What Should Real Estate Investors Be Doing Right Now with Special Guests Gino Barbaro & Jake Stenziano

Join our host Attorney Kim Lisa Taylor as she delves deep into the minds of real estate investing experts Gino Barbaro and Jake Stenziano about the current state of multi-family investing. We'll ask them what real estate investors should be doing right now to survive (and even thrive) under current market conditions.

Episode at a glance:

• Is multi-family an over-saturated asset class?  
• LTV's and interest rates in the multi-family space
• The best strategy for sending LOI's
• What you should be doing if you want to find deals

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Transcript

Kim Lisa Taylor:

Welcome to Syndication Attorneys’ free monthly podcast, where we talk about topics of interest to real estate syndicators, with the opportunity for live questions and answers at the end of the call. I am attorney Kim Lisa Taylor. I would also like to introduce Krisha Young, our co-host and our business development associate at syndicationattorneys.com. Before we get started, please note that all of our podcasts will be recorded and may be used for future promotion, posted on our website, or broadcast in a podcast available to the public. If you don't wish to have your voice recorded, don't raise your hand; instead, either put your question in the Q&A box or schedule a one-on-one consultation. You can do that at our website at syndicationattorneys.com. The information discussed during this podcast is of a general educational nature and should not be construed as legal advice. Today, our topic is “What Should Real Estate Investors Be Doing Right Now?” with our esteemed guests, Jake Stenziano…

Jake Stenziano:

In the pink.

Kim Lisa Taylor:

Yeah, in the pink, and Gino Barbaro.

Jake Stenziano:

In the blue, in the blue shorts.

Kim Lisa Taylor:

Yeah. Jake and Gino are great friends. We've known them now for a long time. Gino actually lives in my hometown, St. Augustine. Today, I'm actually in Coeur d'Alene, Idaho. I'm here for an event, scoping out the place, seeing if we want to have an event up here. It's pretty cool. You guys should think about it, but anyway, let's get started.

Jake Stenziano:

What's the main reason we should visit Coeur d'Alene, Idaho?

Kim Lisa Taylor:

It's just fantastic here. It's beautiful. There's huge lakes in Northern Idaho, a lot of people don't realize that. Lake Coeur d'Alene is about 30 miles long. I live about halfway down the lake. The town of Coeur d'Alene is right on the lake, it's just a really beautiful spot. There's mountains all around.

Jake Stenziano:

So that's your country spot when you're not in St. Augustine.

Kim Lisa Taylor:

Yeah, this is our summer home.

Jake Stenziano:

Got it. Fancy. Fancy, Kim Taylor.

Kim Lisa Taylor:

I know. I know. Okay. Well, great. So you guys got started in real estate a while back. You were doing other things before. What prompted you to get into real estate? How'd you get here?

Jake Stenziano:

What say you, Gino?

Gino Barbaro:

Well, Kim called us esteemed, I'm still trying to figure out what the word esteemed means.

Jake Stenziano:

It's what you do with broccoli. It's what you do with the broccoli, Gino.

Gino Barbaro:

I hope it's a compliment. No, but seriously, when we started, I had gotten into a deal in 2005 with a guy named Maserati Mike, and I wish I had read Kim's book or Kim had a book out there on how to raise capital, because Maserati Mike, he created a syndication, and he took Gino's money. Gino didn't know what a syndication was. Gino didn't have a framework. Gino was like, "I've got money. Here, Mike, you've got a cool car, take my money," and a year later Mike's …

Jake Stenziano:

He's got two Maseratis.

Gino Barbaro:

I don't know if he's got two, maybe it's three. Remember we were talking about the self-storage? If back then I had known self-storage with the climate control, maybe I'd rented one out and put Mike's body in there, but we digress. I made a huge, huge mistake. It was a really big problem. I didn't know, I wasn't educated, and like I said, I'm going to put the book up again, if you're thinking about syndicating, I know Jake doesn't like to read, you get an audible, it's an amazing book. Your first book was great, but this thing dives into syndications, and I wish I had had it. From that point on, I'm like, "I don't want mobile home parks." That was a mobile home park deal. I had done a strip center. I want multifamily because I'm in the restaurant business. I'm working 50 hours a week, I don't want to have 17 single-family homes. I want to buy one deal, squat, then buy the next deal. I can do it part-time.

I met Jake in 2009. He is the drug rep, I'm the pizza guy. He was selling pharmaceuticals, ironically enough, he was selling vaccines and fish oil back then. We meet in 2009. He moves to Knoxville in 2011, and I'm like, "Jake, these deals look pretty good." Back then, the economy sucked, GDP was 1%, rents were 300 bucks for a one-bedroom in Knoxville. It was completely different than now; we were in the buyer's market. There was no capital out there to raise deals, so I'm like, "Jake, let's just look at deals down here," and it took us 18 months to find the first deal. We bought our first deal in 2013, it was a 25-unit deal, we had some seller financing, and three months later we got our second deal, which is a 36-unit, and then six months later, we bought our third deal, which is 136 units. Jake and I, when we started, all we wanted to do was get a 100 units, that's all we wanted, if we get 100 units, we are done, and that wasn't in the…

Jake Stenziano:

That was the pinnacle.

Gino Barbaro:

Yeah.

Jake Stenziano:

If that ever happened, that was the pinnacle. Kim, these are back in the days where pharmaceutical companies and the government were separate entities. At the time it was weird because I was like, "Man, everybody hates me because I'm a drug rep." The pharmaceutical companies are looked down upon so bad as these evil corporations, and then all of a sudden they merged with the government and now it's like one entity combined. So I just want to say this for the folks out there, it was a good thing like that back in the day. It's important to keep these companies in check, so I digress on that. I just wanted get that out there.

Kim Lisa Taylor:

All right. Well, so multifamily, I think a lot of our clients choose multifamily because everybody can relate to it. We've all either lived in an apartment, or we know somebody who live in an apartment, our kids are living in an apartment, so I just think it's a no-brainer for investors to…

Jake Stenziano:

That's why people start a restaurant, right? We know food, we can start a restaurant. Is it that mentality we're thinking here?

Gino Barbaro:

Yes.

Jake Stenziano:

That's why Gino's here.

Kim Lisa Taylor:

But what about now? There's a lot of people ... You guys are training people how to buy multifamily, there's other people out there training people how to buy multifamily, we just created this monster where there's so many people out there buying it that there's too much competition, there's no good deals left.

Gino Barbaro:

I think it's part of the market cycle. One of our educators, one of our coaches says he's seen it the last 20 years, when there's a lot of euphoria, people come in and they start teaching, there's a lot of cheap money. When the Fed holds rates at near zero, asset prices increase, and as euphoria, as interest rates rise, we're slowing the economy down, we're slowing the market down. They're just going to get weeded out. We've been doing this for six or seven years. We created Wheelbarrow Profits, the framework, if you want to syndicate, you got to put both of these together. This is a marriage made in heaven here. Don't go and raise money unless you know the business. It's that simple. Whether you like our framework or somebody else's framework, I think that's what people need to understand.

