Raising Capital & Finding Deals: Hunter Thompson’s Guide to Real Estate Success | Jake & Gino Podcast

[00:00:00] Hey Jake, it's not often that we get a sponsor that transforms their industry.

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[00:02:19] Hello, everybody.

[00:02:20] It's Jake Sonson.

[00:02:20] I host Jake and Gino Podcast.

[00:02:21] You're my co-host, the multifamily mentor, the coach, chef, the father, six, the best-selling author, the G-Daddy.

[00:02:26] Gino Bar-Rogine, how's it going?

[00:02:27] Jake, I'm doing good.

[00:02:28] I just had a song pop into my mind as we were-

[00:02:31] Oombap?

[00:02:32] No.

[00:02:33] Oombap.

[00:02:33] Okay.

[00:02:34] And I know when you close a deal, you just get really anxious about the next one.

[00:02:41] And the song that popped into my mind is, you lost that loving feeling.

[00:02:47] I don't know why it just did because like you close a deal, you get so anxious and you're like, I'm done.

[00:02:52] I'm never going to do another deal again.

[00:02:54] I'm never going to feel that love ever again, but it comes back eventually, Jake.

[00:02:58] It'll come back.

[00:02:59] Yeah.

[00:03:00] It's fleeting.

[00:03:01] I feel like it's never going to happen again.

[00:03:02] And so you always got to get on the hunt, but it's what it is, man.

[00:03:05] So anyways, Gino's getting a little romantico here.

[00:03:09] Today's guest is the founder of RaisingCapital.com and Asim Capital.

[00:03:13] He is bringing over 10 years of experience in due diligence, underwriting, and capital raising for commercial real estate.

[00:03:21] He's also been featured in Forbes Market Watch and USA Today.

[00:03:27] So without further ado, Hunter Thompson from the top rope.

[00:03:32] Welcome to the show.

[00:03:33] Hunter to be on.

[00:03:34] Good to see you guys again.

[00:03:35] I feel like we saw you in Charlotte maybe 15, 16 years ago.

[00:03:40] It feels like it's been a while.

[00:03:41] I know you've been on, but it's probably been even longer than that.

[00:03:44] So why don't you just tell us about the company over the last, say, two, three years and the evolution and the growth?

[00:03:55] Yeah, for sure.

[00:03:56] So I got into business in the wake of the Great Recession and was just lucky enough to, for lack of a better term, given market timing.

[00:04:06] You know what I'm saying?

[00:04:06] I've got to be humble about that because it's probably one of the best times in the history of the United States to start a commercial real estate business.

[00:04:12] But not just the market timing.

[00:04:14] I was able to get mentored by some amazing people that were able to weather that storm.

[00:04:19] So it wasn't just that I timed it right.

[00:04:21] It was that the only people that were left, especially in California, were people that were implementing what now is considered syndicated investment opportunities, buying really quality deals and quality markets.

[00:04:31] Was it Sam Freshman?

[00:04:33] I'm actually not familiar who that is.

[00:04:35] Oh, Gino.

[00:04:35] Give him a history lesson here.

[00:04:36] Well, it's interesting.

[00:04:37] Sam Freshman.

[00:04:38] Oh, the author of the book.

[00:04:39] Yeah.

[00:04:40] Yeah.

[00:04:41] The Red Bible.

[00:04:42] The Red Book.

[00:04:43] The Real Bible of Real Estate, right?

[00:04:45] That's true.

[00:04:46] And Hunter, I got to jump in real quick.

[00:04:47] Well, Gino, you got to tell us about the book a little bit before we're leaving people in the dark here.

[00:04:50] Yeah.

[00:04:51] Before I tell people about Sam Freshman, I love how you said, I was lucky.

[00:04:55] You weren't really lucky.

[00:04:56] What happened was you came in a specific time period.

[00:04:59] You took a big chance because everyone was running for the exits as they have been for the last 18 months.

[00:05:05] You stepped in very similar to myself.

[00:05:07] I met Jake in 09.

[00:05:08] Nobody wanted to touch commercial real estate.

[00:05:10] Rents were 300 bucks.

[00:05:12] GDP was 1%.

[00:05:13] Interest rates were at 6% plus.

[00:05:15] It sucked.

[00:05:16] And everyone says, yeah, you should have bought back then.

[00:05:18] Well, nobody was buying because it sucked.

[00:05:20] But Sam Freshman, who is the author of an amazing thick-ass red book, talks about syndications.

[00:05:26] Two of his biggest mistakes, selling too quick and not buying enough.

[00:05:31] And if you guys want to read a book on syndication, he just tells it simply, plainly.

[00:05:37] But he has so many amazing ideas.

[00:05:39] And he's actually, I think, a California guy.

[00:05:41] And he's done a lot of deals in California.

[00:05:42] Yeah, yeah, yeah.

[00:05:43] Yeah.

[00:05:43] And I think, Hunter, don't discount the work that you had to put in to get it at that time.

[00:05:48] Because there were many people who were burned by real estate and said, I'm never touching this again.

[00:05:52] So the fact that you jumped in, you laid the foundation.

[00:05:55] It's taken years.

[00:05:56] You need to build the foundation.

[00:05:57] So when the building starts going up, the next recession comes, it won't crumble the building.

[00:06:03] That's what most people fail to understand.

[00:06:06] And one last thing.

[00:06:07] If you're thinking about getting into real estate, now is the best time, I think, as it was in a way.

[00:06:13] Because now the opportunities are starting to come.

[00:06:15] Don't wait till the opportunities come.

[00:06:17] It's too late.

[00:06:17] Because a guy like Hunter has those relationships with brokers.

[00:06:21] They're going to send deals to Hunter and not to you.

[00:06:23] I just want to say one thing before Hunter finishes his story here.

[00:06:27] Put a little bow tie in what Gino's saying.

[00:06:30] Everyone was running left.

[00:06:32] Everyone was running left.

[00:06:34] You were running right.

[00:06:36] So while you're being humble pie about this, you were doing the opposite of the crowd.

[00:06:42] And I think that's another component that you can't discount.

[00:06:45] But I'd love to hear more of the story.

[00:06:47] You're so right.

[00:06:48] Oh, thank you.

[00:06:49] There's honestly some depth to that.

[00:06:51] Because it's even harder than that.

[00:06:53] Right.

[00:06:53] So let's say I'm a college kid at the time.

[00:06:55] I graduate.

[00:06:56] I didn't lose my shirt.

[00:06:57] Right.

[00:06:58] I didn't know all my friends weren't going through terrible, bad things where they were

[00:07:02] running out of money.

[00:07:02] I was a college kid.

[00:07:03] So it was easier for me to do that.

[00:07:05] But now I know what it feels like to have a business and to see real estate correct

[00:07:10] dramatically.

[00:07:11] And when you look at that chart and you think, well, only an idiot wouldn't have bought.

[00:07:15] Number one, that idiot has listened to all their friends and family.

[00:07:18] Hindsight is 20-20.

[00:07:19] Don't.

[00:07:19] Exactly.

[00:07:20] All your friends are saying, don't go into real estate.

[00:07:22] Go get a real job, et cetera.

[00:07:24] But also you might be getting squeezed from liquidity.

[00:07:26] It's hard to do.

[00:07:28] And then lastly, and this is-

[00:07:29] No one's giving money at that time.

[00:07:31] Totally.

[00:07:31] And lastly, no one wants to sell and no one wants to lend.

[00:07:35] So it's as someone who's now not 25, but 38, I can kind of see why my young, hey, am I

[00:07:43] the only smart person that sees this?

[00:07:44] It's like, it's such a gift.

[00:07:46] But now that I'm older, I'm like, oh, now I'm starting to feel what it's like when you

[00:07:50] see an economic slowdown.

[00:07:51] The ignorance is so bliss at the time too, right?

[00:07:54] Exactly.

[00:07:54] I was thinking about the other day when we got started.

[00:07:57] I'm just so thankful I was as young as I was and as stupid as I was.

[00:08:01] And I was willing to do the things that I probably would not be willing to do now because it definitely,

[00:08:08] we did some dumb shit.

[00:08:09] To piggyback off what you're saying, you were willing to do it because you're willing

[00:08:13] to get uncomfortable and you're willing to say there's got to be something better

[00:08:16] and I'm going to put in the time and the effort.

[00:08:18] Most people are just comfortable enough to not be uncomfortable.

[00:08:23] That's the problem.

[00:08:24] And Hunter, what you said, this is so important.

[00:08:28] Back in 08, and I think even now, it was hard to get debt.

[00:08:32] So Jake and I used a lot of creative financing and it was hard to raise capital.

