349: Multifamily Power Investing – Generating $30 Million in 18 Months

SHOW NOTES FOR EPISODE 349: MULTIFAMILY POWER INVESTING – GENERATING $30 MILLION  IN 18 MONTHS

Many real estate investors get frustrated and discouraged trying to get over the “one investment at a time” hump to reach total financial freedom.  In today’s podcast, tech executive, real estate investor, syndicator, entrepreneur and podcast host Agostino Pintus shares his personal struggles, moving from “the bottom” to rapidly switching gears into hyper-drive to achieve financial independence in the short term.

What You Will Learn

• How mindset is 90% of your success in real estate investing
• What were the 3 things Agostino had to do to change his mindset
• Why Agostino does not normally do deals less than 100 units
• What it takes to become truly focused on your goals
• The value and risk of forming partnerships
• The importance of “finding your market”
• What it means to be truly committed to your market
• Invaluable tips to establishing long-lasting, valuable relationships with real estate brokers

About Our Guest

Agostino Pintus

Agostino is a multifamily investor, syndicator, and entrepreneur with more than 15 years of experience in real estate. He currently oversees strategic partnerships, capital development, and platform development for Realty Dynamics Equity Partners, an Akron, Ohio-based investment firm specializing in multifamily acquisition and asset management services.

He is also the subject of The Bulletproof Multifamily Mindset Show, a series highlighting topics every multifamily investor should know to build their success, as well the host of The Bulletproof Cashflow Podcast, a show focused on interviewing the top experts in the real estate and the mindset required to build success, all of which can be found on iTunes, YouTube and Facebook.

He helps people build financial freedom through multifamily real estate and leverage their unique core competencies to achieve success. Investors at the top of their game work with Agostino to maintain their position, and in moments when business gets difficult, they strategize their return to greatness. If you are feeling stuck with your real estate portfolio or unsure of how to start, Agostino will lead you to clarity, focus and action.

More About Agostino

• His journey in real estate investing started well over 16 years ago
• Before real estate, he was a C-level technology executive with a publicly-traded company
• Managed large budgets
• How syndication changes everything when it comes to scaling your real estate investing
• Had a great deal of success
• Managed a global team

Becoming a Real Estate Investor

• Some of the other executives in the company he worked for were investing in single family homes
• A friend recommended he do the same to generate cash flow
• He said he would check it out
• Started buying single family homes and small multifamily (at full retail)
• He put tenants in the homes
• Was making $300-400 cash flow per house
• Trying to build a portfolio of rental properties
• Now, even though he was making a lot of money in his job and his real estate investing, he felt no different than someone working at McDonald’s, the only difference being his bills were bigger
• He still feared his boss coming in one day and saying “You’re fired!”
• He was making money with his real estate but was far from financial independence
• While living in Florida,  he had hit rock-bottom and had to make a change
• He was consulting after the economic crash
• Got home after a consulting gig, switched on the lights and there was no lights
• Even though he was investing in rental properties at the time, it wasn’t generating enough to help
• He had no money to pay the electric bill
• He felt like a failure, frustrated, alone and lost
• Had just gone through a divorce that totally wiped him out
• He had to sell off some of his rental homes
• He was a afraid for his future
• It was in that darkest moment that he realized he needed to made a vow to himself to become financially free for himself and his family
• He made a decision to get out of the scenario he found himself in

Looking for Something More

• He knew there were people making big money in real estate – he just wasn’t one of them
• He knew that real estate was the way to build that passive income  to help him achieve financial independence
• He just wasn’t doing it big enough
• When the crash hit, he just tightened up his belt to get through it
• He didn’t go bankrupt
• He didn’t lose any money on the real estate side (he did with his personal residence)
• He stopped investing because he was scared
• He picked up odd IT consulting jobs or temporary CIO/CTO roles to help make ends meet
• There was much turmoil and insecurity
• He realized that part of his problem was that he didn’t have a clear purpose defined
• Without that, he felt like he was just “drifting” through life
• It was years of living like this before a real estate attorney friend said explained to Agostino about real estate syndication
• That, instead of buying one house with one renter, he could be buying entire buildings full of renters through syndication
• Realizing that, changed everything

Becoming a Syndicator

• Agostino decided to sell everything (approximately 25 properties)
• He knew that syndication was the answer
• He just wasn’t prepared
• He made a decision around goal setting to do three things:
  • Creating a “vision board”
  • Writing his daily affirmations
  • Focusing ONLY on ONE THING — multifamily investing
• He found some “virtual” mentors
  • Grant Cardone
  • Carlton Sheets
• Started educating himself
  • Got a hold of any and all information he could to learn the business
• Started analyzing deals – 100 a week or more
• But, even with all that, it wasn’t enough
• His girlfriend (who he recently met in this process and later became his wife) was very supportive
  • She watched him “double down” on all this
  • Watched him sell off all his properties
• A big part of what was happening with Agostino was the psychological aspects
  • Working and understanding people
  • Getting out of his “fear-based” mentality
    • Many people are afraid because they don’t understand
    • Once people understand how it works, they are no longer afraid
  • A big part of his success today

