Journey to Multifamily Millions

A Look Back at 100 Episodes! Ep 102

• Tim • Season 1 • Episode 102

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Join us as we celebrate over 100 episodes of The Journey to Multifamily Millions podcast in this special episode. We'll look back at some of our most popular guests from past episodes.

In this episode, I’ll share three quick highlights from previous guests about busting myths in real estate, spotting warning signs in investment opportunities, and giving tips for steadily building wealth.

This episode is packed with valuable insights and expert advice for investors at all levels.


Episode Topics

[00:38]  Introduction and Milestone Celebration
[00:56] Thanking Our Listeners and Guests
[02:00] Highlighting Key Insights from Guests
[02:32] Red Flags Every Investor Should Watch For
[08:25] Debunking Myths in Real Estate Investing
[16:52] Defining Success in Real Estate
[20:45] Final Thoughts on Wealth and Legacy



Notable Quotes

  • "Every metro is both great, good, okay, bad, and horrible, depending upon the point in the cycle." — Neal Bawa
  • "If I try to sell you a deal and I don't invest in it, how do you expect me to believe in it?" — Jim Lee
  • "The more the GP team invests, the harder they're going to fight for a positive outcome." — Ryan Twomey
  • "Real estate's a get rich slow business." — Chris Larsen
  • "You really got to do your due diligence on the guys that you're dealing with." — Charlie Wessel
  • "If somebody's not transparent, I'm out instantly." — Nic DeAngelo
  • "Every sponsor should absolutely have money into their own deals so that they have that skin in the game." — Tim Little



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https://podcasts.apple.com/us/podcast/journey-to-multifamily-millions/id1634643497

[00:00:00] Tim Little: I have something a little special planned. And that's because we have hit a very special milestone. We have done over 100 episodes of the journey to multifamily millions.

 

[00:00:23] Tim Little: Hello everyone and welcome to the journey to multifamily millions. I'm your host, founder and CEO of ZANA Investments. And for today's show, I have something a little special planned. And that's because we have hit a very special milestone. We have done over 100 episodes of the journey to multifamily millions.

Now, I don't know much about podcasting, but the stats say that most people don't make it past 7. I was pretty proud of myself when I got to 10, let alone 100. First of all, I want to thank you. Everyone who listens to this show, all five of you. Seriously though, I put a lot of time and effort into each episode, and it means the world to me to know that someone is getting value from it.

And a big shout out to all of those who have taken the time out to leave a rating and review. I know it sounds cliche, and maybe I harp on it, but I can't argue with that overstate the impact that it has on getting more people to see and listen to the show. And hopefully that's more people that are getting benefit from it.

Getting to be smarter investors. Of course, I also need to thank all of the amazing guests I've ever had on this show. Some were close friends and some I would have never had the opportunity to speak with if I didn't have this platform. But regardless of where they were on their real estate investing or professional journey, all were kind enough to take time out of their busy schedules to share their expertise, insights, and perspectives with me. And on 

Today, I'd like to do something a little different and take a look back at some of the most popular guests that we've had on the show and to do that, we're going to listen to their insights from the Turbo Round. That's right, where I ask them questions that uncover the red flags, bust the myths, and get at the "why" of every guest.

without further ado, thank you so much again for over 100 episodes. Now, let's get into it.

[00:02:32] Tim Little: What is one red flag that every investor should look out for?

[00:02:36] Neal Bawa: an indicator that has fallen in love with the metro and doesn't acknowledge that every metro is both great, good, okay, bad, and horrible, depending upon the point in the cycle.

[00:02:48] Tim Little: what is one red flag every investor should look out for?

[00:02:52] Jim Lee: I'm going to have to go with, an obvious one, which is don't invest with people or groups that don't have any skin in the game let's say for example, if I try to sell you a deal and I don't invest in it, how do you expect me to believe in it? Our interest has to be in line. That's all I'm saying.

[00:03:08] Tim Little: Yeah, exactly, and I don't disagree at all. I think it's really important that every active investor have some money in the deal and, but I think there's also a tempering of expectations that you have to do with some, especially newer passive investors, to where they think you're going to have an equal amount of money that they do in a deal, right?

