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SHOW NOTES FOR EPISODE 139: MULTIFAMILY PROPERTY BROTHERS CREATE LIFETIME CASHFLOW THROUGH PASSIVE INCOME
What do you get when you put together an over-worked emergency room physician with an amusement park and resort company executive? Answer: All the right components to establish a booming real estate enterprise that has only begun to take the country by storm. In this podcast episode, Tom and Tim Black, two multifamily property brothers, share how they were able to grow a real estate empire to $70 million in just two years.
What You Will Learn
- How building your own apartment community from scratch can be very profitable but also very agonizing
- The value of real estate investing is realized in the freedom it provides
- The difference between working hard and working smart
- How partnering with someone whose skills complement yours can transform your business
- The challenges of trying to get properties re-zoned
- Treating your investors well benefits you more than just financially
About Our Guests
Thomas Black, M.D.
Tom Black is board certified in Emergency Medicine; prior to matriculation to medical school he worked for Wells Fargo Financial overseeing the residential mortgage loans. He and his wife, Micaela, who is a licensed realtor in Texas, have owned numerous single and multifamily assets and are well versed in foreclosure acquisitions. The couple has designed, developed, and stabilized “A” class assets in Texas. Tom is the author of the book “The Passive Income Physician,” an active blogger in the healthcare community and passionate about translating high income earners to high net worth individuals through passive real estate investing.
Tim Black
Tim Black has spent his 30-year career at Six Flags Theme Parks and Great Wolf Resorts. Throughout this 30 year span, Tim became well versed in operations, strategic planning, marketing, sales, revenue management and real estate development. He is the former Chief Operating Officer for Great Wolf Resorts, which owns 14 Resort properties in North America. Tim worked closely with Private Equity to develop new resorts, maximize revenue through pricing and demand, digital marketing and implementing new revenue streams.
More About Tim and Tom
- Tom joined the navy at 17, was not the best high school student
- Serving in the Navy and in the Persian Gulf taught him that whatever you do, do it to the best of your ability
- When he finished serving in the Navy, Tom put his head to the grindstone to get an education and become a doctor
- 10 plus years ago Tom came out of Emergency Medicine Residency Training bright-eyed and bushy-tailed and jumped into really busy clinical practice
- After 12 years of school and working very hard to make his dreams come true, Tom found himself working excessive hours every week – trading time for money – and his family suffered in the process
- The enjoyment of doing the job faded quickly with his exhaustive schedule
- Sought something else that would mentally get his mind going and help him optimistic
- Started buying rental homes, reading and educating himself on real estate investing
- The more he got involved with REI, the more medicine seemed to take a backseat to his real estate business
Land Development
- Tom bought a piece of foreclosed land in East Texas
- With no experience, built a small 18-unit apartment complex with his wife and business partner who was a home builder
- Held on to it, self-managed, and sold it at a big profit 18 months later
- This was the “education” part of his real estate training
- Would never do a development gain without a specialized team
Light Bulb Moment
- His job as a physician made it nearly impossible to give time to his family (he has 4 children)
- He saw that real estate investing could provide the “passive income” so that he could get his life back
- Continued buying single family homes and duplexes
- After gaining his wife’s support, Tom resigned as a full-partner from his medical practice and moved from San Antonio to the Dallas area of Texas, where his brother Tim lived
- Still practicing medicine
- Started plotting how he could make real estate his new profession
- Had many friends in East Texas, without formal educations, making millions by not working hard but working “smart”
Power of the Brotherhood
- Tom’s brother Tim, who was 18 years at Six Flags (ran several of their parks) and 12 years as COO at Great Wolf, sold the company to private equity firms
- Tim saw himself more interested in the private equity business
- March 11, 2016, Tim retired at age 51
- Has 2 daughters (one in college and one in high school)
- Tim had some of the practical skillsets (organizational, operational) that Tom needed (who “runs toward fear”)
- Tom as visionary and Tim as integrator
Today
- Two years ago, Tom and his wife bought a 305-unit apartment community in Arlington, Texas for $13 million through syndication ($3.5 million from investors). They are about to sell it for $20 million
- Currently have over $70 million in multifamily assets in San Antonio, Dallas/Fort Worth, Tulsa, Atlanta (400 doors) and Madison, WI
Biggest Mistake
- Mistakes are good as long as you don’t repeat them and that you minimize the collateral damage
- Tom’s biggest mistake was going to a city near where he built his 18-unit , buying raw land and trying to get it rezoned for condo development
- Battled city council
- Bad publicity, Tom branded as “evil doctor” over 6-8 month period
- For Tim, his biggest mistake was not investing in real estate earlier
Biggest Success
- The brother partnership
- Also, their biggest financial success was the first large syndication deal Tom did – 180% return in two years to their investors (Typically, double digit cash-on-cash returns for 5-year 100% return, 20% IRR)
- Happened a lot faster with this deal with CAP rate compression with the boom Dallas Fort Worth has seen
Advice for Old Dawgs Interested in Real Estate Investing
- Invest in hard assets, specifically real estate
- More fun – you own something you can see direct returns as you improve and upgrade properties
What Excites Them About the Future of Their Business
- Currently, they are putting together a planning session to look at their 2018 goals
- Tom: magazine articles, awards
- Tim: the development of a common thread of consistency throughout the organization – brand development – revenue management
- Looking at acquiring a hotel (Tim has experience in this space)
- Integrating new software platform for investors
Rap-It-Up
- Favorite real estate book: Rich Dad Poor Dad by Robert Kiyosaki
- Favorite business book: Tools of the Titans by Tim Ferris (Tom) and The Art of the Deal by Donald Trump (Tim)
- Most valuable web site for success (other than your own): CoStar.com
- Favorite app: Sly Dial (Tom) and Tiny Scanner (Tim)
- Favorite quote: Tom had two: “Son, you may not make as much money as you think but you’re gonna make money.” And “You can’t make silk out of a sow’s ear.” and Tim: “You build the most wonderful place in the world but it takes people to make the dream a reality.” by Walt Disney
- If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? Tom: Use the money to have lunches and dinners with people. Because the key is relationships and trust to build an investor base. Tim: Send out text messages with Sly Dial for meetings to raise funds.
How Can You Reach Tim and Tom
- Website: Napalicap.com
- Email: Thomas@napalicap.com or Tim@napalicap.com
- Tom’s blog: The Passive Income Physician
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