Journey to Multifamily Millions

Active vs. Passive Investing: Strategies for Long-Term Wealth with George Roberts, Ep 125

• Tim • Season 1 • Episode 125

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Welcome to the Journey to Multifamily Millions podcast, where we speak with professionals on property investing!

George Roberts is the Founder of Roberts Capital Enterprise and host of his own podcast, “The Foundery.”

George makes a comeback to the program to talk about how he got his start in real estate as an unintentional landlord during the Great Recession and how he moved into multifamily ventures. The discussion explores the differences between single-family and multifamily properties, the significance of tenant and market research, and the value of asset management as opposed to just property management. 

George discusses how to remain resilient in the face of market fluctuations, the realities of both active and passive investing, and the evolving patterns in commercial real estate markets. He also offers his own thoughts on using smart investing to become financially independent and free of time constraints. It is advised that listeners make use of their resources, concentrate on learning from several investments, and strive for consistent, dependable results.


Episode Topics

[01:17]  Meet our guest, George Roberts
[02:47] Why Multifamily Investments?
[05:18] Property Management vs. Asset Management
[08:07] Challenges in Real Estate Investing
[09:28] Active vs. Passive Investing
[20:25]  Market Shifts and Investment Strategies
[33:30] What is one red flag every investor should look out for?
[34:43] What is a myth about the real estate business?
[36:25] Connecting with George



Notable Quotes

  • "Find out what tenants want before adding expensive amenities." – George Roberts
  • "Skipping single-family can fast-track your way into multifamily investing." – George Roberts
  • "Owners see problems from a higher level than property managers." – Tim Little
  • "One deal won’t make you financially free—expect a long-term pipeline." – Tim Little
  • "The real goal is doing what you want with your time." – George Roberts
  • "Investor education is crucial when market conditions and opportunities shift."– Tim Little



👉Connect with  George Roberts



👉 Connect with Tim

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

[00:00:00] George Roberts: People say, I wanna be full-time in real estate. Okay, that's great, but you, it's still a job. If the money was free, everybody would be in real estate. Of course. It seems like that. It was that way for a while everybody was going to real estate. Okay. Joking a little bit, it's pulled back a little bit. We have fewer players on the field, a lot of people got washed out, so the idea here is you just have to realize you are gonna get paid on the backend. So consign yourself or resign yourself to 3, 4, 5, or if the market turns against you, maybe six or seven years of work before you see that giant payday. 

[00:01:07] 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 George Roberts. George is the founder at Roberts Capital Enterprise and host of his own podcast, the Foundry. George, welcome to the show For the second time you joined us way back on episode 31,  So welcome back my friend.

[00:01:30] George Roberts: I love it, and thank you so much, Tim, it's great to be back. I love your show.

[00:01:34] Tim Little: Yeah. And so I know you're a very busy guy. you have a podcast, you're investing business, and now a book. But before we get into all that stuff, please tell us how you got started on your real estate journey and how you got to where you are today.

[00:01:48] George Roberts: absolutely. I started as an accidental landlord that was in the depths of the great recession. had the opportunity to keep my family home, which wasn't worth much to tell the truth at the time. And at the same time, get great, new, cash flowing assets while I moved up and bought a new family home. So, that opportunity was really my introduction to Landlording and I realized that I loved it. I loved the cash flow. I love working with people. I love being able to provide an essential service. And, years down the road, I realized that not only did I want to be in real estate. But I wanted to do it at scale and I thought, hey, I've got a great job, six figures, enjoy what I do, but if I do this on the side, I'm not gonna buy them one or two at a time. No, I wanna go for 10, 20, 50 units. And I think that was a very pivotal decision. I decided that I will go in a multi-family and I will never look back.

[00:02:47] Tim Little: Yeah, and talk to me about the reasons for Multifamilies specifically, because there is the aspect of scale, right? Like things get easier and cheap, cheaper with scale. But what are the other unique aspects of multifamily that differ from say, just the buying of multiple single families?

