How to Avoid Losing Money in Today's Real Estate Market

Attorney Kim Lisa Taylor, quizzes Jen and Stacy Conkey regarding their best tips on how to avoid losing money in real estate, especially in today's market.

Stacy and Jen have 20+ years experience as entrepreneurs and real estate investors. Through their diverse real estate experiences, Jen and Stacy know what it takes to identify deals and make offers on properties that will build a long-lasting wealth portfolio. Jen and Stacy have taught thousands of people across the globe what it takes to succeed in multifamily real estate investing over the last 10 years.

Episode at a glance:

• How to you know if you have a good deal
• A red flag in a real estate deal that would cause Jen and Stacy to walk away from
• How did Jen and Stacey got 28k people in your database

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Transcript

Kim Lisa Taylor:

Hey, good morning, everybody. Welcome to Syndication Attorneys' free monthly podcast and YouTube stream where we talk about topics of interest to real estate syndicators and fund managers with the opportunity for live questions and answers before we sign off. 

I'm attorney Kim Lisa Taylor. Before we get started, please note that this event is both recorded and will eventually be streamed on YouTube via video and will be used for future promotion and posted on our website or in a broadcast available to the public. You can ask questions at the end of the broadcast either by raising your hand and we'll allow you to speak, or if you don't want your voice recorded, you can type your question into the Q&A. So we do encourage everybody to think about that. You can raise your hand at any time, we'll get to them toward the end of the call, and we would love to have questions from our audience. I think that's one of the things that makes this podcast so special is we have such great listeners and great attendees.

Information discussed during this free broadcast is of a general educational nature and should not be construed as legal advice. And today, we are talking about how to avoid losing money in today's real estate market with two great friends and great real estate trainers, Jen and Stacy Conkey. So welcome, Jen and Stacy.

Jen Conkey:

Wow, thank you for having us.

Stacy Conkey:

Yeah, thanks for having us, Kim.

Kim Lisa Taylor:

I'm so excited. I love to see women in the space. We're few and far between. There are a few women out there, but sometimes we're more in a supportive role, but you guys take the lead. I like to think I take the lead.

Stacy Conkey:

You do.

Jen Conkey:

You do. You do.

Kim Lisa Taylor:

Anyway, I think it's great that we can do things that help everybody and that I know you guys have a lot of really, really loyal followers. But I'm happy to interview you and find out your secret sauce. 

Let's see, so Stacy and Jen have over 20 years’ experience as entrepreneurs and real estate investors. They know what it takes to identify deals and make offers on properties that will build a long-lasting wealth portfolio. They have taught thousands of people across the globe what it takes to succeed in multifamily real estate investing over the past 10 years. And during this episode, I'm going to see if we can get to the bottom of what makes their program special and what makes their students successful and them successful as real estate syndicators so that you guys can all learn how to be like Stacy and Jen. So how'd you guys get started in this industry?

Jen Conkey:

Yeah. That's a story, right? We got started 20 years ago, but we didn't know each other at the time. We didn't meet until 2015, but I got started doing single-family flips and wholesaling while working in corporate America. I worked in corporate America for about 22 years and the 12 years when I first started, it was just a grind of trying to flip for profits in California where there wasn't a lot of profit. There was a lot of capital put out, but not much return coming back and it was really another job.

And it all started because my brother decided to come over and asked me to go to the store, and we drove around for six hours and before I knew it, six hours later we were at his house creating a business plan to do it for a living. That 12 years flew by and I didn't really make a lot of profit during those 12 years. It was a grind. But in 2015 when I first met Stacy and she started talking about — she also lived in California at the time when she started, but she was doing it remotely — So I was like, “Man, I got to date this broad more, I got to find out what her secret is.” So that's how we ended up meeting and really just dialing in what that process looked like. So I'll let you tell what your background is.

Stacy Conkey:

I got started... I read “Rich Dad, Poor Dad,” right? So many people start with that. And I was like, "Oh, that's so logical." My background is accounting, so I like things that are logical and make sense. And so I just started trying to learn more about it, went to investor clubs, and went and paid for a very expensive education that was really quite awful. It didn't teach me very much, but it just allowed me to get enough confidence to get out there and start trying it. So I did learn very early about remote investing because where I lived, it was very competitive and very expensive and I didn't have much capital when I was getting started. But my path took me through single-family homes, small multifamily, small apartments, and then a little bit larger apartments. And here we are today. We really like to focus on, for smaller buildings, we do joint ventures, and then we get to a point where it's not realistic to have only a few people fund a deal, then obviously we would fund that through doing syndication.

Kim Lisa Taylor:

Yeah, excellent. That sounds like a great business model because I really do think that there's times when you should be syndicating and then there's other times when other structures work for you, but it really only works to joint venture on those smaller deals. In fact, I have a rule of thumb, I'd like to hear your thoughts on that. My rule of thumb is no more than five people in joint venture. What do you guys think?

Stacy Conkey:

The same.

Jen Conkey:

The same.

Stacy Conkey:

Yeah, people ask us that all the time, "Well, how many people are you allowed to?" And I'm like, "It's not about allowed to, it's not cut-and-dried." But if you call and talk to all of the top attorneys in the U.S., they will say something very similar, which is, I'm really only comfortable up to five. Because the reality is, does it really take eight people to actively operate a 20-unit deal? It doesn't. So it's not going to pass the sniff test with the SEC. So that's exactly what we do. We say five. It's not a hard-and-fast rule. Plus you got too many chefs in the kitchen on top of it.

Kim Lisa Taylor:

Yeah. There's a lot of reasons. I've had so many stories over the years from dealing with clients because people use joint ventures on many different levels: to buy property directly, to manage a syndicator or a fund, whatever smaller purpose that you're raising money for. But when you get too many people, I always say six and more is a lawsuit waiting to happen. Actually, worst-case scenario was some clients that had a deal under contract and they probably spent more than $100,000 getting that all the way to the closing table and immediately ended up in litigation right after closing because one of the partners and one of the management decided that, “Hey, I didn't cut out a good deal for myself and I deserve something more” so they took it out of the bank.

Stacy Conkey:

Oh my gosh.

Jen Conkey:

Oh, wow. That's bad business.

Kim Lisa Taylor:

Yeah. So that one suffered because they litigated and so the investors didn't get as good a return as they would've if they hadn't spent hundreds of thousand dollars in legal fees. I used to do litigation and it's horrible. It's a nightmare for everybody that's in it, and the only people that win are the attorneys that represent the parties. I swear that's the way that the system is designed.

Jen Conkey:

Yeah, we've heard that before. I don't have any experience with that, and I don't intend to. I'm just going to listen to you.

Stacy Conkey:

Knock on wood.

Kim Lisa Taylor:

We're getting a little into a segue here. But I do want to say something, and this has come up a lot because we're in this digital world where people think that they can do everything digitally. We can do everything by text, we can develop relationships by LinkedIn, by Facebook, by social media, we don't ever have to talk to people live. And there's actually studies that show that people, when I was in law school, a study that showed that people who were only allowed to communicate electronically, all their matters escalated and went to litigation. People that were allowed to pick up the phone actually resolved their matters.

Stacy Conkey:

Wow, that's very interesting.

Jen Conkey:

That is.

Stacy Conkey:

I'm not surprised, but wow, that's... Wow.

Kim Lisa Taylor:

So SEC doesn't believe you can build relationships with people without having live conversations. So it doesn't have to be face-to-face, but at least phone calls, Zoom calls, something more. So for all of us out there that are thinking, we're in a digital age and we don't have to talk to people anymore, it's not true if you want to be in this business. (If) you want to be successful in this business, you really have to engage with people on a personal level.

Stacy Conkey:

It's such a relationship business. The legal part aside, the relationship part of it is critical. It's critical to success for continuing on. I can't fathom ever investing with someone or having someone invest with me that we've never talked. That seems crazy.

Jen Conkey:

It does seem crazy because…

Stacy Conkey:

And risky.

