Journey to Multifamily Millions

The Importance of Communication in Multifamily Success with Chris Salerno, Ep 61

September 14, 2023 Tim Season 1 Episode 61
Journey to Multifamily Millions
The Importance of Communication in Multifamily Success with Chris Salerno, Ep 61
Show Notes Transcript

Today's guest is Chris Salerno, He started out in the single-family real estate space by brokering and operating the number one team in the Carolinas before moving on to become the Founder and CEO of QC Capital, a premier commercial real estate investment company specializing in multifamily and car wash real estate ventures.

In this episode, Chris shares his journey from high school sandwiches to a multifamily empire, Challenges and tax strategies are highlighted. 

He stresses effective communication, cold calling, and tax-saving insights for real estate investors. Mentorship, growth circles, and white-glove service are emphasized. Adaptation in current markets, car wash investments, and diversification complete the conversation. Don’t miss this episode!

Episode Topics

[01:24]  Meet our guest, Chris Salerno
[02:04 ] From School Lunches to Multifamily Millions: Chris Salerno's Entrepreneurial Journey
[08:33]  Mastering the Art of Speaking: From Cold Calls to Multifamily Wealth
[17:04]  The Path to Multifamily Mastery of Chris Salerno: Unlocking Success through Mentorship
[25:07]  Navigating Real Estate Opportunities Amid Market Uncertainty
[35:11]   Driving Success: Unconventional Investment Avenues in Car Wash Ventures
[37:52]  What is one red flag every investor should look out for?
[38:46]  What is a myth about the real estate business?
[40:53]  What success looks like for Chris Salerno
[40:50]  Connecting to Chris

Notable Quotes

  • "Learn how to speak and be presentable. It has helped me tremendously." -Chris Salerno
  • "I perfected cold calling, which has helped me get into certain rooms that I wouldn't necessarily have been able to access." -Chris Salerno
  • "It's really thinking outside the box when it comes to taxes and how you can best use them to your advantage." -Chris Salerno
  • "Adapt and open up your mindset to explore new asset classes, diversify portfolios, and thrive even in challenging market environments." -Chris Salerno
  • "Taxes are something that should be looked at throughout the year, not just when you have to file. It's about having a tax strategy to maximize benefits." -Tim Little
  • "Find a CPA who understands the type of investments you're in. Specialists are crucial because they know how to unlock the benefits unique to those assets."-Tim Little
  • "Deals will still get done, and money will still be made. Adapt and be disciplined in your underwriting." -Tim Little

Connect with Chris Salerno

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Ep 61 - Chris Salerno (audio)

[00:00:00] Chris Salerno: I challenge you to open up your mindset to get out there to see how you can pivot see how you can change and either bring a new asset class in like we're doing ground up development car washes or you know explore another asset class while you are still heavily focused For example, in the multifamily space, but change and adapt your mindset. If you don't, just like what happened with COVID, the older generation did not change and adapt their mindset and their business to more of a technology based business. COVID put them out of business. The ones that adapted during covid it actually helped them and that year after they flourished They did more sales than ever.

[00:01:13] Tim Little: Hello, everyone, and welcome to the Journey to Multifamily Millions. I'm your host, founder and CEO of ZANA Investments, Tim Little. And on today's show, we have with us Chris Salerno. Chris started out in the single family real estate space by brokering and operating the number one team in the Carolinas. Before moving on to become the founder and CEO of QC Capital, a premier commercial real estate investment company specializing in multi family and car wash real estate ventures. Chris, welcome to the show. 

[00:01:43] Chris Salerno: Tim, thanks so much for having me. Very excited to be on here and give some education to your listeners.

[00:01:48] Tim Little: Yeah, and I definitely appreciate you coming on. So I gave everyone a high level overview of your background. But on this show, we really like to get into the details of how you got started on your journey. So please take us back to the beginning and tell us how you got to where you are today. 