[00:08:36] Jake and I, we didn't raise capital earlier on.

[00:08:39] Now, that's what you're seeing right now.

[00:08:40] So it sort of mirrors what happened in 08, 09 is what's going on right now.

[00:08:44] Similar but different for sure, right?

[00:08:46] Similar but different.

[00:08:47] And I think now there's more of a spotlight on real estate.

[00:08:51] There's a lot more competition than there was, but there's more tools now and there's

[00:08:55] more ability to raise capital.

[00:08:56] It's a different environment.

[00:08:58] So as you're going through it and you're going through real estate those early years,

[00:09:04] what mistakes did you make early on?

[00:09:07] So it's hard to call it a mistake because it's like I really was paying attention.

[00:09:10] And the mentors I had, I feel like that was my Aleppo moment.

[00:09:13] If any libertarians are out there, if someone says Sam Freshman, I go, who's that?

[00:09:16] But I am familiar with that author and I did read his book early on.

[00:09:20] But I kind of saw that opportunity in 2008 as how can I avoid that?

[00:09:25] And so my first true north was diversification.

[00:09:29] Now, it's hard to say that it was a mistake, but if that's your true north.

[00:09:32] So diversification, what sense?

[00:09:34] You know, within the private sector, hey, let's get money out of the stock market.

[00:09:38] I don't want to be involved in this casino.

[00:09:40] I think that's a good true north.

[00:09:41] But then within the private world, it's like, okay, you've got your multifamily.

[00:09:45] All right, what else?

[00:09:46] All right, what else?

[00:09:47] And that was kind of my attitude at the beginning of my career.

[00:09:49] And I don't want to say chasing shiny objects, but it's like now that I know a little bit

[00:09:54] more about investing, I don't know about building a business where the true north is

[00:09:58] diversification.

[00:09:59] I just don't know.

[00:10:00] And as what you want becomes bigger and bigger, you start to learn more things about business

[00:10:05] that like specialization and vertical integration and hyper-focus.

[00:10:09] Those are very advantageous, but are kind of against diversification.

[00:10:14] So then you start to have this conversation around, am I an LP investor or am I an owner

[00:10:18] operator?

[00:10:19] Am I a business owner?

[00:10:20] And so those are the kinds of things where at the beginning of my career, I was thinking

[00:10:24] mobile home parks, self-storage, office, industrial, what can I get my hands in?

[00:10:28] And then I would raise capital for other operators in various niches.

[00:10:32] And then in 2022, we made a pivot as a business to go all in on Phoenix multifamily.

[00:10:38] And it's been such a great shift, but I don't want to say that that was a mistake.

[00:10:42] It was just that was the path that I took based on the information I had.

[00:10:46] I was kidding around saying it's been so long.

[00:10:50] The last time we spoke, I felt like you were all self-storage and I could be wrong, but I

[00:10:55] was like, oh, I thought we were going to talk about self-storage today.

[00:10:57] So I'm out of the loop.

[00:10:58] And the reason I asked the question about diversification was because we look at diversification

[00:11:03] as A, B and C class apartments.

[00:11:05] So we'll have some of the workforce housing and we have some newer built to rent A class

[00:11:10] stuff.

[00:11:10] So that's, but I understand where you were going.

[00:11:13] You were saying, we're stock markets and things.

[00:11:15] Let's diversify this.

[00:11:17] But am I incorrect in saying that?

[00:11:19] Were you guys heavy into self-storage at one point?

[00:11:22] Yeah.

[00:11:22] I mean, that was some of the first deals I did.

[00:11:24] And just for context, I wasn't trying to be a jack of all trades.

[00:11:27] I was trying to find best in class operators in various niches and partner with them as a capital

[00:11:32] partner, usually as a fund of funds.

[00:11:34] And later I had my series 82 and would raise capital under a broker dealer, if people are

[00:11:40] familiar with that terminology.

[00:11:41] So, and that's something that I did for years, but you know, the mobile home park business

[00:11:45] was the first industry where I was like, how am I not, how am I the only one seeing this?

[00:11:49] I mean, the tenants own the homes, you know, just, I'm sure a lot of people are familiar

[00:11:53] with that now, but at the time it was kind of nuanced.

[00:11:55] And then self-storage was another one of those where I just couldn't believe it.

[00:11:59] Like they don't live there.

[00:12:00] The tenants don't live there.

[00:12:01] Like how good can it be?

[00:12:03] And there was definitely some truth to that.

[00:12:04] And there was some great opportunities.

[00:12:06] Now I'm not saying I played a role in it, but people figured those trades out from my

[00:12:11] perspective.

[00:12:11] And you see cap rates come down dramatically to where they're competing with multifamily.

[00:12:16] That was everything in the last few years though, too, right?

[00:12:18] That's true.

[00:12:19] That's very true.

[00:12:19] But in all fairness, at the beginning, the reason I was looking at mobile home parks is

[00:12:24] that there was a 400 basis point difference in cap rate.

[00:12:28] So now if it's like, well, listen, if everything's the same, I mean, goodness gracious, multifamily

[00:12:32] is head and shoulders above everything.

[00:12:33] Let's be real.

[00:12:33] That's what I always thought is just that the price was justified.

[00:12:37] So that's kind of my evolution as an investor.

[00:12:39] And that's what happened with the market.

[00:12:40] What a beautiful story of an entrepreneur starting out, not knowing what he's going to do and then

[00:12:46] pivoting and going through the journey and not trying to figure out in a day or a year,

[00:12:51] but it does take years and not being afraid to pivot and not being afraid to understand,

[00:12:56] hey, this is what the market gives.

[00:12:58] But then ultimately saying, I've learned a lot in my career, but this is where I want

[00:13:02] to land.

[00:13:03] I want to land in Phoenix and I want to land in multifamily.

[00:13:06] Now why Phoenix?

[00:13:07] And maybe more specifically, just go into multifamily a little more.

[00:13:10] I heard cap rate compression.

[00:13:11] Maybe it's a basic human need.

[00:13:13] Maybe demographics look great going forward.

[00:13:16] You know, what are your thoughts on that as well?

[00:13:18] Hey, Jake, it's not often that we get a sponsor that transforms their industry.

[00:13:23] You're telling me.

[00:13:24] After years of fine print contracts and getting ripped off by overpriced wireless providers,

[00:13:30] if we've learned anything, it's that there's always a catch.

[00:13:34] So when I heard that all Mint Mobile wireless plans are 15 bucks a month when you purchase

[00:13:40] a three-month plan, I thought, dude, what's the catch?

[00:13:43] But after talking to them, it all made sense.

[00:13:45] There isn't one.

[00:13:47] Mint Mobile's secret sauce is that they sell wireless services online.

[00:13:50] They don't have retail stores or salespeople.

[00:13:53] Instead, they deliver premium phone plans directly to you.

[00:13:57] And Gino, that's it right there.

[00:13:59] Their costs are less.

[00:14:01] Therefore, they're able to provide the same great service at a much lower price.

[00:14:07] I was shocked, but you're basically getting the same value for much less.

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[00:14:26] All plans come with high-speed data and unlimited talk and text delivered on the nation's largest 5G network.

[00:14:34] Use your own phone with any Mint Mobile plan and bring your phone number along with all your existing contacts.

[00:14:41] Ditch overpriced wireless with Mint Mobile and get three months of premium wireless services for 15 bucks a month.

[00:14:48] To get this new customer offer and your new three-month unlimited wireless plan for just 15 bucks a month,

[00:14:55] go to mintmobile.com slash jake.

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[00:15:09] $45 upfront payment required, equivalent to $15 per month.

[00:15:13] New customers on first three-month plan only.

[00:15:17] Speeds slower above 40 gigabytes on unlimited plan.

[00:15:21] Additional taxes, fees, and restrictions apply.

[00:15:24] See Mint Mobile for details.

[00:15:26] I mean, man, this is interesting because I know you guys are super bullish on multifamily,

[00:15:31] but I'll put it this way.

[00:15:32] I'm in a position to know because I've seen the ins and outs of some of the best syndicated businesses in the country

[00:15:39] of all different asset classes.

[00:15:41] And I'll just say some things that I think are not really up for debate.

[00:15:44] Number one, it's really competitive.

[00:15:47] Okay?

[00:15:48] So some people would say that's a red flag.

[00:15:51] Well, let me go on.

[00:15:53] The reason for that is that it is extremely lucrative.

[00:15:57] There are large enough assets that institutional buyers are attracted to it.

[00:16:01] It's still a simple enough investment vehicle that guys like us can understand it.

[00:16:07] You know, people always need a place to live.

[00:16:09] There's endless demand.