I know, Kim, the opportunity is now. I think in the next 18 to 24 months, there's going to be a huge surge of deals, huge surge of opportunity. Don't worry about interest rates. Interest rates are going to be where they are. You're buying this stuff on actuals right now, and if a seller has to sell, he will sell, but it's imperative that you start, and you need to create those relationships. You need to create the team. You need to learn who the brokers are. You need to focus on one market, understand that market, and from there start applying the framework. What say you, Stenzi?

Jake Stenziano:

No, it's a great point because Kim is identifying the herd mentality. It's the same thing with Realtors. All of a sudden the real estate market is super-hot. All of a sudden there's a record number of Realtors out there. The minute something changes in the economy, they all fall back and try to find different jobs. You got to watch out from just moving with the crowd. You need to look at why you're doing a specific investment. We've committed to multifamily for the long-term. We believe in buying deals for the long-term, that's our main slogan on our podcast, and we're squatting in a specific niche of multifamily investing.

I don't recommend people just going with the crowd and getting in, and that's what you saw from 2020, 2021, 2022, all of these people pushed in, not because Jake and Gino are good marketers, far from that. That's not the case. People saw cheap interest rates. They see all these other people, "My neighbor is going in buying apartments. I just got all the stimulus money back from the government. What do I do with it? I just bought enough plasma TVs, or flat screens, or LCDs, or whatever the hell they're called now for my house, so I'm going to go buy some apartments."

Gino Barbaro:

Crypto.

Jake Stenziano:

Crypto. Yeah, so it's ... You got to really take a step back and say, "Why would I be getting in this investment? What are my ultimate goals?" Not just doing it because someone else is, and I think that's what you've seen. It's funny because we're more active this year than we've been in the past three years because we're actually finding value in the deals. We're on our third — a 100-plus-unit deal this year, we're actively going through it right now. Kim, you're on my short-list of calls. We just did the inspection, I'm going to be reaching out to you here in a second. Well, I just did. Okay, so I can check that off my list.

Kim Lisa Taylor:

You're working on the documents …

Jake Stenziano:

Kim does our syndication doc, but ultimately it's the time now because we're finding distress where opportunities are now. It may be physical distress, in terms of the buildings were not taken care of, but a lot of it is economic where you're getting these mom-and-pop owners that didn't stay up with market rates, their expenses went up by 30%, but their rents stayed the same, so it's created opportunities where they're going, "I don't know what to do right now." There's also a lot of folks that their debt is resetting. All of these things are creating opportunities for long-term operators, so we're much more active in this type of environment than we were in the prior three years.

Sure, we're doing three, four deals a year, but they were smaller, they were scattered sites, it was really hard to find really good opportunities. Now, I don't want to say the flood gates are opening, but we're way more active, it's way easier. I much prefer this market than what we've seen in the past three years, and everyone's going, "What the hell are you talking about? Rates were so low, this, that and the other thing." Yeah, but I was competing with people that had no idea what they were doing. They were underwriting deals for 20% rent growth in perpetuity. They were throwing stupid numbers out there just to get the deal. There was 20 people online, it was nuts. So I much prefer this type of market than what we saw 2020 to 2022. I'm a happier man. My relationship at home is better with my wife. Gino and I, look, he's smiling, he's got little ... the complexion has come back, and it's beautiful, so yes, we like this a lot more.

Kim Lisa Taylor:

Not that we want to get too personal on this.

Jake Stenziano:

Yeah. Obviously. I'm kidding, right? Am I? Am I?

Gino Barbaro:

I don't know.

Kim Lisa Taylor:

The slogan for the billboard for self-storage, which was a little bit off color. So what kind of loan-to-value ratios and interest rates are you seeing right now for multifamily?

Jake Stenziano:

It depends. It depends on what avenue you're going. We refied actually three deals earlier this year, and I think we had a 5-30 rate, these are agency, these are Fannie deals, but we're 55% LTV and people are saying, "What the hell are you doing? 55% LTV?" Well, the refies — and these were cash-out refies on top of it — probably the second or third time we've done it, and so did we like the rate? No. Would I have preferred something in the fours? Yes, but the deal works really well still. Well, the three of them actually cash-flow really well, so that's sort of what we're seeing. You're probably going to have 50 basis points onto that now, just due to where the tenure has gone, so 50, 70, those might be around six now, and the deal we're going through right now, we were quoted at 6.7% rate, and it's a 25-year ARM. This is through a credit union, and that is an 80% loan-to-cost.

Kim Lisa Taylor:

Wow. So that's really good, and is that a fixed rate or is that going to adjust on you?

Jake Stenziano:

5-25, so fixed for five. That's the other thing too, we've never done bridge, and we've always stayed away from it, and we believe in long-term fixed-rate financing, minimum of five years, and then ultimately that deal's going to go out to pasture. We're going to send it to Fannie or Freddie, and we'll sit on it for 10 years. We don't have anything coming due, I think, till 2027, and what we try to do is stagger when these things are going to come due. So you're going to have a 10-year loan out to Fannie, it's going to come due a couple years on the next one, so we try our best to stagger them. It doesn't always work, but you don't want all your portfolio coming due at a certain time, because you have to do it right now where it's going to hurt a little bit, and that's the important loan-to-value. I'm glad you brought that up, because if you're able to renovate, and you don't try to take all the cash out of these things, and you're preparing for the long-term, we're very happy with a 55% LTV on a refi right now.

Again, if someone's in there, and they're not planning on holding their deals like we are and they want to sell, different conversations are had, but this is how we're building for the future, and ultimately trying to create a large portfolio to carry for the long-term.

Gino Barbaro:

Kim, the framework is buy right, manage right, and finance right. The reason why we didn't do those deals in 2021 and 2022, we knew rates were going to rise. It's not a matter of if, it's a matter of when, and when you're quoting bridge at three and a half, and you've seen some really big syndicators out there, they're losing their deals because they thought, "Hey, rates are going to stay low," and there's risk, so long-term…

Jake Stenziano:

What was the slogan, Gino? “They can't raise rates.” How many times do we hear it? They can't. They can't. They can't raise rates. I want to sleep at night. I want long-term fixed rate debt and not ... it's too much gambling there.

Gino Barbaro:

Then unfortunately, they did the opposite. They shocked the system by raising them so quickly in such a short amount of time, that if they'd been doing it sooner before the November ‘22 election, maybe in April and May of that year had done it to slow things down, a lot of these operators would've said, "Okay, rates, I'm not going to underwrite for a 4% exit, maybe I'll underwrite for a six." Now they're looking at eight or nine, that's why we didn't do a lot of those deals in 2021.

Jake Stenziano:

With 20% rent growth year over year.