[00:02:04] Chris Salerno: Yeah, no, thanks again for allowing me to be on and give some knowledge back to all your listeners. I always had an entrepreneur mindset. I remember when I was back in high school, the lunches were so bad that the kids hated them. So they would always travel outside, they'd sneak outside and go down the road to the local Subway or Bojangles that they have here in the Carolinas because the school lunches were so bad.  So I thought, what if I make lunch and sell lunch to the football players, because I was in football, and so I started making this honey glazed Hawaiian sandwich and, sold five, or, what I did was I ate it in front of them, they were, they looked, they said, that smells good, I said, here, try some. And so they're like, wow, that's really good. I said, I'll bring you some tomorrow. So I started doing that and then I built it up. I built it up so much where I was charging them five bucks for the sandwich. And then the school decided to shut me down because I would sell them in the locker room. I've always had that entrepreneur drive and that mindset. And, thankfully, I very quickly understood how college operates. College is the best business there is. Reason being is they're guaranteed their money from the government. you as a student have to pay the government back. That is the only loan you cannot file for bankruptcies against. And also they'll garnish your wages if you decide not to pay them. And I thought that was a one sided business transaction that I was not going to be a part of, so very quickly I dropped out. Thankfully, I paid off my student loans, within six months of working two jobs at the time. From there, I then started, educating myself about the real estate industry. I fell into the residential real estate industry here in Charlotte as a residential broker. First year I did around 40 million in annual sales. I sold that company to the number one company in the Carolinas at the time. And in that agreement, I became their COO. I then brought them from 92 million to 147 million just in another year and a half. After doing that, I got hit with a tax bill saying you're back on your taxes. So I called my CPA up and I said, what do you mean you pay my taxes? What's this bill? Explain it to me. And she said, you are in a different income bracket now. You have to pay quarterly payments. I said, don't you think that would have been great telling me this ahead of time? so very quickly I had a new CPA that was in place and then from there I, I really started focusing on,on how can I limit my tax liability? And so I then educated myself about the multifamily space. joined a very,very, informational and prominent gentleman named Joe Fairless in the industry. He has a private group that I joined. I see you have his book up there, The Best Ever. And, and after that, I scaled the company, left brokerage, scaled the company to what it is today. We're pushing a little over 350 million. we have over... 11, 000 people in our database that we send out monthly and do weekly webinars for. and then a good amount of those individuals are investors into our, alongside of us, in our multifamily opportunities and also our new car wash venture that we just released yesterday. So we're very excited about that. And yeah, that's a little bit about myself. I have a three and a half year old son, which is my world. I love him dearly. He's not at home right now, but when I do have him, he always likes to chime in on investor calls and what I'm doing on the phone.

[00:05:20] Tim Little: Yeah, no, I hear that. my daughter is always able to say hi? Can I say hi, my son? Yep. She's four years old. And I'm like, baby, not right now. This is like a real meeting. I love it. It's good to get started early. So yeah, I just want to hit on some of the things you started with, you talked about that entrepreneurial story. And that's, it's like that, that quintessential story that I love hearing from people, in different ways. For me, it was, I, my uncle had a. a membership to, it wasn't Costco, but one of the other ones, the big, big box stores. And so we wound up going there and I figured out that I could buy a big thing of jolly ranchers and blow pops for, say 20 and 25. And then I was able to sell them at quite a markup and make a good like 10, 15 off of. Each one and that just blew my mind so I immediately started selling, blow pops 25 cents each or three for 50 because I thought I was super savvy. and I had a nice little business going until, like you, the teachers eventually shut it down. I'm not sure why they like to stymie that entrepreneurial spirit. spirit, but yeah, it happens to the best of us. 

[00:06:39] Chris Salerno: That's all of school elementary middle school and high school They want to brainwash you into being an employee To go ahead and pay your taxes to go work a 40 year 50 year job Once you're finished go ahead and put your 401k into the stock market because they have control of it And then you retire and you die. That's what they want you to be. They don't want you to be entrepreneurs That's why if you look and I even thought about this Is creating a bank or creating a fund, just for entrepreneurial entrepreneurs and business owners because for me personally, I can't go buy a house i'm unable to buy a house because i'm an entrepreneur And they a lot of banks will not take my depreciation line item off And so at the end of the day, I only make 50 bucks a month Because of my depreciation. And it is against us, because most banks will not lend to business owners or entrepreneurs because they show that they pay zero to no taxes, and that they're self employed. 

[00:07:36] Tim Little: and not just that, but by the very nature of entrepreneurialism, it's not consistent income. So a lot of banks just don't want to take that chance. And that's something that I started to run into as I transitioned from, I was on active duty orders for a little while and transitioned into doing real estate full time. I was like, Hey, I'm going to need to get a new car here in a few years. And I was like, Oh, wait, who's gonna give me a loan when I have no, no proof of income. don't get me wrong. My credit score is amazing, but that will only go so far. So no, you raised some very valid points there. so you talked about how you went on to go ahead and, what could have been, terrible school loan debt still sounds like you had a little bit, but you were able to rise above it and then became a successful broker. What qualities that you possessed do you think made you so successful? 

