S3Ep21 What It Takes to Scale in Real Estate
“When moving into bigger stuff, one of those economies of scale, I believe with multifamily, is once you do the first deal. I feel like everything else opens up.”
Welcome to the Next Level American Dream Podcast! Are you ready to start taking your American Dream to the next level through passive investing? The hosts, Sean and Abigail, are a father-daughter duo, trying to accomplish their goal of financial freedom through multifamily real estate.
Jack moved from his IT career to real estate and is now a full-time investor for over 10 years. Now owning over 1500 apartment units spanning 4 different states; Texas, Arizona, Utah, and Idaho.
Takeaways
Scaling isn't out of your league
Once you have the right team in place, the number of units shouldn't matter
If you're willing to work hard, you'll be successful
Connect with Jack:
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SUMMARY KEYWORDS
multifamily, deal, partners, people, american dream, loan, family, buy, single, property, idaho, moved, bigger, started, opportunity, years, team, la, business, pursue
SPEAKERS
Jack Aduwo, Abigail Thomson, Commercial, Sean Thomson
Jack Aduwo 00:00
I've been helpped along the way. I did not make it to where I'm on my own, and the least I can do is also help others.
Abigail Thomson 00:10
Welcome to the Next Level American Dream podcast. This episode is brought to you by Thomson Multifamily Group. Are you ready to start taking your American dream to the next level through passive investing? The hosts Sean and Abigail are a father daughter duo trying to accomplish their goal of financial freedom through multifamily real estate. While you're here, please comment, rate review, like or subscribe to help us grow. What is the American Dream mean to you? And how are you taking it to the next level? Here's another episode of Next Level American Dream.
Sean Thomson 00:52
Hi, Jack, thanks for coming on the show. How are you doing?
Jack Aduwo 00:56
Good, good. I'm doing good. Thank you so much for the opportunity to come and chat with you a new show about you know my favorite topic multifamily.
Sean Thomson 01:06
I've had a great time get to know you have the events and stuff that we run into each other and, and it's always great talking to you, it's always have a good time talking to you, you're very easy to talk to. So I appreciate coming on sharing with everybody. Let's start with your background and what you have going on today.
Jack Aduwo 01:19
So my background is it. I'm a former IT person, I graduated from college with a Bachelor in computer science with minor in math. I was in the IT world for 15 years. Right now I'm a full time real estate investor. That's what I do. The way I got started is my first you know, basically step into the real estate industry goes back to 2009. When me and my wife moved to Idaho, we just got married. And we moved to Idaho. We loved it, you know, coming from LA to Idaho, Boise, Idaho, in this case, life was super affordable and very key. I remember we, you know, our first investment was the house we were trying to buy before house, our current house. And you know, they didn't accept our offer. But after we bought our house, he came back on market at a really, really good price. 80,000 To be precise, and we're like, why don't we just buy it because you know, the price is so good. We put an offer on it. It was a short sale, you know, we were able to get it. And I remember the day I went to the property, there was a tenant leaving the property, I did not know how much you're paying for rent. And when went to the property, he told me she was paying $900. And like holy smoke, my mortgage was about $500 At that time, and basically from day one, it was $500 in profit. I was like, Oh man, we're gonna do more of this. So basically, the next few years, you know, I've tried to live a very frugal life, and we just focus on buying an asset, we tried to buy something basically every quarter, you know, mostly in Idaho all over the all over the, you know, the Boise Metro. And, you know, we did that for two, three years, you know, our board like Carol, single family who couldn't get any more loan, because, you know, we basically maxed out on all possible loans, we could get that a good loan status. And then, you know, I couldn't get any more good loans for single family investment. And so we have to figure out something so about two years ago when I was looking for alternatives, and then found about the magical multifamily. And the shocking thing was that, hey, I could buy something larger, and I don't need to worry about the loan being an unrecorded and it's easy to get compared to single family. Oh, the holy smoke, this is what I need to do. And then you know, when we get into multifamily, and typically we'll be focusing on over the last five years.
