Syndication Vs. Joint Venture with Kyle Jones and Jonathan Farber

Episode 84 of the Diary of an Apartment Investor Podcast with Kyle Jones and Jonathan Farber, hosted by Brian Briscoe. Transcript by – please forgive any errors.

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Brian Briscoe 0:00

That said, we got Kyle on the line here what do you want to ask him,

Jonathan Farber 0:03

How did you decide between doing JV deals and syndication deals,

Kyle Jones 0:06

my initial thought process was I need to leverage other skill sets to be able to do certain things. But I knew that I didn't know how to raise money. I knew I had some untapped potential, but I knew I didn't know how to really structure it and go figure that out. So I had to kind of partner with some folks that that had done that before. And so that's how I kind of made that decision. It was just purely building the track record, building the experience and building the resume more than anything else learning how to do things, but more importantly, how not to do things.

Jonathan Farber 0:47

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. This is journal entry number 85. And part of our Ask the Expert series today we talked with experienced investor Kyle Jones and aspiring investor Jonathan Farber. Keep listening for Kyle's thoughts on whether you should do a syndication or a JV first, and how to leverage experienced partners in getting your first deal across the finish line. And now, this show Welcome to the dialogue and apartment investor podcast. I'm your host Brian brisco with four oaks capital super excited for today's show. It's one of our Ask the Expert episodes and we have two amazing people on the line with us today. We got a man with a tonne of experience in this and other businesses, Kyle Jones, and a motivated aspiring investor who's also been very successful things Jonathan Farber. So first we'll talk about Kyle Kyle is the founder and key principal of truepoint capital. He's responsible for the company's strategic planning, investment decisions, asset management and overseeing all aspects of the company's financial activities, operations and Investor Relations. In addition to truepoint capital, he's also the founder of American grid, a real estate appraisal management company. And prior to being a full time investor, and entrepreneur, he was in the corporate world and the high tech sales industry for 13 years, worked for multiple fortune 100 companies. And he's also the true family man. He'd been married for 11 years with three amazing children, including two baseball players and a cheerleader. So that said, Kyle, welcome to the show. Thanks, Brian. And thanks for having me. Yeah, so this this is great. So I mean, you're you're actually one of the very first people I met in this real estate investing business. And I was surprised you remembered, you know, I went to a conference, which was a huge stretch for me. And I remember the very first morning at the networking breakfast, we ended up at the same table and you one thing I have to say is I've been very impressed. I'm on your email distro list, and you probably put out some of the best content I've seen. Oh, wow. Yeah. Good. Good for you. I mean, it's, it's a little bit contrarian at times it is. But it's it's really good content. So you know, before we get into your your story or anything, I'll just tell anybody listening, go to his website, sign up for the newsletter. A lot of this stuff comes out of that. That said, Kyle, Hey, why don't you tell us a little bit about yourself?

Kyle Jones 3:13

Yeah, thanks. Thanks again. Yeah, I absolutely remember that I've got a very detailed memory. But yeah, so like you said, the name of our company is true point capital. We do syndications, much like a lot of your your previous guests, we're primarily buying in the southeast part of the US. I started much like a lot of your other folks who you've had on the show and, and that starting in single family starting with fix and flip homes, I started with an accidental flip with just my wife and I were We were buying our primary residence, and then we're just kind of forced to move with with my corporate job that was moving us back to Houston, we were going from Austin to Houston at the time and on the house for about nine months, and then made a nice little 10 $15,000 profit on it. And we'd really didn't do much to the property at all other than just kind of take advantage of some market appreciation there. But more than anything else, it really turned me on to the fact that hey, there is a way that we could make some additional income. While I was still working a corporate job, she was a teacher at the time. And really just try to figure this thing out. You know, I'd always had an interest in real estate and trying to make it work. I think everybody would be lying to you if they didn't think they had an interest because you can make some good money and it is very lucrative if you do the right things and you buy the right deals and and implement the right value add strategy. I think that's probably first and foremost, most everybody's initial motivation. I know it certainly was for me, but it has evolved to that because it's, you know, money's not sustainable and being motivated by money is not something that's going to continue to push you and persevere. There's got to be a greater purpose there. But after doing some fix and flips and even some buy and hold on the single families, we eventually wanted to continue to scale up and found our way into some smaller multifamily, the 10s, the 15, the 20 units, ended up buying a couple of those. And really, it's just kind of like one of those boring things where it's like, okay, now what, you know, this is this is working. And, you know, we want to continue to go to, excuse me go bigger, which is ultimately what led us to try and to start bringing in additional investor capital rather than just doing everything on our own. And so that's, that's kind of where we're at today, we're continuing to do private syndications through through limited partners, and you know, the properties just seem to kind of keep getting getting bigger, which is good, we're getting more momentum by the by the month, but that's a little bit about us and kind of where we're at today.