[00:08:33] Chris Salerno: I would say the ability to speak over the phone at a very high level. I always say that to anyone who I talk to is to learn how to speak, learn how to word your sentences. It will help you both in legal cases. If you are ever deposed, if you're ever in, in trial or, on stand and you're being drilled with questions and things like that. I always say learn how to speak and learn how to speak very well over the phone and be presentable. That is super important, being presentable and learning how to speak. It has helped me tremendously. I'm an old soul, however, I am fairly young. And when I go into certain business meetings, they see. My me physically and they see I'm young. So a lot of people, mentally will say it will automatically correlate. You're young. You're inexperienced. But once I start speaking About what we're doing and things and our strategy and things like that about what I've already done with the real estate industry The whole, and I feel it, I see it, the whole dynamic of that table switches. And then they start speaking to me like I'm a sixty, seventy year old individual. And so I always say, learn how to speak, and that's one thing I did was, I learned how to spoke on the phone, and I perfected,cold calling, when I was on the phone with, as a broker, which has helped me tremendously get into certain rooms that I wouldn't necessarily been able to get 

[00:09:50] Tim Little: into. Right now, and that makes a lot of sense. And it's one of the skills that I wish I had, picked up early on is, and I don't, I hesitate to say sales, but, cold calling, there's a lot of rejection involved in that, right? And being able to build up that scar tissue, and get those calluses from the rejection and become stronger from it, it just it makes you so much more resilient, in the sense of just social interactions and being able to shake that stuff off and move on to the next one and not let it get you down. So yeah, that's obviously some very valuable experience. 

[00:10:24] Chris Salerno: No, very much. So very much. So spot on there. Yeah. cold calling, you're rejected 99% of the time, you're going to get that 1%. You just have to be able to accept rejection. You have to be able to cope with it and have a positive mindset. If you don't have a positive mindset, you're going to let that stuff get to you. and it's just not going to turn out 

[00:10:40] Tim Little: very well. Yeah, and I'm sure there's like a curve there where it sucks really bad and hurts your feelings at first, but then you get used to it. I did telemarketing just to date myself a bit when I was an undergrad and I did not enjoy it. I thought it was pretty miserable, but I probably took away some lessons that I wouldn't have gotten anywhere else at the age of 21. So I certainly agree with love. and going on to that limited tax liability. This is. Obviously not something that only you are presented with, we see this all the time with passive investors, right? Like they're looking for ways to invest, but to reduce their tax liability, whether it's doctors, lawyers, et cetera, because nobody wants to be bumped up to that next tax bracket, especially without knowing it. and so they're finding ways to bring it down. Talk to me about some of the advantages that passively investing in real estate offers to especially high net worth individuals who are looking to lower their tax liability.

[00:11:50] Chris Salerno: Yeah, I think, a big thing about passive investing into all different types of opportunities. At the end of the day, that's all, I'm not a CPA, so I always say consult your CPA, but you're going to have to get a better understanding of your, the way you file. For example, I have a client, he's a. The CEO of a very large company and his wife works for a very large energy company here in the Charlotte area and she's looking to retire. So what I said to him, I said, look, he, last year he paid over a million dollars in taxes. and I said to limit your tax liability when she retires, start now, get an LLC created and have her get her real estate license. Just so you have that extra proof, have her look at all the real estate deals that come in, have her look at a couple of deals a month locally, get her to hit that 750 hours. Mark a year, and then you can utilize the whole depreciation, 100% of it, towards your other, your taxes when you guys file together, because she is a real estate professional. So it's really thinking outside the box when it comes to the taxes and how you can best use it to your advantage. I always say consult your CPA. If you don't have a good CPA, reach out to our team. just go to our website,, and put in,fill out the information, and put in the memo. Chris told me to reach out and we're more than happy to give any of the vendors that we work with, my personal CPA, anyone who's very savvy in real estate. You want a CPA super savvy in real estate that truly understands K 1s and depreciation. it's, I can't tell you Tim, so many times when we send out our K 1s, we'll get emails back from their CPAs. they can't deduct this or, this K 1 is wrong. And all I do is forward to our CPA and our CPA just drills them because they truly don't understand how to read a K 1, how to actually utilize that K 1 towards their client's income. That is super important, to really limit your tax liability as a high net worth individual, and as another benefit to invest into these opportunities. For example, multifamily depreciates at a 27 and a half year lifespan, and our car washes depreciate at a 15 year lifespan. So it's brought down a lot more. So we're offering two different types of options to our investing partners. So it's always good to ask that no matter who you invest with. What type of asset is, what's that depreciation schedule look like? So you can get an estimated year one based on your initial income. Then also, just like you said Tim, passively investing. This is something where you can passively put your capital. You're not having to worry about the ins and outs. You're not having to worry about the development of car washes or dealing with property managers. That is what we built and I built a team for is that we have those systems in place. To worry about all that and to get all that stuff handled. So it's extremely helpful. as a passive investor to just go ahead and place capital, use your four you can also use your 401k self directed IRA and place it into these opportunities where you're building wealth statistically, based off the numbers a lot higher than the current market environment in the past, three decades, according, to Bloomsburg and, and business insider. That's right there. It's super important to have that passive piece as well. Not only the tax benefits. 