Sean Thomson 03:47
So what was the I guess? What was the trigger there for identifying multifamily as the future? You were doing your single family business? Did you? Did you read a book? Or did you see how did you run into multifamily? Do you remember?
Jack Aduwo 03:59
Yes, yes, actually, I, to me, it was kind of out of my league for the most people and that's what a lot of people were saying like, hey, right out of your league and everything. So just focus on single family, you know, I did not know anybody in I did not attend any of the training or anybody who taught me about real estate investment. I'm always just all about looking for opportunities to make money and you know, kind of that intrapreneurial spirit always be looking for the next you know, business opportunity. And so throughout the time was buying single family to me, you know, doing everything on my own, you know, not going after any program or anything that I need to pursue basically what made me stop single family was you know, I couldn't get any more loan. So, the thing about you know, 2014 2015 Around that time, I couldn't get any more loan because the lending system was basically still restricted, you know, so to speak. You know, I remember I was trying to get a loan for a single family there. I remember this land, I could gain a government back loans as part of my issue. So, you know, he bought more than 10 houses, you can't get any more back going back loan at a time at a local crazy those willing to do a few more deals with me. But then, you know, there were a few. And then after that I remember approaching another bank and they were like, You got to have like 12 months of cash reserve for all your property, basically, the ceiling on the property will be empty for 12 months straight. So there are enough mortgage to pay for all of them for 12 months. And of course, the interest rate was like 200 basis points above what was going on at that time. And when we put a tiny percent down some new cranes and no make the numbers work. So that's what I said, looking at the multifamily and doing online research, but what really pulled me the trigger was the fact that I found that equities, you get a better loan with multifamily competitive family, it was quite an eye opener for me, all of a sudden, you know, I started focusing on and even at that time, I did not know about syndication. So what I was simply doing is I was you know, going to, you know, basically do a cash out refi or do a HELOC on my properties. And then I'd have you know, three, four family friends, you know, that I was going to going to partner up with, I remember seeing like 20 units, apartments in Houston, in Ohio and other places. Because that's all we could afford. You know, I just love the fact that, you know, I could get ready to pay the loan. And, you know, they don't know, I don't have to worry about going through all the hassle of trying to get a loan for single family.
Sean Thomson 06:39
Yeah. Well, now you're doing you're doing much larger deals, you've done several large deals, I know you've got some in Houston and other areas talked about some of your business and what you're how you're doing things today, you've made the transition fully into multifamily, you started buying the smaller units, and then you moved into bigger stuff. How did that work?
Jack Aduwo 06:58
So moving into bigger stuff, actually is one of those economies of scale in a one, and I believe with multifamily once you do the first deal. I feel like everything else open up, you know, once you first deal I remember because Bill was a complete fiasco, but it's still open, you know, to get to me after that first deal. Ever. My first deal was 79, you need you know, you fail because the seller is scared to walk away from the deal. And but then the next deal after that, oh, 784, which is like, whoa. And that's because, you know, all of a sudden, you know, you have one do things open up people that you get to know, that tried to work with you. We tried to do everything, we did everything correctly on that first deal, even though it did not pan out weird thing, right? Take that, you know, people that work with us and that are willing to come and join us for the next investment. It made it so much easier to be able to, you know, move next investment. And in my opinion is one of those, once you get the right team and the people in place, then the number of units shouldn't matter. And I'll usually get her out. So we'd have people come right through, they can help you do that.
Sean Thomson 08:06
And you found a lot of success in networking and finding the right partners. I mean, I know you work with several partners that you've worked with a couple 234 times. Is that kind of been what has made you made it possible for you to go into those bigger deals as the partnerships and network that you've have.