Gino Barbaro:

And 2022. I think the last thing I'd like to say about it is you can always buy real estate in any part of the market cycle; you can't always sell real estate. When we were buying in 2008 and 2009, it was a tough time to sell. You can always buy, but it was hard to sell, and I think that's where we're going to get to right now. If you're buying right now in the next 12 to 24 months, there's an opportunity, but if you're underwater, you're going to say to yourself, "Wow, if I can hold on, let me weather the storm to get over to the other side, but I maybe have difficulty selling that." So always think about that.

Jake Stenziano:

There's some kind of slogan out there with the more institutional guys. I feel like it is “Ride or die till ‘25,” but it's not, it's basically ... There's something out there like everyone is saying, "Hold on until ‘25," I forget what it is.

Gino Barbaro:

Yeah.

Kim Lisa Taylor:

All right, so…

Gino Barbaro:

“Stay alive till ‘25,” is that it? You like that?

Jake Stenziano:

I think so.

Gino Barbaro:

Yeah.

Kim Lisa Taylor:

You’ve just got to ride it out. So these people that are getting in trouble that got these bridge loans, is there a fix for that? Is there a way that they can be helped? Should we start a rescue fund and go…

Gino Barbaro:

He raised his hand. Fine, go ahead.

Jake Stenziano:

I mean, the big thing is capital calls. Every time ... I've been to two events in the last year, everyone is having capital calls, and they're going to go back to their investors, and the really good operators are going to say ... they're going to put out their story, which is accurate. “We didn't foresee this. We didn't see insurance going up a 100%. We've operated the property, we've come through with our rent growth, with our projections, but who thought property taxes were going to go up 30%, and who saw insurance go up a 100%?” You are going to put your hand out and go, "Can I have another 30 or $40,000 on a $100,000?" That's one of the ways to do it. If you're an limited partner in this deal, and you have faith in this operator, and they've gone through the cycle, and you like the asset, well, I think you're incumbent upon giving that operator more money.

I think the other thing is there's going to be foreclosures. We've seen some big foreclosures where you're just going to get back the keys, and I think a lot of operators out there who were in the market are going to come in and buy it. But you still have, in certain parts of these markets, where the insurance is still going up, labor is still going up, property taxes are going up, so when you underwrite these deals, be conservative with that underwriting going forward. I think there's going to be a lot of capital calls in the next couple of months.

Gino Barbaro:

The government's not going to care about a couple syndicators going under. This is not a big bank that they're going to look to bail out, so these guys are in trouble, and I don't think there's going to be some fundraise to bail them out. I think their deals are going to go back, keys are going to go back to the bank, they're going to then sell them at a discount, and someone's going to scoop them up. I think the key is to not ... Look, be okay not doing a deal. Don't force it. If you're so tight that taxes go up, and insurance goes up, and that's enough to knock, and rates go up, which is a trifecta, look, it's a big deal, I'm not saying it's insignificant, but if you can't weather something like that, then should you be buying that deal?

I'm sure people are going to underwrite more conservatively, and it's going to take another 10 years before people get this frothy again, and things run up, and we'll go through it again. 2040, we'll be sitting here, Kim will be saying, "You guys foresee this kind of thing?" We're going to be here again. This is not the first or the last time, it's happened before.

Kim Lisa Taylor:

Yeah. I hope I'm not sitting here in 2040. I'm just…

Gino Barbaro:

I hope you are. You're going to have three vacation homes by then. You'll be doing just fine.

Kim Lisa Taylor:

I have three.

Gino Barbaro:

I don't know that.

Kim Lisa Taylor:

I need to go to other countries or something. All right, so are you seeing sellers adjusting pricing to accommodate any of this or not really?

Jake Stenziano:

It's an interesting question. It's definitely loosening up. The deal that we're doing right now, we're using a bank for the first time. It's actually a credit union that we haven't used in the past because they had really good terms. I asked for a 30-45, and that's a 30-day due diligence, with a 45-day to close for the financing, and there was zero pushback. If you'd have gone back six to eight months, I would've got two middle fingers and been totally…

Gino Barbaro:

They'll laugh at you.

Jake Stenziano:

Yeah. So on the pricing, our market is still pretty hot. We're investing in Tennessee. We haven't seen a huge adjustment. I know it's happening in other places, but terms are definitely loosening up. People are being more reasonable, it's not, "Take it or leave it, F you," and that was the sentiment from the buy side for the last two years. It was like, "Dude, you're going to do exactly what I tell you. Here's the deal, take it or leave it. There is no adjustment anywhere on anything." That was the feeling going back, I would say last year, for sure.

Gino Barbaro:

But Jake, even to this deal we're doing, you're talking about concessions. We wouldn't even have thought about asking the seller for concessions a year ago. You've been like, "We'll take it … for sure." So there's concessions, number one, and number two, I see deals that are coming out that actually have pretty good numbers, Jake.

Jake Stenziano:

I think pricing out the gates makes more sense.

Gino Barbaro:

Yes, that's what I saw. It's not my deal, it doesn't fit our “buy right” criteria, it's a little bit older, but it actually works, whereas a year ago it would've been 20 or $30,000 per unit more. The interest rates would've been a lot lower, so it would've worked based on an interest rate perspective, but they're seeing that the DSCR doesn't work, so they're like, "We got to drop the price on this." We're seeing deals out the gate that do make sense that you can actually make them work, whereas two years ago you're like, "There is no way this deal is working. There's just no way in hell this thing is working." I've seen that in the last few months also.

Kim Lisa Taylor:

What about rescue funds? I've been hearing a lot of people talking about rescue funds. We've actually even had a lender suggest to someone we know, that they bring in some preferred equity to put in whatever capital they need instead of doing the capital call. Because usually capital calls are usually marginally successful, it's a sales job, you have to sell the investors on why to do it, then some of them won't. We typically write voluntary capital call provisions into our documents because of that reason. We don't want to penalize the investors that can't. Then there's usually always two or three people that'll raise their hand and say, "I'll do it," because they're going to get a better return, they're going to get a preferred position, they're going to get something different than what everybody else gets, and so they're willing to take that on. Are you seeing any of that in the market, where people are infusing some preferred equity into their deals?

Gino Barbaro:

Have you seen any of that, Jake? When I go to these events, no one has mentioned that to me yet. I just think…

Jake Stenziano:

I'm sure it's happening. It wouldn't surprise me. It hasn't come up in any of the conversations I've had with folks recently.

Gino Barbaro:

Yeah, I haven't either.

Kim Lisa Taylor:

It's kind of a short-term solution, so it is an option. So if that is something that we can help with, especially on documents that we've written, but even documents that we haven't written, there may be a way to go to the investors and say, "Hey, you can either put up the money or we can get it from these people. What's your vote?" If it's that or lose the property, they might vote, "Go ahead, take it."

Gino Barbaro:

I think they need to work on the marketing though. It can't be called a rescue fund because it just sounds like ... the marketing there doesn't sound great, we got to call it something different. I don't know that would be right now.