Jen Conkey:

Without that personal connection and making them a priority makes them want to connect with you, and making them priority also helps you make sure that they have their investment secure. So I just don't know how you could do that without having a conversation.

Kim Lisa Taylor:

All right, so this is totally deviating from our questions, but I think it's such an…

Stacy Conkey:

That's okay.

Jen Conkey:

We love the ad hoc, it's okay.

Kim Lisa Taylor:

What do you guys think about mindset? What's your thoughts and how do you teach your students mindset?

Jen Conkey:

I love it. I feel like this is a softball question. Yeah, so mindset is 80% of anything that you do in life. That's our philosophy. So it's 80% in business, relationships, everything, it starts right here. So it's 80% of it, and then the other 20% is the how. It's what you're going to do, it's the actions and implementation. But without that 80% and having a focused mind, you can really, really hold yourself back. So what we do is there's five primary reasons why people will quit or not engage and move forward. And the very first one — and it's the first domino that knocks over the other four — but the very first one is the wrong motivation.

In our academy, what we do is we really try to find out when they come in, what's their motivation for doing multifamily, for going in and doing a syndication or if it's going to be a joint venture, what's their motivation, their why behind it, and why is it a must for them? And I have them ask that five times so that they really get down to the root of why they're doing it. And the reason why we do it is as soon as they hit that first challenge, what you usually do as human beings is you'll revert back to what's comfortable because it's in every fiber of our being to stay with what's familiar.

So when you're trying something new and you're not the subject matter expert of it yet, and you're having to learn it, that first 90 to 120 days is a critical period. It's like you're on a trapeze and you're swinging from one bar to the next, but you haven't let go of the other and you're doubtful, you don't understand. And so you really just want to go back to what you know, and we just nudge them. It's like a professional nudge that I call a shove into, no, you got to remember why you started. And when you go back and remember why you started, there's no problem, there's no challenge that you can't overcome. And we have a mindset course where I teach them what I've developed as a resilience factor, so they assess what's my resiliency when I face a challenge, what's the gap, and how do I develop that resiliency within me so I keep going. Mindset is everything for us. We even incorporate it at the events.

Kim Lisa Taylor:

Oh, that's great.

Jen Conkey:

Yeah.

Kim Lisa Taylor:

That's awesome. Yeah. I've written two books on how to legally raise private money. Actually, one's “How to Raise Capital for Real Estate Legally.” This one's more like an encyclopedia, the second book, but everybody should have it on their desktop.

Jen Conkey:

I have the first one, I'm going to have to get the second one.

Kim Lisa Taylor:

Yeah. This one is more in-depth, so it's about double the size. This one is a little easier read and it's more of a how-to, step-by-step. But the first chapter was all about mindset. You have to realize you're not asking people for a favor, you're offering them an investment opportunity that they need. And if you think about, “I'm not just doing this for me because I want to change my career and I want to have a different career path and I want to make money for my family,” you're thinking about who else in my world or who can I meet that I might be able to also help achieve their goals, their financial goals in a way that they're not able to do in just traditional investing and introducing them to this new world that they can be part of and participate without having to go through all the training and coursework that your students are doing. So it's critically important. And so I'm really glad to hear that you guys are focused on that because you’ve got to flip that switch in your head or you're never going to be able to pick up the phone.

Jen Conkey:

Absolutely.

Stacy Conkey:

It's absolutely true. And the thing is, it really is, it is truth. And I think that almost everybody struggles with that until they get that reframe because it feels like, “Oh, I'm asking for money.” You are not asking for money. You're not getting the money, the money is going for a real estate transaction that they now get to own. And I think when you shift from “I'm asking for money” to “These people would never have the ability or opportunity or the knowledge to have gotten into that deal. They wouldn't even have known the deal existed” if it wasn't for you bridging that connection. And so to shift from, “Oh, I got to raise money, I need something from them.” It's like if you can clear that energy and just be about service and truly know if you believe in multifamily real estate — I'm assuming everybody watching this does — then you must know that the more people that can get involved in multifamily real estate, the better off all of them are going to be and their families and their kids and their generational wealth. And so if you can harness that it's not about you, it is about them and helping them. And yes, you'll be compensated for your part in that and which is absolutely perfectly fine, and that's how it is.

Kim Lisa Taylor:

It's a win-win.

Stacy Conkey:

But it's really about them and how you're helping to serve them and their family when they wouldn't have had access to that deal otherwise. But I think almost every investor goes through that, especially in the beginning like, “Oh man, I am asking for money.” No, you are absolutely not asking for money.

Jen Conkey:

You know what? It really comes down to, when it comes to that mindset, it comes down to fear. And what they fear is that it's not going to be received, or maybe they might be rejected and they might even fear they're not worthy. So we've created some mindset meditation to help people get through that and work through that. We have it on a playlist on our YouTube channel just a “I am worthy” hypnosis and meditation, and I also recorded one that “I'm a money magnet,” and I recorded one for “if you're going to pitch your deals.” Because the thing is that you have to have these relationships, touching and interacting with people all year, all the time, instead of, "Oh, I got a deal. What's up?" That's why it feels weird. "Hey, do you want to invest in it?" That's when it feels weird because you haven't really invested in a relationship.

Kim Lisa Taylor:

Well that, and then it's also the difference between selling something and educating someone. It's a lot easier. So I mean, that's how I've built this entire business. I don't sell anything, right? I just help people understand what their options are, what's available to them, and then they make the decision whether they want to work with us or not. And it's the same thing with you. With you and all of your students, if you can educate your investors on how this can work for them and how they can participate and how it might benefit them, then all of a sudden they're making the decision, they're raising their hand, "Yeah, I want in. How do I do that? Send me the docs." They're asking you instead of you calling, "Hey, you want to invest $100,000 in my deal? Then let me tell you about it." It's a lot more comfortable conversation. Yeah.

Jen Conkey:

Absolutely.

Stacy Conkey:

Absolutely. I think that for me, the big adjustment for that, for my own mindset, because it's one thing to know it, it's a different thing to be like... Now, I mean, it's in every cell of my body, I'd have zero hesitancy about reaching out to anyone. And it came when we were first doing our first syndication raise, and I mean, I was nervous about it. I was like, “Oh, man,” because I still had that, “Oh, I'm asking for money.” But as people started responding, whether they said yes or no, 99% of people, regardless of their answer, said, "Oh, my God. Thank you so much for thinking of me. I appreciate that." And even when they said, "It's not the right time for me," they were always like, "Oh, but please stay in touch and let me know when you have something else."

And I was like, “Whoa, this really is being of service. I am servicing them.” That's what allowed me to really shift my mindset and be unapologetic in reaching out because everybody says, "Oh my God, thank you. And thank you for following up." If I reach out and I don't hear anything, I'll send... Like yesterday, I sent out the happy hump day camel where it’s got the big lips on it. And I'll just send that, happy hump day, and brings it back up. And they're like, "Oh. Oh, yeah." Either, "Oh, I can't do it right now," or "Yeah, yeah, send me your thing."

Kim Lisa Taylor:

Yeah, but that's how they remember you and that's how you stay in their mind, so that when something does come up then they're going to pay attention to it. Yeah. I always tell our clients that if you get on the phone and you call somebody and talk to them and then ask their permission to follow up, now they're expecting it. Say, "Hey, are you interested at all?" First of all, the first conversation you have to have is whether or not they're even a right fit for the kind of deals you have to offer. Right? You've got to develop that relationship. Most of our clients start out doing 506(b) offerings. Is that how you guys started?

Jen Conkey:

Yes.

Stacy Conkey:

Yep, exactly.

Kim Lisa Taylor:

That allows you to bring in an unlimited number of accredited investors, up to 35 non-accredited but sophisticated investors, but you have to determine their suitability before you even offer them investment opportunities. And that means having a conversation about whether they are accredited and if they are sophisticated, how; how do they feel like they're sophisticated enough to be able to understand the offerings that you're going to provide them with, and then you have to have that in place. You also might want to ask them questions about, "Hey, our deals last five to seven years. Is that a good time horizon for you? How much have you invested in other things?"

