two people come and talk to me after, and that's it, you know, so you're not going to find a mentor unless you're approaching people. And I think the third thing on that one is, you took them to lunch, and the next week, you know, that's, that's huge, you know, just offering to add some sort of value, you know, buying lunches, at least a little bit of value. That's, quite honestly, that's probably enough for me to say yes to, you know, 30, you know, lunch probably takes about an hour or, you know, an hour, you know, sit down with somebody, but a lot of goodness there. So, so you got your mentor, understand the two other people in the deal. Let's talk about how you found, you know, the other people on your team as well.

Josh Ferrari 16:43

So yeah, bringing in the the partners, the first partner that I had initially was just two of us, as myself get. And it was it was Reggie, and he is our primary asset manager. And I always thought that he was going to be the, like, the capital raiser and everything as well, when we first built our relationship. But the way I found him, he actually technically found me he is funny, because he lives in Gulf Shores. And I live in mobiele. So we live like 30 minutes for each other. But he found me on bigger pockets, this like international website. And so he just found me somehow I guess he was searching multifamily or something and found me reached out to me was like, hey, realise that, see that you're, you're local, you know, we'd love to connect with you and see if there's any synergy or something there. I was like, yeah, you know, and they the intent, the intent, or the connection was not to be a partner whatsoever. It was just like, let me just meet this dude, I think he seems like a cool dude. He's like, he knows he's doing like, he's got some experience. So let's see what he's all about. See if I can add any value to him. So I met him at this coffee shop. And he walks in, I see him. And he's just like, huge, like, jacked, dude. Like, looks like a professional bodybuilder. And I'm like, like, kind of scared, you know, little little intimidated here, because I was like, this little scrawny guy, that he's this big, big dude. So, initially, you know, the conversation started leading to like, working out and you know, like, are you a bodybuilder? Like, is that like something in your past life? do you do that? Is

Brian Briscoe 18:11

that a hobby? Or is it your profession? Right?

Josh Ferrari 18:13

Yeah, he's like, he's like, Nah, I just, I just enjoyed doing it. And it's something that I do, you know, twice a day, you know, like this, let's do this, like, in love with working out. And I'm like, Well, I really like to work out, you know, not nearly as much as you but it was like a little something of what we connected on there. And then we jumped into, you know, conversating about, you know, our personal lives. And we jumped right into real estate at first, and so found out that he was had been flipping homes for like 10 years, but that he was he was interested in getting into multifamily. He had kind of thought about the idea and wanted to jump into it. And I was like, yeah, that's actually what I'm doing. I'm diving into multifamily syndication. And, you know, obviously, I haven't closed a deal yet. And I do, I've done it's a four Plex, but I'm trying to learn as much as I can about it, I've got a mentor and, and, and who knows, you know, maybe we could maybe we could eventually kind of partner up or something. There's something that we're both kind of interested in, you know, both kind of like, say markets and it just it like sparked that initial thought of, you know, partnering up, but but still wasn't like totally thinking about it, or thinking that was gonna be something that was plausible. Then I also found out, he was a bass player in a band. And I've been a drummer for like, 15 years. And so I'm like, dude, we got a jam together, man, like, this is awesome. We're both musicians. And it was just a couple little like, small things of all these things that we both really liked doing. We'd like similarities. And then we jumped in, we jumped into the conversation of like, what did he actually enjoy doing inside of real estate? And he loved you know, the asset management side of it, the financial side, all that stuff. And I was like, let's great because I hate that, you know, going through the four Plex that I had gone through, I had to do all that and I hated it. And I was like, what I do like, is Investor Relations when talking to me. I love you know, getting on stuff like this like a podcast, sharing my story, creating relationships with folks. And he was like, Well, I'm an introvert. So that works out great. Yeah. And so it was like, cool. So we kind of went our separate ways at that, and didn't really talk to each other about two months. And then he actually found a deal was actually a single family portfolio that kind of came across his desk. And it was like, we could syndicate it, you know, it kind of checks all the boxes of multifamily other than actually being multifamily. And so I was like, Yeah, I'd love to partner with you. And he called me up. And, and that's, that was kind of the start to our connection there.