[00:03:05] George Roberts: one thing is the tenants. You're gonna have a different tenant base, and a lot of times it's a little rougher. you're definitely dealing with a different group of people. Something I like is the psychological aspect of it. If you're, I think a good person, you provide a good product to people, they really appreciate that because not everybody is good at the business of Landlording. The second is the ease of implementing property management. Now when I say landlording, I think a lot of multifamily people probably ah, turn it off you. I, we didn't lose you, because you don't really have to be the landlord in the sense of dealing with everybody's problems. But at the same time, I think you get the very best end of being a landlord because you get to set the policies and somebody else deals with the person who can't pay the rent. But, obviously. I had plenty of money for pot this month. let somebody else deal with the crazy psychological issues that people often have. And at the same time, you can set the policies to say, Hey, we're gonna keep this place in repair. We want to attract the finest tenant base. You get to make those business decisions and you get to benefit when your apartment has a nicer tenant base than the apartment down the street.

[00:04:13] Tim Little: Yeah, and the thing that I noticed that is interesting to me, like you might come into this type of business saying. Oh, if you have a professional property manager, right? Say you have a hundred unit property and you have a full-time property manager, full-time leasing agent there, they would be the expert in every aspect of running a property. And to a very small extent, that's true. They are very capable of running day to day. But just like any business, they run into problems, right? And. I am always surprised at how, like, when we come together as a group on these,property management meetings with the different owners trying to help solve the problems of the property manager. 'cause ultimately it's their problem too. you come up with some really creative ideas just because these people are coming from different backgrounds and so they're able to provide all these recommendations that maybe the property manager hasn't thought of, not because they're. Not good at their job, but just because us as owners are seeing it from a higher level perspective and maybe have faced those problems on previous properties ourselves.

[00:05:17] George Roberts: Yeah, a hundred percent. And I think one of the things that you're driving at here is the difference between property management and asset management. a lot of people, as you said, they think, hey, I got this property manager, I'm done. Passive income. Not exactly. you have to set the policies. You have to decide, for example, what is the budget for renovation, for example. And, how many units do you renovate? How do you renovate them? Do you take the best from the worst? Or do you take them, you start focusing on the ones that just need a new countertop. there's all these things that you can do, and it's really your business plan. and at the highest level, I think that asset management is really the most exciting thing. You set the policies, you set everything in motion, and when you hire the right team, it all comes together.

[00:05:57] Tim Little: Yeah, and there's the creativity aspect too, right? When it comes to say, like additional sources of income, the property management team may not be thinking about that so much as they are about, making sure that they're leased fully and tenants are paying. And so we're able to step back and say, what are some other ways that we could be making money by perhaps providing a service that tenants would want anyways? Some simple examples are like,trash valet, for example, or. Paid parking spots. Maybe if parking's tough and someone's willing to pay an extra 25 or $50 a month to have that reserved parking spot, they want that to provide you additional income. But that's something that maybe the property management, might be hesitant to do. 'cause they don't want to raise rates or fees any higher than they have to because that might make their job a little bit harder. So there's this balance that comes into play.

[00:06:51] George Roberts: Yeah. Very delicate balance, and I like the way you put that because consider, if you're making a percentage on the rent if the rent goes down a hundred dollars and you can get that thing leased this week. you don't care about your percentage of that hundred dollars a month you want at least today. whereas obviously that means a lot more to us as the owners. And so we always have to be doing these.rent surveys. You need to do that all the time. and here, I think is another thing when you're supervising your property managers, and when you're coming up with your business plan, you mentioned a lot of great things, valet trash, your own assigned parking space. These are beautiful. Like I had a place where it's not possible for everybody to park in front if everybody parks straight, but. If you angle the parking spots you can, and little things like that allow you to run the place better, you gotta think from the perspective of a tenant. I've got one place where we installed security cameras and that alone, and just cleaning things up made a huge difference. We sent a message that there's a new sheriff in town, so it doesn't always need to be something like adding an amenity, just having. A clean and safe place to live is an amenity in many places. And if you don't mind, I'd like to add, one, one quick thing here, because I see a lot of underwriting and there are a lot of people who think they could take a c minus place and they're gonna add valet trash and assigned parking. And, maybe they got parking garages or we're gonna put a carport in there and,we're gonna have a swimming pool and that they're gonna raise the rent. $500 and I just wanna warn people that's not gonna happen. All of these are good ideas, but if you're not in a good area and you don't have a property that's nice already. Or the willingness to,to improve it vastly, your tenants that are just getting paycheck to paycheck, they don't want all of those things. Find out what they want.