[00:16:10] You can go on and on.

[00:16:11] But I think at the end of the day, it really comes down to this.

[00:16:14] The tradability of the asset is paramount to its success in the long term because it speaks to how many friends you have.

[00:16:21] And how many friends you have means how can you solve problems?

[00:16:25] You got a lot of friends in multifamily.

[00:16:27] If you start doing eight connecting flights to get to your mobile home that's 50 minutes outside of whatever, you don't have any friends.

[00:16:35] And you can get a 12% cap rate.

[00:16:37] But who are you going to get to renovate the asset?

[00:16:39] How are you going to get new tenants in there?

[00:16:41] What if you need a new home?

[00:16:42] You start to run out of friends quickly, especially when the market turns around.

[00:16:45] Because what happens is everything that's tertiary gets bid up and bid up and bid up.

[00:16:50] But when the market changes, everyone runs to safety.

[00:16:53] And so from my perspective, multifamily is like the bond market of the private equity.

[00:16:58] And you just always got a friend because of that.

[00:17:01] Gino, let me make a few points to what he said there.

[00:17:05] It's more scalable than, say, mobile home parks and RV.

[00:17:11] And I think to a certain degree, self-storage as well.

[00:17:14] But it's also the credit worthiness of the residents.

[00:17:17] You can get a higher credit worthiness of a resident base than you can in mobile home parks.

[00:17:23] I think there's more stability as well.

[00:17:26] So those all lend itself to, if you're actually going to try to grow and scale a business, the ability to do it.

[00:17:33] Especially if you're a regional player.

[00:17:35] I think being a regional player with mobile home parks could get very challenging and burn out pretty quickly just due to the inventory that's probably there.

[00:17:43] Yes, 100%.

[00:17:44] You can go on and on.

[00:17:45] But at the end of the day, the reason the debt is less expensive is because the institutions and the smartest people in the world, they view multifamily as a lower risky investment.

[00:17:55] And I think it's someone who wants to play the game.

[00:17:57] Exactly.

[00:17:57] And the reason for that is just the number of participants and how savvy the participants are.

[00:18:02] So you might look at that and say, well, I don't want to be swimming with the sharks.

[00:18:05] But it's like these people have a lot to gain and a lot to lose.

[00:18:10] So they're just way more inclined to be more ethical.

[00:18:13] They're way more inclined to be straight shooters.

[00:18:16] You don't want to rely on that.

[00:18:17] But at the end of the day, it's like we're talking about savvy people standing to gain seven and eight figures.

[00:18:23] That attracts really quality talent.

[00:18:25] And I want to play the game where that's the outcome.

[00:18:28] That's the ideal outcome.

[00:18:29] One more cherry, Gino.

[00:18:30] I just want to go on this because he's getting a bunch of things from our Monday morning meeting that we have.

[00:18:35] So if you look right now, and I'm going to speak specifically to our portfolio, the demand that was there in 2021 is not there.

[00:18:46] Meaning people coming in left and right, everything is rented.

[00:18:48] There's no way that there's an available unit.

[00:18:50] It's just crazy.

[00:18:51] Right?

[00:18:52] I've never seen it like that.

[00:18:54] But right now, if we look at our physical occupancy, it's just about 96% today.

[00:19:02] And so even though you're not seeing the kind of crazy demand, people are not moving as much.

[00:19:07] It's still a very stable, basic human need.

[00:19:11] And I think that's why it gives agencies, institutions so much confidence in it.

[00:19:17] Because look, people need a place to go.

[00:19:19] And it's not easy to put these things up.

[00:19:22] The time it takes to build and the shortage of housing in the country is a real thing.

[00:19:27] So I don't know.

[00:19:29] It might not be the hottest right now, but it's still hot.

[00:19:32] But you both are speaking about larger assets.

[00:19:35] Let's not poo-poo the little guy.

[00:19:37] No, I'm not.

[00:19:37] I'm speaking about it all.

[00:19:38] Like it all, yeah.

[00:19:39] Two unit, the five unit, the 10 unit, the 20 unit, where these institutions are not investing because it doesn't make sense.

[00:19:46] And their mom and pops right now are winning.

[00:19:48] Well, they want bigger dollars, right?

[00:19:49] Yeah, exactly.

[00:19:49] So if you have a 30 unit asset that's going for $2 million, let's say.

[00:19:53] Well, an institution is not really going to buy that.

[00:19:55] But the mom and pop can't buy.

[00:19:56] So there's so much opportunity in the space right now.

[00:19:59] And my next question, Hunter, is you're an amazing capital raiser.

[00:20:04] That's where you, I think, cut your teeth.

[00:20:06] People are saying to themselves, I can't get into multifamily.

[00:20:08] I don't have $800,000 for a down payment.

[00:20:11] Let's walk through a little bit of your capital raising, how you started out,

[00:20:14] and some of the skills that you learned to become a really good capital raiser.

[00:20:18] Well, if people have read my book, I'll kind of be brief about this.

[00:20:21] I've told the story a bunch.

[00:20:23] I'm sure a lot of your listeners are familiar with it.

[00:20:25] But 2014, I had invested in a couple deals passively, decided, hey, I'm going to partner with this mobile home park operator,

[00:20:33] and I'll do this through what's now called a fund-to-fund structure, where I basically said to the mobile home park operator,

[00:20:39] hey, if I show up with like a half million dollar investment versus a 50K investment,

[00:20:44] will you give me a 70-30 split versus a 60-40 split for this entity, essentially?

[00:20:50] And then I went to like 30 people and said, hey, listen, I'm going to create an LLC.

[00:20:55] You can invest in this LLC, and we'll just invest in this deal.

[00:20:59] I'm not saying I'm the man and I know all this, but I found someone who's pretty freaking good.

[00:21:03] And the only money that I'll make is just the difference that I negotiated with the sponsor.

[00:21:08] That'll flow through the LLC, and that portion will flow to me.

[00:21:11] So you're getting the same deal if you had gone direct, but you're giving me credit for finding this opportunity

[00:21:16] and conducting due diligence, which I had and invested with them and all that stuff.

[00:21:20] And they said, okay, interested.

[00:21:21] Let's hear it.

[00:21:22] And so I laid out this pitch for like 30 minutes, and I had already promised the sponsor I would bring half a million dollars.

[00:21:28] And I fell on my face, basically, and no one wanted to invest.

[00:21:33] So I was like, it didn't make any sense to me.

[00:21:36] I mean, it was producing 10% cash flow month once.

[00:21:39] Totally.

[00:21:40] And I had to be super embarrassed.

[00:21:42] I texted this girl that I was trying to impress about my soon-to-be million-dollar capital raise

[00:21:48] and had to be like, well, you know, she asked me, Chrissy, my friend at the time, but now my wife,

[00:21:53] was like, how'd the capital raise go?

[00:21:54] I'm like, well, we didn't lose any money.

[00:21:57] Like, how could it go worse?

[00:21:58] The zero dollars, you know what I'm saying?

[00:21:59] So I basically learned this lesson that like, just because someone knows, likes, and trusts you,

[00:22:06] which those people do, that's a requirement.

[00:22:07] But there's so much more to it.

[00:22:09] They've got to be financially willing to invest.

[00:22:11] They've got to be emotionally bought in.

[00:22:13] They've got to have confidence in their own willingness to look at the deal and make a good

[00:22:16] decision.

[00:22:17] There's just so much more to it.

[00:22:19] And then for the last 10 or 15 years, I've built a business around, how can I do that

[00:22:23] in a way that is a one-to-many approach?

[00:22:26] How can I attract people to me that are getting nurtured and educated and going through that

[00:22:31] customer journey without me spending all my time just trying to force people across

[00:22:36] the finish line?

[00:22:36] And that's what I built my business doing and went from struggling to raise half a million

[00:22:42] to, I think, I've raised close to $100 million now and placed money and investments all over

[00:22:47] the country and hundreds of millions of dollars of deals.

[00:22:50] Hunter and the listeners, I'm going to put this into context.

[00:22:54] He didn't fail in 2014.

[00:22:56] Jake and I bought an asset, 136 units for $29,000 per unit.

[00:23:02] It was producing $450 a month in rents.

[00:23:05] We went to $595 day one.

[00:23:08] So if you think about it, that more asset was sitting on the market forever.

[00:23:12] We still own the assets.

[00:23:13] So to think about you not being able to raise a 10% cash on cash, their deals were out there.

[00:23:18] That was the minimum back then.

[00:23:19] And people weren't buying these assets because they were afraid.

[00:23:22] They just didn't-

[00:23:24] That deal's sat forever.

[00:23:25] It was on the market for three years.