So it's if that passive investor puts a hundred thousand they shouldn't necessarily expect every GP to be putting a hundred thousand in as well, because the problem becomes, we can only do so many deals if we're putting a huge amount of money into each deal that we're doing. my, my cash fault isn't limitless.

And you're limited as that is active. investor As to how much you can put into each deal. Because I hear some folks say, oh, you need to be putting in at least this percentage of your net worth into the deal. And I'm like, that doesn't make sense. because then I'd only be able to do one deal, maybe two deals, a year 

 if that and these deals last, five to seven years that money is locked up. So I think it's both, right? I think every sponsor should absolutely have money into their own deals so that they have that skin in the game. But passive investors need to understand that it may not be the same amount that they have in the deal. Right. Alright.

What is one red flag every investor should look out for?

[00:04:30] Charlie Wessel: you really got to do your due diligence on the guys that you're dealing with. There's a lot of really good guys in this industry. There really is. I'm telling you, the majority of the guys in this industry are out for their investor's best interest but they also may not know what they don't know.

A lot of guys that are new, they just don't know what they don't know make sure that you're, the guys you're investing with or, make sure they're being coached by somebody, make sure they're masterminds these are things that they need to, people coming into this business need to spend money on and they'll get, I'm telling you, it just gets you light years ahead when you do that.

And it's the Ray Kroc theory. The McDonald's thing, just do everything and other people have already failed, take their lead, let them show you what not to do and what to do. So just, do your due diligence on who you're investing with, make sure that they're, cause they probably do have your best interest at heart, but Hey, there were a lot of short term loans out there as well.

We didn't get involved in them. 

[00:05:34] Tim Little: Absolutely. No, that makes a lot of sense. All right. 

[00:05:37] Tim Little: What is one red flag every investor should look out for?

[00:05:40] Nic DeAngelo: I'll think about it from the perspective of a passive investor. I think lack of transparency is the number one thing because you can evaluate as an individual. Humans are smart, right? we're really smart. We sniff out problems very quickly. We sniff out lack of trust. If your issue with a potential sponsor is that you just don't trust them, or you feel they're hiding something, or they're not transparent, just run away.

Whatever you think it is probably worse than you think. and at least if somebody's a hundred percent upfront, you trust that they're gonna be a hundred percent upfront about all the bad things, or at least the vast majority, and paint them in the right light. I just want to know the problems I'm getting into.

I invest a lot with others, with leather, and a lot of other sponsors. So if somebody's not transparent, I'm out instantly.

[00:06:24] Tim Little: Yeah, I couldn't agree more. And that comes with the good, the bad. everything. I'm in the military, in the Army as and one thing that I always brief my people when I have my initial counseling with them is Bad news does not get better with time.

you need to tell me the sooner you tell me one, the better. I feel about having known it and, but the sooner I can react too. and for investors, they just want to know so they don't think that you're trying to hide something. 'cause that makes it a million times worse.

[00:06:51] Nic DeAngelo: Absolutely. Exactly right.

[00:06:53] Tim Little: What is one red flag that every investor should look out for? 

[00:06:59] Ryan Twomey: So one red flag, and this is coming from me as being an indicator. So one thing every investor should ask the GP team when they're thinking to invest as if they're the GPs are investing their own capital in the deal and how much they're investing. If the GP tells you they're not contributing their own capital, or if it's like an insignificant amount, that's a huge red flag in my opinion.

because when a GP invests alongside investors in their deals, it creates alignment of interest and incentive to make sure the property is performing. Make sure that they have enough skin in the game before you actually invest in their deal. And that way they're most likely 100 percent focused on making sure the asset is hitting or even exceeding those target returns.

So I guess in turn, the more the GP team invests, the harder they're going to fight for a positive outcome. That's something I would definitely look out for if I was an investor.

[00:07:42] Tim Little: Yeah, I agree. Alignment of interest and skin in the game. And I think sponsors just need to be open and honest with how they're doing it. 'cause they may not be able to invest as much as each investor is putting in. Otherwise, they would, run out of capital to do their deals but,

they should be putting some money in on every deal, not just, highlighting the work that they're doing as the skin they have in the game. Cause again, I think like you alluded to, then there's not that alignment of interest there for the passive investors. All right

 

[00:08:25] Tim Little: What is a myth about this business that you would like to set straight? 