Brian Briscoe 20:35

So good. So a couple a couple things that that I pull from there. And there, there's a lot of similarities to our story as well, you know, I met you know, Eric, surely he's the first of the four partners that I met. And it was very similar. It was, you know, I saw him in a different form and realise we had a couple similarities, and contacted him. And one thing that, you know, you never know, when you contact somebody how far the relationships gonna go, you know, in our case, it was it turned out into four Oaks. And you we've got, you know, a sizable portfolio right now and your case, same thing, you know, you made that, you know, I guess that that leap of faith, you took a chance on, someone sat down and, and had lunch with them, and eventually led into, you know, something that they bloomed into, blossomed into a partnership. So, so let's, let's talk now about getting that first deal. Tell us, you know, basically, how you guys got it under contract? And let's go from there.

Josh Ferrari 21:31

Yes. So my guess goes back to my mentor, which I think is why we're really discussing it earlier, he actually emailed me randomly, one August, sunny afternoon, sometime last year in 2020. And the message just kind of went like, hey, we've got this deal. I think you remember it, you know, I've talked to you about it a couple of times, because we discuss some things. And he said, but I'm actually thinking about selling it, I'm thinking about getting rid of it kind of dispersing the partnership that I have inside that deal, and continuing to move forward in the new entity that he had created with his other partner. And so he said with that, where I've been talking to some brokers, we're looking at selling it for this price, if we have to go through a broker, and we probably won't sell it until early in January, February of 2021. But here's the proposition that I wanted to throw away, he said, I know you've been shooting, you know, you've been striving to get a deal you've written a tonne of like, probably hundreds of ello eyes up to that point. But nothing's really came through for you guys, you guys have been analysing deals, I think you and Reggie are like a Power Team. I really like what you guys have going on. So if you think that you can close on this deal before the end of the year, if you even want it. And then if you think that we can close it without having to go through a broker, then I'll give you a $400,000 discount on on this deal. And then I was like, emailed back so quick, like Dude, yes, yes. All the info, you got love to start analysing. And then partner who runs a lot of the, you know, financial underwriting and everything. So that was kind of how we found it, you know, it really just kind of came our way through an organic relationship.

Brian Briscoe 23:15

You know, and part of that, there's a couple of things to dissect with that. One is a lot of sellers are more interested in a smooth transaction than they are in price, you know, so he was able to give a little bit or he's willing to give a little bit on price to not have to go through the broker process, multiple bids, multiple offers, and then hoping that one of those teams actually comes through, you know, and I've heard said, I haven't seen any, like any specific studies, or anything I heard said that about half the deals that get under contract end up falling out. So, you know, in this case, you know, obviously, there's broker commissions and a lot of things, you know, he's gonna pay the broker. So there's a little bit of give there, but he was willing to basically not, you know, what is this? Look at the numbers 10% off the deal price or more, I'd be 20. Anyway, he was able to knock a significant part of the deal price off, you know, just because you were known quantity number one, you guys had a relationship. And, you know, it would it would save him trouble and maybe a little bit of stress in the long run. So great. So you guys looked at it, you analyse it, and you said yes, we're going to take this right. Right. Alright, so deal numbers 42 unit complex, just outside of Mobile, Alabama, I think we talked earlier $1.85 million purchase price, right? Right. Okay, so let's talk about raising the capital for this one. What was what was the amount of capital you guys had to bring to the table?

Josh Ferrari 24:44

So the amount of capital that we initially thought we're gonna have to bring 650 and enough being 605 because we were able to, we didn't quite need as much capital but it's funny story on a capital raise because we got that deal and you know, he In August, we ended up actually getting on a contract in September of that year. But it was July of that same year that I did a money raising challenge 30 day money raising challenge, and previous to the challenge had only raised like $100,000. So I never really thought I was going to be the capital raiser on this deal that was going to be where I was really gonna be leaning on Reggie. And I was just going to handle a lot of the communications and, you know, I brought the deal in. And so that was kind of going to be my value add. Well, I did this challenge and raise $6 million in 30 days. And I was like, holy cow, maybe I know what I'm doing here. Maybe I need to be the capital raiser. So jumping into it. I'm like, I got $6 million. Like, yeah, I'm ready to go. Let's do this.