[00:23:27] It was on the market for three years and it was just amazing.

[00:23:29] And people just didn't understand the value.

[00:23:32] Now, I love how you talk about the simplicity.

[00:23:34] So in raising capital, let's dive into a little bit deeper because I think it's important.

[00:23:37] I was at a winery called the Renault Winery this past weekend.

[00:23:42] And I think one of the most important things when you're raising capital is to keep it simple,

[00:23:47] depending on who you're speaking to, but also creating a story or a narrative about what

[00:23:53] you're trying to raise capital for.

[00:23:55] Like that mobile home park, I'm sure you didn't go in with a story about how you're just being

[00:24:00] able to deliver affordable housing to people who can't afford it.

[00:24:03] And you're going to be able to deliver superior returns because I think most people, they just

[00:24:06] focus on IRR and cap rates and you lose people.

[00:24:09] So let's dive into that a little bit.

[00:24:11] Did you refine your storytelling?

[00:24:13] Did you, you know, how did you go from that half a million to over a hundred million dollars?

[00:24:17] What were some of the things that you did?

[00:24:19] So Gino speaking from experience and it takes to really experience and also confident capital

[00:24:25] raiser to be able to say what he just said, which is that the narrative or the story

[00:24:31] of the deal is what's going to sell the deal.

[00:24:34] And so when you're getting started, maybe some of you are just getting started.

[00:24:37] To be honest with you, I was a bit insecure when I got started.

[00:24:41] So I try to come off as super buttoned up and dive right into the numbers.

[00:24:45] Oh, I'll show them.

[00:24:46] I know the numbers, which I did.

[00:24:48] But the thing is like a random dentist isn't going around thinking like, I wonder if I could

[00:24:53] find like a 1.4 X DSCR.

[00:24:56] Yeah.

[00:24:56] You're becoming like off putting to him because how old were you at the time?

[00:25:00] Well, I was 25 when I really started.

[00:25:03] No, but the mobile home park deal.

[00:25:05] How old were you when you pitched that mobile home park deal?

[00:25:06] It failed.

[00:25:07] I think I was something close to that age.

[00:25:09] Yeah.

[00:25:09] So you're 25.

[00:25:10] You're wearing like a black suit, looking like the mafia coming in, telling this dentist

[00:25:14] that you're the, you know, fucking hottest shit ever.

[00:25:17] And he's going, dude, you're just making me uncomfortable, man.

[00:25:20] Get away from me.

[00:25:20] This is like, I wanted to come here and have a glass of wine and hear about the deal.

[00:25:23] And like, yeah, this kid is pitching me and I just want to go home now.

[00:25:28] Right.

[00:25:29] Right.

[00:25:30] And, you know, I didn't know anything about marketing.

[00:25:32] I didn't know.

[00:25:33] I just was a real estate person.

[00:25:34] You know, that's what I was all in on.

[00:25:36] And so, but that's the truth.

[00:25:38] Like, sure, I can come and talk to you guys about DSCR, but like, what are the problems

[00:25:42] of the people you want to have invest with you?

[00:25:44] And how can you speak to their soul?

[00:25:46] Like the reality is maybe dentists or doctors, for example, they're thinking, dude, I've

[00:25:50] got carpal tunnel.

[00:25:51] I don't see a way out of this rat race.

[00:25:52] I made a bunch of money in my career, but I don't see a way where I'm going to retire.

[00:25:56] I've got no passive cashflow.

[00:25:57] That to me sounds like the hook that's going to get someone to actually pay attention.

[00:26:02] And if they go deep enough in due diligence, they'll start to learn about things like DSCR,

[00:26:06] but it's like, hey, got a problem.

[00:26:08] Here's a ladder.

[00:26:09] What's the deal going to do for me?

[00:26:11] Exactly.

[00:26:12] Exactly.

[00:26:13] Exactly.

[00:26:14] And so that first pitch was not a good version of that, but at the same time, like you want

[00:26:19] to be also careful about where people are in their awareness.

[00:26:23] You know, so a lot of us, like we read Rich Dad, Poor Dad.

[00:26:27] We realized that our financial advisor had lied to us.

[00:26:30] We realized that there wasn't really a path to retiring at 65 if you relied on the 401k.

[00:26:34] This is stuff we had to come to ourselves.

[00:26:37] And so when you go to smush that 10 year customer journey that you went to, that started with

[00:26:43] Rich Dad, Poor Dad, and ended with you at Jake and Gino for three years, listening and

[00:26:46] just obsessing over these guys, you try to smush that into a 20 minute lunch.

[00:26:51] And people are like, you're just an evangelist for God knows what.

[00:26:55] You're freaking me out.

[00:26:55] You're forcing this on me.

[00:26:56] You're freaking me out, bro.

[00:26:58] 100%.

[00:26:58] Jake's freaked out a lot of people, by the way.

[00:27:00] He's got great experience with that.

[00:27:04] You know, A plus mentor making people uncomfortable.

[00:27:07] That's the trick though.

[00:27:08] You know what?

[00:27:09] Can I just say one quick thing though?

[00:27:11] That's the trick of it all is because you have to be obsessed with this business to be

[00:27:15] good at it.

[00:27:16] So all you people that are just, holy crap, you're evangelists for real estate.

[00:27:20] You've got to learn how to not only taper it back, but speak in a language that's maybe

[00:27:25] you a couple of years ago when you were just flirting.

[00:27:27] Find the wavy scenes, Gino.

[00:27:29] Exactly.

[00:27:30] Jake, let me jump in real quick before you make your point because this is important as well.

[00:27:33] I'm sure when Hunter went to that meeting when he's 25 years old, he's the one who's speaking

[00:27:38] and he's the one who's talking and he's the one who's being braggadocious or a little

[00:27:42] more bravado instead of being the hunter asking, hey, Jake, how are things going?

[00:27:46] What are you trying to accomplish?

[00:27:48] Get to learn the person that you're trying to pitch.

[00:27:51] And it may not even be a good fit and it's okay if it's not a good fit, but that person

[00:27:55] will respect you and he may or she may even say to you, hey, I have somebody who wants

[00:27:59] to invest with you.

[00:28:00] So the first thing you need to do is you really need to get to know the person and it's not

[00:28:04] a 20 minute lunch.

[00:28:05] It should take a little bit longer.

[00:28:06] If you're going to raise hundreds of thousands of dollars for somebody, get to know them,

[00:28:09] get to see if they're a good fit with you, get to educate them a little bit, and then you

[00:28:14] can offer them the opportunity.

[00:28:15] Don't do what Hunter did.

[00:28:16] And what Jake and I have done early on is here's the deal.

[00:28:19] You want to invest.

[00:28:20] It's like, hold on a second.

[00:28:21] We haven't even dated yet.

[00:28:23] I don't even know you and you're already trying to sell me something.

[00:28:26] That's the problem.

[00:28:26] And he's got that thick cologne going, right?

[00:28:30] The Jaquan Noir.

[00:28:31] And it's just too much, man.

[00:28:32] It's too much.

[00:28:33] You know what I'm saying?

[00:28:33] He just knows how to freak people out.

[00:28:36] Smith and Stenziano, as you were saying, I'm sorry.

[00:28:38] Oh, no, no.

[00:28:38] So all I wanted to do is bookend the first deal, the mobile home park that failed.

[00:28:42] So you were a little bit too know-it-all and everything and maybe turning people off.

[00:28:47] Just why did you get zero investment dollars on that first deal?

[00:28:52] Was there any more to it?

[00:28:53] Because I think that the valuable thing for the listeners here is that they may be going

[00:28:56] into that first pitch.

[00:28:58] And if they can glean from your experience of where you failed, they may be able to not

[00:29:02] make that same mistake.

[00:29:03] So I just love to have you kind of wrap that up.

[00:29:06] Hey, Jake.

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[00:31:15] When you're an entrepreneur, you are kind of playing a no-holds-barred type of situation.

[00:31:22] You got to use what you have.

[00:31:24] And so I was very fortunate.

[00:31:25] I was from a family where I knew some rich people.

[00:31:28] I get 30 rich people in a room on my first pitch.

[00:31:30] The problem is none of them invested with me.

[00:31:32] But to say that it was a mistake, I had to try.

[00:31:35] It was the only people I knew.

[00:31:37] Well, they had the money.

[00:31:38] Why not?

[00:31:39] Exactly.

[00:31:40] So I wouldn't say that people shouldn't go and do it.

[00:31:42] It's just that when you talk to friends and family, you shouldn't use it as a ruler to

[00:31:48] determine how successful you'll be for two reasons.

