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SHOW NOTES FOR EPISODE 555: SCALING UP WITH PARTNERSHIPS
Investing in real estate later in life can be frustrating because of the time it takes to ramp-up, scale and leverage a portfolio. However, partnering with others can accelerate the process significantly. In today’s podcast, you will hear how three investors joined forces to rapidly build a 322-unit multifamily portfolio through networking and strategic partnerships.
What You Will Learn
- The exponential value of networking for older investors
- Where to find powerhouse networking organizations and which are the most effective
- How to maximize your involvement in meetup groups
- Tips for quickly making contacts for partnerships and investing
- The strategic value of managing your own properties
- How to build and organize a partnership based on skill levels
- Why property cash flow is king
- The valuable role of mastermind groups
- How to find and grow a pool of investors
About Our Guests
Mike Bocanegra started out as a video-game technician, transitioned into retrofitting vans for mobility, then into sales, and finally into real estate investments. He owned, managed, and later sold a portfolio of single-family properties in Michigan and Florida and moved into multi-family. He leads an in-house property management company. Mike typically runs the business remotely while traveling around America in an RV (Not present for the interview)
Mike Jacobson completed a career as an aerospace engineer. He began exploring real estate in college. He has built a portfolio of properties, including ownership in mobile home parks. Mike was president of the Georgia REIA and has served in leadership with the Central Florida Realty Investors’ Group, one of the largest REIAs in the country. He is a Navy Veteran and has his M.B.A. Mike has a passion for teaching financial literacy
Harland Merriam has 45 years of experience as a Pastor and Army Chaplain. He began investing in real estate in the 1980s, has a portfolio of single and small multi-family properties, and an Airbnb. He is a personal coach and leads masterminds.
Together, they are the general partners of Attune Investments. They manage a portfolio of 5 multi-family properties with 350 doors in Florida and Georgia.
More About Harland and Mike
- Mike J. got his real estate license in 1982 and helped his dad with the analyzing of investment properties – his dad was building duplexes
- Mike J. was at the work sites, helped in a variety of the management side and would run cash flow analysis to present to investors
- Later, he didn’t bother renewing his Realtor’s license
- He didn’t start buying properties for investment until 2006
- He has been a passive investor in real estate projects (a mobile home park, single family houses)
- It was a good learning experience
- He was involved with the Georgia REIA in Atlanta and then move to the Orlando, Florida area
- Mike J. first met Harland at a CFRI (Central Florida Realty Investors) group meeting in the Orlando area and later at some local mastermind group meetings
- Over 1,000 people in the group and there are many sub-groups
- Later, they met at an Apartment Investing Bootcamp put on my Anthony Chara
- They found out that they both had a shared interest in multifamily
- After the bootcamp, Mike J., Harland and a few other people from the bootcamp formed an “accountability group” to support and encourage each other to stay committed to acquiring multifamily properties
- Harland was following in the footsteps of his grandfather (who was a physician) and his father (a college professor), who both invested in real estate while working their full-time jobs
- Harland began investing in the 1980s
- He bought a mobile home park with his sisters
- When Harland met Mike J. there really clicked, not only for their interest in real estate but also in their interest in helping people and making better communities
- Later, they linked up with Michael B. at some of the classes and networking events they all attended
- Mike B. had more experience in multifamily – specifically, value-add apartment investing – and some investor contacts
- He has some larger apartment communities
- The three hit it off well
- Harland and Mike J. were good at investor relations
- Mike J. was also very good with the numbers
- Mike B. handles the property management
Acquiring Multifamily Properties
- Mike B. found a property in Tallahassee, Florida
- Near Florida State University
- 129 units
- Not student housing
- It was workforce housing (housing affordable to households earning between 60 and 120 percent of area median income)
- Their plan was to renovate the units, increase rents $130 per month, per unit
- That would both increase the value and cash flow
- They would hold on to the property for a minimum of 5 years
- They would let the market tell them what they should do
- They have a 12 year balloon on the note
- They decided to syndicate so they all joined together to raise the millions of dollars necessary to acquire the property
- They have 17 investors – people who know and trust the three guys
- They communicate with them monthly
- They have both accredited and sophisticated investors
Adapting to Covid
- And then Covid hit!