Jack Aduwo 08:23
Yes, yes, think of this as our safe compared to like a football or a soccer game, you know, you gotta get the right teams to help you execute on it. And we're going to play a different role, you know, you can never do it by yourself, right? If you want to be successful with it, you know. And so one thing I put a lot of emphasis on is the partners in I'm forever looking for new partners that can join forces with me, everyone on my deal, you know, I always tend to have, you know, similar lead partners that are bringing to the deal. But as far as CO partners or CO DPS or limited partners, they all change from one deal to another. So I'm always looking for new partners. And I believe that the way to grow in this business is to find the right partners that can enable you and help you execute and build acquire more properties.
Sean Thomson 09:12
Yeah, that's a major difference between single family and multifamily. You know, my single family business too similar to yours? Oh, no, it was just me. And multifamily you have to have, you just have to have a team around you in a multitude of ways. On your ownership side, you have to have a good team around for legal lenders, you know, property management, all those sorts of things. So it's definitely a multifamily. It is economies of scale, but you also have to scale up your operations to so that's very important. I think for most people just get out there and network and find find teammates that that you kind of feel, have similar goals and outlooks and things like that as you and try and get those get those people on your team and it'll take you much farther I think so. Well, yeah. So Jack, so what are some of the lessons that you think you've learned? that have made you successful from going from just one single family house to sort of scaling up. I guess it's taken you several years. But what do you think has made the difference for you and getting to the bigger bigger deals now you're in
Commercial 10:12
We are Thomson Multifamily Group, we generate passive income for our clients and partners by investing in apartments. Apartments are like giant factories that take in rent checks and create profits that we share with our investors. If you'd like more information about us, or how to get into the deal room, please visit our website at Thompson multifamily group.com Thompson multifamily group and alternative to the stock market.
Sean Thomson 10:40
But what do you think has made the difference for you and getting to the bigger bigger deals? Now you're in
Jack Aduwo 10:44
the past and foremost, it's that relationship, right? You know, looking for the right people that you have similar vision with, you know, that you can agree with on a lot of things like, you know, in terms of just general view about, you know, the industry, the approach the business, I think that's very key, because, you know, what I've learned over the years is that, you know, sometimes, you know, you could have, you know, agree with a partner and things weren't great, but you know, once you get a deal, under contract, you know, you and you purchase it, of course, you now monitor that person. So, knowing that you guys agree on certain key things, I think it's very important. The other thing also learn is, you know, in this industry, if you're willing to pursue every possible opportunities, there'll be something coming up. So one thing I've learned is that they say, pursue deals, always. I don't want to say like, okay, that's outside marriage, because, you know, that's the mentality I had before, right? But you can say, like, okay, anything's possible, if anybody can do it, I should be doing it. Having that mindset of being over, can't do it mindset, I think is extremely critical, because it's going to kind of help, you know, remove some of the, you know, self imposed roadblocks that you might have, as you pursue, you know, these opportunities, I was allowed, you know, apart from partners in that ship to acquire the deal with another key partner user need to have it. The brokers have learned that, you know, in this industry, you know, it's the wild, wild west, you know, in multifamily, and having great relations with the broker makes all the difference.
Sean Thomson 12:26
Yeah, yeah, I agree with all those things. So it's, you would say, the relationship with your partners is get out there and make those relationships that's going to help you that's gonna help you be able to do the bigger deals, and then and then have a confidence to do that, go out and do something that you may not think is quite within your reach. But but just go ahead and, and believing yourself and do it anyway. And then making sure you have great broker relationships for those deals once you start to look for them. So if you could go back to 2009, when you first started bought your first house, what would you what would you have done differently? I guess to to, to be more successful? Or to do things differently? Is there something you would do differently when you first started as opposed to what knowing what you know now?