[00:31:50] One, maybe they don't want to invest with you because they're totally not interested, not

[00:31:56] educated, don't trust you because you're friends and family.

[00:31:59] Or on the other side, maybe they're like, hey, you got some random rich uncle that's

[00:32:02] like, here's a hundred grand.

[00:32:03] And you're like, oh, I'm going to be rich because I'm going to now create a bunch of

[00:32:05] those people.

[00:32:06] Neither one of them are very helpful.

[00:32:08] But you got to try because getting that first deal is really difficult.

[00:32:11] But what I would...

[00:32:12] Is that okay if I kind of stop?

[00:32:13] Because I mean, that's my honest answer.

[00:32:15] You got to go for it.

[00:32:16] Well, you tried to raise from friends and family.

[00:32:19] They didn't have confidence in you at the time.

[00:32:21] And you came across as a little bit too arrogant.

[00:32:23] That's...

[00:32:24] If I can summarize it, that's what I'm hearing from you.

[00:32:27] Yes.

[00:32:27] But just be careful because the reason that I was arrogant was because I was insecure.

[00:32:31] I didn't want to come off as not knowing it.

[00:32:33] Well, you're 25 pitching doctors and dentists.

[00:32:35] Like, duh.

[00:32:36] Exactly.

[00:32:36] Who's not going to be?

[00:32:37] Fair enough.

[00:32:38] Fair enough.

[00:32:38] But like, the note is, if you feel like you're going into one of these pitches and you're

[00:32:43] like, I really got to prove it, the way to prove it is to do what good salespeople do,

[00:32:48] which is to listen.

[00:32:49] And it's hard to do that when you're just trying to be like, everyone's going to think

[00:32:52] I don't know.

[00:32:53] I got to show them how competent I am.

[00:32:54] Yes.

[00:32:55] Exactly.

[00:32:55] I love that.

[00:32:56] So the key takeaway is go in, understand your facts and figures, but be conversational and

[00:33:03] try to meet them where they are and find out what's important to them.

[00:33:06] And if they're a doctor that's attempting to retire, don't push DSCR, but attempt to show

[00:33:13] what the deal can do for them over time.

[00:33:16] Maybe.

[00:33:16] Here's my ultimate playbook for raising money when you're just getting started.

[00:33:20] I would go and put a bunch of people that you know in a Google form, rank them on a scale

[00:33:25] of one to five in terms of how in a position they are to invest, mostly financially.

[00:33:30] I would text them all, text them something like this.

[00:33:33] Hey, I've been looking at real estate deals for the past couple of years.

[00:33:37] Nothing's under contract right now, but would you be interested in staying in the loop if

[00:33:41] there is something?

[00:33:43] And then when you get some yeses, which you will, by the way, I would prompt them to book

[00:33:48] a call as soon as possible and basically show them an example deal that's not available

[00:33:52] because it's already fully subscribed.

[00:33:54] And I don't care if you still need to raise an extra half million.

[00:33:56] You start the call off by saying, hey, listen, just like to give you prepared, I can show

[00:34:01] you the last deal that we closed, the one that we're about to close right now.

[00:34:04] There's nothing available for it, so it doesn't really matter.

[00:34:07] It's just the way you can get accustomed to it so that next time you'll be more comfortable

[00:34:10] and ready to learn more.

[00:34:12] So just immediately their sales pressure is just off.

[00:34:15] It's not possible for you to invest.

[00:34:17] Or even the last deal that we missed on, right?

[00:34:19] Say you haven't even done a deal yet, but you've been underwriting them and say, hey,

[00:34:22] we were outbid on this one because we're being conservative.

[00:34:24] We don't want to overpay or something.

[00:34:25] Everyone loves hearing that bullshit, right?

[00:34:27] Absolutely.

[00:34:27] Everyone loves hearing that.

[00:34:29] But the key thing there is that if you turn that pressure off, now they realize that they're

[00:34:35] dealing with a professional.

[00:34:36] They're not in for this hour and a half pitch.

[00:34:38] And now you can go to as much detail as you want because they know, like as long as they're

[00:34:42] showing curiosity, you can go all around the rabbit hole.

[00:34:45] And by the way, I've done this exercise many times.

[00:34:49] And sometimes you can take someone from there's nothing under contract to here's an example deal

[00:34:55] that we're about to close to, you know, we might be able to squeeze you into a 50K to 100K block.

[00:35:01] I mean, you can do that if you just simply turn it off.

[00:35:03] Now, some people say, well, you're kind of being misleading there.

[00:35:06] Fair enough.

[00:35:07] But it's more like you're trying to put it in a position where they're going to have a

[00:35:10] more comfortable experience.

[00:35:12] It's like dating.

[00:35:13] You know, you don't walk up to, I didn't walk up to my wife at a club and be like, hey,

[00:35:16] you want to go have these on a baby in 10 years?

[00:35:18] No.

[00:35:18] But you did with your investors though.

[00:35:20] You did with those first investors.

[00:35:21] Yeah, yeah, exactly.

[00:35:22] And then go for it.

[00:35:25] You know, let's go.

[00:35:26] Gino, can I ask you a question?

[00:35:27] You can.

[00:35:27] Yes.

[00:35:28] Just don't freak me out.

[00:35:28] I mean, you went, you went from freaker, non-freaker.

[00:35:31] Let's not go back to freaker.

[00:35:32] It's a little flattering.

[00:35:33] So when, when Gino and I were doing syndications, we would typically raise in 24 to 48 hours.

[00:35:39] So really, you know, pretty quick.

[00:35:42] And we're very proud of that.

[00:35:43] Right.

[00:35:43] But the funny thing is, is that I got zero friends and family to invest.

[00:35:51] Hunter got zero friends and family to invest.

[00:35:54] Gino, why were you able to bring the friends and family to the table and they invested

[00:35:57] in you?

[00:35:57] What, what, what are Hunter and I doing wrong?

[00:35:59] What was up with you?

[00:35:59] Cause you were bringing, you were bringing in the, the familia here.

[00:36:02] It's actually interesting.

[00:36:04] I think I started to identify as a multifamily investor.

[00:36:07] My family knew me as the pizza guy, but then they saw me leave the restaurant and they

[00:36:12] saw me have success.

[00:36:13] And Hunter, the one word that we all need to really focus on is scarcity.

[00:36:18] You're talking about scarcity.

[00:36:20] When you make something scarce and hard to get, people want it even more.

[00:36:25] And then that sucks.

[00:36:26] Not for me.

[00:36:26] They didn't.

[00:36:27] It's unfortunate.

[00:36:28] I will.

[00:36:29] You show a little leg.

[00:36:29] I mean, listen, for, for me, I was just fortunate because my brother was all in on it

[00:36:35] and they saw the wealth that I created for him.

[00:36:37] They saw the wealth that I created for myself.

[00:36:38] I love the asset.

[00:36:40] You had, you had a proven record with somebody close.

[00:36:44] We had like three or four.

[00:36:45] My, my family started coming to our events and they're like, well, this guy seems like

[00:36:49] he's the real deal.

[00:36:49] He's not, he's not a bunch of BS.

[00:36:52] The first, if I had done this, when we first launched, it may not have worked very well,

[00:36:55] or they may have done a token investment just to try it out and don't be deflated if

[00:37:00] they don't.

[00:37:00] And don't be deflated if they want to put their toe in the water and just try it because

[00:37:06] put yourself in their shoes.

[00:37:07] If Jake's come to me and he's my cousin and he's a pharmaceutical sales rep.

[00:37:12] And all of a sudden he's telling me that he's doing real estate.

[00:37:14] I'm like, Jake, what are you trying to sell me, bro?

[00:37:16] And that's the reality.

[00:37:18] Put yourself in the other person's shoes.

[00:37:21] But Jake, I want to move on from the Drakkar wearing Hunter in 2014.

[00:37:26] Drakkar on the wall.

[00:37:26] Yeah.

[00:37:27] To 2021, 2022.

[00:37:30] And then all of a sudden he doesn't have a deal over the last year, but now he's got

[00:37:34] a deal in the contract.

[00:37:35] What's shifted in your mindset over the last 12 to 18 months where there was no opportunities?

[00:37:40] I mean, there's opportunities for others that weren't opportunities, but now all of a sudden

[00:37:43] you're seeing opportunities in the market.

[00:37:45] Well, for context, obviously in 2022, interest rates rose faster than they've risen in 40

[00:37:51] years.

[00:37:51] And this created pretty significant distress in the multifamily space in several markets.

[00:37:57] And it actually created more distress from my perspective in more desirable, highly traded

[00:38:03] markets.