Jake Stenziano:

It's the next leg of growth opportunity.

Gino Barbaro:

I like that.

Kim Lisa Taylor:

The leg fund. Leg up fund, there we go. The leg up fund.

Jake Stenziano:

Kim's got the parachute, save me fund.

Kim Lisa Taylor:

I like that. All right, so I talk to people all the time and they're like, "Hey, we've been looking at this deal for two weeks, and we're getting ready to put in an LOI," and I say to them, "Okay, you should have put that LOI in, and another 50 of them between now and when you're talking to me." What's your thoughts on that? How many LOIs should people be putting in every month? What's your thoughts on whether they should put in LOIs that makes sense versus what the seller wants?

Gino Barbaro:

I think the problem with the person you're talking to is they don't have a framework. They're not focused. They don't have clarity. When you do buy right, manage right, finance right you know what your “buy right” criteria is. You know the market, you know the median income, you know the unit mix, you know the number of units you're looking at, you know all the submarkets, so when a deal comes on your table, you're like, "That's a deal, mom-and-pop, 80 units, 85 a door, median income of 50 grand, I got the twos and the threes. Jake, let's rip it." You don't even waste your time, whereas that person that you talk to is like, "Ah, I'm not really sure." They don't know what a deal is to them. You have to understand what the deal is to you so you don't have to be ripping off 30 or 40 LOIs. When you see a deal, you know that deal fits it, you know it feels right. Most people don't know what it feels like because they haven't really cleared that out.

Jake and I were at a syndicator event over a year ago, and we're on stage and we're like, "Does anybody have a ‘buy right’ criteria?" Me and Jake, not one person, and these are all high-level people who are investing millions of dollars. If you don't know what your criteria is to buy an asset, you're buying anything, and when you buy anything, you're buying nothing. That's the real problem with things. So don't go on quantity of LOIs, put on the quality of the deals that you're looking at, so when a deal comes across your desk and it doesn't fit your criteria, you're not spending six hours underwriting the deal. It's in part, it's got $23,000 median income, it's all one-bedrooms or studios, don't even waste your time underwriting it. I think becoming clear on what you want to buy, and what fits your business plan will allow you to strike, and don't waste ... if you're taking two weeks to write an LOI, someone's already written the LOI, and that deal is going to go into contract before you even have an opportunity.

Jake Stenziano:

You're not even competing.

Gino Barbaro:

Yeah.

Jake Stenziano:

Yeah. We've always said clarity will set you free as a multifamily entrepreneur. I see a deal, probably within five minutes of looking at it, having some financials, I'll know if we're moving to an LOI, maybe I like to get on-site. Then between that period of time when we've locked it up, we're doing our inspection, we've done some further due diligence, that's when it'll get close, and we'll say, "Okay, we found this wrong with it physically, it's a no-go," or, "Hey, this didn't add up to what we believe." It really isn't that much on the front end. I think it's because you need to have that clear buying criteria, and that's a big component of what we do in our community, is we ask people to set this up, and we go through with certain financial parameters, "Okay, what market are you going to be in? What are you looking for out of that market? What are your end goals?" If you can document all this stuff, and as a deal comes through, over time with experience, it's almost going to become intuitive because you know it so well.

For folks that are just getting in though, this is one of the biggest things that they need to do, is get clarity. Put those numbers on paper, understand what it is exactly you're looking for, know your business plan, because that's going to make the job a lot easier and a lot more fun, and you're going to be able to sift for gold quicker. You're going to take more in, and you're going to be able to sift and get a lot of stuff off your plate.

Kim Lisa Taylor:

Well, and so you guys, Gino's mentioned a couple of books, one's ours, one's yours, how can people get your book?

Jake Stenziano:

Man, you got to be rich. This is the one time where they're not cheap, these books ... No, I'm just kidding. Very easy. Gino will probably give it to you, but they're all out there. You can go to jakeandgino.com, I'm sure we have links for them all there, “Wheelbarrow Profits,” “The Honey Bee.” This is something that is very tangible. I'm telling you, Gino, if you email him, gino@jakeandgino.com, you might get a free PDF copy. 

Gino Barbaro:

Yes.

Jake Stenziano:

Maybe.

Gino Barbaro:

I will do that.

Jake Stenziano:

Maybe. Maybe.

Gino Barbaro:

I will do that.

Kim Lisa Taylor:

Well, and we've got two books. All right, so this is kind of our beginner's guide. This is the first book, “How to Legally Raise Private Money,” and then we got ... Okay, so if you look at the two, you'll see the difference.

Gino Barbaro:

Real heavy.

Jake Stenziano:

Real heavy the second one, yes.

Gino Barbaro:

Academia in the house.

Kim Lisa Taylor:

I was actually kind of depressed when I finished writing this book, it's like, "What, it's only 168 pages?" That's like my entire brain on paper, that's all I got, more with the second book because it's twice as thick.

Gino Barbaro:

That's the ego play, Kim. Yeah, no, it's great. I'm telling you, honestly, I truly love the book, and I'm not joking. I think if you're going to go out and syndicate a deal, I think learn the business. I mean, you're taking somebody's money, understand what your business plan is, and as you're doing that, get on a call. Even if you're not going to syndicate today, get on a call with Kim and spend the hour, hour and a half on structures, spend the hour and a half on what your exit plan is, your exit strategies are, and the whole structuring of what your entities look like, because it's really, really important. You don't want to go through your first syndication and the timelines are so quick, and not understanding timelines.

In the book, it talks about timelines. Kim will help you with the timelines as well, and that's something in our very first syndication that we were really surprised at how quickly things move, how you need to get that webinar, how you need to have your operating agreement together, how you need to have those structures together, when it's go time and you send out that webinar, you have 48 hours, you want those people to start getting in money. You have soft commits, and hard commits, then closing the deal, it's all in the book on how to raise capital, so learn the business.

Jake Stenziano:

Guys, real quick. Going back to the LOIs too, you want to make offers that people can say yes to. Don't make these things contracts. Don't make them overly complicated, really clean, you know, "Okay, this is the price. This is what we're talking about."

Kim Lisa Taylor:

How long is an LOI?

Jake Stenziano:

Maybe a page and a half, maybe, get it down to a page if you can. What are the terms for the earnest money deposit? What's your timeline? That's what I'm looking at when I see these things. Give someone something they can say yes to, get to the second level, which is going to be your attorney, their attorney going back and forth in the contract. Most groups have an established contract that they're going to use, so it's not going to be much variation from that, unless you're dealing with some of these crazy yahoos out there, but it's all kind of ... there's certain parameters in the space that people generally agree upon. So give someone an offer on the front end that they can say yes to, and then work to massaging the relationship to get to the finish line.

Kim Lisa Taylor:

Well, and make sure you use a real estate attorney; you don't need it for your LOI, but you do need it for the purchase agreement. Because we got stung on a property that we bought by me thinking, "Oh, I'm smart, I'm an attorney, we can do this ourselves," and wrong, wrong answer. Because we ended up in a situation where the seller actually enticed 16 of our tenants in a 27-unit apartment complex to move somewhere else, and gave them incentive to do so.