- It created a lot of challenges
- They managed to stay Covid-free on the site
- Some tenants lost their jobs
- Some tenants took advantage of the eviction moratorium
- Others who were having difficulty, tried to work with management
- It definitely affected the bottomline but they are coming out of it now
- They used the time, during Covid, to step back and reassess their strategies and processes
- They found that good communication was essential
- They re-worked their website
- Added a blog
- It better serves their investors now
- They re-worked their website
- They found that good communication was essential
Other Areas of Focus
- They also own/operate their own property management firm that manages their properties
- They are also regularly working with new investors
- They are regularly communicating with a large list of potential investors
- They are in a mastermind with several other investors around the country
- Members of their mastermind are also helping them find investors
Roles as General Partners
- As sponsors, managers and general partners of their syndication deals there is much responsibility
- Asset Management
- Coordinating with property management
- Investor communications
- Finding new investors
- Answering questions
- Communicating with a large list of potential investors
- High level decision making (especially when Covid hit)
- They are also looking at alternative investment offerings
- Being debt partners instead of equity partners
- Providing a consistent. longer-term return for investors
- They’re also looking for new markets
- Georgia
- Alabama
- They spend around 10-20 hours a week looking for new properties, talking to brokers/lenders, submitting LOIs, etc.
Biggest Mistake
- Their first investment property
- It was a beach condo in Myrtle Beach, Florida
- Bought it at $254,500 in January 2006
- By summer, the price had dropped to $70,000
- They had to put money into it every month
- Their lesson: Cash flow is king!
- Every property has to stand on its own
- If you don’t have the cash flow, it really hurts every time you make a mortgage payment
Biggest Success
- Networking and giving back to others
- Several real estate friends of his formed a meetup group in their county
- They now have over 700 members
- They meet twice a month
- They just get together, help out new investors, share wisdom, build relationships, partner up on deals together
- Mike’s REIA group in Georgia had orientation for volunteers
- He became a volunteer
- The more he volunteered, the more he learned
- The more experienced guys really wanted to help the newbies out as much as they could
- They wanted to see you succeed
- It really made a big difference
- Mike learned from other people how to do things right
- He used to volunteer to pick-up the national guest speakers at the airport
- He learned tons just talking with them
Their Mastermind Group
- They joined a mastermind group formed by Michael Blank
- Multifamily apartment owners
- Some are rapidly growing
- Some are raising funds for other investors
- Varying levels of experience
- 6 members from around the country
- They meet every other week on Zoom
- Support each other
- Hold each other accountable
- Talk about challenges they are facing
- Encourage one another
Advice for Old Dawgs Looking at Real Estate Investing to Help Them in Their Retirement Years
- You can be either active or passive as an investor
- Either way, partner with successful investors if you want to succeed yourself
- There are many niches to choose from. Focus on one:
- Single family homes
- Multifamily
- Mobile Home Parks
- Apartments
- Join your local real estate association group meet-ups
- Volunteer
- Meet people
- Ask them to introduce you to other people
- It’s all about relationships
- Take ready action
- Find successful investors and join up with them
Current Business
- Their motto is better returns for better communities
- They want to be in more communities
- They want to serve the people in those communities
- They also want to generate better returns for their investors
- They are looking to continue to grow
- They are talking to a variety of partnerships
- Harland is 71
- He hopes to be able to kick-back at a certain point, become less active and just advise new investors
- Looking ahead and looking forward to the next 10, 20, 30 years!
- Mike J
- They want to enjoy some of the cash flow
- At the same time, they look forward to turning over some of the projects for long-term capital gains every 5 or 7 years
- Both appreciation and cash flow are key without tapping into our principal
- They want to keep growing the nest egg
- He also sees the opportunity for their children to participate in their investments so they can pass it on to the next generation
- They both don’t need to do this but they are doing it for bigger purposes – to make better communities, to serve other people and use the wisdom they’re gained over the years to make life better in this world
Rap-It-Up
- Favorite real estate book: How to Wake-Up the Financial Genius Inside You by Mark Haroldsen and Financial Freedom With Real Estate Investing by Michael Blank
- Favorite business book: Rich Dad Poor Dad by Robert Kiyosaki and Profit First by Mike Michaelowicz
- Most valuable web site for success (other than your own): BiggerPockets.com
- Favorite app: The HP 10Bii Financial Calculator, Trello, Deal Machine
- Favorite quote: “The sky is not the limit. It’s another vantage point from which you can see what else you are capable of.” and “It’s never too late to be what you might have been.” – George Eliot
- If you lost everything – all your assets – and had to start all over, knowing what you already know, and you only had $1,000, what would you do to re-launch your real estate investing business? Join the local REIA, get to know people, volunteer, invest in your education and then choose a niche that works for me. (Mike) The same goes for Harland but he would also reach out to people he knows to get funding as well. (Harland)
How to Reach Harland, Mike & Mike
- Website: AttuneInvestments.com
Get Their Free E-Book
- Download their free eBook – “3 Keys to Unlocking Your Retirement Dream“
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