Brian Briscoe 25:39

Now. Let's qualify the $6 million was a soft commits. I mean, obviously, no money was transferred hands you just soft committed people. Okay. Ronnie, soft commit people, you Hey, you know, is this something you're interested in? You know, would you invest? You know, 50,000 $100,000 with me if I had to deal? Right?

Josh Ferrari 25:56

Yeah, figuring out where their money was coming from how much money they actually had, what they would be comfortable actually giving me on like, a sample deal. Yep. Yeah. And so that's how I came up with the $6 million number. So I'm thinking high in the sky, you know, I'm ready to go. There's can be no issues here.

Brian Briscoe 26:12

6,600,000 is gonna, I'll do that in two minutes.

Josh Ferrari 26:16

All right. Thanks, coming so easy. Yeah, well, we actually got into, you know, this was two, three months later, when we actually started raising money from having done that challenge. And it was so much more difficult to actually get hard commits on this capital than I had ever imagined that it would be. So I had $16, and sock commands. And when it came down to it, I only actually raised about 300 $350,000. I'm like, What in the world? Where's the rest of this money? And, you know, having conversations with folks, a lot of them are saying, Well, you know, I had money three months ago, but you know, I'm not just waiting around for you to find the deals I've since moved the money elsewhere. I'm in another deal. I've got this other thing go and, or they were scared about the economy, because it was during COVID. They're like, Yeah, I'd invest with you. But maybe if the economy was a little better, or I don't really like mobile as a market or, or you know, all these different reasons, which are valid reasons. You don't want to force anyone to give me money. But I was like, Man, this sucks. You know, all these people were like, ready to go. And then I like it took too long timing wasn't right. Kind of he's not right. All these all these things aren't lining up. So it's deals,

Brian Briscoe 27:20

right or Yeah, whatever. Yeah, lots and lots of issues there. Yeah. And I think that's that's a common trend among a lot of people is some people grossly underestimate how much they can raise. But I think most people overestimate how much they can raise and realise it's it's a lot more difficult than it seems. So anyway, yeah. So So go on. So you raise 300 and change 350. And you have to get to 600,000. Right. So

Josh Ferrari 27:45

Reggie brought 350, he brought about 153 500,000. Now think we need about another 150,300 80,000 shy, we've talked to everyone we could possibly know to talk to we're doing a five or six B offerings. I can't just blast it out to everyone. I can't just accept any Joe Blow Sallie Mae, individual, I've got to have a few conversations. And we're about three weeks out. Like there's only so many conversations I can have in this amount of time, and then also have enough time to review all the documents, be comfortable with the investment actually get us the money. And especially if it's like through an IRA or something, it's going to take some time, and we got to close this thing. Yeah, so we're like scrambling a little bit. We're a little worried. So I actually contact my, well, the seller, which was my mentor. I'm like, Hey, you know, we're about $150,000 shy on this deal. Obviously, I'm not trying to like scare you or anything, you know, we still think we can close it. But what do you think about helping us raise the last bit? It'd be a win win, you raise the money for us? Yeah, you know, then it immediately goes back to you. And everybody wins. So he took about you keep a little piece of the pie.

Brian Briscoe 28:52

Yeah. Right.