So you get a feel for do they have $20,000 to invest or do they have $500,000 to invest. They're not going to invest it all in one deal, but you don't want to take somebody's last $50,000 and you don't want to have something financially devastate them if your deal does fail, because a small percentage of deals do fail, but it is a small percentage and people have to be able to withstand that. So that's the suitability criteria. But during that process, you are getting to know them both financially, but also you need to get to know them on a personal level because there's dangers in letting people into your deal that you don't like. Right? You experience anything like that?

Stacy Conkey:

No. Well, I shouldn't say no, not ever. It's been a long time, but we learned that lesson. I learned that lesson at least pretty early. No deal is better than a deal with someone that is not a good fit. But it's hard when you're new and you don't necessarily have the discernment or the wisdom from experience to know that it's okay to pass on a deal if it's not going to be the right partnership. But I did learn that fairly early, but I only needed to learn it once.

Jen Conkey:

I learned it fairly early also, and it was with a cousin's boyfriend, who he invested like 40 grand and come to find out it was 60% of his net worth. So I'm like, that was not good, and I couldn't wait to get out of that flip. And thank goodness it was just a flip. But yeah, so I learned that well before getting into larger buy-and-hold deals, and it was a very valuable lesson early on. The panic factor was real. So I like to know what is this percentage of their net worth that they're about ready to hand over to me and what does that look like for them, and are they aware of that, do they think about that? Because that's what a savvy investor would be thinking about. You've got to think safety, growth and risk, right?

Kim Lisa Taylor:

Well, as soon as they invest with you and then tell somebody else about it, they're like, "Holy, that's crazy. Why did you do that? Those people are going to steal your money." And all of a sudden this doubt comes in and now they start questioning you and questioning their decision and all of that. If they're sophisticated enough to understand that and it's not such a significant portion of their net worth or their savings, then they're just going to say, "Oh, I know how to do this. I've educated myself, I'm good." And they won't even probably tell people about it. We all have naysayers in our lives, right?

Jen Conkey:

Totally.

Stacy Conkey:

We don't talk about business or real estate with anybody. I don't even know if we have any naysayers left in our life.

Jen Conkey:

Not anymore.

Stacy Conkey:

Certainly for many years we did. We just kind of thinned our contact list so that everybody around us is all about it. We don't have to deal with that anymore, but we did a lot in the beginning. All of our students do in the beginning. It's hard. That's a hard thing. When you don't have any confidence yet because you're just getting started and you got people seeding doubts.

Kim Lisa Taylor:

Well, and a lot of times that happens around the holidays. You get together with people…

Stacy Conkey:

Yeah, exactly.

Kim Lisa Taylor:

Cousin, you know, family members, "Oh, you're crazy. You don't know what you're doing." And they think they know everything about it because of something they've read or something they did in the past. It's completely unrelated, and they start telling you horror stories. And so yeah, you just have to be careful about talking to those people and try not to let them bring you down because they probably have never done what you're doing before and they really don't understand it. You'll never convince them. It's like, we no longer engage in political conversations around the holiday dinner table.

Stacy Conkey:

That's a good point.

Jen Conkey:

Absolutely.

Stacy Conkey:

Religion, politics, and real estate is off the table, unless you're of the like mind.

Jen Conkey:

Don't bring that to the table, only bring turkey and ham.

Kim Lisa Taylor:

Another one that I say, "Don't ever talk to my husband about these things: religion, politics, or PC versus Mac."

Stacy Conkey:

Right, right, right, right.

Kim Lisa Taylor:

iPhone versus Android.

Stacy Conkey:

They're very divisive. Right, iPhone versus Android, that's another one. Yeah.

Kim Lisa Taylor:

Yeah, exactly, exactly.

Stacy Conkey:

Really important first-world things.

Kim Lisa Taylor:

Right. Yeah. So that's probably a good idea not to talk about those things. I mean, generally and jokingly like we are now, but actually getting into those discussions with your potential investors is... I mean, I guess if you're all like-minded and you know you're like-minded then that's fine, but if you're not, it doesn't mean that... You don't want to alienate people. It's just not appropriate to talk about certain things in business settings and this is an example of that.

So we did promise that we were going to say how to avoid losing money in today's real estate market. … So how can you tell a good deal from a bad deal?

Stacy Conkey:

Well, okay. Well, in the theme of how to avoid losing money or how to maximize profit, but knowing right now there's a lot of people who are about to lose a lot of money, there's a massive foreclosure wall coming because of a lot of the bridge financing that happened, and operators are going to be losing their properties. So anytime there's a time... We went through 2008, so we were around, and that was a very painful time, yet there was so much wisdom that was borne out of that time that I'm also grateful for the difficult parts of that. But one of the things that we adjust, we thought interest rates are going to go up…

Jen Conkey:

A long time ago.

Stacy Conkey:

Many years ago. We adjusted our business plan four years ago…

Jen Conkey:

2019, we did, yeah.

Stacy Conkey:

Yeah. Kept thinking it was going to happen any day, and then COVID came and that just, I think, delayed things, but…

Jen Conkey:

They started printing 4 trillion more dollars.

Stacy Conkey:

Yeah, and that was problematic. But when that happened, one of the adjustments that we made in our business and we further made once interest rates really started climbing up is it's not just about “we will only focus on fixed-rate financing.” We've been doing that for a couple of years because we thought the interest rates were going to go up. But more than that, it's when you're evaluating a deal and you're underwriting it, underwriting it conservatively. And I know that's such a broad statement, but when people are new, and I remember what... It's been 20 years, but I can absolutely remember like it was yesterday, the emotion of “I just want to get a deal so bad because I just want to prove to myself that I can do this, that I am an investor. I'm calling myself an investor, but I've not done a deal.” That desire and that desperation can make it very easy to, instead of underwriting conservatively, to underwrite with rosy colored sunglasses and underwrite on the hopes of what it can be without recognizing the need to look at... Everything doesn't go right in a deal, it never does. Some things go right that you didn't even expect to go, so hopefully it balances out. But the big thing is going in and conservatively looking at every piece of it.

In particular, when you're taking over a property, particularly a value-add — and every deal that we do and that our students do has some value-add component to it — but looking at that saying, “Okay, I see that there are three opportunities to increase the net operating income. There's rents that are under market, there's rubs that can be initiated, and some other random thing.”

Jen Conkey:

Cable optics.

Stacy Conkey:

Okay. Yeah. That's right. “We can install fiber and make some money on the internet.” But one of the things that I think newer investors don't think about until it's too late and then relationships are damaged is when I say, okay, it's 50 units and let's say it's on average $150 a door under market value. Wow, that's an amazing opportunity. I totally want to look into that. But the reality is you don't buy it and then in month one have all the rents go up by $150. That is a graduated process. There are already leases in place. You have to take into account what are the economics in the area, what are your competitors doing, what's going on in the economy as a whole? So from a conservative underwriting standpoint, it's taking the time to literally close your eyes and picture, “Okay, it's day one, we now own this property, what can we realistically do in the first 30 days?” Probably all of nothing honestly. Probably all of nothing except start maybe giving some 30-to-60-day notices depending on what the state is. So it's really looking at month-by-month, both in the revenue area and if you're going to increase revenue in more than one way, looking at what is the timing of that? How quickly can we do that?

And then not just being realistic but then being conservative on top of it. I” think we can do this, we could start implementing these eight leases by month four, and then these other six leases in month five based on the expiration dates.” So that's a big part of it. When it comes to reducing expenses or instituting rubs, that's another thing, especially for both. If you're going to increase rents and put in rubs, you got to think from the tenant standpoint, that's a really massive change in their financial thing. So you might need to take what you want to do on day one and spread it out over 12 to 18 months in order to fully implement your business model. And the reality is, it is better to take that 12 to 18 months to do that than to push it all in month three and lose 30% of your tenant base or 50%. You will crush your deal when you push a business plan too far too fast.