[00:08:41] Tim Little: Yeah, that's hugely important. Like you said, doing tenant surveys is one way to find that out. If you're, if you're going into a, like you said, a Class C minus property, the problem is a lot of times those are surrounded by other C minus or D properties. You, every once in a while you may find that random diamond in the rough. That's, a c property in a B neighborhood, and that's where you really have the opportunity to raise it up to what the surrounding area is. But it's really hard to fight demographics. IE what the surrounding area is. So yeah, I recommend against putting in that pickleball court, in that CC minus property before doing the tenant survey to find out if that's really on, on the top of their list.

[00:09:26] George Roberts: Yeah, exactly.

[00:09:27] Tim Little: Yeah. That's awesome. So talk to me about how your business developed, you said you got into multifamily and then I assume, did you start passively investing first, or did you start on the active side and then go into passive investing? 'cause I know you've done both.

[00:09:45] George Roberts: So it was about the ring at the same time. And I would say that if you do have cash and a lot of us, you might be in your thirties or forties, you might have a 401k, makes it a whole lot easier. Definitely become a passive investor. First, or at least concurrently with becoming an active investor. But some of us are hardheaded like me, Tim, and we just gotta go and do it ourselves no matter what. so I did both,and both taught me a lot and I. What, what I would say is that people who don't invest passively who say I'm an operator, all my capital goes into my properties, and hey, hats off to you, bless you if that's how you are. But, I learned something about every passive investment that I make and, because I'm able to have my fingers in multiple pots and I'm able to invest more widely now. As an operator, I stay in my lane. I'm in multi-family, and I know specifically what sort of multi-family I'm looking for. I like class C. Okay. I like to reposition assets. I. I like smaller properties. I like tertiary markets. There are all these niches that I found that you're not gonna hear that from the guru because the guru can very easily sponsor your 100 or 200 unit deals. I didn't go the guru routes, so I had to. Fight my way up, scrap my way to the top, starting with these smaller properties. And I have properties that are over a hundred units as well. But,I wanna send a message to people that you don't have to do that. My first multifamily property was bought with real estate investors who had been in the business for over a decade, but who had never purchased a multifamily property. We bought something, there was. Or, there were rats in the kitchen. We had pest infestations when we took it over, but we got a sweet deal and we only had to put in, I think, about $90,000 a piece. And when you look at that, a lot of these single family landlords, they don't leverage. So what do you get for $90,000? You can hardly get a single unit. But we got 14, the three of us banding together and there was some deal fatigue. The seller had two deals that fell through during Covid, but we decided that it was a good enough deal that we were going to pull the trigger. And part of the reason it was such a good deal is that when you're on that third deal and two of 'em fell through. you are willing to accept that low ball offer. Somebody else trained that seller, and it wasn't the broker. The market trained that seller that you need to drop the price if you want to sell this thing this year. And we were able to move right in. So if you're willing to start a little bit smaller,you can skip a lot of the rigamarole and, 14 units, that's a whole heck of a lot more than, a duplex or a, or try or a quad.