Josh Ferrari 28:52

He took about two to three days to think about it. And he was like, I just don't feel you know, ethically right. It doesn't feel right to be on both sides. I don't think I could do that to my investors. And I'm like, I get it. And so I'm thinking, you know, I read that and then initial like text message or email or however he had messaged and messaged me that and I'm like, like, doubt about like, we're gonna do now. But things like but you know, I've gotten I've got this investor that's invest with me a couple of times. He's he's actually raising money for us and a couple of deals we've done. Great guy lives over here in Florida and Destin, and I think, I think you guys would work well together. You know, he's kind of got the same vision he's had in the same path. He wants to do the same things that you're doing. So how about I make the introduction? I'm like, please make it definitely Yeah. So he, he makes this introduction, we go to brunch together. And it was already like 80% of the solution. There was then he was a direct referral. You know, this potential partner was a direct referral from my mentors and like the students, obviously got instant credibility there. Yeah. So the other 20% was really like, does he mesh well? Are we headed in the same direction do we have

Brian Briscoe 29:58

credibility when both directions, you know, you had. I mean, it was it was him looking at you with instant credibility, you're looking at him with instant credibility. And that's, that's the nice thing about referrals is you once again, you you take on the the reputation of whoever refers you when when you get that referral. So anyway, go ahead. Sorry about that.

Josh Ferrari 30:19

Yeah, no, absolutely. I mean, and so we had that we had the brunch, and he actually brought his daughter. So that was like another, like, personal touch wherever, but I like meet someone in his family. He seemed really cool. We got we all kind of had, like, you know, the same sense of humour. We all thought a lot of the same things were, were funny, we're heading in the same direction here, the same vision, where he wanted to head. And so we're like, it makes way too much sense not to do this. So you know, let's go and jump into this. Let's make this thing happen. And he was like, Okay, great. You know, I've already got, like, $300,000 waiting to move into the deal. I'm like, well, well, I need 150. But, but but great. Awesome. So then, two weeks goes by, you know, we get ready to move towards the closing table. And you know, in a two week period, he brought $700,000, he had raised $700,000. For this deal. We're like we only needed 150. You know, what are we gonna do with an extra $550,000. And, and so we just had that, like, set aside, while we were like waiting to shoot for the next year, we're like, well, we need to make this like permanent relationship, you know, you're obviously got some kind of skill set here to continue to raise more and more capital. And so we ended up, then just two weeks goes by we get ready to go to the closing table. And closing didn't happen. It got delayed. And so we can we can discuss why that is if you like yeah,

Brian Briscoe 31:38

that's let's hit it. What Why did closing get delayed?

Josh Ferrari 31:42

closing got delayed. It was supposed to be December 1 is our initial closing date. But we got the property under contract early September. And then late September and late October, we had two hurricanes hit Mobile, Alabama, and it was like the two most, you know, painful or deadly hurricanes that have happened to mobiel. And like a 16 year timeframe, what are the odds that even one would hit nevertheless to two. So now we've got two hurricanes that hit we've got this property under contract that now all the roofs have blown off. All the siding is destroyed. There's like trees down everywhere. There was no power at the property for a while. A lot of interior damage to some of the units. And we're like, oh,

my gosh, yeah, we've

got all this money raised. Are we going to close? Now? The biggest question is still we keep moving forward. Is this still? Yeah, is this still a deal. And so we ended up there were there was a lot of, you know, back and forth. And there was some some confusion with their power of attorney that they had their power of attorney company that they had actually handling their insurance claim. They were telling us that there was like almost $800,000 worth of damage. And then we were like, okay, so we expect to get 100,000 hours of closing, you know, we'll get all this stuff fixed, it'll be back to normal, even better, because it'll all stuff will be brand new. So we're thinking everything's on the up and up. And we were told this on the first of December, on the day, we were supposed to close. And so we had scheduled a delay all the way to the end of the month, because we still wanted to close within the year because that was a big promise we had to our investors. And then we get to three days before the end of the year before the last business day of the year that we could actually close and we finally hear something back from the insurance company on how much they're actually going to pay out. They tell us they're only going to pay out $350,000 and we're told we've got this $800,000 worth of damage. So we're like, well might just have to pass on this one. But we're like, well, we're not gonna give up that easy. We've gotten this far. You know, let's let's dive into the numbers. Let's figure out why 350 What the heck's going on? So I'm talking about these were like 24 hour days, man like no sleep, we're on the phone all the time talking to the power of attorney talking to contractors talking to the seller talking to us amongst ourselves trying to analyse what the heck's going on and what we're gonna do. And then also trying to keep the investors up to date, like, Hey, we still haven't closed the heck's going on trying to have all these conversations. So we ended up finding out that this power of attorney like the way they had it set up, they $100,000 was primarily going to them, you know, they were going to make a big chunk of that money. And they were just stating that it was going to cost that much to actually fix which at the end of the day didn't matter to us if we were going to get the money from the insurance company who cares where it goes, as long as it gets fixed. You can get paid, you did the work, whatever. But now we don't have the money so we're not paying you you know $550,000 to do this work. So what are we gonna do what's what's happening here, and we ended up finding out that it was only going to cost like $270,000 to replace all seven roofs, get all new vinyl siding, paint the exterior, and then have an additional like $70,000 to do whatever with