So it's just like being slow and trying to remember what it's going to be like on the receiving end of these increases and just doing “slow and steady wins the race.” Because over the five- or seven-year hold, you're going to get all the value that you need, but take a little bit more time in the beginning and do your financial underwriting for year one, month-by-month. Write down all your assumptions and then have other people on your team or outside your team question and challenge your assumptions and really make sure it's solid. I know you have some other things, too.

Jen Conkey:

I do. I want to add that because I want to back up a little bit because it all starts with underwriting. It absolutely begins there and it's a domino effect afterward. So there's a couple of things that I look at that I would like to share, if that's okay.

Kim Lisa Taylor:

Sure.

Jen Conkey:

When underwriting it, you’ve got to stress-test the heck out of this deal nine ways from Sunday. Stress-test it in terms of what happens if vacancy is higher than you anticipate, what happens if you actually can't increase the rents, does it still work? Put all of these factors in there with all these variables. And then when you're looking at it in those months, month-by-month, does that DSCR ever get below 1.4? If it does, I'm alarmed because you also have to figure out on the exit what happens if the cap rate goes up, by how much? Stress-test every aspect of the deal before you even get into it and then implement the plan, what Stacy said. But the thing is, rose-colored glasses, every red flag, you can't see it because everything's rose-colored.

So when you're going in with these rose-colored excited glasses and you just want to get that first deal, you need to take those glasses off and you need to stress-test it. You need to convince yourself, maybe even talk yourself out of the deal. Look for all the reasons why this isn't a good deal by stress-testing it to make sure you have certainty that, “Okay, this is actually a good deal. I've stress-tested at 70% occupancy and it still works. I've stress tested it down to if the cap rate goes up from a five to a 10 or a seven.” I mean, realistically it could happen, and so you've got to look at that and then really stress-test it. Then come up with the plan on what's going to happen if you can execute this plan flawlessly, what's going to happen if something does come up and you can't increase the rents as quickly as you thought. What will be your contingency or your tertiary plan?

And you have to have all of that together in your mind and on paper and as a team before really getting in there. That way, you know which way to move. I was a professional poker —well, semi-professional poker player — and I believe you have to have outs. You have to have at least three outs. If you have less than three outs on an exit, you're stuck. And you don't want to be stuck with everybody that you know and care about's money. So I would say it begins at the very beginning with stress-testing that deal so aggressively. That's just my 2 cents.

Kim Lisa Taylor:

I think you're absolutely right. The other thing you've got to be super-cognitive of is raising the right amount of money. Because if you…

Jen Conkey:

Oh yes. Yes, yes.

Kim Lisa Taylor:

So when we do an offering, we'll do a syndicate that has a minimum amount that has to be raised before you can actually close on the deal, and it has to be enough to close the deal with investor funds. And maybe some of those investor funds are your own funds, and maybe it's more of your funds than you really want to leave in the deal, but you've got to get into the deal. But what we see some clients do, and the ones that fail, are the ones that get in there and close the deal and then they take their foot off the gas and they stop raising money because we've got a target raise. That's enough to pay yourself, your acquisition fee, pay back all your pre-closing expenses, pay all the closing costs, have some nice reserves, have your capital improvement budget, plus your down payment coverage.

That's the ideal. That's what you want. If you can raise all of that before you close on the deal, you're in golden, right? But if you can't and you try to get in with this minimum investment or minimum dollar amount, and then you don't raise the rest of the money, you're stuck with the same property that the seller had. You're not going to do better than they did and you're going to suffer. And then what I see people doing is becoming acquisition junkies, acquisition fee junkies, right?

Jen Conkey:

Yeah.

Kim Lisa Taylor:

It's like “I have to get paid again, so I have to go do another deal, I have to go do another deal.” When they really should be focusing on and raising the money and finishing the deal that they started and then getting to that target raise amount. And then we also give a cushion, so it's a maximum raise amount beyond the target. So it's your contingency. You've got up to a year to figure out, “Oh gee, we didn't know we had to replace all the water heaters and that's going to cost us another $150,000 so we need to go ahead and be able to raise that.” But you've got to be able to absorb that into your NOI and to your returns to your investors because that's going to help impact that.

Jen Conkey:

Yeah, absolutely.

Kim Lisa Taylor:

Don't take your foot off the gas when you close on a property.

Jen Conkey:

Ever.

Kim Lisa Taylor:

Raise money to your target and always have a cushion that you can just reopen the raise and bring in more investors if you need to get whatever you need done, make sure that that's available to you. There's going to be a lot of people who are going to get caught by these bridge loans is what you're saying, is because the documents don't allow that, don't allow them to reopen the offering, don't allow them or force them to do capital calls and the investors resist and say, "No, we're not doing it. Not putting money in a sinking ship," and they're the ones that might lose. But those that have the flexibility and the ability to recapitalize or to bring in new capital and whatever's needed to bring the deal, they're going to be in a much better position.

Jen Conkey:

Yeah, absolutely.

Kim Lisa Taylor:

And that's one of the things that we make sure all of our docs have is we try to give our clients a maximum flexibility to do what's needed to make the right decisions and salvage the investment for not just themselves, but for everyone.

Jen Conkey:

Yeah.

Kim Lisa Taylor:

Yeah. It's some interesting times coming. And I did live, we grew our practice in 2010, 2011. Actually, I started with Gene Trowbridge in 2008 and we formed our firm in 2010, and we grew our practice during that time when the market was going crazy because all this new capital needed to come in to be able to either buy these deals or recapitalize the deals. So it's feasible and possible to do it, but you need to have some good guidance. Something you guys do is kind of help people, I would imagine. Are you doing a little bit of that? Are you doing some bad-deal counseling at this point in your coaching?

Jen Conkey:

We actually have zero students in our academy that are facing any foreclosures or any issues. They listened to us for the past three years on don't do it, just don't do it.

Stacy Conkey:

I think when your teachers and mentors have been through 2008, and obviously our desire is to make sure that all of the difficult parts of our journey aren't the difficult parts of their journey. And yeah, it's true, we don't have a single student in our academy that's facing any…

Jen Conkey:

None.

Stacy Conkey:

Anything like that, any kind of foreclosure.

Jen Conkey:

Instead, we've been telling them to get ready so they're all poised.

Stacy Conkey:

Yeah, we were like, "Let's go. It's on... 2024's going to..." I mean, we already have a lot of students under contract on really solid deals, so we're already seeing it. We are expecting it to be a little bit more toward 2024 when we started seeing more opportunity, but it's already happening on some deals.

Jen Conkey:

We find ourselves in the unique position where we are not having to coach through bad deals right now. We did have to do a lot of — for three years — mindset work on people be like, "Oh, but everybody's door count is going so high." I'd be like, "That's not the metric to focus on." It doesn't matter how many doors you have, you need to make sure it's the right amount of doors, it's the right deal, it's the right financing. That's all you need to worry about. And you're going to see what's going to happen for everybody that's going ham on deals right now and trying to get into this bridge loan, just don't do it. And now we're poised.

Kim Lisa Taylor:

It's the people that did the bridge lendings, those are the ones that are maybe going to get caught short, right? Because they've got a short term on it, it's hard to get those refinanced out unless you bring in more capital.

Stacy Conkey:

Yeah. I don't think anybody expect... I mean, even we didn't expect it to get this nuts this fast. I knew it was going to go up, I didn't know it was going to go up that fast. But no matter what, I'm so conservative, I was like, "I don't want anything that's not a fixed rate. I don't care if I have to pay a little bit more. I want the security. I don't want the stress." I remember the stress of 2008, I don't want that. And it's funny because between Jen and I, and then we have three coaches, and our coaches all have 17-plus years’ experience in multifamily, all of us were in 2008. All of us went through it. So I think the reason our students — we have no students with any issues on any deals — is because they don't come to us after they've already been doing real estate. We kind of cater to people who are brand-new or just getting started or they've got one thing and they're trying to learn to scale.