Jake Stenziano:

That's gangster.

Kim Lisa Taylor:

Yeah. That was the government.

Jake Stenziano:

Yeah, you're dealing with some real thugs there.

Kim Lisa Taylor:

But the point being that if we had a real estate attorney helping us with this, we could have had a clause in there that said that, "Hey, if you do something to cause our tenants to move, then you're going to be responsible for six months’ rent." Which would've allowed us the time to … the project turned and recovered, instead of we had a lot of turns we weren't anticipating, and it just took a long time to get it back in shape. The broker's agreement, it protects one person, and it's not the seller, and it's not you as the buyer, it is the broker, and it's their right to …

Gino Barbaro:

Have your attorney look at the broker agreement too if you're selling something because they'll try to throw a couple zingers in there for themselves as well.

Kim Lisa Taylor:

Yeah, so just make sure that you're using a real estate attorney. By the way, we have brought a real estate attorney in on staff who does commercial real estate, so we're excited about that.

Gino Barbaro:

One-stop shopping.

Kim Lisa Taylor:

Hey, we do PR, we've got marketing materials, we've got education, we've got the documents, and we've got connections. Anyway, all right, so I like the discussion about LOIs, I think that it's important that people understand what they're offering. So how do they get that information? You guys have some educational programs; let's talk a little bit about that.

Jake Stenziano:

We have a huge documents library. Ultimately, we have a huge documents library of everything that we use. Again, it's for informational purposes only, but it gives you an idea of what a lease looks like, what an LOI looks like, what a contract looks like, and then you can go and say, "Okay, I like this," and then get with a team member like yourself, and have that produced for your team. It's like going back to that clarity thing, you don't know what you don't know. I remember our third deal. We were getting all these requests, it was 136-unit. Up to that point we did a 25, and we did a 36, and now it's starting to get a little bit real, professionals are involved and they're asking for these different things and lease audits, and I don't know, SREOs, and all this stuff and I'm going, "Gino, what the hell is all this stuff?"

He had it from his prior mentorship that he was involved in, so Gino's ripping it out like this, “I got you, bro. I got you." I'm like, "Oh, my goodness, he's a genius," but if you have this stuff in your back pocket when you're getting started, it's huge. It makes a real big difference because, look, there's certain terms, speaking the lingo that you're going to get into this, and it's like law, Kim, you get into it, there's a different lingo that people speak. There's a certain club that you get into once you learn it, and you're expected to know it, otherwise you're a weirdo. Same thing with commercial real estate, so we help folks out with that.

Kim Lisa Taylor:

Well, and we can't have a discussion anymore without talking about AI.

Jake Stenziano:

You're talking to the wrong guys.

Kim Lisa Taylor:

Yeah. I know that…

Gino Barbaro:

You're really.

Kim Lisa Taylor:

Listening to this like, "Oh, hey, why don't I just have a ChatGPT write my purchase agreement, they know what they're doing," and so the thing is they get things about 75% right, but it's the 25% that's going to go, and it's going to go very wrong, and I saw a physical example of that. I was looking at somebody's ads and I'm like, "Oh, my God, these are so cool. Look, we should do something like that on our website." My marketing director, Cassia, says, "Oh, that's all AI," and I'm like, "Well, how do you know?" She goes, "Look at their hands." So this is an assignment for everybody, look at the fingers on any AI person, they are wrong, and they are very, very wrong.

Gino Barbaro:

I don't even know what you're saying right now.

Kim Lisa Taylor:

If you look at an AI generated picture, and it has a person in it, then their fingers are just ... sometimes there's six fingers, they're cut off at the…

Gino Barbaro:

Really?

Kim Lisa Taylor:

I saw one the other day where these two fingers were really long, and one was going off in the other direction, so this has led me to…

Gino Barbaro:

Kim, I'm telling you right now, this is not going to age well. In 10 years, you are going to get canceled because you discriminated against the AI bots. I'm forewarning you. I'm going to be your counsel here. Be careful because this stuff's probably recorded, and they're going to come back to cancel you, so just be careful on what you're saying. Six-finger robot, hey, we got to be accepting of that, okay?

Kim Lisa Taylor:

I actually have a theory. It's not artificial intelligence, it's alien intelligence, and they're all like, "Yeah, hey, why don't these people have six fingers like us?"

Gino Barbaro:

But Kim, seriously…

Jake Stenziano:

Can you imagine what you can do with six fingers?

Gino Barbaro:

Let me ask you real quick though. Seriously, are people actually using AI to write contracts, and to do PPMs, and to do ... are they…

Kim Lisa Taylor:

I believe that people are trying to do it, so you have to be careful because it's partially right, but the part that's wrong could be very, very wrong, and that could be the part that ends up killing your deal, or stinging you later on if the deal goes bad.

Gino Barbaro:

So Jake is a frugal guy, and…

Jake Stenziano:

10 grand is going to make or break your deal, don't do it, if that's what you're worried about.

Gino Barbaro:

Yeah, don't even go down that route, with legal and with accounting, those are two places you really don't want to be cheap. I'm just saying. Well, how do we know that? We've made those mistakes, not with the contract…

Jake Stenziano:

I was an attorney back in the day, and I'll tell a little story. When we first started, I was doing our evictions on our first 25-unit, and then Judge Brewer ... I don't know, it was like three, and I was going for my fourth one, I was feeling really good about myself, and I wore a suit every time, so I was looking the part, and then said, "Son, are you an attorney? I've seen you here a couple times." I was like, "No, sir," and then that got a little weird. He let it through. He let that last eviction go through, but I corrected at that point, so came through unscathed, 4 and O, feeling good about it, but you got to be careful out there because not everyone's a Judge Brewer, okay?

Kim Lisa Taylor:

Yeah. Well, you do have to be careful. I think that AI has a place. If you want to write an article on something, go ahead and get an AI article done, but don't use that. First of all, you don't know where that came from, you don't want to be accused of plagiarism, but you can use it for ideas on what you want to write, and then write for yourself.

Jake Stenziano:

So Kim, if I'm understanding you correctly, like screenwriters, writers, we're okay to take them out of business, but don't touch our attorneys yet with the AI. They are the ones that we got to look out for. I'm with you. I'm with you. I got it.

Gino Barbaro:

He actually is, the Hollywood ... Get rid of Hollywood, right?

Jake Stenziano:

Yes.

Kim Lisa Taylor:

No, no, no, no, I'm not saying that. I'm going to be canceled if I say that. No, no, no, I don't want to say, and I'm sure there's a fair amount of Hollywood people that are doing deals like the ones that are…

Jake Stenziano:

Well, I heard a quick clip on it, and that was their big thing, they're trying to block AI from taking their jobs. That was a huge thing that they're negotiating for.