[00:12:17] Tim Little: Yeah. No, I think it's a good point because a lot of us do go from duplex to a hundred units and you can do it. But then there's the difference between, I assume, that wasn't a syndication right? For that, that

[00:12:32] George Roberts: No it wasn't. It was a joint venture and that's another thing that I would recommend. 'cause people say syndication is great and it's wonderful if you have the ability to. You don't have a whole lot of money. You can become a syndicator and you can grow your wealth reasonably rapidly, at least on paper. Those of us who have done it know that you get into that first deal and you give away a lot of it probably to a larger partner. And you get an asset management fee and you realize even if it's say like a 50 unit or something, you don't get paid a whole lot of money to take care of that asset. You get paid on the backend and there's a good reason for that too. you're gonna get an acquisition fee and unless you go for a real giant deal, the first time a hundred, 200 units, you're probably not going to get much of an acquisition fee. So just, understand that you're gonna be. It's a job, right? People say, I wanna be full-time in real estate. Okay, that's great, but you, it's still a job. If the money was free, everybody would be in real estate. Of course. It seems like that. It was that way for a while everybody was going to real estate. Okay. Joking a little bit, it's pulled back a little bit. we have fewer players on the field, a lot of people got washed out, so the idea here is you just have to realize you are gonna get paid on the backend. So consign yourself or resign yourself to 3, 4, 5, or if the market turns against you, maybe six or seven years of work before you see that giant payday.

[00:13:57] Tim Little: Yeah. And I think this is such an important point to foot stomp because I hear so many, you, you use the word gurus, out there who say something to the effect of,I'll make you financially free after your first deal. And I'm like. no. You won't. It is virtually impossible to become financially free from doing one deal for all the reasons you just mentioned, right? You may get that acquisition fee upfront, but unless you're heavy hitting in terms of the amount of capital that you're able to bring in and negotiate, then.it'll be nice, it'll be something. But in terms of the big payoff, that's gonna be like you said at the end. So you're waiting again, like you said, 3, 4, 5 years. And I don't want to say it's like an unpaid job, but it's a matter of creating this pipeline of deals, knowing that payoff is down the road. But in that meantime, you don't expect a whole lot of income. And I think that's what a lot of new folks are unprepared for. they say they quit their job or whatever, and then they're like, I'm just gonna do this full time. you're not getting a check every week anymore. and that's a rude awakening, I think, for a lot of folks.

[00:15:10] George Roberts: it, it is because, yeah, you have to look a little bit behind the headlines and that's why it's good to have a significant amount of money in your own deals because your money, generally speaking, is partly pursued with the passion of investors. So the check that you get every month. Is pretty much the check that the passive investors get. So it's not just about aligning your interests with them and looking out for them, you're also looking out for yourself. You put a large amount of money into your own deals. That's one of the ways that you can feel like you're getting paid over those years.

[00:15:39] Tim Little: Y. Yeah, and that's a good segue into something that I wanted to cover, which is. the purely limited partner passive investing side of things. and I joke with people that my end goal is to just be a passive investor, right? Like that.

[00:15:53] George Roberts: Oh, for me, it's not a joke.

[00:15:55] Tim Little: Like you're, yeah, and I guess you're right. It's not a joke that the end goal is to just be passive investing and have those, sweet distributions come in every month and have it be enough to where I can, hang out on a beach, read a book, whatever the case may be, somewhere down the line. but help us put into context for folks who maybe just got started passively investing realistically. what can they in expect and how much do you really have to invest in, in terms of getting enough to I don't know, fund, fund your retirement or your lifestyle, 

[00:16:31] George Roberts: I wanna say, I'll give you two answers. First is, the standard answer is,it's your lifestyle. look,

[00:16:35] Tim Little: right? It depends.

[00:16:36] George Roberts: Alright. One of them, I hope he gets a scholarship, buthe may be going to the Ivy League. My expenses are not, your expenses are not the guy down the street's expenses. So you gotta look at that and you also have to see how lean you want to live. How much do you really need? and this is one of the things I talk about in my book that I observed one day while I was riding out in the park with my son. I'm at a park, it's free. We're about to go to Urban Air. We pay $19 a month for that. He can go as often as he wants. He gets a free slice of pizza. Like the best things in life are free or cheap. And if you look at it from that perspective, maybe you don't need as much money as you think you do, but then I'm gonna say that the flip side of that is, don't think of it as that you have this freedom number. Like when I have this much money, then I will retire. I'll be completely passive and I'm just gonna do what I want all day. Because at that point you tell me that you're not gonna travel, that you're not gonna have hobbies. By your desires, human desire, I will tell you, as a matter of philosophy is limitless. So whatever you think you wanna retire on, you could easily spend five or 10 times as much as that. So it's all just a matter of. How hot of a lifestyle do you have to have at the same time realize that number is gonna grow?