[00:15:05] Tim Little: Yeah. And you dropped a couple of gold nuggets there that I'm going to have to pick up and emphasize for people. So one piece of it is. having a tax strategy, essentially, right? These are not, one off things, and nobody should look at them as one off things. I know I fell into that trap at first until I brought in my aperture a bit and really started to understand, taxes are something that should be looked at through the entire year, not just when you have to file your taxes, because you want to have a strategy throughout that year so that you can maximize The benefits. So the things that you're talking about, you got into the, the more advanced stuff with the real estate professional status and, granted, most people won't fall into that, but it doesn't mean that they're not going to be able to benefit or take into account, like you said, the depreciation that gets passed through to passive investors through the K one, the biggest example that I've seen in my own, passive investing. I'm getting these distributions, right? And then I get the K one that basically nullifies all those distributions and says, Hey, you got enough depreciation to wipe out. All the distributions that you got for that year. So what does that mean? That basically just means that those distributions aren't getting counted against my income, potentially knocking me up into another bracket. Now, again, neither Chris or I and our CPAs, just a. Put that out there. But, it's just again, getting people to think about taxes more holistically. And the other super important piece that you mentioned is finding a CPA that understands the type of investments that you're in that none of them know everything about. And there are specialists. And what you need to do is find those specialists who understand those assets. Because otherwise you're not going to get the benefits because they like you said they just they don't understand 

[00:17:04] Chris Salerno: No 100. it's just like for example, if you're going through a custody battle or a divorce, you know I pray it never happens because those are very tough times in individuals lives and very life changing situation for individuals But say if you're going through a divorce, you're not going to go hire a real estate attorney to represent You know, why would you do that? So why are you going to hire a CPA that truly doesn't know the ins and outs about real estate? It's the same. It's the same example so really think on that and it's always good. You can have two CPAs. You can have one that will help you out on the real estate side and pass it over to that other CPA if you truly want them. However, if you are looking to dive deep into the real estate industry, you're going to want to get started early and get a good CPA early that understands the ins and outs about real estate and depreciation. Yeah, absolutely. 

[00:17:50] Tim Little: I couldn't agree more on that piece. So you said you got into a program with Joe Fairless. Can you just talk to me about in your opinion, how much of an impact that coaching, mentorship, whatever you want to call it, had on your growth? And do you think you would have found the same success without that coaching or mentorship? And if so, how quick or slow would it have been? No, that's 

[00:18:14] Chris Salerno: spot on. I'm going to relate this to an example of, most people went to college and most people got a degree. you're willing to go pay 000, be in debt, a lot of people for the next 20 years, maybe even longer if you're a doctor or an attorney, and without creating your own business, you're going to be paying that for the next 40 years, if you're willing to go do that, however,you're hesitant to buy a program and I'll explain certain types of programs I do not like and that I like here in a second, but you're hesitant to go buy something that is going to be a direct correlation to your success in that career, whereas I'm In college, the first two years is basically, bogus. I always tell kids to go to a community college because it's cheaper. And then make sure it just transfers your credit over to your four year college that you want to go to. because, you're learning math, you're learning English. basic classes that at the end of the day, in my opinion, you've already done for 12 years. You don't need to do that anymore. It's just another way for college to make money for you for the next two years. and get you wrapped up in their program. and I think it's super important to get a coach and a mentor. It has helped me tremendously with connections and with success. I don't only have Joe Fairless, but I have a couple others in the industry as well. And it has helped tremendously with introductions and success. And then also, obviously, name dropping, that does help tremendously. So you gotta use it right. Don't get into a program and not use it at all. It's just like going to college and not using your degree, don't do that. unless it's, do that if it makes sense financially to get into a new, a new, a new career, but don't go to college to do hair because you're bored and you just need a degree or to be an English major because you're bored and you just need a degree. That's not the right thing to do. I always say take off, find out what you want to do, and if it is the route that you have to go to college. If it's not, then, don't go. when it comes to finding mentors. I'm a firm believer of being one on one with the mentor. I'm not a believer of having a mentor who has multiple classes and you don't ever talk to that mentor. You only go through their classes and their programs like that. It's just like school. What comes out of it is what you're gonna put into it. Same with both scenarios. However, it's a lot better with one on one. I can text Joe right now and Joe will shoot me a text back. That's how close we are. So when my son was born, he sent some beautiful gifts over for my son. we're very close on that aspect. And if any roadblocks I'm coming across, I'm able to talk to him about it. So I highly recommend getting a coach and a mentor to limit your mistakes. It will help you grow a lot faster because you are basically partnering with someone who's already been there, has already done it, and you're following in their footsteps. Why not do that? Instead of waiting 10 years for Joe to build his beautiful company that he has, it can take me 3 or 4 years because I have him with 10 years of experience. In my ear, it is super important to surround yourself with like minded individuals If you are not being surrounded with individuals that are talking money talking growth talking. Okay. This is our goal this year. We'll accomplish it next year. This is our goal. This is our goal this year. We have not accomplished it. This is why you know, then you're in the wrong room. Frankly, you need to put yourself in rooms where people are talking about money. People are talking about growth, building large organizations and doing better for the community. If you are not, I encourage you to get into a room as soon as possible, where you can change your mindset around, because in my opinion, 95% of success is all about mindset. if you don't have the right mindset, it will really destroy you. 