So really early on, the foundations that we lay with them, and then not only that, they're coached every week, they have a one-on-one coach, we have group coaching, there's all of this. So during the entire process, if there were any red flags that came up, us or one of the coaches would've been like, "Hold up." So I think that's why no one's in any bad deal because we were with them the whole time. And we can see a red flag 20 miles away because we lived it, we've been there, we made the mistakes. We don't want them to make them.

Jen Conkey:

I think it still puckers, still puckers.

Stacy Conkey:

I think that's why we don't have any students in those, is because they've not just been listening to us, but we've been working with them and we are not shy about telling them our hard stories. And part of why I'll tell them that is to scare them on purpose so they don't do the dumb... I don't want to say do the dumb thing, but I don't want them to do the dumb thing that I did 18 years ago or 16 years ago and end up in pain because of it. So our people are in a really good position, which is…

Jen Conkey:

Avoid the pain.

Stacy Conkey:

And that was the whole point. That's what we wanted when we built it, was just to make sure that people who are starting off, this new generation of investor that's starting and wanting to scale, that they can do so successfully. Because you have one bad deal, if it's big enough, people will generally just give up on real estate. Even if they believe in it and they wanted it so bad, you get kicked in the stomach hard enough, you just tuck your tail between your legs. There was a guy I talked to in the summer when we were at Zion, I was talking to him on the phone, and he still has not done a deal since he lost his multimillion-dollar portfolio in 2008.

And I was like, "Dude, you've got to get back on the horse, but there's a way to do it right. We can help you with this.” It's such a sad thing for me to see people who literally will give up on any kind of wealth building for themselves and their family because of what a bad thing it is. So our goal is to make sure that as many people as possible know how to do it right. So even if you make a mistake, if it's a little one, you could recover. A big one, most people just won't psychologically get back in the game. And that's…

Kim Lisa Taylor:

We have some of those counseling sessions with people, clients or even potential clients, and we're happy to do that. If someone does have a deal that's in trouble, we can start examining what they have, what's in place already, and help them figure out a strategy which might involve getting permission from their investors depending on what their documents say, or maybe even from the lender. But there are workarounds, there are some strategies. Some deals can't be salvaged, but there's also some groups of people that are coming to us and saying things like, “Well, we had something fail, but now we want to try to make it right, and we want to try to move forward and figure out a way to bring those investors into another deal and give them maybe a part of our earnings so that we can make them…”

Stacy Conkey:

That's so good.

Jen Conkey:

That's awesome. That shows so much integrity.

Kim Lisa Taylor:

Well, those that do that and actually have that story to tell later on, "Yes, we had a deal fail, but here's what we did, here's how we saved the investment for our investors," and they have a fantastic story that is so much credibility. But those that stick their head in the sand and disappear, actually had somebody that knew someone that got in trouble with a deal, and I think they got the worst legal advice they could have gotten, which was, "Cancel your phone number, cancel your email, move out of your office, move out of your apartment and disappear." And that person, had they not taken that advice, had I had a chance to counsel them, I would've said, "No, don't do that," and they would probably still be doing what they were doing before. But now, I haven't heard from them in a very long time so I don't know what they ended up doing, but I don't think they're doing this anymore.

Stacy Conkey:

Totally not. And what's the quality of their life, having that monkey on their back? How do you ever shake that off? I wouldn't want to go through it, that sounds awful. We never had anything that bad happen that we would want to disappear, but the process of going through a difficult situation and working through it psychologically, emotionally, mentally, financially, it brings you to a really different place which allows you to better serve your future people. But when you just duck and run and hide, what is the quality of your life ever for the rest of your life?

Kim Lisa Taylor:

And it's just like you guys, “Hey, I went through this stuff, I made those mistakes, now I can teach other people how not to make those mistakes or how to get through it if it happens and how to manage it.” So I think that's so critically important. So let's think about, we totally have not gone through our list of questions. I love the conversation that we've been having, so I'm not at all sad about that.

Jen Conkey:

It's good. We prefer, it's cool, it's just casual.

Kim Lisa Taylor:

Sometimes it's easy to ad lib when we've got great guests. But all right, so here's a question. I often tell potential clients, "If you're making..." They'll come to me and they'll be like, "We've been looking at this deal for the last two weeks and we think we're going to make an LOI on it." Okay, so how many LOIs should somebody be sending out? Is this kind of a numbers game or should they send out LOIs for the price they want, even if it's not the price the seller wants? What's your thoughts on that?

Jen Conkey:

Well, I mean, it is a numbers game to a point. I feel like you've got to be in the game, you've got to get the repetition of analyzing, underwriting the deal and knowing it. If you're not at least doing 25 in a month or 25 in a week, then you're not going to — and I don't even know if you'll have 25 in a week right now, but if you could, right? Maybe 25 in a month? — But if you can, that's going to give you the repetition on underwriting and stress-testing and figuring it out. And I would absolutely tell people, “Do not just make the arbitrary offer that the seller wants, you have to make the offer that makes sense, that's penciling out for you whether the seller wants that or not. Your offer is whatever makes the deal work.”

So for me, I think 25 deals a month, if you're analyzing them right now, before I would've said to do more, but in today's world, if you're analyzing those 25 and really truly stress-testing them in a way that “This deal makes sense for me at this price, this is what I'm offering,” do it. But don't feel compelled to meet the seller where they're at if the deal doesn't make sense at that number, do the number that makes sense for you and have the competence and certainty to let that LOI go. But don't ever compromise and increase the price just because you feel bad or whatever, you need to make sure that the deal works. So I think analyzing 25 deals a month, you might get two LOIs, maybe three LOIs that make sense out of that number. And I think that that's actually pretty optimistic honestly.

Kim Lisa Taylor:

But the story there, and what I hear often is “We're analyzing one or two deals a month” and that's what you're never going to get any…

Stacy Conkey:

Takes so long.

Kim Lisa Taylor:

Yeah, this is a 10-year process before you get to your first deal.

Jen Conkey:

Right.

Kim Lisa Taylor:

And you're going to give up long before that, so you really need to step it up.

Jen Conkey:

Yeah, you need the reps in.

Stacy Conkey:

I think it has some additional benefits too, because especially when somebody is new, submitting that first LOI, it's the most terrifying thing that exists on the entire planet. You'd rather be eaten by a shark than submitting your first LOI is terrifying. So one of the things that we'll tell our students, we don't encourage them to submit a bunch of low-ball offers because that's not going to be great for the relationship with the broker. But there are times where there's an emotional component or a mental component where they're just not moving forward on something and it's like, "Look, here's what I want you to do. Write up the LOI at whatever the price is that makes sense and you know that it makes sense because you underwrote it. No matter what, if any experienced or knowledgeable investor looks at that deal, they're going to end up landing at the same place you did. So have that confidence."

But have a conversation with the broker. So you can still write up the LOI, but it's not because we think the deal's going to be accepted. We know for a fact there's no way, it's way too low, but just talk to the broker and be like, "Look, I know that this is so much lower what the seller wants, but let me help you understand from our perspective why." So even though that LOI is not going to go anywhere, what it does is it allows you to, it's not necessarily a flash roll, but to establish credibility with the broker, even if it's the first deal and they don't know it's your first deal, say, "These are the factors that go into that. So this deal is probably not going to work. I wrote up the LOI anyway, just to show you that I would, I told you I would submit it. I don't expect you to present it to the seller. If you want to, fine, but I did want you to understand this is what it will look like when we submit an offer, and here's some of the criteria we look at. So this one isn't working, but let us know as you come across other ones because we are serious. We want to purchase whatever, three properties this year."

And it allows you to, as a brand-new investor, establish credibility because just sending in the LOI, the number's so low, that won't do it. And then, not doing anything is worse because now they think they did all this work to give you the memorandum and give you information about the property and then you just ghosted them, as far as they know. They don't know that you just kind of analyzed the deal and it didn't work. So taking the time to get back to them is what's going to make it possible for you to get more deal flow, which is why our students have been, they are doing one or two deals … would be like, "You must be joking, what are we trying to do here?" Because it is just a numbers game, but you can get so much more out of each deal that you analyze by taking it that next step and showing them that you are serious, you're taking action, it's just the numbers don't work.