[00:17:53] Tim Little: Yep. No, I think that's fair. and so it really comes down to, like you said, determining what your lifestyle is. potentially. How much that costs. And after that, it's really just a math problem, right? If you look at the averages of, what kind of return you can expect on, your common, passive investment and just break down the numbers that way. But again, just like the people who are doing it actively, becoming financially free after the first deal, I don't think you should expect that either as a passive investor, right? 

[00:18:28] George Roberts: Yeah. And if I can give you another perspective, Tim, like I talked about this in the book, the Freedom Quotient. So don't ask, how much money do I need to retire? 'cause it'll change. But ask how much of my time do I spend doing the things that I love? So I wake up in the morning and, I've got someone,works for me that I can supervise. I find that very rewarding. Writing books is rewarding. My kids come home, I get to have lunch with them right? Late lunch, three o'clock and. I spend almost my entire day doing things that I want. It's not that I'm not working anymore, but I'm passive enough that when I'm working on my active work, or even when I'm investing in stocks or I'm investing passively in someone else's deal, that I'm doing what I want. Almost all of the time, and that should really be the goal is how soon can you get to be doing what you want? And if you're still working for somebody else, some of the time or you still have to run these deals because you're not a passive investor yet, just always make sure that every day you're getting closer to that ideal of I do this thing called what I want.

[00:19:37] Tim Little: Yeah, and I consider that the time freedom piece,

[00:19:40] George Roberts: time freedom. 

[00:20:16] Tim Little: Yep. you have control over your own schedule. you do what you want, when you want. I think that's absolutely true. All right, so let's move on from there. It looks like there's some shifts in the commercial real estate market, and I'll say multifamily specifically. And since that's what you're exclusively focused on for your syndication side, I would really like to get your thoughts here. I've seen. not every market 'cause every market is different, but a lot of markets that were especially hot before have somewhat softened, maybe rents softening a bit, occupancy, softening a bit, in some of these areas. What are you seeing with your properties and is that causing you to make any shifts in your business plan?

[00:20:59] George Roberts: Yeah, absolutely huge. shifts. My first large property was in Orlando, Florida. I'm not buying out there right now. I would look, but it's unlikely that anybody's going to sell to me at a price that I think is productive. So when you look at markets that are, as you said, hot or that are not so hot anymore. It's always the hottest markets that do that. Tampa, Florida, Orlando, a lot of markets in Texas,the hotter it is, the more likely it is to cool off suddenly. So you can look at home prices by state and by market. Go someplace like Fred, fred.st louis fed.org. Take a look at how volatile these markets are and ask yourself, am I investing in the first inning? Is this a seventh inning stretch or is this the bottom of the ninth and we don't have very far to go before things may reverse. The other thing that I would say to people is you really have to look at supply. For the longest time, we really didn't have supply coming online, so all you had to look at was the demand side. Are people moving to the area? the demographics are good, let's invest there. But now you really have to look at the areas that are overbuilt. So when I invested in Orlando, we had. Tremendous tailwinds. And then for the last couple years we've had some significant headwinds, but a lot of that building has started to peter out. if you take a look at the statistics every month and at Census Bureau hud, they will show you the residential construction. And what we've seen is that we really haven't been building above 1.5 million. That's the replacement rate. That's what we need to do for a growing country and to replace the real estate that's become obsolescent. And we really haven't gotten a lot, far ahead of that, except for maybe a little bit of last year. Now, all our leading indicators, our starts and our permits are telling us that we are not going to get above 1.5 million, for a long time.so on the one hand, the supply side, it is calming down a little bit, but more importantly. The multi-family supply is decreasing. Now, I'm talking to you right now about national statistics 'cause I don't know if you invest in Cincinnati, Ohio or whether you're in Nashville, Tennessee. But, looking at those national statistics, you can see that the multi-family starts have gone down quite a bit, and as that washes through over the next couple of years. We are going to see that there's gonna be a whole lot less multifamily coming online. So not only are we gonna have less real estate in general, because we're all competing for a place to live on one level, but more importantly, our more direct competition and multifamily is coming down. So I would say, look, if you've got property now and you can hold on for two years. Until the end of 2027, that's probably when we're gonna see significantly lower rates as well as, significantly less supply. We're gonna see that rent growth, the kind of rent growth that creates the optimism that caused multifamily prices to shoot through the roof in the first place.