Jonathan Farber 5:46

So let's, let's unpack that a little bit. So you did a couple of single family, you know, with you, which for a lot of people, it's kind of the proof of concept phase, you know, you see, oh, my goodness, you know, we just that nine months $15,000 in nine months for doing nothing. All right, that's, that's, that's a proof of concept that real estate can work, you know, so you saw that. And you started to scale started getting into multifamily. Where, where were you living at the time? And where did you start buying multifamily?

Kyle Jones 6:15

So we were living in Houston. And that's where we live now. And for the folks that are watching this, you can see the backdrop that the nice Houston skyline behind me, but we actually started buying, we were buying the single families in Houston, I started buying some single families outside of Houston and to like the clean market. So okay, that's there's a big military base there. It's Fort Hood, a lot of just renter demographics there. So still on one of the houses today, even still on it's been the same, the same tenant since we first bought it, you know, five years ago, that purchase is what got me comfortable with buying out of my own market. So the first multifamily was actually in Houston that we were pursuing. And then the second multifamily property, which was a 14 unit was in Tulsa, Oklahoma. And so and I was I was already kind of familiar with that specific market, I have a lot of family there, I have a brother there, my entire extended family is actually pretty much there. So there's some familiarity with the market itself. I didn't just, you know, throw a dart at the map of the US. But that's really what kind of got me comfortable with buying out of state and really just where we're at now, you know, we are actually just now this last year and in 2020, we were just starting to buy our first deals in the Houston market. So we're just now starting to buy local, everything else has kind of been out of state. Okay.

Jonathan Farber 7:41

Yeah. So he says something that I think resonates with a lot of people and you know, I did the same thing. You know, I started looking in Columbia, South Carolina. It's a good market like Tulsa. And like you with Tulsa, we've got family there. You know, that was part of the reason that we selected that market. But you know, when you're looking at investing out of state, obviously if you invest in your backyard, I think that's the the best way but not everybody's backyard. is fertile grounds for for real estate investing, going somewhere where you're familiar with just gives you a leg up versus you know, throwing a dart at the map. And I'm glad you said that. So yeah. All right now, so so you're starting starting to move to Houston. Now, if I remember. Right, you also have Huntsville, Alabama properties, right?

Kyle Jones 8:27

Yeah. Okay. Yeah, we're we've got several in Huntsville, we've been buying in Huntsville for a while now. And even to the point now, we are actually doing a ground up construction deal there as well. So we're building a 228 unit property there that we just broke ground on a couple weeks ago. And then we actually have another 25 acres under contract right now that we're going to, we're going to build on that as well. So kind of in the it's in the same market but just in a little bit different part of Huntsville, it's actually the 25 acres is probably in a slightly better area. So we're really excited about that.

Brian Briscoe 9:00

Nice. Now on the ground up development. Are you looking at like Class A Class B construction you looking at?

Kyle Jones 9:06

Yeah, I would still call it workforce housing. It's not the high end, you know what you're going to see, you know, gallery of Dallas or you know, Buckhead Atlanta markets like those, it's gonna be nice and clean and new. But you know, it's gonna be a really basic pool. You know, it's gonna be a nice little real little rectangle with, you know, maybe a little grill area and, and probably a fire pit because fire pits are pretty low cost to build. And then really just have a good clean place to live. Just brand new, nice, fresh units. So we're gonna try to add a couple of amenities in there that aren't ultra high end, but that are definitely necessary and, and what most people want today.

Jonathan Farber 9:50

Nice. Nice. That's good. Yeah, it's hard to you know, when you look at Class C, you know, housing, which is where most workforce people are. It's hard to build work. Force housing because built into the definition is, you know, workforce housing is 20 plus years old and whatnot. But yeah, it's I think there's I think the definitions probably should be, you know, refined slightly. But so Huntsville is I think it's a great market. What What attracted you guys to Huntsville?

Kyle Jones 10:18

So I actually, when I first started really looking at going out of state and I got comfortable with the concept, I was really trying to pinpoint some other markets that showed signs of growth. So that would be two specific indicators are population growth and job growth. And there were other markets that we identified. I mean, we we bought properties, and Chattanooga actually still own a couple properties in Gulfport, Mississippi, you know, they're, they're kind of off the radar. Now, they're these secondary markets. But they have jobs there, they have a good size population, they're, you know, anywhere from 250, to 500,000, in the whole MSA. And that was kind of our sweet spot. As I was getting started. And coming into it, I was being somewhat priced out of Houston and Dallas and Austin, some of these major metros, and I just didn't really have the track record with the broker community yet to two that I, where I really could feel like I could push a little bit more and get aggressive on our on our offers and our underwriting a little bit to be able to do so. So. But we're still very active in those secondary markets. Like I said, we're just now coming into the Houston metro area and looking at some other major markets, but we're still very active in Huntsville, and some of these other tertiary markets.