[00:38:04] And the reason for this is that to buy deals in your Tampas, in your Houston's, in your

[00:38:09] Dallas, in your Phoenix, you basically had to use floating rate debt if you wanted deals

[00:38:14] to pencil.

[00:38:15] Caveat, unless you had a ridiculously low cost to capital, meaning that it was standard to

[00:38:19] use floating rate debt.

[00:38:20] And so what ended up happening is that when interest rates rose, people were not underwriting

[00:38:25] for their debt service to double.

[00:38:27] So even if they were doing well from an operation standpoint, you just can't beat that in terms

[00:38:32] of debt service.

[00:38:34] Now I'm trying to be, you know, appropriate about this because like, look, there's some

[00:38:39] really smart people that I respect that were really all in on the floating rate product

[00:38:44] at the wrong time.

[00:38:46] But for context, so we're like the best and most knowledgeable billionaire bond traders

[00:38:52] in the United States.

[00:38:53] So like, I just got to give a little bit of buffer because I don't want it to make it seem

[00:38:56] like, oh, like you're an idiot or you're not an idiot.

[00:38:59] Like this is just a market dynamic and sometimes these things happen.

[00:39:01] So having said all that, you see distress in a market like Phoenix where there's booming

[00:39:08] population growth, massive job growth, crazy supply and demandness equilibrium, and a huge

[00:39:13] demand for affordable housing.

[00:39:15] But then distress sellers with their shirts on fire and their hair on fire.

[00:39:19] And I'm like, that's the green light I've been waiting for.

[00:39:23] And so my partner and I decided to stop doing everything else.

[00:39:27] He moved to Phoenix and we're going all in when everyone's looking right.

[00:39:31] And we're having calls with experienced operators that are saying, oh, you're catching a falling

[00:39:35] knife in Phoenix.

[00:39:36] And it's, you know, it's down into the right.

[00:39:38] And we're like, oh, perfect.

[00:39:39] At least somebody thinks that because three years ago or two years ago, this was just the

[00:39:42] talk of the town and we were never going to get deals to pencil back then.

[00:39:46] So he moves there.

[00:39:47] You know, he tells his wife, I know you've spent your whole life living in Michigan.

[00:39:50] He's lived his whole life in Michigan.

[00:39:52] We're moving.

[00:39:53] Well, that's an easy sell.

[00:39:54] Exactly.

[00:39:55] Exactly.

[00:39:55] And then we just start underwriting deals and we're 50 deals of underwritten.

[00:40:01] We haven't seen anything.

[00:40:01] 100, 150, 200.

[00:40:04] And, you know, I'm the guy that's on the more like, I'm like, let me get in there and make

[00:40:08] these numbers work.

[00:40:09] I'm just want to see what we have to tweak to make numbers work.

[00:40:11] And we look at it.

[00:40:12] It's like, we can't do this.

[00:40:13] You know, it's like, it ain't happening.

[00:40:15] And I can't believe they paid that.

[00:40:16] But eventually a couple of deals started selling for more than we thought in a good way.

[00:40:22] And it brought other sellers to the market.

[00:40:25] And now things are starting to relax a bit.

[00:40:28] And so we have a deal that's under contract that sets a close.

[00:40:31] We'll probably be putting another deal under contract.

[00:40:33] And so we went from 200 deals underwritten, none, you know, two under LOI, one that bounced

[00:40:38] out, that kind of thing to probably going to close two deals in one quarter.

[00:40:43] Before we go to the short answer questions, this last question for me, it's pretty important.

[00:40:48] How did you keep your composure?

[00:40:50] How did you not want to like jump off a bridge like Jake would if he didn't do a deal for

[00:40:54] a year and a half?

[00:40:54] Because that's really challenging because it's a get there right.

[00:40:56] It's like, I've got to do a deal.

[00:40:58] I've got a real business here.

[00:40:59] I've got to keep this going.

[00:41:00] But at the same time, no deal is better than a bad deal.

[00:41:04] How did you keep your composure?

[00:41:05] And how did you keep that discipline?

[00:41:07] Not easy.

[00:41:08] Because look, I'm a seasoned professional.

[00:41:11] We have a legitimate balance sheet, right?

[00:41:13] Now, in all fairness, we also have real employees.

[00:41:16] And, you know, it's a serious thing that's going.

[00:41:20] But like, I was just thinking about like, we have coaching clients where that's their

[00:41:23] first year in real estate.

[00:41:25] And it's like, if we're struggling, I know people who are like, just quit their job to

[00:41:30] do this are going to struggle.

[00:41:32] And so I just had to lead by example and be like, I know this is hard on you.

[00:41:37] It can play games in you.

[00:41:38] Maybe you want to force a deal across the finish line.

[00:41:40] And I've seen what happens when you do that.

[00:41:43] It's going to be fine for four months.

[00:41:45] Yeah, exactly.

[00:41:46] First quarter, right?

[00:41:47] So that's kind of the thing I'm fortunate for that as well in terms of my experience and

[00:41:52] where I am now.

[00:41:53] But just going back to the comments around 2008, I think this is like similar to 2008,

[00:41:58] but way better because the data is just so clear this time.

[00:42:02] It's so specific to real estate.

[00:42:04] The overall economy is doing very well.

[00:42:07] Things were frozen in 2008.

[00:42:09] So I know what this story goes like in five years.

[00:42:13] And I want to be in the winning side of the equation.

[00:42:15] So we were patient and we still are patient, but, oh, it feels so good to just pick off

[00:42:20] a couple of these deals.

[00:42:22] And even if you just do a couple, it could change your life.

[00:42:25] The wait is worth it.

[00:42:27] That's right.

[00:42:28] It's just everything's moving so slow right now.

[00:42:31] I feel like there could become this sort of like pent up demand and it's slow, slow, slow.

[00:42:37] And then like, boom, the floodgates open.

[00:42:38] And I'm not saying that will happen, but there's just liquidity is moving slow right

[00:42:43] now.

[00:42:43] You know, money is just not transacting like it.

[00:42:45] Well, obviously it was going at a rapid pace, you know, two years ago, but it's just so

[00:42:50] slow right now.

[00:42:51] But anyways.

[00:42:52] Things change.

[00:42:53] Yeah.

[00:42:53] Things change.

[00:42:54] Oh, yeah.

[00:42:54] It's always different.

[00:42:55] But there's a certain point where the data in real estate is so publicly available.

[00:42:59] It's no proprietary algorithm that Tyler and I have.

[00:43:02] It's that supply and demand is heading one direction.

[00:43:04] And so we know what's going to happen in 2025, 2026, 2027, 28.

[00:43:09] We have a very good understanding of what's going to come to market.

[00:43:11] We also have a very good understanding of what's going to be needed.

[00:43:14] And so by the time 2027 comes around, now it's, well, duh, it's the most obvious play

[00:43:20] of all time.

[00:43:21] Yeah.

[00:43:21] Phoenix multifamily or, you know, Nashville, which I know you guys are bullish on, you

[00:43:25] know, these types of markets like, duh.

[00:43:26] Well, that doesn't count.

[00:43:27] You bought in 2025.

[00:43:29] It's like, that's what I want to buy.

[00:43:30] Yeah.

[00:43:32] Well, and here's the thing, guys.

[00:43:34] We're buying hold investors, but majority of folks in real estate at some point plan to

[00:43:41] exit.

[00:43:41] So these things, you know, will trade and it will speed up and there will be this pent up,

[00:43:45] you know, sales demand.

[00:43:47] So I'm interested to, you know, see it happening again.

[00:43:50] But hey, let's take a quick time out to hear from our sponsor.

[00:43:52] Now we have had a great run in multifamily going from zero units to over 250 million in

[00:43:57] assets.

[00:43:58] That's over 2000 apartment deals that we've been able to purchase through our

[00:44:01] our framework, buy right, manage right and finance right.

[00:44:04] Now, Jake and I, we created the Jake and Gino community back in 2015.

[00:44:08] We launched our first book, Build Our Profits.

[00:44:10] And since then, our students have closed over 60,000 units.

[00:44:14] That's over $4 billion in assets they've been able to close over the last six years.

[00:44:19] And that's why this community has been so successful.

[00:44:21] We call it results-based education.

[00:44:23] And we pour back into the community everything that we've learned on our journey from zero

[00:44:27] to 2,000 units and all our systems and scale that we use on our very own property management

[00:44:32] and investing companies.

[00:44:33] Jake, I love that.

[00:44:34] It's not just education.

[00:44:35] It's implementation.

[00:44:37] So what I want you to do, click on that link down below.

[00:44:40] Apply to work with our team.

[00:44:41] See how we can help you on your journey in multifamily.

