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SHOW NOTES FOR EPISODE #013 – GENERATING WHEELBARROW PROFITS WITH MULTIFAMILY INVESTING
In this episode, Jake Stenziano and Gino Barbaro, #1 Amazon bestselling authors of Wheelbarrow Profits, share their story of how they went from restaurant owner and salesman to real estate tycoons with over 600 units.
What You Will Learn
- How a pizza guy and a sales rep built a $32 million real estate empire in under 3 years
- The one-word question you have to ask yourself before you get started investing in real estate
- The six needs we have as humans
- The importance of getting that first deal done
- What their three step re-positioning process is
- What a Wheelbarrow has to do with REI success
About our Guests
Jake Stenziano
- Amazon #1 Best-Selling Author of Wheelbarrow Profits.
- Currently owns 674 multifamily units.
- Co-founder of Jake & Gino, LLC.
- Founder of Rand Property Management
- As creator of the multi-media, multifamily investing framework, Wheelbarrow Profits, Stenziano is a leading expert on investing in the multifamily space.
Gino Barbaro
- Father of six children
- 25 years as a restaurant owner
- Graduate of IPEC (Institute of Professional Excellence in Coaching)
- Certified Professional Coach
- Exited rat race March 1, 2016
- Founder of Gino’s Family
- Partner in JakeandGino.com, a real estate education company
- Owns a portfolio of 675 units, valued at $32,000,000
First Property
- Bought 25 unit in TN for $600K in 2012
- Jake borrowed from 401k for his share of down payment
- Got in at 10% down ($80K)
- Seller carried half of down payment (10%) – their broker suggested it
- Owner finance requires you to “educate” the seller
- Distressed property
- Deferred maintenance
- Motivated sellers
- Value add play
- Created a “credibility kit” and business plan
- Appraised a few years later at $800,000
Owner Financing
Three Things Needed for owner financing
- Cooperative local community bank
- Motivated seller
- Cooperative broker
Owner finance requires you to “educate” the seller
- You’ll be getting residual check every month
- You’ll be able to defer capital gains
Pitch Book
- Show to the bank to describe your plan
- Includes your underwriting
- Shows how they’ll get their money back
Three Step Re-positioning Process (Buy & Hold)
(Buy building that is not the prettiest but structurally sound)
- Fill vacant units at market rent
- Implement water bill-back program (RUBS program) – NWP has a website and does the program for you – charges tenants directly
- Year later, go through and raise the rest of the rents to market (rentometer.com has market rents)
Next:
- When it’s full and stable, they’ll do a cash-out re-fi
- Do other amenities (pool deck, dog parks, etc.) that are expected for that category of property
- Upgrade units:
- Redo flooring with vinyl wood-like flooring
- Two-tone paint scheme
- Light switches
- Lighting – fixtures
- Resurfacing countertops
- SETS UP SYSTEMS FOR EVERYTHING
Properties they target
- Mom & Pop owner
- Must have value-add component
- C to B properties
- Working class people
- Garden style
- 10% c-o-c
- At least 8 CAP
- Debt service – 1.3
- Buy on actual numbers not pro forma
How do you find your deals?
- Brokers (sent pitch books to them)
- loopnet.com
- Primarily relationships
What is the significance of the wheelbarrow in your book Wheelbarrow Profits?
REI Success is sean as a 3-Legged Stool
- Buying right (fixed pillar)
- 10% cash-on-cash return
- Buy on actuals
- Cash flow from day one
- Managing right (the wheel)
- Always spinning
- Ongoing every day
- Financing right (fixed pillar)
- Fixed, long-term loans on each property
- Non-recourse
Set up systems around each pillar to insure success
Biggest mistakes
- Gino
- Bought commercial property not knowing what he was doing (mixed use – retail – office – industrial)
- Didn’t know class
- Didn’t know niche
- Didn’t understand leasing
- Didn’t understand market
- Jake
- Hiring the wrong people as they scaled up
- Too interested at first about saving money, so didn’t get the best people
- He now knows it’s all about attitude
Biggest Successes
- Just doing their first deal – opened the doors
- Park Place Deal – $800k to $1.6 million (opened the door for other properties)
- Another property – 281 Units. No money down. Bought at $11 million. Owned by family. Wanted out. $140K in revenue – now $180K per month
Advice for Those just Starting Out
- Getting a real estate license or work closely with a broker
- Network
- Go to meetings — REI, meet ups, etc
- Flip to raise money
- Find a partner
- Take lower profit to start if necessary
- Jake – Education + Action = Results
- Be scrappy/resourceful
- It’s not easy
- Got to “make it happen”
- Find partner with the Skills you need
What excites you about your business?
- Education side is growing
- Business in a Box (New Product)
- Wants to eventually have 10,000 units
- Wants to be largest holder of apartments in the area
Rap it Up
- Favorite real estate book
- Multifamily Millions – David Lindahl (Gino)
- Emerging Real Estate Markets – David Lindahl (Gino)
- Investing in Fixer-Uppers – Jay P. DeCima (Jake)
- Favorite business book
- Traction – Gino Wickman (Gino)
- The eMyth – Michael Gerber (Gino)
- Atlas Shrugged – Ayn Rand (Jake)
- Most valuable web site – Facebook.com
- Favorite App – Snapchat.com / Mapquest.com
- If you only had $1,000
- Get broker license. Work with mentor and look for partners (Gino)
- Go get a duplex – live in one/rent out other – 3% FHA loan
How to reach them
- All the social media
- jakeandgino.com
- Email: Jake@jakeandgino.com
- Email: gino@jakeandgino.com
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1 comment. Leave new
Excellent show!