Gino Barbaro:

Well, they can write a better script than what they're writing right now. They're writing crap right now, so I'm sure…

Jake Stenziano:

Come up with something new, all right? We don't need “Lion King 14,” all right? Do something new, and then we'll come back and talk to you.

Kim Lisa Taylor:

So what do you recommend? I know I have a recommendation on what kind of things that our clients should be doing every week to be able to further their syndication business. My recommendation is at least one thing every week to find deals, at least one thing every week to find investors. What's your rule of thumb on that?

Jake Stenziano:

I don't know that we have a rule of thumb. I think going back to Gino's point earlier, make damn sure you have your buying criteria done because you're going to know what you're looking for. If you're out there just looking, "I'm looking at deals. Well, what's the deal?" That right there is your problem probably. So once you understand what you're looking for, and what your criteria is, what an actual deal is to you ... Look, we like two-bedroom townhomes with washer-dryer hookups that are built after 1980, this type of stuff in a certain area with a certain median income, with a certain level of crime — hopefully none — but that's the type of stuff, if you're clear on that, you're going to be much more successful.

To your point, from that stage on, you're going to be hunting, you're going to be out there working with brokers, maybe you have a direct-to-seller program going on, where you have folks on your team reaching out to sellers, seeing if they want to sell directly to you, but it's those types of activities that you attempt to systematize. If it's doing one broker meeting a week, or I'm going to be on site for at least one evaluation, those types of things are going to move the needle. Those actions will result at some point into your career growing, but look, it took us two years to get our first deal. This is not immediate gratification, and this is not retail shopping. You're not going into Walmart picking up a pair of socks, and going to the register and buying them. There is a lot of work on the front end that has to be done before you can close one of these transactions.

Gino Barbaro:

What I would say is something a little different. I would work more on the personal development side, and I'd recommend two books to everybody. The first one would be “The Psychology of Money,” and I don't think people understand their relationship with money. We had Alex Hormozi on the podcast about a year ago, and he was talking about how he needs to be busy, and how he needs to be active, and how multifamily is boring, that was his psychology of money, so to him, multifamily may not even be the right avenue for him to go. Understanding your relationship with money, is it holding you back? Are you having blocks with money? I can see a lot of people who are so smart and so successful, yet their relationship with money is pretty toxic, and if you're repelling money, you're not going to be a really good investor. You need to understand what that relationship is, go back into whatever happened in your childhood, do some work on yourself personally, because it took me a long time, I figured in 2008…

Jake Stenziano:

Tell the story about Phil, the soccer player that he had.

Gino Barbaro:

Oh, well, yeah. So going back into your silent psychology, we're working with a gentleman named Phil McKernan. I think he's one of the best coaches in the world, he's a clarity coach. On our podcast, I went out to Ireland back in May for four days with the Jake and Gino community. We went with 10 couples, we had a couples coaching retreat, and in one of the stories, he basically was talking to a high-level soccer player, and this soccer player was stuck.

Jake Stenziano:

Professional, like really, really…

Gino Barbaro:

Professional like the European Leagues, and this gentleman couldn't progress, and Phil started diving into it. At one point he asked the guy the question, "When you go home, where do you park your car?" To give some backstory, his brother was older than him, was a much better soccer player, but he quit, and he went to go work as a mechanic, and he helped the younger brother, this guy, to really propel his career. Subconsciously he felt really bad about that, so every time he tried to do something, he would self-sabotage himself. So Phil is like, "Where do you park your car?" He says, "I park my car around the corner. I don't want everyone to see how successful I've become." Although his brother was probably really proud of him. Once he became clear about that block, it's like, "It's okay, your brother did this for you," and he understood that he was holding himself back. That release is like, "Wow, now I have the clarity."

Jake Stenziano:

Yeah. His brother's a factory worker who was a better soccer player, so that's a lot of guilt that he was carrying for a long time.

Gino Barbaro:

Yes. For me, Kim, early on, I was a really big saver, great at saving money, but I didn't want to leave that money ... I didn't want that money to leave my bank account. Once I met Jake, I understood, "Wow, saving money is great, but saving it to buy an asset, to pay for an event is even better." I had to rewire my psychology, because my mom was always telling me, "You've got a restaurant, stay small. Don't take risk." When you hear that over and over and over again, it becomes part of your DNA, and you're like, "I can't buy a 25-unit." My mom didn't know I was in partnership with Jake until I had 200 units, and I sat down with her at my restaurant, I said, "Mom, I'm leaving the restaurant in six months." She's like ... I didn't want to tell her because there was always the negativity and the negativity, and she didn't mean to be negative, she was just trying to protect me.

So for those of you out there, start understanding your relationship with your money, and those blocks that are holding you from taking that next step further. The next book that I'd recommend is “Small Giants.” Jake and I don't need to be the next private equity, we don't need to own five or six, or 10,000 units, we're comfortable with our strategy. Understand what makes you comfortable with your strategy. We want to be a vertically integrated real estate company that can buy three to 500 units a year, that can manage that, and we work on profit per unit. That's what we're trying to strive, that's what we're trying to achieve, and we don't need to be the next Facebook of real estate. Understand what you're trying to accomplish.

Kim Lisa Taylor:

Right, right, that's really great advice, and kind of hit home for me in a couple of places, so I'll definitely check out those book. So the two of them, again, were “The Psychology of Money,” what was the other one?

Gino Barbaro:

“Small Giants” by Bo Burlingham. We interviewed him on the Jake and Gino Show, I would listen to that podcast because him and Paul Spiegelman started at Small Giants, and their small little companies that have core values, that live by taking care of their employees, have really built great company culture. They don't need to expand and grow at 50% of the year, they're really worried about serving their employees and serving their customers, and that's what Jake and I have tried to adopt.

Jake Stenziano:

Well, let's talk about that, Gino. So we do syndications with Kim, but they're not your traditional type syndication. We do syndications that are only for our team members, our employees, as many people refer to them as. Ultimately, what that is, is we'll open up a deal, and Gino and I — look, we plan to just go and buy the deal, but then we open up spots for our team members to invest dollar for dollar with no fees, no acquisition fee, no asset management, because we want to see their wealth grow. We don't believe in 401(k), we don't have a 401(k), so that's actually how our syndications are structured, not your typical … and Kim set that up for us. We kind of have this rinse-and-repeat program that we do, and we're going to be doing another one here in a couple weeks.

Kim Lisa Taylor:

That's amazing. All right, so anybody who's on the call right now, this is an amazing opportunity to ask Jake and Gino, or me, or Krisha, any questions that you want. Krisha, by the way…

Jake Stenziano:

I have the answer. Okay, October 14th and 15th, Multifamily Mastery 6, it's the financial vacation for smart people. It's a multifamily event of the year. Me and the G dad, Phil McKernan is going to be there actually, the gentleman he just mentioned. We got some great folks, we got Bradley, he's going to be there, Chris Voss, the big daddy, and then, hey, don't forget Kim, 15 vacation homes. Taylor is going to be there as well, showing you how to get to those 15 vacation homes.