[00:23:53] Tim Little: Yeah, you raised a lot of important points there. I love that you talked about not just, the multifamily starts, but the housing starts as well because they feed into each other right there. There's a relationship there. And yeah, I don't think housing starts are going to increase anytime soon, just based on this. Consistent rate of inflation. the cost and then, it just doesn't, it's not beneficial for housing builders to build, say, entry level housing, right? So anything that is being built is at a much higher demographic. but at the same time, you still have, 7%,mortgage rates, which is stifling, the. The housing sales and it's, that's not going to approve any time, which will at least maintain, the. The need for apartments, for the time being. And I think what we saw happen was 2024 and then May, early 25 maybe was like a peak for multifamily completion, somewhere around there, at least in certain markets like, Dallas, Houston, those places saw their multifamily completion when these things that got kicked off in. 22, 23 and took a couple years to build. Now there's thousands more units available that's causing some of the strain and the holding down of rents and prices. But once that wears off, like you said, within the next year or two, and there are no more Units coming online. Then eventually we'll get, maybe not back to where we were, but going in the right direction anyways.

[00:25:32] George Roberts: Yeah, a hundred percent. If I can correct, I think I said the end of 27, if you can get even to the end of say, 26, get close to 27, I think you're gonna see that we're gonna have significantly better prices. And of course that's gonna bring in the next boom of building. But, but so it is, if I could just add one more thing. You did talk about competition and you underscored the point. It really is one housing market. All of those units are gonna be occupied by somebody and we all impact each other. Jay Parsons from, formerly a RealPage, had some great visualizations of data where he shows that these markets that are getting a lot of Class A, the rents for Class B and class C are under pressure. The old guru that you know, that is telling you that, Hey, by Class C, it's okay, because guess what,the class as you know, they get kicked out. They're gonna come to class B's gonna come to Class C. That's not really what happened. It's certainly not what happened during the pandemic. And we can see even in the recent data, just for more supply in the class A side that wherever the building happens. It's going to put a pressure on rents wherever you're at. So yes, look most closely at your closest competition, but realize that all housing is competition.

[00:26:40] Tim Little: Yeah, and I feel when you're talking about A, B and C, like part of the issue was the gap was starting to close between those levels. and we hadn't really seen that as much before. But yeah, when it's not much of a leap to go from like one to the other, then that's when you're gonna start either losing or gaining between those different classes.

[00:27:01] George Roberts: Yeah, a hundred percent.

[00:27:02] Tim Little: All right, so with that being said, what, how is your business changing, if it is at all, in terms of,your business, your investment thesis, right? You said you're a class C guy. Are you holding to that? And are the markets that you are investing in now, the same as they were a year ago? Yeah. for the record, Tim, I'd like to think of myself as a class A guy who invests in Class C, but Yeah, sorry. Sorry.

[00:27:28] George Roberts: No, I'm kidding. Thanks. Thanks for setting it up, by the way. That was perfect. but I, as I mentioned, I am changing my market, so getting away from these rent constrained places I like, parts of Tennessee, like West Tennessee, for the longest time has been the run to the pack West Tennessee. Growing like crazy. You got property in Memphis right now, you're doing just fine. East Tennessee, notice I'm avoiding Nashville

[00:27:49] Tim Little: Yep.