[00:44:46] All right.

[00:44:47] We are back.

[00:44:48] You've been kind of talking about your company a little bit.

[00:44:53] But again, sorry for my confusion about the storage units and things.

[00:44:58] But I'd love to hear about your business.

[00:45:00] And you brought the term vertical integration before.

[00:45:03] Are you guys self-managing?

[00:45:05] What does the portfolio of multifamily look like now?

[00:45:08] Just unpack that a little bit for us.

[00:45:09] So we've done nine transactions in Phoenix prior to making the pivot to buying deals directly.

[00:45:16] We did six transactions as like a capital partner.

[00:45:20] And now we're buying deals directly.

[00:45:22] I think that, you know, the conversation regarding vertical integration, it's one that's up for

[00:45:26] debate in my view.

[00:45:27] I've got some really great mentors, like for example, Gelt, guys that I have a ton of respect

[00:45:31] for.

[00:45:32] They always use third-party management.

[00:45:33] I think that if you're going to go all in on one city, maybe that's something that you

[00:45:38] should consider.

[00:45:39] And that's our current vision.

[00:45:40] But there's property management groups in Phoenix that are just so good at what they do.

[00:45:45] I think the hybrid approach is probably our approach where it's a really scrappy strategy,

[00:45:50] but we're highly integrated with the management.

[00:45:52] Obviously, my partner lives there.

[00:45:54] So like they're not going to squeak in anything by him and he's seeing assets on a daily, weekly,

[00:45:59] monthly basis, et cetera.

[00:46:01] So that's kind of our current vision with that.

[00:46:03] I don't think it's worth the overhead personally, but that's just my personal thoughts.

[00:46:06] I got people that made a lot more money than me in this game that only do that.

[00:46:09] I also know a lot of people that never do that.

[00:46:12] And I think it's just kind of how you're-

[00:46:13] Yeah, no, it's sort of how you're built, your preference, what you're comfortable with.

[00:46:17] So just to hear you, if I'm hearing you correctly, you may get there at some point,

[00:46:21] but not today.

[00:46:22] Is that right?

[00:46:23] Yes.

[00:46:23] I think maybe if you buy 20 assets in a market, it's like, well, gosh, now it's not

[00:46:28] about making money.

[00:46:36] Because that's just something an investor has to pay.

[00:46:38] I think that's kind of our current mentality is just to be as scrappy as possible.

[00:46:42] Yeah.

[00:46:42] And I think too, for us, we're vertically integrated, but we're all essentially located

[00:46:47] within a couple hour radius, all the assets.

[00:46:50] And the piece that I really love about it is the repositioning type stuff, the CapEx projects.

[00:46:58] We're doing all of like, because the two that I've really noticed that we've picked up over

[00:47:03] the last year, siding and decking.

[00:47:06] Now we have a good amount of like 80s product assets and a lot of them have decks, right?

[00:47:12] And something has got to give.

[00:47:14] And the margins that these contractors are putting out there on decks these days, absolutely

[00:47:19] crazy, right?

[00:47:20] And so we've been working hard on that.

[00:47:24] And I just think that also some of the older stuff, the siding looks like crap.

[00:47:31] And also the breezeways.

[00:47:33] We've been doing vinyl siding in all of our breezeways now.

[00:47:37] And it's like a pride of ownership thing, but they're impossible to maintain.

[00:47:41] For those garden style units that have breezeways, and then the original developer put up sheetrock,

[00:47:48] it's impossible to maintain that at a reasonable standard if you care about your asset.

[00:47:54] If you want to get on site and tour a property and they put sheetrock in the breezeway, there's

[00:47:59] no way that you're going to be able to do that with sheetrock and be like, I'm glad I

[00:48:03] own this.

[00:48:03] I'm proud of this asset.

[00:48:04] And it's creating a great resident experience.

[00:48:06] It's impossible because it always gets turned to shit.

[00:48:09] The other thing is just the control, right?

[00:48:11] You can fully manage those timelines and those budgets, and you can hold yourself accountable

[00:48:16] in a way that's not possible to a third-party firm.

[00:48:19] So for the listeners that are investors, it's a thankless job that Jake and Jono are doing

[00:48:23] that.

[00:48:23] But I think it's just an exercise in taking it to the next rational step.

[00:48:27] How can I leave as little of my business to a third party, which I respect?

[00:48:31] But it's real dollars, though, at the end of the day.

[00:48:34] I mean, we are saving a lot of money by not subbing out these bigger jobs.

[00:48:39] And so it's not that you won't make money.

[00:48:43] It's just how do you choose to spend your time?

[00:48:45] You want to scale or sort of fine-tune and go deeper on operations.

[00:48:49] Then there's no right answer there, right?

[00:48:51] It's just depending on what your goals are.

[00:48:53] So we were talking about Sam Freshman for any book recommendations, anything you've read

[00:48:58] in the last year or two that you want to get out there to the listeners?

[00:49:02] I mean, you know, I'd say broadly, Who Not How is a banger by Dan Sullivan.

[00:49:08] And the other one, which maybe you guys can remind me the name of, there's Who Not How,

[00:49:13] which is the one that everyone knows.

[00:49:14] The Gap and the Gain is another one that I feel that those two wrote again that I think

[00:49:18] is really great.

[00:49:19] Those are probably the books that recently have really shifted my perspective.

[00:49:22] I'll give you another one.

[00:49:25] Ready, Fire, Aim.

[00:49:26] Book about business.

[00:49:27] I've seen it on Audible.

[00:49:28] I don't think I've read it.

[00:49:30] Yeah, it's good.

[00:49:31] I'd also say the hard thing about hard things.

[00:49:33] Those are a couple like broad.

[00:49:35] What is the hard thing about hard things?

[00:49:37] It's about people that are basically credited with to playing a role in inventing the internet

[00:49:41] and blowing up a business in a good way during the dot-com bubble and then also keeping it

[00:49:47] going during the collapse.

[00:49:48] And it's just like, dude, I mean, I've had some challenging conversations with employees,

[00:49:53] but imagine firing 2000 people.

[00:49:56] Like you just learn lessons that it's difficult.

[00:49:59] Hopefully you can learn them through other people when they go through big booms and busts

[00:50:03] and the lessons you can take away from that.

[00:50:06] That's the thing with the floating rate debt.

[00:50:10] You think about it and it's like, okay, well, if everyone's telling you that they can't

[00:50:14] raise rates, you start to believe that narrative, right?

[00:50:18] And then it's like, and here's the thing.

[00:50:20] People are throwing money at you.

[00:50:22] The only way to make the deal pencil or work is if you use this.

[00:50:26] So I just, yeah, it's one of those things where you just want to be able to sleep at

[00:50:30] night.

[00:50:30] And it's not that it hasn't worked countless times before.

[00:50:34] It's just a little bit rolling the dice there when it comes to that.

[00:50:38] So let me add one thing there because I think it's got to be fair here.

[00:50:41] So like we've definitely done deals with floating rate debt and like I'm a savvy, I would consider

[00:50:47] myself a very savvy passive investor because I've invested in quite a few deals.

[00:50:50] Like I've got 50 K ones right now.

[00:50:52] A lot of people were doing it.

[00:50:53] I'm not trying to sound like the biggest hater in the world.

[00:50:55] Oh, no, no, no.

[00:50:56] I'm trying to give, um, you don't sound like that at all, but like when hindsight is so

[00:51:01] powerful, like let me put in perspective the conversation that I had when making that

[00:51:05] decision.

[00:51:05] Okay.

[00:51:06] As a, as a past investor that really knows his stuff.

[00:51:09] So yeah, I'm going to invest in this deal.

[00:51:11] It's, it's a 10 year term and oh, okay.

[00:51:14] There's this thing called a rate cap, which now everyone knows, but the back then no one

[00:51:16] knew, right?

[00:51:17] So how long is the rate cap?

[00:51:18] Well, it's three years.

[00:51:20] Okay.

[00:51:20] So we've got a five year business plan, but we have three years of the rate cap.

[00:51:24] Well, how much is the rate cap?

[00:51:26] Oh, it's 30 grand.

[00:51:28] So you're telling me at the end of the three years, we got to buy something that's worth

[00:51:32] 30 grand.

[00:51:33] Well, that sounds like a no brainer to me.

[00:51:35] It's worth the risk because the bank is valuing that insurance at $30,000.

[00:51:40] Now I didn't expect that rates would go up so fast that that $30,000 rate cap extension

[00:51:46] would be half a million by the time the three years expired.

[00:51:50] So it's like in all fairness, like.

[00:51:51] And then, and then you're stuck.

[00:51:53] You're caught at that point.