Kim Lisa Taylor:

Yeah, that's the problem, everywhere I go it's like, "Oh, I want to buy something here."

Jake Stenziano:

Well, I get it. Airbnb is great, but who slept in that bed before me? Yeah, I get a little weird with it too, Kim. I get it. I get it.

Kim Lisa Taylor:

Well, I just look at it as other people are paying off my houses when I'm not there.

Jake Stenziano:

Oh, so you're Airbnb-ing them when you're not there.

Kim Lisa Taylor:

Yeah, so that's what I do. I just block off when I want to be there.

Jake Stenziano:

I got a condo downtown here, I'm only one that sleeps there.

Kim Lisa Taylor:

Every time we go up to a new front door, he thinks it's his new house, "Is this our house too?" All right, so we got this event coming up, how can people get tickets for that? You guys have a website for it or just go to …

Jake Stenziano:

jakeandgino.com/mm6, and the concert, so we were a little stingy last year, and we didn't feel good about it. We had Vanilla Ice there, and we had a concert Saturday night, but it was only for the community, and then Gino opened up, he should have closed, but Gino opened. We were trying to be nice to the Ice Man, he was our guest. But this year we have DJ Panda getting … in the main stage, it's going to be electro EDM fantasy world. Gino's going to be doing a little riff with him with the opera. What are we calling this, Gino? Tenderism?

Gino Barbaro:

Tenders and turntables, that's what we're calling it.

Jake Stenziano:

Tenders and turntables. Look, you want some entertainment and you want the best multifamily coaching that's out there, buy right, manage right, finance, right, that's all we got to say about that.

Kim Lisa Taylor:

Well, and those are separate events that you guys also have throughout the year, right? Your Buy Right, Finance Right…

Jake Stenziano:

Yes, for our student community, for our members, we actually have a Buy Right ... we have multiple Buy Right, Manage, and Finance Right events throughout the year. They're just fulfillment events, that's all it's going on.

Kim Lisa Taylor:

Yeah, but that's where you can kind of take that deep dive, and really get deep into this stuff.

Jake Stenziano:

That's right.

Gino Barbaro:

Yeah, we're onsite at our properties, we're in the classroom teaching.

Kim Lisa Taylor:

You know what? Education is key. All of our clients that have gone on and done big things, that have gone on and done a ton of syndicates, or gone bigger in the things that they buy have all started in a coaching program for their first two, three, four deals, and then they don't need it anymore.

Jake Stenziano:

Well, it doesn't stop there though. We've done systems scale coaching. We've done stuff with Chris Voss, who's going to be their FBI negotiator. You're always attempting to get better, and find out where you're lacking, and improve your team and your organization. It doesn't stop, gang, once you get your multifamily systems done, it's going to just continue to grow from there.

Kim Lisa Taylor:

Excellent. All right. Well, that all sounds really great. Let's see, I think we have a shy audience today.

Jake Stenziano:

It's the pink shirt. I'm going Barbie on them, they don't know what to think. I haven't seen it, I'm just saying, so I can't answer any questions about that.

Kim Lisa Taylor:

Anything you'd like to add that we haven't covered yet?

Gino Barbaro:

I just think there's a lot of opportunities out there right now. I think that it's important to get the foundation, understand your criteria, and just ... Look, that first deal might take you a little while, it might take you a year, it might take you two years if you're starting out. But feeling really good about it, don't force in something that doesn't feel right, listen to your gut, and wait for your pitch. How is that? Is that a good ... Did I sound like a football coach or something?

Kim Lisa Taylor:

The thing I would say is that the clients of ours that have done really, really well have really taken the time to set up a database of pre-vetted investors, people they've developed relationships with. That database has grown over time. I've seen clients that started out buying $3 to $5 million deals, six years later buying $30 to $50 million deals, and raising $10 million in a week, and they've done it by creating a database of ready, willing, and able investors that are just excited for their next deal. So that really needs to be your goal, is to really create that solid database, create that network of prospective investors, have conversations with them, develop relationships, and go from there.

Jake Stenziano:

Don't force it. Because we look at every deal as if we're raising a child, and if you bring a bad child into your family, it's going to make your life hell, and you're going to always be stuck trying to fix that bad child that's going to be a bandwidth suck. It's going to really take a lot away from your business. You don't want 90% of your asset management time being spent on one property. So don't force it, make sure it fits into what you're trying to do ultimately. Because, look, we've been there, we've had deals that we haven't liked that we're a little lower on the median income. Thank God we were able to go out of them while the market was rising, and it saved our butts, but they were a suck, they were a drag, it was not fun. So make sure you feel good about the asset, make sure you have the parameters so you're not buying something that may be below the median income that you know can perform at a high level with, things like that.

Gino Barbaro:

Kim, the last thing I'd say is multifamily is a team sport, and I want everyone to look at investing in multifamily as a business. It's really creating systems. We say we create multifamily entrepreneurs, but that's really important. You're not just buying an asset, you're buying a little cash machine, and if you treat it as a business, it's going to pay you forever for as long as you own the asset. Understanding that concept that it's a team sport, and that syndication, I think, myself personally, is a business within a business because you have the asset itself, and then you have your syndication business where you have your investors here, and you need to take care of your investors, but you also need to take care of the deal. So you have an asset management company, and then you have the third-party property management, so delineate between the two, and you're saying to yourself, "Well, how do I do this all by myself?" You may be able to in the first or second, or third deal, but then as you start growing, you may have to actually get more team members.

So think of it as a team sport, and as you are building an amazing, scalable business with huge tax benefits, a great way to build wealth. Understand that you're buying a business when you're buying multifamily, you're not just buying a few buildings.

Kim Lisa Taylor:

Well, and when you're interviewing your prospective partners, or staff, or whoever you're going to have help you do this business, think of it as you are hiring people to fulfill roles within your business. Loan guarantors. You need people that love talking to people, those are going to be your investor relations. You need people who are the detail-oriented people that are going to oversee property managers. You need somebody who's got the numbers that's going to be analyzing deals, maybe looking at working with the CPA and the bookkeeper. You've got to fulfill all these roles. Sure, in the beginning, one person may be wearing multiple hats, but as your business grows, you're going to actually hire people to fill those roles, so think about that. You don't only need passive investors when you're meeting people, you need to look for other people that can help you in other ways.

You were talking about euphoria earlier. I'm actually at an event right now, and I have this thing, I always call it guru euphoria, where you go to an event and you learn something, and you get all this good feeling about being with all these people. Then I get people that come away from these going, "Oh, my God, I met the most amazing people. I sat with them for three days, and all 12 of us are going to create this syndicate." They're delegating roles, and they're coming up with their brand, and then they come and talk to me, and I'm like, "Okay, first of all, eight of you have to go."