Jonathan Farber 11:35

Nice, nice. Yeah, a couple things there. I like and, you know, we followed some of it a similar path. I mean, I live in DC, you know, we're not investing in DC, for obvious reasons. But you in the Carolinas, you know, Charlotte is one of those markets, that kind of has that high barrier to entry. Like, like you're saying, Houston does, you know, we were, we were, we were priced out there, too. And we started in the Greenville and, you know, in the other the smaller markets, you know, Spartanburg I think there's, there's a lot more traction for the newer investors in those, you know, secondary markets. But it seems like a lot of people choose that same route, you know, cut their teeth on on the smaller markets, maybe smaller apartment size, and then grow up. So well, cool. Hey, so let's, let's focus on, you know, maybe one specific deal or overall Buying Criteria, if you want to go into a little bit of detail on on what your you guys are doing?

Kyle Jones 12:31

Sure. So let's start with the Buying Criteria, then I'll kind of go into maybe a specific deal. But as far as the Buying Criteria, we're looking at at least 100 units, ideally a little bit larger. But the main thing is we want to be able to carry a full payroll, and that is a leasing person, and then a maintenance technician. So those two are critical for us, and just getting the economies of scale and keeping our costs down. And then we'll go all the way up to 250. I mean, we're buying a 300 unit property right now in Houston. So there's really not a limit on on what we're willing to look at. But at a minimum, we're looking at at least 100 units, ideally, maybe closer to the 120 to 150, just to get economies of scale and the markets that we're already in. And then we've got a certain set of returns that we're looking for, and everything else as far as how we're underwriting the deal, and just how we structured the deal with our investors. So all that goes into it, too. So we just kind of reverse engineer back into it, make sure we have our, you know, true conservative assumptions, you know, everybody has a conservative underwrite Oh, yes, you know, we know we can do, and especially in the markets that we're already in, we know, we have actual use cases for what our expense per unit what we can expect, what we can expect with rents. So we've got a track record there. But, you know, to talk a little bit about a specific deal, you know, we ended up closing little over 500 units all in 2020. And a couple of those were actually very difficult closes just because of just the global pandemic that was happening if folks weren't aware of that. But we actually had one of one of the first deals that we closed in the first part of the year, it was actually the second deal. But we had brought it to market, there were three separate properties. We had taken it to our investors as as just kind of like a, you know, we kind of made the appearance that it was a fun, but we were very clear that they weren't investing in a fund. We kept every property separate and kind of as a standalone syndication, but if they invested, say 100k, it would be allocated pro rata across the three properties. So the second property is part of that. We put all this under contract in end of January, early February. And we're really gearing up to close on this one. Very, you know, more context on the deal very true. That we had a possibility to actually increase rents by about $200 And we knew that based on our other property that was about two miles away from this. So it wasn't just the broker offer memorandum that's you

Brian Briscoe 15:09

get your own comps,

Kyle Jones 15:10

yeah, we have our true own comps. And so and we were actually only underwriting to be about 150 on the rent bumps after year three. So we that's kind of what a way that we go about our conservative underwriting. But so we knew there was a lot of opportunity there. But the reality is we had to take it on a bridge loan, usually we do agency debt, day one, but we had to do it. Because the gross income was was low, it had a really low debt to income ratio, just because this owner was the original developer developed the property back in the early 80s. And he hadn't raised rents in the last six years that he owned the property. So a lot of meat on the bone, but not much income right away a lot of potential. What had happened, though, the week of spring break for us, is that's when the NBA shut down. And that's when things really started becoming real for the US here. And that following Monday, I got a call from the current lender, and they backed out of the deal. And we were supposed to close the end of March. So that's two weeks away from our initial closing, we were gearing up for closing. And, you know, of course, I had a little bit of a panic. But I immediately that day started jumping on the phone going through my call list. And I mean, heck, I might even open up a mortgage broker shop after that experience. I think I called every every lender and every bank in the US just seeing if they would lend on this deal. And not to mention if they could close it in the next 30 days, because we had a 30 day extension that we had to trigger. But then we also had a remorseful seller. You know, even though this gentleman was older, he he was there's a lot of sentimental value with the property. So he was sort of being difficult through this process. And, you know, wasn't really being understanding at all about the fact that our lender just backed out of the deal in this pandemic.