Jen Conkey:

And it's also showing them how you think, how you work through it and what your box is and why, and that makes it even better when they find those deals and they know, “Okay, this person thinks through it. They're not just being cavalier with this, they actually have a methodical process,” which (lets) you stay at the top of their list when you do it that way.

Stacy Conkey:

Yeah, they know they're dealing with somebody savvy, even if you're new. I mean, assuming you have enough knowledge that you do know how to underwrite, so that is an assumption. But yeah, that's how we look at it. It's totally a numbers game though, because most of the deals out there are not deals. They're just not.

Jen Conkey:

If you're analyzing 25 deals in a month and making one to two offers, that's 12 to 24 offers that you've made in a year. The chances of you getting one deal or two deals done in that year, they're higher if you're analyzing more deals and getting the reps in.

Stacy Conkey:

And you never know when you're going to find one. You got to be talking to people, and yeah…

Kim Lisa Taylor:

I feel like we could on for another hour easily, but we do have a commitment to our guests that we will end at the top of the hour and we want to give people an opportunity to ask questions. So if do you want to ask a question of me or our guests, please either raise your hand or type it in the Q&A. You've got either opportunity. Happy to answer your questions. 

Just in case you don't know, you can get a physical copy of one of my books mailed to you. All you have to do is text the word “syndicate” to our phone number, which is 844-796-3428, and if you're looking at your phone, it actually spells 8-4-4, SYNDIC8, S-Y-N-D-I-C and the number 8.

Sorry, that's my dog helping put in his 2 cents here. But text the word “syndicate” to our general phone number 844-796-3428. Let us know. You're going to answer a question, “Have you raised capital before?” If you say no, you're getting this book because that's more appropriate for you. If you have, then you're going to get this book. So if you already have this book and you want the other, go ahead and just say you've raised capital and you can have it on your shelf. We want you to all to have these resources available to you because they will help you tremendously. You can read the reviews and you'll see how many people that have been helped by this. 

So before we go to Q&A ,though, Jen and Stacy, you guys have an event coming up, let's talk about that.

Jen Conkey:

Oh yes, we do. February 2nd through the 4th. We have, WoW Con. It's the Warriors of Wealth Conference.

Stacy Conkey:

It's epic. It's so epic.

Jen Conkey:

It's so epic. You're actually going to be speaking there. So Kim will be there as a speaker on day one. We also have Julianne Peterson that's going to be speaking there on day one, we've got Ron White, who's a brain athlete, and he's coming to speak on day two, and what he's going to do is he's going to teach you guys how to memorize people's names as you're meeting them, because it feels so awful when you first meet somebody and as they're talking, you're like, crap, what was their name again? I don't know if any of you have that happen, but I do.

Kim Lisa Taylor:

All the time.

Jen Conkey:

All the time, right? We're human, it just happens. But he has a very specific methodology to teach you how to memorize people's names so that you can connect with them in a meaningful way and instead of freaking out about, “Oh my God, I didn't remember their name,” you'll actually be able to engage in the conversation comfortably, and it is just amazing what he does. He'll be able to come in and teach that, and then you can go out and raise capital and network and get to know everybody's name in the room using his methodology. We have people that are coming, Rebecca Weaver's going to be coming and talking about performance management, specifically how to manage remote teams, how to manage your team that's maybe boots on the ground, what to be doing and having performance conversations with property managers, contractors, if you're doing rehab. Just the framework to have a conversation when performance isn't being met and to get people back on track with projects. So that's going to be cool too.

I think on day three we're going to be doing mindset work, so I'm going to be walking everybody through why is multifamily a must for you, what's going to get in your way, what are your biggest goals, what's your audacious life that you want. And I have everybody draw it on the board on a one-inch board, it's like we're going to break it. So what we do is we have you draw your ideal life and everything that you want and how you want to be feeling on the front, and then on the back I have you write everything that's going to get in your way that you can think of. And then you come up on the stage with me and you put all those limitations that you think are going to be in your way, facing up at you, and you read through those and you're like, no, this is not happening, and you just smash through the board. And it's a symbolic activity where you break through and realize, you know what? It's so illogical that I believe these things, I actually can do this, and I have done a lot of things to kind of rewire your beliefs along the way throughout the event so that you step into the identity of somebody who's just unstoppable and going for it safely, safely.

Kim Lisa Taylor:

Wow. Sounds like an amazing event. Okay, so where is it and how do people register?

Jen Conkey:

So go to wowcon.com. It's W-O-W-C-O-N.com, and it's in Orlando, February 2nd through the 4th.

Kim Lisa Taylor:

Okay. Okay. So it sounds like everybody has to be there. I mean, this is amazing, just learning how to remember people's names. I live in three different places, and so every time I go, I've got a list of, “Okay, these are the people I've met that in this place, these are the people I've met here.” And oh my gosh, that is probably one of the biggest awkward moments that I have, is when I've met somebody three or four times and I can't remember their name.

Jen Conkey:

Right. That's why we have brought them in. And then we're also going to do speed dating, so you'll remember everybody's names and then we put you face to face with one another so that you can continue to solidify the relationship. Everybody feels that way. Kim, you are not alone.

Stacy Conkey:

We saw Ron in the Bahamas. We were at a Tony Robbins Platinum Partner event. There was 250 of us there. He came in on one of the evening sessions and literally went through, just while we were hobnobbing around, he was looking at each person's tag at their name, and then he went back up and anybody he didn't see, he's just like, "What's your name? What's your name?" And then an hour later had everybody stand up and he went through every single person, 250 people in the room, not their first and last name, but their first name. And as soon as he said it, they sit down. And once in a while, he'd get to somebody and he's like, "I'll get back to you." But by the end of it, 250 people…

Jen Conkey:

It was jaw-dropping.

Stacy Conkey:

I was like, "He's getting on our stage."

Jen Conkey:

Is what we said.

Stacy Conkey:

Wow. I think he's like the Guinness World record (holder) for something of memorization, but…

Jen Conkey:

Yeah, he's pretty cool.

Stacy Conkey:

He's amazing. So I'm very excited about that. It's an incredible networking opportunity. The relationships that are built there, between the networking and obviously our speakers are just absolute top-notch, obviously. And then the mindset work that Jen does. Sometimes people think, “Oh, mindset stuff,” but I'm telling you what I already know for a fact, that is one of the reasons our students have so much success. It's not just the instruction and the coaching. It is that too. But when you get rid of whatever's going on behind the scenes that's keeping you from moving forward, when you get rid of that, it's like you get to live the life that you want, which gives you the courage to go do the scary things, which are not scary once you've done them. But when something's new, it's nerve-wracking to do something for the first time. Anyway, we just highly recommend it. The relationships you'll build there will just, they'll blow your mind. You'll have lifelong friends.

Kim Lisa Taylor:

Can you say that website again?

Jen Conkey:

Wowcon.com. W-O-W-C-O-N.com.

Kim Lisa Taylor:

Okay. And we do have a question. Tim, hey, Tim. Go ahead and ask your question. You can unmute if you'd like.

Tim:

Oh, there we go. Hello, can you hear me?

Kim Lisa Taylor:

Yeah, we can. Hey, Tim.

Tim:

Here with my wife, April.

April:

Hello.

Stacy Conkey:

Hi, April.

Kim Lisa Taylor:

Hi April.

April:

Hi.

Tim:

So we are very new to apartment syndication. We've been studying up extensively for a couple of years and we're finally ready to go for it. So we've been shopping and we've been underwriting a lot and learning a lot through that. We have a deal that we're very interested in, and I'd like to know your opinion. It's a 48-unit. They have a current Fannie Mae loan with a 3.6% that we can assume.

Kim Lisa Taylor:

Oh awesome.