[00:27:50] George Roberts: of the State's, kind of crazy Kentucky. I love this. And if you're in these places that I just mentioned, rent is nowhere near constrained. People are spending 13, 15, 17% of their paycheck on housing. If you consider that, you can go up to 30%. There's a lot of room to grow. And as people are moving. To the more affordable areas. It makes sense. If you, we can't all live in San Francisco,a lot of these people that are in these very expensive areas, particularly younger people, may not even have a family yet. They've got fewer roots they've thrown down. It makes sense that they're going out there. We have. people who can work remotely now and, why not work in the Smoky Mountains? It's a beautiful place to go. West Virginia is providing a huge tax incentive for people to come out there and work remotely. There are huge demographic shifts that have been driven partly during COVID. Partly due to the interest rate hikes as well. So I think you want to take advantage of that. Don't go for the hot markets. Go for the affordable markets. Those are the hot markets. And go and take a look at the Midwest. I know a couple years ago when I was talking about the Midwest, places like Cincinnati, a place that I never invested in but wanted to, you could see the demographics of that have been turning around for maybe 10 to 15 years. At least, but only in the last couple of years, people now see that as one of the hotter places to invest. Kansas City's projected to have tremendous rent increases next year. So when you look at these places that you know weren't sexy three or five years ago, a lot of those are the places to invest right now. And being in the Midwest may not make you a ton of money. The Sunbelt might've made you five, or three to five years ago, but. You can park your money somewhere where you're getting a good rate of return and you don't lose, you're gonna be in the pool position when the buying, the best buying opportunities come about. Which for all we know, Tim could be right now, we are on the cusp of seeing significantly lower interest rates. And as we mentioned, the supply is significantly declining or it's poised to significantly decline. We have all our factors pointing to. That now is the time that people are still largely frightened, but, but things are getting better as Warren Buffet put it, if you wait for the first swallow of spring, it's too late. So don't wait until you see the swallows. As soon as you feel the thaw hit it.

[00:30:11] Tim Little: Yeah, and I think there's a certain amount of education for investors that needs to happen because like any industry, right? they get used to what everybody has told them is hot. This is where you need to be investing. And so when that changes a bit, then you have to give them all the reasons why. And you just mentioned most of them as to why they might want to consider these other areas. I think an example for me is, South Dakota, Rapid City to be specific. Not a place I would've ever thought I would be part of a deal. But here I am. and to your point. The level of stability that I've had in that deal compared to my other deals that are in the Sunbelt, it's like night and day. It's consistently like 99% occupancy continuing to raise rents, maybe not at the speed that we projected, but still continuing to raise rents and it's just going swimmingly. The, exactly where we wanna see it going since we've closed on the deal. And that's about as good as it gets. We can't expect these home runs of Covid because that was a Black Swan event. I. And, there should be no expectation of some of the gains that we got during that time. But the next best thing is the stability of promised returns actually coming to pass. And like you said, it's in those markets that we may not have thought twice about, say two, two or three years ago.

[00:31:42] George Roberts: Yeah, and I would say study is the new sexy. And when you look at the returns that people have produced in the past, hey, the track record is huge, but you also have to ask about the vintage of those deals. So when you do see the extraordinary track record. But it was with tremendous tailwinds. You gotta take that with a grain of salt. And I think a lot of the more I would say, the more honest, the more reliable syndicators they're gonna tell you, look, I'm not going to give you the same return that I gave you from that,20, 20, 21, 20 22 deal. But I can, I know what I'm doing. I can do this. I'm gonna give you a great return. So yeah, we can't expect to replicate that. So when you see those returns coming from the more recent vintages of deals, for those of us who have exits for more recent deals, that really means a whole lot more.

[00:32:34] Tim Little: Yeah, I totally agree. Like you said there, the track record matters, but you also have to look at the track record, not just having one. I can claim that I had a deal that went full cycle in two years that was meant to go for five. But if you look at what years it went, two years in that's exactly why, right?

[00:32:54] George Roberts: I think I had one in 2021 . I think it was just under one year and they produced most of what they expected in five. So yeah, you can't do that twice. or you shouldn't expect to do it twice.