Brian Briscoe 17:07

So he must have been under a rock because I mean, lending completely shut down in the bridge market.

Kyle Jones 17:12

I mean, well, he was I mean, he, you know, I if I had to guess I know he was into his 80s. And, you know, the, the sad part of it, he actually passed away three weeks after we close on the property. And I think, you know, he was in bad health. And I think he kind of knew that this was the only thing that was kind of keeping them here. I mean, that's just I think the reality of the situation. But we ended up finding a lender. And I actually found it through one of my appraisal relationships, which is a hard money lender that we do some work for, had no idea that they were even interested in multifamily. They really weren't, they don't do multifamily, but they had money to deploy, they had their own fun. So they weren't actually like, you know, doing kind of a rap where they go and get a community bank loan, and then just wrap their terms on top of it. This was a true fun that they controlled. So they were able to live but you know, we of course got gouged on single family hard money rates, which is in the 10% range. And then a couple points up front, but we ended up having to do it. And now looking back, it was it was the best decision for us. But not only are we getting $200 increases, but on average, we're actually getting closer to 250 and in some cases $300 increases on the renovations that we're doing. And those are those are real numbers. So

Jonathan Farber 18:28

yeah, I mean, fortunately, there's enough meat on the bone that you know, taking that big hit on on the lending, you know, kept you in the game, we had a, a property under contract in South Carolina, and it was gonna be a bridge debt play as well. And when bridge fell out, you know, we basically had to back out, you know, we didn't have enough there, there was meat on the bone, but not quite enough meat on the bone to stomach that type of interest rate. But yeah, well, cool. Hey, so one question. I like to ask everybody, you know, what's your big burning? Why? What's your motivation for all of this?

Kyle Jones 19:01

Yeah, you know, I, I kind of it's gone through phases. I think initially, I mentioned it, and I'm just being transparent. I think a lot of people I think the first interest in real estate kind of starts from a financial standpoint, but as you really get into it, you know, to sound cliche, a little bit it is my my family, my three kids and more specifically, the freedom that this type of career can buy somebody and you know, it's definitely not passive, you know, especially somebody on the active side, which I know you are as well, I mean, you know, you can attest it's this is not just to set it, forget it passive type strategy. Now, you can put some greater systems in place so that you're not having to be extremely hands on every single day all day long. But even if you are having to do a heavy hands on or deal where you've got some some heavy capex projects going on, or maybe you're in the middle of closing, that's always the most time where I feel like I'm really getting pulled every which way and direction. You Still control your schedule? Yeah, you know, I can still be, you know, you mentioned in my bio, I've got three kids two are in baseball, one's a cheerleader, I am their baseball coach, both of them. And I'm showing up, you know, we'll have 536 o'clock practices, and you just see all the parents coming in late, because they're still there, they're getting off work late, you know, they, they're stuck in traffic, and they're getting there late. But, you know, we're actually able to get to the field a little bit early, so that we can spend some one on one time together with them. Same thing for for my, my daughter, or my cheerleader, she's, she's got competitions, you know, she's in a competitive space, and there's some travel involved with that. And so, you know, at the drop of a hat, we can, we can go and do that. And so that's why I say more than anything, it's just being able to have the freedom to create more experiences with with our family, especially while the kids are still really young. So as my primary driver and of course, we've got some some financial goals in place that we that we try to I but you know, more than anything else, when the nitty gritty and when the times get really tough. It's just, that's that's the, the motivating factor for me. Yeah,

Jonathan Farber 21:07

yeah, I think that resonates with a lot of people, that's, that's part of my big burning y is being able to control my own own time, I'm active duty military. So for me, sometimes that means, you know, six 810 months away from the family. And, you know, I want to be able to do exactly that. I want to be the baseball coach, you know, not, not the dad that can sometimes be the games. But yeah, I appreciate that. Well, Kyle, what's one more question before we move to Jonathan, what's next for you.

Kyle Jones 21:34

But then we're gonna continue to really try to double down on some of the markets that we're already in, continue to expand. And really, we're not entirely committed to starting our own property management company, although we are starting to hire some of our own personnel on our side to be more regional tights, if that makes sense. So they, they, they would kind of take a regional type of role, but they would still be under the truepoint. umbrella side. So really representing the owner, more so than the property manager. So we've got some some hiring goals for this year in that regards. But, you know, it's just, like I said, just continuing to scale the markets that we're in and really, maybe find a couple other ground up projects.

Brian Briscoe 22:13

Nice. Nice. Appreciate that. Now, you also mentioned part of the show, you got a podcast coming out, what's that about?