April:

Nine years remaining on it.

Tim:

Yeah, nine years remaining on it.

Stacy Conkey:

Nine years? Okay then.

Kim Lisa Taylor:

Okay.

Tim:

Yeah. However, so they owe $1.82 million, and the broker is saying he's thinking it's going to go for around $3.8, $3.9, which means we need to raise $2 million or $2.1 million in capital. So what is your opinion? What do you think about this?

Stacy Conkey:

So far, so far sounds compelling.

Jen Conkey:

So far sounds really good. Yeah. Do you have it under contract?

Tim:

No, not yet. Wednesday, next Wednesday is their…

April:

Accepting offers.

Tim:

Accepting offers date. And so my thing is, so during this whole process, I've been reaching out to everybody I know and collecting potential investors. And so since this is our first time buying something with other people's money, I have so many questions. How do you have your agreement with the investors? What kind of contract? Do you have your attorney do that? And then what else do we have? I mean, let's start there. How do you do that? It's in that book.

Kim Lisa Taylor:

Yeah, you need to get the book. You absolutely need to have that.

Tim:

We just got that, we just got that.

Kim Lisa Taylor:

Good. 

Tim:

We started reading.

Kim Lisa Taylor:

Yeah, start reading that. I always caution people against talking to investors or anybody with any specificity about any deal until you have a signed purchase agreement.

Tim:

Oh.

Stacy Conkey:

I was just going to say, I was curious what market it was in, but I was like, I'm not going to ask you what market it's in, because I don't want that information to go out.

Kim Lisa Taylor:

You might be pushing your deal on somebody else that's going to go get it, and it's easier to figure out…

Tim:

Right. I thought about that too.

Kim Lisa Taylor:

Yeah.

Stacy Conkey:

So a couple of things come to mind, Tim, on that, because we have ... In our academy, a lot of our students start with smaller deals, they do joint ventures, and then they move into syndication. And one of the things that we're always encouraging them to do when they're working on the smaller stuff is man, be building those relationships, which is why we're paying a lot of money to have Ron White come and work with everyone. Be building those relationships as early as possible, because when you go to do your first syndication and you're probably going to do a 506(b), it is common for people to do as their first one, if your Rolodex isn't ready, it could be a very stressful time because obviously you can't pitch the deal to anybody that you didn't already have a preexisting relationship with when you put it under contract.

So there's a couple ways, I don't want to say around that, but there's a couple of things that you can think about as you guys are looking at doing this potential deal. One is just really truly make sure that your Rolodex is as deep as it can be before you go in. Because I don't wish the stress of this on anyone. You're going to face it no matter what, but I'd like it to be less if possible. But the other possibility that's something that we do, Jen and I, will go in as a co-GP with someone else. So if we know someone that we've been watching them for a couple of years, they're solid operators, but they don't have the number of relationships that we've built over the years, we will come in and we will partner with them on the capital side and we'll have some other role in the deal, but it allows them to capitalize on our network because we will start reaching out to all the people we know.

So I just want you to be aware as you're looking into that, if you don't feel really, really confident that you could raise the ... How much does the raise, two…

Tim:

Yeah, like $2.1 million. So yeah, that's my other question. I know a lot of people, and I did have a rental property on my own for about 15 years that I did really well, but I did it by myself and I managed it myself. But I don't want to do that again. Yeah, I want to go much bigger and I'll have a management company do that, and I'll be the general partner to handle it. So now, what is the importance of having accredited investors and like…

Kim Lisa Taylor:

Yeah, you're not going to start there.

Tim:

Oh, okay. Okay.

Kim Lisa Taylor:

What I would recommend is, we have something called a Pre-Syndication Agreement, and it's for people like you that don't have a deal under contract yet, but they want to have a relationship with a securities attorney, they want to be able to get some one-on-one guidance and strategy sessions on how they should be structuring the deal, what kind of exemptions are going to work with them, what kind of rules and framework they have to follow, and also understanding the importance of developing those relationships and how to go about doing it right now before you do get that deal under contract. So if you want to know more about that, you can go to our website at syndicationattorneys.com and there's a schedule a consultation link.

April:

Yeah, I already know.

Kim Lisa Taylor:

Schedule a free consult with one of our staff, and they can tell you about it and what it includes, but it's got a lot of free perks and it will also get you onto our weekly Masterminds. Those are amazing. But yeah, I think that you can benefit by having a one-on-one consultation with me or another securities attorney kind of giving you some guidance definitely. The book is a step-by-step. It's going to talk about securities exemptions and developing those relationships, why it's important, how to structure your deal. You're going to have a much better understanding of it after you've read through those chapters.

Tim:

Great. Okay. We love that. We'll definitely read that. We started…

April:

We scheduled. We scheduled the consultation.

Kim Lisa Taylor:

Oh, perfect.

Tim:

We did. We already scheduled it. Yeah. And now, so I thought that you had to have the money raised and ready before you wrote the LOI.

Kim Lisa Taylor:

No, no. No, no. What you have to have is a database of prospective investors.

Tim:

So like verbal agreements, like we're ready to go?

Kim Lisa Taylor:

No, these are people you've talked to that said, yeah…

April:

Relationships.

Kim Lisa Taylor:

"I'm super interested, let me know when you have a deal," and you've already talked to them. You already know whether they're accredited, you know if they're not accredited, how they're sophisticated. But every one of our clients starts with a Reg D rule 506(b) offering because…

Tim:

What is that?

Kim Lisa Taylor:

Your friends and family will invest with you before you develop a track record. If you try to advertise, the first thing a stranger's going to ask is, “How many have you done before?” If you haven't done any before, you are going to need to bring somebody else into your management team that has experience and leverage off their experience.

Tim:

Okay, yeah, that makes sense.

Kim Lisa Taylor:

So the reason you want to do the 506(b) is it allows you to bring in up to 35 non-accredited but sophisticated investors, and that's typically your family and friends, somebody with some savings, in a job, they have to have some education or business background or a degree or something that makes them capable of understanding this, what you're doing and whether it's appropriate for them. So you've really got to pre-vet your investors and get that relationship established so you have that information before you start to…

April:

Oh, wow.

Tim:

Yeah, awesome. So much, so much to learn.

Stacy Conkey:

It is a lot to learn. And you know what? You guys, you're doing the right thing. You're getting educated about it, you're seeking professional help, and no matter what, it's going to be nerve-wracking and scary until you're on the other end of it. That's just how it is. And if you want a different life, which obviously you do, that's just what you do and you go for it. I will tell you, because we have an academy and we have all of these different people, in addition to Kim, there's at least one other that I'd say is extremely public as far as being a syndication attorney, and we know most of them. From our students, from our coaches who coach our students, I will tell you for a fact that the other main person who we respect and stuff isn't ideal for new investors.

So if you are looking on the internet and you're seeing a lot of videos from Kim and then someone else, I will tell you that Kim, when you are new, Kim is absolutely the way to go because they actually do take the time to lay the foundation for you and help you go through that, navigate through that successfully. Where our feedback from our coaches with some of our students going through syndication for the first time was that other firm, it's like they're better suited for people who've done 10 deals, but for the new person, they're just like, it's not a good experience. I highly recommend…

Tim:

Yeah, a lot of those other people are charging so much money. We don't have that. We're trying to get there, but we can't afford to pay what some of these other companies are asking for mentorship or guidance. We want to get there eventually, but we can't do it right now so that's the whole purpose for it, and we want this cash flow.

Stacy Conkey:

You'll be in good hands with Syndication Attorneys. They're just a great, especially great when you're just getting started, And then you can use them for life and they're great.