Gino Barbaro:

She's cutting heads, Jake.

Jake Stenziano:

This is actually three teams. This is going to be three teams, not one.

Kim Lisa Taylor:

Exactly, and you can't know what people are going to produce. You get too many people in your management team, some people do all the work, some people do none of the work, some people just aren't compatible because they can't get along. My opinion, five is the magic number that you don't want to exceed for management. Three is even better, two or three, so just be aware of that. Don't get too much guru euphoria, and try to create these big groups, and set up all your systems before you start doing deals, it just becomes a way to procrastinate. So you've got to just go out and start making the offers, doing the deals. If you're not comfortable making offers, you need to get some education on what offers you should be making. I think that's the point that was made here today, and I think it's a great one.

Krisha, Krisha has a really great coaching background. Krisha, is there anything you want to add based on the things you heard here today?

Krisha Young:

Well, we do have a question too, so we'll get to that in a second. I love any kind of topic around mindset, and I love that you brought up our relationship with money, because it's a sneaky saboteur that can really hold us back when it comes to doing bigger deals, or even going out there and having conversations with investors ... and procrastination, there's all these little sneaky little things in our subconscious that come from our past or whatever, that if we're not investigating them, it can really hamper us. I love that you brought that up because it's like, "Okay, if you're not progressing, and you are doing all the tactical, practical, strategic things, then there's some sort of mindset." There's some sort of subconscious thing holding you back, and engaging in a really good coach who can move you through that material fast is like ... because once it's done, you're a rocket ship until you hit your next level, and then you got to go through it again. Yeah, so I love those suggestions.

Kim Lisa Taylor:

I'm glad that you were able to input on that. Jake and Gino are already looking at Krisha like, "Hey, why don't we have Krisha speak at our next event? We don't need Kim anymore."

Krisha Young:

No. No. So Jake also mentioned ... It looks like in the chat here, it's only going to the panelists, so it's only going to us, so we're just talking to each other here, but Jake mentioned make sure your partners have values alignment, and I think that's really important too. Values, know your own values, it's huge. You've got to know what your own values are, and most people don't, or they think they know what their values are, but then it's living your values, and that becomes such a beautiful guidepost for you as an individual. But then knowing your company's values, and then having that alignment in there is so important, because when things start to go sideways, it's like, "Wait, wait, wait, wait, what do we believe in here? What are we doing? What's our mission? What's our why? What are our values?" So I love that.

Gino Barbaro:

Responsiveness is one for me. If we're going to be doing a new partnership or something like that, and there's someone new that's involved, and there's any lack of responsiveness early on, that's kind of a…

Jake Stenziano:

It's a red flag.

Gino Barbaro:

Warning sign for me, like, "Get the hell out of this, we ain't doing this," because there's too much going on, we can't be waiting on folks. So that's one for me that I'll turn away from pretty quickly.

Krisha Young:

Yeah, I love that.

Kim Lisa Taylor:

Right, to our questions, and ...

Krisha Young:

Yeah. So Tarryn —, sorry if I said that wrong — "With all the capital calls, will it be harder to raise money from investors going forward? And how do we get over this hurdle?" Who wants to…

Gino Barbaro:

That's a great question. It depends upon the individual syndicators, if they're brand new and it's their first or second deal, I don't think they're going to be raising capital until they get that ship righted. I think syndicators who've been in the space for 20, 30 years, or even 10 years, and have done full-cycle deals and have that track record, I know a couple that are having capital calls that are closing the next deal. It really depends upon where you are, I mean, if you have the experience. Me personally, if I'm going through a capital call, I'm not looking at another deal. I need to fixate on what's on my plate. I want to make sure that this deal that I'm messing up on, I don't want to take anyone else's money.

There's obviously people out there that are doing that. I don't know how they can do that with what's going on with their original deals, but I think that's what Jake was talking about. There's not as many people at the table right now, because for them to raise that capital they're having problems with the original deals. They can't go back to their investors and ask for money on another deal if those deals aren't performing, and we're going to see more of that go on. All that happens is there's going to be less demand for the assets that are going out there, because there's going to be less capital that's going to be raised.

Kim Lisa Taylor:

Oh, and that…

Jake Stenziano:

And not to…

Kim Lisa Taylor:

Go ahead.

Jake Stenziano:

Sorry. I was just going to say not to get too aggressive, but it sounds like you're trying to talk yourself out of multifamily, and not to be, again, not to be overly aggressive, it sounds like one of these questions where it's like, "Is it going to be harder?"

Gino Barbaro:

Yeah.

Jake Stenziano:

Yeah, guys, it's going to be harder. If people are failing around, and you want to raise money from those same people, they're going to look at you harder. Do you have an amazing deal? Can you provide real value? What is your structure like? Are you systematized? Are you bringing professionalism to the table? Yes. Don't look to talk yourself out of this. Look for an asset that you want to be a part of for a long period of time. That's how I do this stuff, and then I figure out how to systematize it and grow it. If you're looking to, "Oh, my God, is this going to be harder?" Well, yeah, guess what? When things are harder and then you figure it out, less people are going to be at the table trying to do what you're doing, and you're going to have more value. You're going to create more value.

It's the people in this business that can solve problems that do really well. Just saying. So it depends how hard you want to work at it. Do you want to be in multifamily? Do you believe it's a vehicle that's going to take care of you and your family for the long-term? It may be yes, it may be no, either answer is okay, but don't sit there and look for ways to talk yourself out of it. Yes, it'll be harder. Are you okay with the challenge? That should be the question. Are you okay working harder?

Kim Lisa Taylor:

I would say use the right attorney, because we have provisions in our docs that allow our clients to do what they need to do to salvage a deal. So those funds, voluntary capital call, if that doesn't work, then you can bring in a superior class if you need to. You can joint-venture with somebody. You can do whatever you need to do. You can loan your own money. You can do what you need to do. I don't know what other people have in their docs that they draft, but we've crafted these provisions based on the real experiences of our clients, because we want to have the major flexibility that they need to be able to do what they have to do, without going out and getting permission from every single investor, or have their hands tied because they now have to start penalizing people, the people that can't put more money in or just don't want to.

So with that, we do have to wrap up today, so love to having you guys here. Krisha, thanks so much for joining us, glad you're able to be part of the call. You guys all need to think about going to the Multifamily Mastery event. It's epic. It's great. It's at a fantastic hotel. Jake and Gino, of course, are the real thing, they're genuine, and…

Jake Stenziano:

Throw us a high five in the lazy river at the top of the water slide.

Kim Lisa Taylor:

I will.-

Jake Stenziano:

At Gaylord Palms, it's great.

Kim Lisa Taylor:

All right, thanks so much.

Jake Stenziano:

Thanks, Kim.

Gino Barbaro:

Thanks, everybody.

Krisha Young:

Thanks, everyone. Bye.

Kim Lisa Taylor:

Bye.

Gino Barbaro:

Bye.