[00:08:29] Neal Bawa: That multifamily is great at all points in all points of the cycle.

It may be the greatest asset class. It doesn't mean that you should be buying it at all points. This is, that's just Kool Aid. 

[00:08:40] Tim Little: Yep. Do your own due diligence, make sure you know what you're investing in as should always be the rule. 

What is a myth about this business that you would like to set straight? 

[00:08:50] Charlie Wessel: Oh yeah. The overnight success. Yeah, man. Those guys that, man, we've been doing this for three years and we got, 400 million under assets under management.

Yeah, they did it for three years under this name. Because they did it for four or five years under this name. And, it just finally, they partnered up with some other people and figured it all out. There's no overnight success in this business, but my whole thing is that I'm just going to keep clipping along. I'm not going to stop.

So I'm going to keep going and it's just going to continue to roll together. It took me three years to do two deals, and now we've got a good bit of deals under our hat and over a hundred million in assets and it's. It's not too bad. Life's pretty 

[00:09:42] Tim Little: good. Yeah, and I think that's a super important point too for those people who are listening to gurus, going to conferences or something, and having someone pitch them a 30,000 course saying that they will be financially free within a year.

Okay, calm down. It just doesn't make sense on the face of it, considering how long these deals are, first of all. When you're all hyped up it's hard to get past that. So people, like you said, need to look at the long game and understand that, yeah, these deals are, anywhere, like you said, for three to seven year time horizons, and, we are, operators, syndicators.

That's when we get the biggest chunk, is when we've proven value for our investors, when we sell exit. At the end of the deal and get our chunk of the equity from it. It's not a time in between. It's maybe a little taste at the beginning, if we got an acquisition fee and then the big chunk at the end.

So exactly like you said, you have to be building that pipeline and continue to do deals because one day down the line, all those seeds that you planted, in the form of deals will start to come to fruition. And that's when you really start to see the returns.

What is a myth about this business that you would like to set straight? 

[00:10:58] Chris Larsen: Ooh, a myth about the business. I would yeah, I mentioned earlier, I said, real estate's a get rich slow business.

And if people are like, Hey, you can come in and be a multimillionaire in a short period of time. It's certainly possible. But I think if you set a reasonable timeline, with. And have, as I mentioned, my investment thesis, you want something that's going to work over say 10 years or even 20 years, versus something short and quick because if you have a game plan like that's going to work and say, Hey, I can be financially independent in 10 years.

If it happens in five, great. If it happens at seven, great. If it happens in 15 years, is that the end of the world? No, but. You want a consistent plan. And as I mentioned that there's one other thing that kind of falls into that. I think that this is more broad, but we talked about how, when you're young, you should take risks early.

I think that's, excuse for my language. I think it's bullshit. I think you need a plan that's predictable when you're early because. Tim, if I can say when you were 21, if I could pull you aside as 21 year old Tim and say, Tim, I got a plan for you to be financially independent by the time you were 30. Now it's not sexy.

It's not even that exciting, but it involves real estate, but it's predictable. Now you're 30, you're financially independent. How much risk can you take as much as you want, right? If you spend five, 10, 20 years swinging away, trying to hit home runs and striking out. If you're 35 or 40 years old, you got a family, you got student debt.

Then now you can't take risks because you have to make it happen. Take, make a predictable plan early, get it to work. schedule that risk into your life later on. And then that's, to me, that's how you can really create massive wealth. 

[00:12:41] Tim Little: No, I think that's a great myth that I don't think has been busted on here.

You should take all that risk when you're young. Because you're right. It's about phases in our life. When I was young, I didn't have any money to risk. I, I did, I couldn't jump in big on anything. It wasn't till I had that good income and I was stabilized financially that I was able to take those risks.

Awesome.

[00:13:06] Tim Little: What is a myth about this business that you would like to set straight.

[00:13:10] Nic DeAngelo: Okay. I really like this. is a myth that I've seen over and over consistently. I'm on many hours of investor phone calls a week. It's that being a landlord where you own the properties is hands off. It's passive investing. I think that's by far the biggest myth that's been shoveled.