[00:51:54] Yeah.

[00:51:54] Totally.

[00:51:55] Of course.

[00:51:55] And it's difficult, but like, think about what that means.

[00:51:57] The banks, the institutions, the bond traders viewed the value of that insurance, AKA the

[00:52:05] rate cap at only $30,000 and they're off by a multiple of 20 X by the time it was done.

[00:52:11] So you just got to be fair about these things.

[00:52:12] And I think that that's the reason I speak like that is that I'm trying to get myself

[00:52:16] in the habit of like recognizing that I don't have it all figured out.

[00:52:21] Cause when you feel you do have it all figured out, that's when you really get blindsided

[00:52:24] without doing the math, without asking how much the rate cap is.

[00:52:28] Hunter, I'm going to jump in here real quick before Jake wraps it up.

[00:52:31] I like to say that nobody has it figured out.

[00:52:34] We had the minds of the United States, the biggest minds telling us inflation was transitory.

[00:52:40] And I'm here to say, I'm here to be a hater right now.

[00:52:43] The administration that we have currently and the fed screwed it up because they should

[00:52:47] not have shocked the system.

[00:52:49] They played politics.

[00:52:50] They should have raised race before the 2022 midterms.

[00:52:53] They didn't because they wanted to win the house.

[00:52:55] And this is my opinion.

[00:52:55] And I think if you look back on history, it'll probably prove me right because they knew inflation

[00:53:00] is not transitory when you pump the system with $6 trillion and everyone out there is

[00:53:04] trying to buy a used car and it costs $10,000 more today than it did yesterday to buy a used

[00:53:08] car and lumber prices.

[00:53:10] It wasn't transitory.

[00:53:11] So if they had done their job properly and they had actually started raising rates slowly

[00:53:15] to slow the economy down, to be able to have this less liquidity, we wouldn't have

[00:53:20] this conversation of rate caps going from $30,000 to a half a million dollars.

[00:53:24] That's the reality.

[00:53:26] Now, you can't change history.

[00:53:28] All you can do is look at it today, learn that lesson, and don't say to yourself, they

[00:53:32] can't do that.

[00:53:33] Rates can't go up that quick or cannot.

[00:53:35] Don't make those assumptions.

[00:53:36] Just tweak the business plan.

[00:53:38] And the next time you look at short-term bridge debt, just say, hey, what's worst case

[00:53:42] scenario?

[00:53:43] Because this is what happened in the last cycle.

[00:53:44] This is what may happen in the next cycle.

[00:53:48] Fair point.

[00:53:49] I don't want to sound like cliche or how I was joking before about everyone says we're

[00:53:53] conservative or whatever, but I'm going to be like a hypocrite right now anyways.

[00:53:57] And say my biggest issue with all of it is price predictability.

[00:54:01] And that's why I've always been nervous about floating rate debt is just because you just

[00:54:08] don't know.

[00:54:08] And especially if you want to hold the asset, that's why it's always kind of made me nervous.

[00:54:12] And then going back to just managing expenses, because it wasn't just that.

[00:54:16] You had a lot of markets that boomed with taxes.

[00:54:19] And a lot of people in Texas getting crunched because property taxes are a bitch.

[00:54:24] And then also insurance.

[00:54:26] So you had this trifecta of just getting clobbered.

[00:54:30] And the only thing that was keeping things in place, I think, was the inflation of the

[00:54:37] rents.

[00:54:37] Right.

[00:54:38] So you had like this boom in rent.

[00:54:39] So it was, I think, enough for a lot of people just to hold on.

[00:54:42] But in this super uncomfortable way where it's everything's stagnant now and capital is not

[00:54:47] moving, but they don't they don't know what to do.

[00:54:49] Deals are not trading.

[00:54:51] There's a call for offers.

[00:54:52] The deals are not moving at the call for offers are not coming in, you know, because

[00:54:56] I think a lot of people are aware of the situation.

[00:54:58] A lot of these investors are in that are still holding these things and they're looking for

[00:55:02] a 30 percent discount.

[00:55:04] And you're not seeing that happen either.

[00:55:05] And that's why you're in this very like stagnant environment.

[00:55:10] Some will break eventually.

[00:55:12] I don't know.

[00:55:12] Maybe Hunter's seen the beginning of the crack in the ice here.

[00:55:15] I don't know.

[00:55:16] Something's got to give.

[00:55:18] You know, it will.

[00:55:19] You know, it will.

[00:55:20] And that's but that stagnation.

[00:55:21] That's how you and being difficult to raise money.

[00:55:24] That's how you know you're buying good deals.

[00:55:25] That's just all you need to know.

[00:55:28] So, Hunter, what's the best way for folks to get a hold of you?

[00:55:31] Find out more about you and your business.

[00:55:34] So we have a conference coming up that is in Phoenix, actually, and it's called Raise

[00:55:39] Fest.

[00:55:40] R-A-I-S-E-F-E-S-T.

[00:55:43] You can come check out.

[00:55:44] We have a very cool trailer, by the way.

[00:55:45] If you don't cry during the trailer, then I'll owe you a Coke or something like that.

[00:55:50] It's like these new Apple like Air Bud things with the dads listening to the daughter's

[00:55:53] music kind of thing.

[00:55:54] One of those.

[00:55:54] You know what?

[00:55:55] You go check it out and let me know, man.

[00:55:57] And then if you want to learn more about my company, it's RaisingCapital.com.

[00:56:01] And then, of course, our private equity group is ASYMCapital.com.

[00:56:05] We have a special program for people who want to partner with us, kind of like I did when

[00:56:09] I started my career.

[00:56:10] And you can check that out at ASYMCapital.com.

[00:56:14] Gino, you're back in Florida.

[00:56:16] You got the pastels going.

[00:56:18] I even see a little bit of a tan coming out.

[00:56:19] You got out of that North Country.

[00:56:21] You ready?

[00:56:22] I am ready, Jake.

[00:56:23] You step up to the plate?

[00:56:24] In 2008, Hunter Thompson gets out of college and he latches on to a couple of real estate

[00:56:28] mentors.

[00:56:29] He's like, I like this real estate game.

[00:56:31] I see things that people don't see.

[00:56:33] We are in the depths of a recession right now.

[00:56:35] There's a lot of opportunity.

[00:56:36] While everyone's heading towards the exits, I'm going to go in and I'm going to dip my toe.

[00:56:41] And I'm looking at these amazing deals, mobile home parks, self-storage.

[00:56:45] And in 2014, going to do my first big raise, going to knock it out of the park.

[00:56:50] Going to walk in there wearing my cologne, being buttoned up.

[00:56:53] Going to raise hundreds of thousands of dollars.

[00:56:55] Three-piece suit and some hair gel.

[00:56:57] And I got a goose egg and I don't raise anything.

[00:57:00] And I'm saying to myself, what the hell did I do wrong?

[00:57:02] But you know what?

[00:57:03] I didn't quit.

[00:57:04] I figured this is where I want to be for the rest of my life.

[00:57:06] How am I going to learn and how am I going to get better?

[00:57:09] And you fast forward to where Hunter is right now.

[00:57:12] He's not only said to himself, you know what?

[00:57:15] I was doing great, but what I want to really focus on right now is Phoenix.

[00:57:19] And I want to focus on multifamily.

[00:57:21] He's really drilled it down.

[00:57:22] And if you really look at the story of an entrepreneur, that's what it's all about.

[00:57:25] You make enough mistakes, you know, make enough money to pay for your mistakes.

[00:57:29] That's exactly what Hunter did early on.

[00:57:31] He learned from his mistakes and then he was able to say, this is what I want to ultimately

[00:57:35] do and this is where I want to ultimately be.

[00:57:37] And I think that's the story of a true entrepreneur.

[00:57:40] Learning and having the vision and being able to say to himself, this is where I want to be.

[00:57:45] Well said, Gina.

[00:57:46] I like Florida Gino more than New York Gino.

[00:57:48] I'm just going to say.

[00:57:48] Bro, I love Florida Gino so much better too.

[00:57:50] No more grumpiness.

[00:57:52] I can't handle 20 degree weather.

[00:57:53] You like the Peter Millar?

[00:57:54] I mean, I got the Peter Millar back on.

[00:57:56] I got a little tan going on.

[00:57:57] I knew you'd see that.

[00:57:59] Thanks, brother.

[00:58:00] You're there.

[00:58:01] All right, guys.

[00:58:01] As always, we believe in buying deals for the long term.

[00:58:03] Think in decades.

[00:58:04] I'm Jake.

[00:58:05] He is the Peter Millar G daddy and we make it happen.

[00:58:08] We'll see you next time.