[00:21:51] Tim Little: Yeah, no, I obviously agree with everything you're saying. One of my favorite sayings is if you're the smartest person in the room, you're in the wrong room, right? Because you're not able to grow if you're not surrounded by people that are smarter than you at what you want to be doing. so totally feel you there. and then I guess I want to move on to your current business.  And talk about some of the numbers there. So I was checking out your website and again, just some really impressive numbers. You've raised over 35 million from over 550 investors. Now, how were you able to attract and keep those investors? 

[00:22:28] Chris Salerno: Yeah. Obviously each investor has everyone, all, all 500, all thousand, all over 11, 000 that's currently in our database. They all have different lives. They have different situations, unfortunately some have cancer, some are getting older, they all have different situations in life. So, to have a 100% attention rate can be very difficult. We are sitting around a 77 to 80% attention rate. And the reason being is because we are providing a level of white glove service to our investing partners. Everyone's going to go back and stay at the Ritz Carlton. stay at the Grand Bohemian because those are the level of services that they're going to provide that if something goes wrong, they're going to take very good care of you. So that is, I would say a reason why we have a lot of investors that come back. However, we also find out what that other percentage is. Is it something that we have to tweak? as you build a company, anyone out there, You can't change your company off of one person's opinion. You can take that opinion, take that constructive criticism, and appreciate it. However, you can't always change your company based on one person's opinion. Apple did not change their iPhones, because of one person's opinion. they are listening to everyone, yes, but still at the end of the day, you're either going to use an iPhone or not, or you're going to go to other options. And that's just like investors. So we do quarterly surveys to get their opinions on how we're doing, how the market is, where they are currently at, but also, sometimes given this current market environment, people want to be cash heavy. They don't want to spend cash. They want to hold the cash in their pocket. Sometimes people need cash. you have to take all that into consideration and you always have to be marketing your company to raise more and more capital every time given. All the current market environments that we are in.

[00:24:47] Tim Little: Yeah. And that's, I think, a great segue into the next question, which is, talking about the current state of the market. There are a lot of people from passive investors to active investors like us who are saying things don't make sense right now. And they're just going to sit it out until the dust settles. What are your thoughts on that? 

[00:25:07] Chris Salerno: I've never understood that. I remember when I got into the industry in 2018, 19, and they said, we're at the peak of the market, I'm going to, I'm going to sit on the sidelines. And now I ask them,2018 to we're going on, 2024, what'd you do for the past six years? Did you just sit around? Because we got another four more years and then it'd be ten years. So you're gonna wait another three to four more years, and then you've just done nothing for ten years? I like to challenge those individuals that say they just want to sit around. I like to challenge them to open up their mind to think how they can create opportunity in the current market set that they are being given. Now look at Uber, look at Lyft, look at... Look at Airbnb. They were all designed back in 2010-2012. Most of your companies that have major success are designed in current market corrections and crashes. So I'd like to challenge those individuals to think differently. Instead of saying, we're sitting on the sidelines, there's nothing out there. Okay,it's still good to actively play, even if you are sitting on the sidelines. I'm a big F1 guy, so let's talk about F1. Daniel Ricciardo just got back in, he's a F1 driver, just got back in racing again in the second half of F1. Prior to that, he was the backup driver to Red Bull, both Max and Checo. What did Daniel Ricciardo do? He had headsets on listening with the engineers, understanding what's going on, and understanding the car. He is back there understanding, even though he's on the sidelines, he's back there understanding how everything's operating. And then now he's racing for the second half of the year. What I mean by that is don't fully shut your mind off given the current market environment. If you do go work for someone else who is an entrepreneur who has an open mind to adapt. That's what we did. We adapted, even though. In my opinion, the next 8-10 months will be extremely slow. Will deals still be made? Yes, deals will still be made. However, it will be extremely slow. CBRE, Newmark, JLL, they're all down 90% in revenue with their brokerages because deals are not being done. Only deals are being done if they need to be done due to the seller having to sell so There are still opportunities out there. Don't get me wrong However, I challenge you to open up your mindset to get out there to see how you can pivot see how you can change and either bring a new asset class in like we're doing ground up development car washes or you know explore another asset class while you are still heavily focused For example, in the multifamily space, but change and adapt your mindset. If you don't, just like what happened with COVID, the older generation did not change and adapt their mindset and their business to more of a technology based business. COVID put them out of business. The ones that adapted during covid it actually helped them and that year after they flourished They did more sales than ever. I've talked to multiple restaurant owners and business owners here in charlotte. They did multiple sales after that year because they were able to adapt so I challenge you again to open up your mindset to adapt to these current market environments that we have. Bring a new asset class to your investing partners. Give them some diversification in their portfolio. Don't give up on multifamily because I still, everyone needs a place to live that is not going out. That's not a question. We all need shelter. and if you can find that right deal in that right market, I think, you are 