Brian Briscoe 35:12

and so we're like, oh, numbers work. Oh, seven numbers work again.

Josh Ferrari 35:15

Yeah, yeah. Now the numbers make sense like, why are you way overcharging we can go with his other contract over here that does amazing work because he's worked on a couple of the properties that Reggie had, you know, been flipping over the last 10 years. So we know his works good, you know, let's, let's just get this guy in here. So we ended up letting our the power of attorney go letting that company go and bringing in this other contractor. Now the numbers make sense. And then we get we close, you know, last day, and we're told from our attorney, because now we didn't have them, we didn't have their power of attorney. So we were like, maybe there's still a way to get the rest of that money from the insurance company. So we get close to the closing. Close. And our attorney specialises in real estate law and an insurance law. And so he tells us that he thinks he can get us the other like $400,000 if we do like go through these, you know,

Brian Briscoe 36:07

paper, a couple hoops, and you get the right,

Josh Ferrari 36:09

yeah, jump through a couple of hoops. So I was like, if we got an extra $400,000 we could basically give like an immediate investor capital return, like this deals, just getting Juicy Orange Juice here. So you know, we closed the deal. Now we're, you know, three months, three months in advance, and, and we're still jumping through hoops, but the deal seems to be getting Juicy Orange juice. I think nothing's came to fruition. But you know, we got $350,000 check at closing, we've got you know, we're in the process of fixing everything, making it all brand new. And everything's going great right now.

Brian Briscoe 36:40

Sweet. That's awesome. Well, hey, glad glad it's working out for you so far. And, you know, it's amazing, you guys were able to take that I mean, insurance, insurance claims hurricanes like that, you can be a blessing in disguise. You know, I remember on one of my single family homes several years ago, and this was this is probably a dozen years ago, we had a big windstorm come through, you know, gusts up to 120 miles an hour. So hurricane force winds in you know, in Salt Lake City actually was kind of weird, but, you know, blew our fence down to our roof off. And, you know, fortunately for us, we had a huge insurance payout, you know, that put a new roof on, it was an old roof, it was a 20 year old roof, and a 20 year old fence. But I think those you know, that's why you have insurance. And, you know, it's it kind of highlights the importance of keeping that insurance on there. But also, you know, the insurance money, your insurance payout, can actually go to the new owner, you know, through a transaction, which is something that, you know, a lot of people, you know, a lot of people will look at distressed properties like that, that have an insurance claim on them. And immediately, you know, run away, but there's always options, if you're willing to work through the options. And looks like it's gonna it's going to turn out very well for you guys. So once again, congratulations on closing, glad it's working out so far. Next question I have for you is what's next for you.

Josh Ferrari 38:04

What's next for us, we, like I mentioned earlier, we got another 148 units under contract and other 88 units will probably get under contract either today or tomorrow. And the goal for us in this year 2021 is to reach 1000 units, and that that number comes from just kind of being a nice round number. But that's you know, also that my goal, my wife and I's goal, and then one of my partner's goals is to is to go full time in this in this business this year, get out of our deputies and go full time. So we know that if we can even get close to that, to that unit count, you know that that level of passive income, as long as we keep doing deals that meet the same number of qualifications that we've been doing, then we'll get to that threshold, and we'll be we'll be out of the W two. And everything will be great, we'll really be able to build more systems and processes around it. Now that we're full time we'll be able to spend more time. Yep, I guess like analysing deals, creating relationships. Yeah, the whole shebang. We're

Brian Briscoe 39:06

in the business, you know, working in the business working on the business. Yeah.