[00:33:04] Tim Little: exactly. These have been some great insights, but right now we do need to switch to the turbo round. So I'm gonna ask you three questions that I ask every guest that's on the show, and I just ask for a quick, honest answer. And I know you know what's coming, but we're gonna, we're gonna go ahead and do it anyway.

[00:33:20] George Roberts: I do my homework, Tim. I hope I know what's coming. We'll see.

[00:33:23] Tim Little: And you've done this before, so I don't know, maybe the answers will change. Some things change with time. All right. Question number one. What is one red flag every investor should look out for?

[00:33:33] George Roberts: bad comps. your broker's always gonna give you bad comps. Always pull your own. Don't just average a few similar buildings in the area. Find the close comps and you're gonna have to do your own research for that. And also look at the rent roll. Make sure. If you think you've got below market rents, make sure that you are seeing above market occupancy and hopefully you're gonna see many, a large percentage of people that have been there 3, 5, 7 years or more. Those are the sorts of things that tell you really do have below market rent.

[00:34:01] Tim Little: Yeah, and I, I would just say that, when it comes to the comps, sometimes you just get into the tough situation where there's not a whole lot of good comps. And, and I guess I would quickly ask you, what do you do in that situation?

[00:34:14] George Roberts: That's a lot harder and you may have to buy that at a discount. I have a very large network. I talk to people who know the area. and so if you've got somebody who can really get in there and say, yeah, yes, I believe we can get these rents and not your property manager. I love them, but they have a different perspective. As you mentioned earlier, they have a different perspective than us, so don't just listen to the property manager and say, oh, we can raise the rent $200.

[00:34:38] Tim Little: Yeah, no, that, that's, that's good advice. All right. Next question. What is a myth about this business? You would like to set straight? 

[00:34:46] George Roberts: That you have to beg or go home by being in multifamily, you're already going to beg, and I've carved out a larger portion of smaller deals and done very well for myself.

[00:34:57] Tim Little: Yeah, I. That's fair. It's not, a lot of people get into the hype and that's where you, you get into the, the go bigger go home mentality, but there's, there's just as much money to be made by even starting off small, like we talked about earlier, and then working your way up. Because I think an important point that we didn't get into before was, hey, your percentage of that joint venture. What do you do? Yeah. You know, with three other people that's 30% of the property. You know, if we're doing simple math that, that you own, 33, I guess, compared to whatever the single digit percentage maybe that you have an equity of, a syndication that you're doing. 

[00:35:39] George Roberts: Yeah, a hundred percent.

[00:35:40] Tim Little: All right. Final question. What does success look like to you? 

[00:35:43] George Roberts: I said it before Tim, and I'll say it again. It's doing this thing called what I want. When you're doing that, when your freedom quotient gets up towards a hundred percent, I. That is when you are successful, it's when you're able to build your body, your relationships, and your career 100% because you don't have anything holding you back. You're the captain of your own ship. That's where you wanna be in the catbird seat. There you go. time, freedom, and control. Just like, yeah, just like we talked about earlier. All right. Well, George, I wanna thank you. This has been awesome. Please, tell our listeners if there's anything else that you'd like to share with them.  Yeah, sure. if you wanna reach out to me, you can find me at my website, www.roberts capitalenterprises.com. If you are new to the business and you want to meet other people, the network, I've got a networking call every Wednesday. I. At noon, Eastern, I call it CRE Network at noon, where deals are made. And I also try to be friendly. And so I am still at this point, reaching out or allowing people to reach out to me. So if you've got deals, feel free to show them to me. And by all means, if you have the opportunity to check out my book, passionate Living Through Passive Investing, it's still, I believe, just 2 99 as the Kindle edition. if you don't find, like $10,000 of. A value in that book that you bought for 2 99. Feel free to send me hate mail.

[00:37:09] Tim Little: All right. That's fair. Well, George, thanks again. We will have all that information in the show notes. I certainly appreciate you coming on again, and look forward to continuing to see you do big things on your journey to multifamily millions. 

[00:37:22] George Roberts: It was my pleasure. Thank you so much for having me back. 

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TIM LITTLE (FOUNDER/ CEO)

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