[00:28:20] Tim Little: spot on. Yeah, and I think there's a couple of key things in there. One, deals will still get done. And that is true of any market. It doesn't matter what's going on and money will still be made. If you look at the parallels with the stock market, people who try to time the stock market. I usually do it very poorly. In fact, statistics say that they actually do the opposite of what they should be doing. Everybody invests when things are on the upswing, and then they divest when things are dropping, doing exactly the opposite of what they should be doing. if they were a disciplined investor because human psychology takes over,And I don't think that real estate is different in too many respects, at least on that point. And so a lot of people, they aren't sure what's going on right now. And so that's what's keeping them on the sidelines. And they see a lot of scary headlines, right? Oh, rents, reducing or reds going down, blah, blah, blah. you also have to understand we were coming off of some of the highest rent increases in, God knows how long during COVID, when they were just going up by astronomical percentages. So some of that is, is really more of a correction and it's going back to normalcy versus what we saw over the first couple of years. So I think that has a couple of implications to, one, we need to adjust how we're underwriting deals because it comes down to adapting, like you said, right? It's not going to be bridge loans, really low percentages and all this stuff. Now we're dealing with a different lending environment. Lenders are getting a little bit tighter. They're not giving as much money, so we have to come to the table with more cash. And all of that needs to be accounted for in our numbers. But if you could still find a deal where the numbers still work, then it's still a deal. It's just being disciplined in your underwriting. And you're probably just going to have to go through a lot more deals to find one that works, as opposed to a year and a half ago, two years ago, when everything was a home run. And I think we're probably going to see a lot of operators fall to the wayside, because Things might be getting a little harder, and they're not willing to stick it out. But I think that can be considered a good thing, right? A culling of folks who aren't taking it as seriously as some others. Spot on there. Spot on. Yeah. All right. So hopefully, that gives everyone an idea. it's not all doom and gloom. I know there's some scary headlines out there. but if you stick to the fundamentals and you trust the sponsor and they're doing their due diligence, you should be all right. and the other question I ask is what are your alternatives, right? A high yield savings account. Okay. Maybe you're getting three to 4%. Maybe. and outside of that, you can go into the stock market, which you just hop right back on the roller coaster if you want to. but, again, I'll emphasize the diversification piece that you talked about earlier. So you talked about diversification. Of, the types of assets that you're getting into as a way to weather this storm, talk to me about car washes and I live in Tampa, I see a new car wash going up like every couple of months I'm over here, so I kinda get it. Please give me the case for how you found yourself in that relatively unique asset.