Kim Lisa Taylor:

That's our forte is that we love taking people that have never done this before and really helping them understand what they're doing. If you've been to our website, there's a whole resources library with over 70 different articles all in one or two pages on different aspects of syndication. We have our podcast, we have our YouTube channel. It's a very nominal fee to get into our Pre-Syndication Agreement. So that just helps you get that foundation so that you're confident and you're doing the right thing when you get this deal. Just in case somebody's wondering, because I think you asked a really important question. I know we're going a little bit over and we usually don't, but I think we tell people to hire us after you have a signed purchase agreement, you've been physically to the property, and you've reviewed the financials. Because then our statistics show you're 85% likely to close. We don't draft those agreements, we don't form companies for you. There's no commitments or anything like that with investors until after you've done those three things and we've drafted the documents. So you can plan on, you need 90 days to syndicate a property, the first 30 days is going to be your due diligence, us drafting documents, and then the last 45 to 60 days is going to be processing the loan and getting your investors to invest.

April:

Wow.

Tim:

Wow, that's great. Yeah, so we've already formed the company. By the way, we love your podcast. You guys have been great. We learned so much from you just listening to you today. So thank you for everything.

April:

Yeah, because I thought that was good, what you said about even putting in the letter of intent, even if it's you’re going to be putting in a way lower offer. Because we've been looking at deals and we're like, “What they're asking for doesn't make any sense. There's no way this property is worth $10 million, they're in the negative.” So then we were like, “Okay, let's move on to the next.” We were doing underwriting, but I think it's important, like you said, so we can at least show the broker what we're we're doing. 

Stacy Conkey:

You'll increase your deal flow by doing that because they're going to be like, “Oh, okay, so you...” Because a lot of people can make phone calls, a lot of people can watch videos on YouTube and get excited enough and have enough guts. I wouldn't be one of them, but to have enough guts to make some calls to brokers. So brokers, they're very hesitant with new investors because a lot of new investors from their perspective waste their time. So if you will be the other person that actually shows them that not only did you take the time to look at the information they sent, that you actually analyzed it and you have a thought process behind what's driving this offer, you will change the course of your business forever and you will get the deal flow that will help you get a deal.

Tim:

I love that. I love it. I definitely have called a lot of brokers and had some really good conversations with them, and I'm learning from all of them, too.

Stacy Conkey:

Yeah, that's awesome. Congratulations, you guys.

Tim:

Yeah, thank you.

April:

All right, thank you.

Kim Lisa Taylor:

One last thing I want to say is that having a coach in the beginning is extremely important. All of our successful clients that have gone on and done more than one or two deals have all started with a coach. They've all accelerated their practice because of having a coach, they've avoided a hundred thousand dollars mistakes with other people's money because they had a coach. And I know it's a big investment, but it's also, you don't decide that you're going to be an accountant and say, "But I'm going to learn it all on the internet and I'm going to read some books." You've got to pay your dues and you have to learn, and you have to find people that will teach you how to do it.

And so this is part of what Jen and Stacy offer. Having a coach will definitely accelerate what you're doing and help you avoid mistakes. I can't stress that enough. Our clients that try to do it alone without coaches, they'll do one or two deals, or maybe they'll do two or three deals over four or five years. Some of ours that started with a coach, one of our clients, long-term clients, Bill Brancucci, talked about the fact they started six years ago buying $3 million to $5 million properties. They had a coach, they started in a coaching program, and now they're buying $30 million to $50 million deals just six years later. Got some other clients, we just interviewed self-storage clients, and they had a coach. They started out, they did multifamily, now they're doing self-storage. They've got thousands of self-storage units now within two and a half years, $10 million later. But all that didn't start just trying to do it themselves. So it is an investment, but it's an important investment if you want to do it, versus just trying to flounder around and then not get where you want to go.

Jen Conkey:

I completely agree with that, Kim. You think about a doctor in residency. They go to college for all those years, then they got to go do residency, and that's why we set the academy up the way that it is. It's a three-year education, which it's also while implementing, it's probably better than any education you would get out there. But yes, if you don't have both, if you don't have the information and the implementation, yeah, you'll start…

Kim Lisa Taylor:

Somebody, you know, prodding you along and making sure you're doing what you should be doing and not getting distracted and doing the wrong things. That's so critically important. When I started my law firm, I immediately hired a coaching program.

Jen Conkey:

Same. Absolutely.

Stacy Conkey:

We probably spent, what, three quarters of a million dollars over our mentorship and coaching.

Jen Conkey:

I'll tell you this, mentorship and coaching, I was one of those do it yourselfers back in 2003, and I will just share this openly. I lost $80,000 in one day because I was too arrogant to hire a coach and also didn't think I had the resources. And then I shocked the hell out of myself when I figured out exactly what was available to me to go get that education. And once I did, it was a game changer. So $80,000 in one day, that's what could happen. And that was on a single-family home. That's embarrassing

Stacy Conkey:

It's hard. One of the things that we've just made the decision for ourselves, and even when it's hard, you don't always have a lot of capital, especially if all your capital's out in deals, you don't always have a lot of liquid. But we've always made the decision, not always, last several years, last five years, we've made the decision anytime that we could leverage someone else's learning curve to shorten our learning curve…

Jen Conkey:

And the pain…

Stacy Conkey:

We are making that investment because every single solitary time, we trim five years off of our learning curve and we avoid the hundred, and two hundred, and three hundred thousand dollar mistakes that other people are making. So we are huge... Not only, obviously we have a coaching program. I know that sounds self-serving, but we believe so strongly in it even if it's go get education with someone else — granted it's not going to be as good, but that's okay — go get education, the investment, you have no idea how much money that will not just save you from mistakes, but help you make. But it is, it's scary to make an investment like that when you haven't done it yet. You don't know for sure, is it going to pay me back? If you're going to do it, yes. But God, the mistakes you can make in apartment investing are, oh, they're so expensive.

Jen Conkey:

Sometimes people…

Stacy Conkey:

We just don't want that for anyone.

Jen Conkey:

Sometimes people are afraid to make that investment because they maybe possibly don't believe in themselves that they'll be able to get the results. I experienced that myself. When we went to go enroll into Tony Robbins Platinum Partnership, it's $150,000. And handing the card over, I was like, “Oh my God, what if we don't do this right?”

Stacy Conkey:

That was scary.

Jen Conkey:

But it increased our net worth by $1.5 million and that's a 10x…

Stacy Conkey:

Just that first year.

Jen Conkey:

Just off of that first year with him. So second year, I threw my credit card. Let's go. So it's like you got to look at the return on the investment because of exactly what Stacy said, you cut off so much learning curve. And then when you have somebody that is with you, that's like, "Okay, you got to do it by the book and do it legally," that's going to protect your investment. So you need the coaching and the protection.

Kim Lisa Taylor:

Well, we have officially broken the record for the longest podcast we've ever done because it was so exciting and there's so much good information and…

Stacy Conkey:

A lot actually.

Kim Lisa Taylor:

We talk too much. I'm sorry.

Stacy Conkey:

Sorry. We just have a good time. We really just want to help people. 

Kim Lisa Taylor:

Because that's exactly, you're asking questions that everybody else has, and so it's good for everyone on call to hear it. So anyway, we do have to sign off. Website one more time for the conference.

Jen Conkey:

Wowcon.com, W-O-W-C-O-N.com.

Stacy Conkey:

Early bird specials until, what, December 20th, and you get a plus one and it's, I think, $300 cheaper than general admission. December 21st, it goes to the regular pricing, but a couple weeks where…

Jen Conkey:

We also have a free resources page if you want to go learn about what we do, WarriorsofWealth.com, like seven videos that just give our entire blueprint away. So if you're interested in that, WarriorsofWealth.com.

Kim Lisa Taylor:

Excellent. And if you want anything to know more about us SyndicationAttorneys.com. Check out our resources page, there's a ton of free stuff there, free educational materials. We would love to have you check it out. Definitely text the word “syndicate” to our phone number, 844-796-3428. Get your copy of the free book mailed to you. And thank you so much, Jen and Stacy, this has been amazing.

Stacy Conkey:

Thank you for having us, Kim.

Kim Lisa Taylor:

Look forward to seeing you in February.

Jen Conkey:

Absolutely.

Stacy Conkey:

Yeah, same. All right, have a good one.

Jen Conkey:

Bye, guys.