Kyle Jones 22:18

I do. So you know, it does a little bit of a crud tray and thought process there. And the approach that we have to take it's not it's not a traditional real estate podcast, it is more investing as a whole related investing in alternative assets. So we talk a lot about wealth strategies in general, at a high level, obviously, there is a big multifamily component to it, but it's called the income investor podcast. It's available on every podcast platform. And it kind of parlays with the newsletters as well. And what we what we try to, we kind of pick a fight with Wall Street. That's the that's the that's the ploy. So it's not really, you know, picking a fight with any one person, although we do tend to pick on some financial advisors, but they're not all they're not all bad people. It's just the industry that I think has has really misled a lot of folks. But that said, the income investor podcast, and we've got a website, the income investor,, as well.

Jonathan Farber 23:16

Alright, we'll make sure that gets the show notes, too. So perfect. All right. Let's switch gears here and bring Jonathan on. So real quick, just intro to him. Jonathan is a 27 year old side hustle investor living in Raleigh, North Carolina, grew up in Long Island, and spent the last couple years working at a tech company in Raleigh, where he's the youngest enterprise account executive. He's also working on his real estate side hustle, as I mentioned, on his lunch breaks nights and weekends, which I think a lot of people will relate to. So you know, that said, Jonathan, welcome to the show. appreciate you having me excited to be here. Yeah, this is awesome. So do us a favour tell us a little bit more about yourself. I mean, I would very very, you know, high level details on on your BIOS that you could fill in all the blanks yourself.

Yeah, I need to update that bio, too. So that's on me. But um, yeah, because because I feel like it's been changing just just more recently, which is which is cool and exciting and, but just for some specific reasons and just like realising some things, but just I guess one layer deeper on that. I live in Raleigh now from New York originally, but my whole path was just changed dramatically when I was like 2122 and I wasn't really sure what I want to do in life. And my family had a little bit of a financial challenge and kind of just changed direction like woke me up in the sense of can't keep going through life just doing what you're doing. I thought I was gonna play golf professionally. I played golf in college and that was kind of just what got me fired up at the time. And then it's kind of like a light switch just started reading finding mentors reaching out to a lot of people something I've always been fairly good at is just taking action and just, you know, building it on the way down, but um, yeah, just started adding rentals with house hacking every year. Oh, just move out into a new one. My whole thing was On educated kind of goal, and now like learning more about goals and everything, like, you know, bigger than just money was I just wanted to be financially free retired by 30. You know, I wanted like 10 to 20,000 coming in a month. And that was kind of my goal. So that was all I was chasing after on the side of doing this kind of addressing and working in the corporate job. Then when COVID hit long story short, I left New York I kind of was a nomad for a little while, I moved to a couple areas, I was prospecting, I bought a couple deals actually in a different direction. I thought I wanted multifamily specifically. But then I was focused on furnished housing, short term rentals, Airbnb and then extended stay stuff for like nurses. And that was kind of where things changed for me in that sense, focusing a lot more time on it and building a community. And then this year, I was able to do that financial freedom kind of checkbox, which is cool, I still do have the W two job, but more or less looking at it differently to utilise it to get more deals. And now, for me, it's just been more journey of adding deals, you know, strategically doing deals that kind of excite me and align with whatever my goals are, you know, so like, for me this year, my goal I thought was to buy an apartment building, because I thought that would get me to my financial freedom number the fastest. And then learning more about it and having some multifamily mentors, I realise it's an amazing path. But for me, syndicating wasn't going to be that path for shorter term cash flow. So it kind of changes strategy a little then, yeah, this now. Yeah, we're working on just building the community and some wholesale flip stuff. And then the short term rentals. Nice. Nice.

Brian Briscoe 26:31

So you talked a little bit about your, your reason for doing this. But let's let's just dive one level deeper on that one as well. what's what's your big burning, why for for investing,

Jonathan Farber 26:42

I thought it was money. I thought it was like, Oh, I need more money. I'll be happier when I have more money. And then I made more money than I ever made in my whole life last year. And I was like, I'm not that happy. I'm not any happier than I was the year before. And I don't even like what I'm doing. So for me now it's become more about is building a community and helping more people leave their jobs by adding creative low money down passive income strategies, or you know, I would say hybrid passive active strategies. So now that's what gets me fired up. We started a Facebook group this year, I have no clue how we've 2300 people in it all hungry, trying to get at it every day, trying to retire before 33 real estate. So that is my big why. I wish I had a wife and kids to Kyle's point, I guess I got to put some time back into that area of my life.

Brian Briscoe 27:29

Yeah, you see that time you're still young. So I know.