[00:31:49] Chris Salerno: Yeah. So actually, back in college, I worked at a car wash for about a year and a half here locally. So I understand it from a numbers perspective and have some experience in it. The reason being is diversification. It's around 90 to 92% mom and pop. 8 to 10% is private equity. Private equity is buying anywhere from 18 to 22% EBITDA, which if business, normally businesses trade around 5 to 9% EBITDA. So it is substantially, very large with these private equity firms because these car washes cashflow substantially. we operate all deals as a 506 C, so it's only open to accredited investors. Therefore, I could tell you all about this stuff. our, or this, the car washes came to me because I wanted to diversify and I saw a niche in the market. The type of car washes we're doing are smaller bays. They're around 60, feet by 40, or 60 by 20 depending on the lot size. And we are doing two different types of options. So normally you have your Express Bay, where, right now 77% of Americans get their car washed, at least once a year. So for those who've been in a car wash. they're, the express space is with the track. So you have someone guiding you, you put your car in neutral, and then the track pushes you. Ours is different in the aspect of there's no one guiding you on site. So you're going to pull up, you're going to run over some sensors, the sensors will then notify you to put your car in park. Then the machine goes around you, and then once that's finished, you'll go ahead and hit the tire shine, dry, and you're done. All within two minutes. The lovely part about this is you get a better quality clean wash. Plus we offer two different types of washes. We offer a touchless and a soft touch. Your other expressions will not offer a touchless, which basically means it's pressure washing your car, and you don't have to do anything, and then you got free vacuums and offering that type of level of service that we are going to offer is substantial. With these types of washes, what we are also doing, unique is that we can put these type of washes on a smaller parcel of land compared to your other type of washes. And we're finding it extremely lucrative, the subscription base. It's also. P. E. Firms are finding it extremely lucrative to have a subscription based model, which will have as a membership on limited mortgages. And that is what's really boosting the industries that subscription based model, that, P.E. Firms are going in and buying. So we found an opportunity. It's mainly mom and pop, not that many P. I think that number will change to about 6040 as PE firms realize the cash flow that these car washes offer. It costs 1. 85 for us to run one car. We are very cautious about the environment. And so with that, we are recycling up to 75% of our water. so we really like to be cautious about the environment and chemicals. So we're recycling up to 75% of our water, for our washes, through a filtration system that we have on site. and yeah, I think it's a very lucrative asset class. We're offering 10 and 12% annual returns, preferred returns to our investing partners. And then we have some percentages on the back end of five to 8% on top of your initial capital with your initial capital being returned, Yeah, 

[00:34:56] Tim Little: just a few quick follow up questions on that. So what is the average hold time for one of those investments? And two, are these, all,acquisitions, are you buying these mom and pops or are you doing some ground up construction of these as well? Great 

[00:35:11] Chris Salerno: question. So it's a five year hold time. A great thing about these car washes as well. It's on a 15 year depreciation schedule. So the depreciation is a lot higher because we're doing it for 15 years instead of 27 and a half. We are not buying existing car washes. Those are coming at a very pretty penny right now and they're catching on. So we're doing ground up development. We were actually in Kentucky just yesterday alone. Visiting our manufacturer. Our structure is coming pre, pre manufactured in a warehouse. They specialize in car washes for the past 40 years. And basically within four weeks, our structure is built, shipped to us on site, and can be assembled within one week. Whereas if I was going with a contractor who's building ground up, it's going to take me six to eight months. Yeah. and so that is why we have a very unique niche is that we have these structures and if you go to our website, you'll be able to get some more information to see the renderings, but they look beautiful. They're white, sleek, and modern. They are competing with the expressions on how they look. That's something that we are very cautious about is our logo, how the physical structure looks, that's what's going to draw attention in and then the free vacuums, free, mat cleaning that we have to offer as well. All of that right there plays a huge factor into this and, and that type of structure that we can get up very quickly will be a very,I would say eyesoring attraction to. these individuals that are getting their car warts and the members who want that reoccurring unlimited membership that we're going to offer.

[00:36:47] Tim Little: Yeah, no, that all makes sense. It's interesting to get the details on that because I, I honestly know nothing about it as an asset class and I'm sure it's the first time a lot of our listeners are hearing about it. I try not to be multifamily, devotee, but obviously it's my go to, but always interested in hearing about other asset types because diversification is. So important. And, if you're looking for any feedback from car wash customers, my daughters love lights and colored foam. So I already knew it. 

[00:37:19] Chris Salerno: We have the top lighting, led lighting in the industry who specializes in car washes. Same with the foam on top of that. What's unique about ours as well is our foam and our soap is scented and you can actually pick the scent you want. It comes in through your air vents to scent the inside of your car. 

[00:37:37] Tim Little: Nice. Yeah. All right. we do have to transition to the turbo round now. So I'm going to ask you three questions that I ask every guest that I have on the show. And I just asked for a quick, honest answer. All right. First question. What is one red flag that every investor should 

[00:37:54] Chris Salerno: look out for? Ooh, one red flag that every investor should look out for. Is this a sponsor not investing into the deal itself? I think it's super important and all of the opportunities that we bring to our investing partners. I invest in them. I will not bring an opportunity to our investing partner if I am not invested in the deal itself. I think that's super important because I want one. I'm not a fan of the stock brokers and stock market where they have zero interest alongside The, the, their clients and, they truly don't have a fiduciary responsibility. you can also look at it with financial advisors and how that's laid out. Also on top of that,I want our investing partners to know that our interests are aligned. I'm in here as an LP, as well. And so I think that speaks volume. 

[00:38:39] Tim Little: Yeah, I think that's huge having that skin in the game and having investors know that you're also invested in the deal. All right. What is a myth about this business that you would like to set straight?