Josh Ferrari 39:11

And then more time with family as well, more time was what actually matters. So that's, that's kind of our big goal for this year. But then, we actually just finished or I just finished putting together our our vivid vision. And if you guys have ever read that book, shameless plug recommend go check it out vision by Cameron Herald, but it's nice putting together and it's basically just a vivid idea of where you're headed in the next three years. And then in that three year mark, what is what's your life gonna look like? What's

your business going to look like? Where are there gonna be like employee benefits? What's it smell like? Where are you living? How many employees do you have? How much money are you making? And so we really just sat down and zeroed in on what we wanted. And so now that we've got a target to aim at, we're able to really propel ourselves even further into that was that that That's kind of where we're headed. Awesome.

Brian Briscoe 40:02

So, now here's, here's probably the biggest jam, I hope of the whole podcast here. You know, here comes the question, right? What advice would you give an aspiring investor? Who's six to 12 months behind

Josh Ferrari 40:14

you? What advice would I give to an aspiring investor? I'm going to have to say, just start doing something, just start start learning, you know, first of all, I guess, figure out what it is you're even wanting, like, why real estate? You know, you asked me what is my What is my fiery why earlier? If you don't have a why you're gonna get burned out in this industry almost immediately. So figuring out why and where you want to head and then just getting started, like, a lot of people think i think one big myth inside of real estate, or any business is that you can go out and you can take massive action immediately. And that's, you know, just right from the get go, you're going to take this massive action, how many people do you really know that go out, have no experience in real estate, no money, no nothing. And buy 1000 unit property, their first deal, just them, it doesn't happen. You know, you take you take baby steps, you make the phone call your Google What the heck, bigger pockets is, you listen to a podcast, you read an article, you talk to someone, you go out to someone with for coffee, you have all of these small baby steps that eventually accumulate to you having taken massive action, and it doesn't start with massive action. So don't let the fear of like not knowing where to start or not knowing what to do, like stop you from getting in into this. Just take one one small baby step a day. And you'll be surprised where you get in the next six to 12 months.

Brian Briscoe 41:47

Yeah, it's like, like the proverb but journey of 1000 miles starts with one step. And that's that's exactly, that's actually exactly true. I mean, that's what I found as well is, you know, consistent daily action, consistent action, pushing the ball forward, you know, whatever, whatever, you know, metaphor you want to use, eventually is going to get you there, you know, eventually is going to create massive results. So I love it. priceless advice. All right. Last question, how can listeners learn more about you,

Josh Ferrari 42:16

you can check out our website at Ferrari capital calm. But that about tab, actually check out our vivid vision that I was just mentioning, that's something you're interested in putting up putting together or he just wanted to learn who we are, what we're doing, where we're headed, and see if it isn't something that you might want to be a part of. And we've got a whole bunch of other things on our website, you can check out all my social media links or podcasts or what have you. But just checking checking out my websites probably the best way.

Brian Briscoe 42:41

Right, awesome. Well, hey, I appreciate you coming on the show today. And you know, we'll put a link to the website in the show notes. And you know, make sure that the people have access to that. So, appreciate it. And once again, congratulations on your first deal and your second deal and soon to be your third deal and your fourth deal. So you're on fire right now. So this is awesome. So appreciate your time again, and you will talk again soon, I'm sure. Absolutely. Thanks so much for having me on the show man.

Thank you for listening to the divergent apartment investor podcast today brought to you by four oaks capital. If you'd like to know more about how to invest in apartment buildings or want to be a guest on our show, visit our website at four oaks capital comm slash podcasts or email us directly. If you're still listening, you obviously like the show. So pull out your phone, tap subscribe, and leave us a five star rating on your favourite podcast app. And we'll see you again next week.

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