I. to, to potential investors. Oftentimes when I'm on a call and someone says, I'd rather just buy the property myself. I'm like, you should just save my number. Okay? Just save my number. Call me in about a year. Let me know how it's going. I'm rooting for you. I genuinely want you to win. But when you, your high income, our community has a lot of really successful people with very little time.

So I go, you have not enough time on your plate to manage this how you would like to and get the returns that you'd like. So just keep in touch. 'cause we could probably do higher returns, and I'm sure you do the same, Tim, but you could perform higher returns for somebody and they do essentially near zero work.

Whereas if they do it on their own, it's tenants and toilets. It's a lot of management. I think that drawing the line between real estate and passive is ownership. If you own the property, it's not passive at all. And I think that's been, not clear to investors along the way.

[00:14:19] Tim Little: Yeah, I couldn't agree more. Having been in both Situations, and even, self-managed, which I will never do again. because I think a lot of people just don't realize that they've never been exposed to the opportunity of passive investing, so they can't even compare the two, right?

They've just always been told, like you said, Hey, buy properties. hire a property manager who will take anywhere between six and 10% right off the top, and then once you start adding in, everything that goes wrong, that profit really starts to dwindle in addition to the time that you're spending managing the manager.

[00:14:57] Nic DeAngelo: Absolutely

[00:14:58] Tim Little: What is a myth about this business that you would like to set straight?

And

[00:15:02] Ryan Twomey: I think one of the most common myths is at least, especially lately, and this kind of goes for all asset classes in general, throughout investing and whether it's stocks, bonds, or real estate, is waiting for a perfect time to buy. So a lot of people tend to invest in real estate when a market's thriving, but when things slow down, they perceive it as dangerous to get into, or maybe they're skeptical about it.

and I actually disagree with this and think that there can be great deals found at pretty much any point in the market cycle as long as you're sticking to your fundamentals and making the right decisions. So that's what it comes down to is sticking to your fundamentals and not forcing a deal because when people do that, they tend to get into trouble.

So like I mentioned before, I was underwriting 50 to 75 deals every few weeks. And when people do that, they tend to become impatient and begin to tweet their assumptions and try to make one work just to get one under contract. but as an investor, when you have the finances and are ready to invest, I'd say, don't wait for the perfect time.

If you could tie the PR to the market already, you would be rich, right? you should. Be out there looking and starting to look for what you want. Find a trusted operator if you're going to invest in the passive route and ask the tough questions to better understand the ins and outs of the investment as a whole.

So from how we arrived at the projected returns, if the property has been stress tested, pretty much all the tough questions to make sure the investor, the GP team knows what they're doing and knows how their business plan is going to make it. Make it possible to hit those returns, regardless of where the market is currently, because there are good deals in really any market cycle.

[00:16:27] Tim Little: Yeah. I really want to stop one that, if you think you can time the market, you're wrong. and to stick to whatever your fundamentals are. Because the moment you stray from those is. Is usually the time when you find yourself in trouble, right? Because you, you broke your own rules.

[00:16:52] Tim Little: what does success look like to you? 

[00:16:55] Neal Bawa: Having my mind at peace more than anything else, having my mind at peace is success for me.

I think that most people who are rich have their mind less at peace than when they were working a day job and they may not like that day job and they might like what they're doing now, but if they lost their peace, then what did they gain? 

[00:17:17] Tim Little: Yeah, I think that's so true. And it's based on evidence, right?

There's so much statistical evidence that shows that even people, who are considered wealthy aren't necessarily happier that has to come from somewhere else. All right.

What does success look like to you?

[00:17:34] Charlie Wessel: Being the best husband and dad I can be really and truly, and that's in my personal life. I helped coach the baseball team and I sit there for my daughter's two hour gymnastics practices. It's. Just being there for them, doing things with them, man.

I heard somebody say, it's not quality. It's quantity because you may be doing something you think is super cool with your kids. They, and then when they grow up, do they remember it? They remember what they want to remember. So they might remember the little things when you went out and pick fricking blueberries with them.

I don't want to pick blueberries. But it's just something that, going to spend time with your kids, just sitting there like me, I remember most about my dad is that him being there at my football practices at high school and he worked. He ran a big company that took a lot of his time away from his family.