[00:38:50] Chris Salerno: Oh a myth about this business that I would like to set straight. I mean if you google multi family syndication, it has a bad rap or if you google multi family or a syndication Not multi family syndication. If you just google syndication, it has a bad rap and so I would like, to, offer that, another, and challenge individuals to really think and do their research on the company, the sponsorship group, and the deal. Syndications are meant, and they happen every single day. Look at Twitter. Elon Musk syndicated Twitter. The Charlotte Hornets just got sold. They syndicated the Charlotte Hornets. So every, all deal, most deals are syndicated. and even with banks. Look at the banks. With J. P. Morgan partnering with Bank of America to bail out Silicon Valley. They syndicated that. they did it together in, as a partnership. They all put money in. I would say really do your research on the group, the sponsorship team, their experience, their success track record, the deal itself, and make sure you feel comfortable with that,and their underwriting before you dive deep into it, but, not all syndicators are bad, not all, syndications are bad, so just do your research on that.

[00:39:57] Tim Little: Yeah, absolutely. We call it passive investing, but there is some responsibility on the part of the investor to know something about what you're investing in. And that's true of any asset class. 

[00:40:08] Chris Salerno: Yeah, we, I have some passive investors that literally,we released our Carver's fund yesterday and it's already a half a million subscribed and they don't, and I don't even have the OM out yet and they're going to get the OM after the webinar and it's, they're already, so that is the level of trust we built with them, thankfully. However, I do like to let, before we accept any funds, I like to say, okay, make sure you look through everything. Let me know if you have any questions. Let me answer some of your questions that you may have, because I'm sure you'll have one or two. and that's just due diligence that I like to do to our investors. After you build that level of trust, you will get investors that just invest because they know you, they know that real estate. Yeah, 

[00:40:49] Tim Little: absolutely. All right. And final question, Chris, what does success look like to you? 

[00:40:55] Chris Salerno: That's a good question. And it's deep. I think for any of those individuals out there that have a child, it really goes a long way. And success for me and what I see is that if I can hit my financial goals. and be the best father I can be. I know that my son and I will have a wonderful life. and I say that in this aspect it's because money does buy everything. it's just the money that buys everything that we have the roof over our head, the car that we drive, the food that we eat, the clothes we put on our back. And so I think individuals have a misconception that they have to focus on their child a lot, which I agree, trust me. However, if you're not focusing on building a business or an organization to support your child, you're also failing as well, in my opinion. So I think it's super important to focus on the business, focus on the organization, and stay healthy. And then be the best parent you can be to your child and spend time with them too. Like I put my phone on, do not disturb. So I can spend time with them. And thankfully my business offers me the ability to do that. And to me that is success. 

[00:42:02] Tim Little: Yeah, absolutely. I agree. I know some people don't like the term work life balance, so I won't say that. But I'll say you definitely have to prioritize work so that you can pay the bills, provide for your family, et cetera. But at the same time, you have to pick and choose those moments where you're like, Nope. You know what? This time is going to belong to my child. I am going to devote that time and be there if you say you're going to be there in the moment, right? Not scrolling on your phone, whatever it is. yeah, devoting that time to them. I think that's huge. 100%. Spot on. All right. Hey, Chris, this has been awesome. Really appreciate you taking the time out. Definitely educated me and hopefully listeners on, not only multifamily and entrepreneurialism, but, on car washes, which, like I said, is… Something I didn't know a whole lot about. Please tell our folks how they can get a hold of you. And if there's anything else that you'd like to share with them. Yeah, 

[00:42:53] Chris Salerno: very much The best way to get a hold of our team is go to, or type in multifamily syndication. We pop up number one, after the sponsored ads, but go ahead and click on our website. And you can go ahead and actually fill out your information. We will send you a, I will send you a hand signed copy of a book I wrote about multifamily syndication, the ins and outs, the red flags, what to ask, sponsors and how to understand a deal. So I encourage you to go ahead and go to our website, fill that information out. Our head of investor relations, Nick Abraham, will be in touch with you. And you'll also get a free copy of a book. You don't have to pay for shipping. Literally, it is free. We will mail it out to you. You don't have to pay for shipping or anything. It will come directly to your mailbox. It is, with,the post office. So I can't promise next day shipping with them, but, it will get to your doorstep, I promise. 

[00:43:42] Tim Little: All right. I certainly appreciate you offering that to our listeners. Chris, again, this has been awesome. We'll have all that information in the show notes. I appreciate you coming on and definitely look forward to continuing to see you do big things on your journey to multifamily millions.

[00:43:58] Chris Salerno: Looking forward to it. Thanks so much.