Jonathan Farber 27:31

But you know, I'm kind of one bucket, I gotta I gotta spread it out a little. But you know, maybe it's time I'd love to have a partner. And that's but that's my why right now it gets me really fired up to see people leave jobs, they don't like doing or see other options out there, then just having one stream of income, and then if that goes away being really in a bad place. So that's my main why and drive right now. I'm a minimalist. Sure. I love making money. I love fancy things. But like, I live, just I wear the same thing every day. You know, I don't need this stuff. So my Why is more about just community and kind of seeing more people do it.

Brian Briscoe 28:07

Nice. Nice. Well, that said, we got Kyle on the line here where you want to ask him? Kyle,

Jonathan Farber 28:12

I do have a lot of questions for you. But I was thinking about what would be best for a short period of time and this use my first question, because this is the one that burned me for a long time. I think I have a little bit more of an answer on it now. But I'd love to hear your approach on it is How did you decide between doing JV deals and syndication deals? You know? And do you look at it on a deal by deal basis? Or is it more just you guys have a business model that you like for a specific reason?

Kyle Jones 28:41

Yeah, that's a really good question. So my initial thought process was I need to leverage other skill sets to be able to do certain things. And so for me, you know, I had already kind of proven my own strategy, with self funding our previous deals, our early deals, just with the money that I was making in bonuses through my high tech sales jobs. So I was working for IBM, but I knew that I didn't know how to raise money. I hadn't done that before. I have, you know, a decent network of folks, you know, a lot of people who, you know, were in the high tech sales space that had bonus money coming in consistently and everything else, and they just would just put that into like the 401k or whatever else. So I knew I had some untapped potential, but I knew I didn't know how to really structure it and go figure that out. So I had to kind of partner with some folks that that had done that before. And so that's how I kind of made that decision. I knew those first couple deals weren't going to break the bank. It was purely building the track record, building the experience and building the resume more than anything else learning how to do things, but more importantly, not you know, how not to do things. You know, what, what can we do better? So that's kind of how I made that decision. In my mind. I just knew that It was going to be a little bit of a sacrifice on some of those early deals. And I thought about it the same way. You know, I wanted to figure it out. You know, I was okay with losing some of my own capital, if that's what it took to get me the education and some of those early days with a single family homes and everything else. I just wanted to figure it out.

Jonathan Farber 30:18

Okay, I've that. Um, I guess there's one other question and I like this format, Brian, because I can I have a podcast too, but I can't ask him my selfish questions as selfishly but

like, this. Yeah, this is this is perfect, because, you know, and here's the great thing about it, too, is people listening, have the same questions. You know, I struggled with the JV vs. syndication question early on, who was something that I thought about to the Do It Yourself versus, you know, JV on smaller stuff, or syndicating? So? Yeah, anyway, go ahead. Okay, so

this one is similar, because I again, like I'll just tell her to myself, but also, a lot of people that I see in the beginner community, let's just say starting out, and they might have hustle, and they might have time, but they don't have the money, you know, so they can hustle up and maybe find the deal that the person with the money might not be so interested in doing. So. For me, I didn't know that there was even the world of KPIs or bringing on balance sheet partners. So like, again, back to this, you're starting out for me, my whole thing was, I need to find a deal. I'm going to cut my teeth on it, I had $1 amount in mind, I wanted to deal between like one and $1.3 million, so that I could do slight value add on in the Midwest. And that's why when I moved to Kentucky, and Ohio, that was all I was looking at every day, I was just trying to find those deals. And then I was thinking, wow, is this reckless or dangerous to think I'm doing my first quote unquote, big I mean, I had eight units, and then three short term rental unit. So this would be significantly bigger from an operation standpoint. So I was just, like thought to myself, is this reckless to try to do this all on my own? Would it maybe make more sense to bring on someone that is a Kp, if you can maybe just to find what that is? And then like, do you recommend to your point how you started but for someone like me that's considering doing it myself? And kind of staying in a box first? Maybe? I think I know your answer, but versus maybe tagging up with someone who has experience giving away some more of the equity and then just getting the experience on a deal.