But yeah, he would still make sure that, twice a week he was sitting there at four o'clock watching me practice football. I remember looking up at the stands being like that's awesome. He's supposed to be at work right now. That's incredible or he can be playing golf. He's an amazing golfer, but yeah, he can be playing golf, but he's sitting here watching me practice football.

So it's quantity time over quality time. And yeah, that, and I also want to help out as many people as I can grow their wealth. I really do. I see what this business can do for people and we were whipping the pants off of financial advisors out there and it seriously angers me. And I go hunting with a bunch of financial advisors once a year out in Arkansas.

I love them to death. They're all Ed Jones guys. I, they're great dudes. And, we don't have to bring it up much, but as soon as one of them starts talking about their returns, they're getting their guys. Man, I shut them down pretty quick. It's fun. It's fun. Yeah, 

[00:19:35] Tim Little: and I can't agree with you more on the quality, quantity, time.

It's all a matter of perspective, right? We may think that that vacation at Disney or whatever is going to be that memory that's seared into their mind for the rest of their lives when really it's, when you hold their hand, walking them to school or something every day.

Yeah. 

[00:19:55] Charlie Wessel: Yeah. I went to Disney World. I hardly even remember. Yeah, but I remember throwing baseball with my dad up in the big field just past our house. Yeah, I remember that like it was yesterday. 

[00:20:06] Tim Little: Yeah. No, that's huge. I, yeah, I have two daughters too, five and eight, so it's a fun time.

Life is good brother. We'll see how fun it is when, I have two teenage daughters at the same time, but you'll be in the 

[00:20:20] Charlie Wessel: same boat. Just live in the now, man. Live in the now. 

[00:20:23] Tim Little: All right.

[00:20:25] Tim Little: What does success look like to you?

[00:20:27] Nic DeAngelo: This is a good one. So this is why. Why do we work all these freaking hours? Why do we put in such hard work? What do we want to give our investors opportunities for? So far, I think about this a lot. I'm a really big guy. Why? I don't want to do something unless I see the reason for that very clearly and strategically.

For me, it's three things. It's health, wealth, and legacy. That's success, period. If I'm not healthy I can't give, I can't give to my family. I can't be a good dad. that includes spiritually, physically, mentally. wealth. So health, wealth on that side, it's freedom, right? It's freedom. It's being able to give my family and my children the opportunities.

To be whatever they want, but they must be the best in the world at it, right? So if they're gonna compete, that you give them the best advantage possible where they can work their butts off and be world class. and also the ability from wealth to give legacy, not just to your children and opportunities that way, but to give the causes.

Make the world a better place as you see it. For me, I have a lot of health causes and other causes. Entrepreneurship's a very passionate thing for me to teach people how to make themselves more money and to be able to create that freedom for themselves. So it's health, wealth, and legacy, and it's maximizing those three.

Every single tech second of my day is going to one of those.

[00:21:48] Tim Little: What does success look like to you? 

[00:21:51] Ryan Twomey: I have a very simple definition of success. So success to me is just simply the achievement of a set goal. Obviously there's many different types of goals, but for me, my main ones I want to achieve have to do with health, my time, and my wealth. My mind and my relationships. So essentially I look to optimize all those things and have short term milestones that lead to long term visions for each.

But really overall, I think just setting those goals, hitting those milestones, taking the, second action plan in place and making, having those small ones along the way is crucial for consistent improvement in all those areas. 

[00:22:23] Tim Little: Yeah, love it. because when it comes right down to it, if we don't set any goals for ourselves, there's not that feeling of accomplishment, right? And people don't feel like they've really had success. If they haven't accomplished anything, they just float through life.

So having those goals is so important.

[00:22:40] Jim Lee: What does success look like to you? I'm going to have to use one of the quotes out there, which I'm pretty sure everybody has seen. Success is not, is in the journey and not the destination. I think I first heard this quote actually come from the great Kobe Bryan, which I'm a Lakers fan and I.

With it because no matter how tough the road gets, I thrive on these challenges and by overcoming these obstacles, I feel a sense of fulfillment and growth. And I think that's really the rewarding part for me. 

 


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