Jack Aduwo 13:05
Yes, you know, knowing what I know now, I would say, don't go to single family just go straight towards family because I've seen too, that was a start from zero, you know, and they just go straight to multifamily. So knowing what I know now, I will not go with single family, I just get tired multifamily. But also know that you know, this that kind of like people are scared or scared or simply just don't know where to start. So I feel like single family is good for those, at least, what I would say just get it. Just do it. Right? No, don't try to see wait for the wild Republic because the world will never be perfect, right? You know, look for the opportunity. There's always a compromise, Nothing's ever perfect, but it's good enough for you to move it with it then go with it. But knowing what I know right now goes into multifamily
Sean Thomson 13:52
single family that single single family helps give you that kind of a comfort level and kind of gives you some experience but it's not necessary. You can really go and do the bigger stuff without without that experience and and I guess fear overcoming if you're just confident if you build the right team, you can go ahead and go into the bigger stuff and sort of the name of the podcast next little American Dream slash ask every guest pretty much what their American dream is. So what is the American dream mean to you?
Jack Aduwo 14:20
So the American dream they say ways to look at it the financial freedom right to multifamily has been able to help help us with you know, the family, you know, to me the American dream, is it the family, right, having a good, great family? You know, I gotta tell you know, you and I were at a conference yesterday right and I left on Saturday, I think you're there till till till Sunday, right? But I left on Saturday night, you know, flew back, flew out flew to LA to pick up my my, my daughter, you know, she was spending time with our grandkids. And then on Sunday, you know, maybe home on Sunday at 5pm right in time for dinner. Just coming back home. and being able to spend an evening with the family I think means a lot to me. And so, you know, having a good family is a true American dream, in my opinion, being surrounded by the right, you know, friends and everything part of what I love about our health, just the kind of friends that are in our home. I lived in LA for eight years. And LA was great. But, you know, when I moved to it was like, just the environment, the people, you know, way more friendly, than you know what I had in LA. And it gets way better. For my lifestyle. Of course, you know, that being generalistic, my wife from you know, LA, of course, right, sort of this messy way. And that led to just dismissing me on the same page. Yeah, but that is my my American dream, you know, the financial freedom and the family I think is extremely important. Yeah,
Sean Thomson 15:53
those are both those are both good American dreams, I think. So Jack, if someone wanted to get you know, you do syndications and use things like that. So someone to kind of reach out to you and maybe see what you had going on? Where would you send them? Is there a website or something? Yes,
Jack Aduwo 16:06
yes, candidate properties. That's my website, or my recommendation of becoming, you can see a profile this link there to contact me, and I'll schedule a meeting with me, I would love to have a phone call. You know, I'd love to hear about multifamily. And I love I love helping you know, and assisting. You know, one thing you know is that at one time, for example, like me, I moved to the US 20 years ago, right? And when I moved through and years ago, like a lot of people in my case, who came here students, I didn't have buttons, you know, they're like, I don't know, $20 in my pocket, right? And then, you know, as long as you work hard, you know, it's possible. And I believe, you know, you work hard, and you're willing to reach out to people, they loads with somebody willing to help I've been helped along the way, I did not make it to where I am on my own. And the least I can do is also help others. So if somebody has a question or you know, something, I'll always be, you know, very open to help. You know, one of one of the people that I admire a lot is largely, you know, one of the things he likes to say there's enough bread to go around right? So as long as you have the mentality of that there's enough bread to go around which means you don't feel like you have to keep the the entire bread for yourself shared because the more you share, the more you know you live in abundance.
Sean Thomson 17:23
Right, exactly. Yeah, that's great. Well, we'll we'll be sure to put the link to your your website there. People can reach out to you on the website and and get more information what we have going on. And then like you said, if you if you can help in any way you're willing to do that so people can reach out to you for advice on their multifamily business or whatever they have going on. That'd be great. Well, thanks, Zack. I really appreciate you coming on the show. I always have a great time hanging out with you and talking and stuff. You're you're super easy to talk to. And I love your story and and I hope to see you again real soon in another event or something. Okay,
Jack Aduwo 17:54
yeah, definitely looking forward to connecting with your next event man.
Abigail Thomson 17:58
Thanks for joining us for another episode of Next Level American dream. If you would like to learn more on what we talked about what to contact the team directly, or are interested in passively investing and becoming a part of our TMG investor club. Head over to our website at thomsonmultifamilygroup.com Before you go please leave a review your comments help us create more episodes for you to enjoy.