Kyle Jones 32:10

Yeah, so that that's a great question. I think it's, you know, the first comment is, it just kind of depends on what you really want to do and what your strategy is, it sounds like you're doing some more short term stuff. So you might not necessarily have to give up equity initially. But maybe you might have to pay somebody to coach you. So if there's a way to do that, obviously, that's always better for you. But there is a cost to that. If you're starting to go and take a bigger approach and wanting to do some larger deals, you know, even in the short term space, it's not don't don't completely rule out bringing in equity to just if that's the only thing that you kind of have to offer. But I would just say it really just kind of depends, you know, if there's a certain skill set that you're lacking, and you're talking to somebody specifically, and you think that they can help you, and they would prefer to take some equity versus just a fee. Don't be scared to offer that up. You know, it's really just about building the experience and building the track record. Now, I did learn, I learned from those first few deals that it was not going to be a long term partnership. So don't be so fixated that you're going to partner with that person forever. You know, just make sure that you're going into with eyes wide open, because that is one thing we learned. Unfortunately, we will learn very quickly after we closed on the first couple properties that we did, that that wasn't going to be a long term partnership, then. So thankfully, each deal stands on its own. So we ended up selling those those assets. So you can definitely go bigger, faster, if that's really what you want to do. Or if you're just kind of staying in your lane and working on those smaller deals, you know, you might not have to give up so much equity.

Jonathan Farber 33:52

Yeah, we did something. I mean, similar. I did coaching, first of all, and then we brought in a Kp as well. So we had somebody who's got, you know, ballpark 2000 units, that is a co GP with us on our first two deals, actually. So you know, and that was something that was very, very relevant to us at first is, you know, we were looking at our first deal was a 55 unit apartment complex, you know, so we were looking at that. And that was something that worried us was Do we have the track record? Do we have the experience? know, how can we, you know, make sure we have the track record and experience? You know, and between me and my three partners, we've been in three different coaching programmes. And like I said, we brought in somebody with 2000 units on the on the GP, it cost us a little bit. But, you know, like Kyle said, it depends on what you're doing, you know, what we we were doing we had, we felt that we needed a little extra pump and didn't mind you know, shaving off a portion that GP for someone else to provide that for us.

Kyle Jones 34:54

Yeah, I would add to that for sure. The brokers control the deals in the larger commercial space. Despite, you know, people making their best effort to get to mom and pop owners, or maybe that's their criteria, we're only looking for mom and pop owners. That's great. But even the brokers are calling those mom and pop owners more so probably have more formal systems in place than than any of us could ever create unless we actually come from that background. So you've got to work your way into the broker community. So establishing that credibility, like Brian was talking about is really important, because there's people out there that are even on the education side that are telling you, hey, if you just give them a quick offer, and you know, run through your quick analysis, and, you know, you can just fake it till you make it kind of thing I can tell you firsthand, that doesn't work. Like they can brokers can see right through it, they can sniff it, this isn't their first time doing this, they know how to use the internet and find out your track record. And if you're actually a real player or not. So you kind of do need to make sure to align yourself with somebody. But at the same time, you can't just start throwing their name out either, you've got to make sure that you've actually had a conversation with that person that you that they're willing to partner with you and give their blessing to use their name. So there's a way to go about it the right way. But, you know, we're not in the days where we can just kind of fake it till you make it, you really do need somebody that can show that track record that shows they have closed deals before. And that's going to give that broker confidence to choose you.

Brian Briscoe 36:24

Good, yep,

that's interesting, I guess, you know, it's different for everyone. But it's, I think, something that I struggle with, I mean, less so than I used to at the beginning. But finding that balance between doing something yourself partnering with someone that has experience or paying someone for coaching or consultation, like those are kind of the three routes that I see. And like they can all work. And that's I guess, to the point of depends on the skill set. But you know, I think people The one thing I see is like, Did you do anything, Kyle, that helped you identify what you're good at doing what you are looking for in a partner that they're good at doing that can then bring to the table because the partnerships that I've had that failed and leave me feeling like I don't want to do another partnership, are the ones where I realised we didn't do a good enough job on the front end of fleshing out who was good at what and who's going to do what, and I sometimes look back and realise it's because we didn't know what was going to be needed. And then as things popped up, it was like, Well, are you going to do that? Or am I gonna do that? I don't want to do it, you know, and it was like, became a difficult situation.

Kyle Jones 37:30

Yeah, you know, that's, it's, it's clear now, based on the My partner now what the roles are, but no, early on, it wasn't, you know, we had to just kind of figure it out. And as things popped up, you know, there's, there's a couple times where they were both both of us were kind of running the same path. And it was like, hey, wait, we're duplicating efforts here. Let's, you know, you run with that, and I'll run with this type thing. So you do need to probably have that conversation upfront, but it's really just about getting really, really clear, you know, even to the point where you could almost write it out, you know, if you're vetting a partner, just write out your roles and responsibilities, you know, talk to them, get to know them, what do they like, you know, I really don't recommend somebody that just has one conversation with somebody and decide to be partners, you know, the internet has made it very easy to expedite that relationship and vetting process. But you really don't truly know who that person is until the pressure is on. And that's what the experience was for me. Because when things got tight, I quickly realised that these other folks that I was partner with were just folks that we didn't need to be aligned with because of how they just handled the pressure. And they couldn't really they couldn't handle it, or they handled it differently, I should say, there's no right way to do it, but they handle it differently than than I would have done. And when deals get stressful. So, you know, I think it's just making sure that you do have multiple conversations with prospective partner really talking to them about what they like to do if it's operational, if it's just raising capital, if it's just, you know, what other responsibilities would they be willing to take if they're willing to, you know, scrub the financials, and put them into a reporting tool that is easy for investors to understand if that's something you're looking at, or, you know, if you're talking about on a smaller scale, you know, you said some short term rentals. So I imagine that's like Airbnb type stuff. So you know, making sure that if you're the one talking to the property manager, that your other guy or partner is kind of running through you allowing you to be able to manage that relationship or vice versa, you know, so you're still including that person. But there is a single point of contact for the manager, because I can tell you to, you know, having done deals with more than two and in some cases, three and four partners, and when everybody knows who the manager is in there calling directly the managers get really, really frustrated.

Jonathan Farber 39:52

Yeah. Yeah, I agree. Now, we had I've been fortunate the first partnership I had with multifamily ended up being you know, the The four partners in forex capital, and we've been together for two years now. But, you know, we had a very long and painful conversate conversation up front on, you know, roles, responsibilities, and also, you know, ownership percentages, you know, who was going to, you know, who's going to own what part of the GP. And I think that was the basis for for a lot of other things that followed. And it was absolutely an unnecessary thing that happened is we took that hour, hour and a half and talked about, hey, I want to do this. Well, I kind of wanted to do that. And we sorted through everything. And we designated a lead person on each one and support on others, which that's how we do it in the military, too. But it ended the day, once we had that agreement, everything from there on out was a lot smoother, because we had pre determined who is doing what when, and it's helped enormously since.

Kyle Jones 40:52

Yeah, that's great feedback. And I would add to Brian's point that keep it deal by deal specific. You don't have to, you know, he he's got a brand for x capital. And I don't know, we have to get into the exact structure. But I, if it were me and I had four other partners, I would, you know, we could keep our brand. But each deal now because we're changing the name, we're putting it into a separate entity anyways, that is going to actually hold title, you can have you know, where one deal, you know, if you've got four partners, one deal, you have maybe 30%, one deal got 25% the next deal, so you're keeping it separate. And that's just to keep it flexible, because if there is a breakup, it can get really messy if you're 100%, dialled in to you know, a conglomerate versus just a property specific. Yeah.

Jonathan Farber 41:40

Yeah, that's that's what a lot of people do. You know, the deal the, that allows a tonne of flexibility. The the guy who came in and copied on our first deal, you know, he's got 2000 units, he does a very much a deal by deal on everything he does. Anyway, we're about out of time. So I got one last question for both of you and Kyle, you go first, how can our listeners learn more about you?

Kyle Jones 42:01

Oh, thanks for that opportunity. So my email is Kay Jones at truepoint k. Jones at true point cap calm. Our website is www dot truepoint They can click and subscribe to our newsletters, like you mentioned early on. And you know, so all the social media with some pretty easy to find to LinkedIn, Facebook, Instagram. So

Brian Briscoe 42:26

yeah, reach out. Got it easy. And we'll we'll we'll get some links and put those in the show notes as well. So Jonathan, same question for you. how can listeners learn more about you?

Jonathan Farber 42:34

Yeah, I'm probably the best way the most content I'm putting out lately is in the Facebook group for the podcast. It's just called millennial millionaires through real estate. I email Same way, but it might change my personal emails, just J. One, j, f, ar br at outlook calm. And then social media. JOHN j, farbe, j, one, J, fa, rb. And yeah, should be some more stuff coming out lately. And then, Kyle, actually, I definitely want to tie off with you if you're starting a podcast, we're coming out with a course of how we produce our daily podcast for $9 an episode. So that's something we're pretty excited about will be a lot more out around. So anyway, if anyone wants to reach out has any questions on podcast, real estate, short term rentals, whatever. I keep my Fridays completely open for networking. So I will connect with anyone that reaches out and would love to do so. But thank you for having me on, Brian. Really appreciate it.

Yeah. Hey, Jonathan, you had a lot of great questions. Kyle, you brought a lot of value to this a lot of good answers solid, you know, advice coming in. So thank you guys, both for being on the show today. You know, I think this is going to be an amazing episode.

Brian Briscoe 43:47

Thank you for listening to the diary of an 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 podcast or email us directly. If you're still listening, you obviously like the show. So pull out your phone, app, 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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