Finding Syndication Deals

• Started looking at smaller deals
• His mentors eventually told him that the small deals are a pain to finance and raise money
  • He may do the small deals today but only if the financing is simple and easy because of the work that goes into putting a deal together
  • It’s usually not work the time and effort
  • It depends on the deal, the upside, the return that he can give to the investors
• At first, he had to understand what the levers were
• When he found that Cleveland/Akron market he had to be in, he sold everything in all the other areas he was investing,  focused only on Cleveland/Akron, and moved there
• He ended up buying an 11 unit property there (not on syndication)

First Multifamily Syndication Deal

• He knew that if he was going to go out and raise money, that he needed to demonstrate that he was serious about doing a deal on his own
• His first syndicated deal was an apartment in Canton, Ohio
• He found it on Loopnet.com
• He was only on Loopnet.com to practice analyzing deals
• He would get emails every now and then on new potential deals in a market
• You need to really know your market first!
• He usually knows all the deals available in his market
• He found a deal that looked good on Loopnet
• Called the property manager because he saw that the property manager for the property manager was the same he had on his first deal in Ohio
• He asked what was going on with the deal and the PM said it just fell out of contract
• It was listed for $1.8 million
• Agostino asked what the bottomline number sales price was was and the PM said $1.4 million
• Agostino said, “Send over the PSA (Purchase and Sale Agreement,” which he signed without looking at it
• When he hung up the phone, he immediately started to call his potential investors to raise capital
• He knew the market well enough to know that this was a good deal
• Started to get soft commitments from his investors
• Agostino, with a new partner he had out of Washington, closed the deal in 90 days
• There was a lot of background work that had been done as well
  • He’s always talking with investors on what they do and how they do it
• The property appraised for $1.8 million
• On closing day they had more than $400,000 in equity already built in
• The property
  • 56 units
  • Low income, affordable housing
  • Good cash flow
  • Higher rents
  • Higher risk
  • Tenants don’t care much about the property
  • Wouldn’t recommend buying this type of property, especially for newbies
  • Requires a special type of management

His Goal for Each Market

• Focus, learn and master a market
• Grow portfolio up to 1,500 units
• Move on to a new market
• Finding potential markets:
  • Agostino follows The Black Creek Group
    • Real estate investment/development company
    • Based out of Denver, CO
    • Monitors 54 MSAs
      • Show where each market is in the real estate cycle
      • 4 cycles:
        • recession
        • recovery
        • growth
        • hyperinflation
      • Oklahoma City stands out in these markets as the only market not in hyperinflation
        • Even with this, prices are high and you really need to know the market

Partnerships

• Agostino does most of the work finding and analyzing deals and communicates most with property management the most
• But partners are important to his operations as well
• He has partners in Washington, Texas & Cleveland
• Most are active
• For example, one partner found discount flooring that they buy overseas by the container
  • They want to do flooring in 60 units (that’s half a container) and buying cheap boosts investor returns
  • That has substantial savings for the work they are doing on a day-to-day basis

Biggest Mistake

• Has learned a lot from other people’s mistakes
• Has read lots of books, emphasizing human psychology
• His background is engineering and tech but, one thing he really overlooked early on in his career, was the human aspect
• Hos biggest single mistake was establishing a bad partnership
  • He noticed that his partner was not willing to do his fair share of the work but he noticed too late
  • When you commit to doing a deal, the sellers, banks and others are counting on you, and if your partner lets you down, it all falls on you and you have to pick things up — you have no choice
  • What he learned:  You need to vet your partners very thoroughly
    • Not just your general partners (GPs) but your limited partners (LPs) as well
    • And one thing he doesn’t want at all in his business is negativity — especially working at the pace that they are working today
      • You don’t want one of your partners dragging you down with their negativity, calling you every day, worrying
    • Agostino learned this from Warren Buffett
      • Spend time with your partners
      • Get to know some of their friends
      • Set up meetings
        • Do they show up on time?
        • What kind of excuses do they use when they don’t show up?
      • If they’re in a committed relationship, are they running around on their spouse?
        • It tells you a lot about their character
      • Do they complain about other people?
      • Are they reliable?
      • Do you have have a gut feeling about whether they can be trusted or not?
      • If you need to borrow funds for a few days and they have to write it down, think twice about working with they

Biggest Successes

• Getting to know his market well
• Getting to know the local brokers
• Being first in mind when brokers have good deals come across their desk
• When he picks their next market, he will start traveling there on a regular basis, meet with brokers and get to know that market well — before they commit
• He also feels he has picked some good partners who are critical to his success
• He wants his partners to travel with him and be active in learning the markets as well

Tips for Developing Broker Relationships in a New Market

• Show brokers how they will want to know you
  • The 25 Cognitive Biases
    • “The software that runs every human being”
    • You can use these to help you in terms of sales and marketing
    • You have to give that broker, in a new market, a reason to talk with you
      • The “social proof tendency bias”
      • states that other people follow/endorse him or her
      • If you show that person you have people that “listen to your podcast,” “endorse you,” have “vetted you out,” or demonstrate that other people say you’re great, then that will help sway someone to believe you are an important person to know and talk with
• Get another broker that knows you to give a warm introducing you first
• For newbies, it’s best to develop relationships where you live FIRST
  • You need to have a “value proposition”
    • For any deal, there are main aspects to every deal:
      • Raise the money
      • Locate the deal
      • Operate the deal – Property Management
      • Do construction
      • Bank financing
    • If, for example, you can raise money, you have a “value proposition” that will allow you to partner with anyone in any market in the country and build from there

Advice for Old Dawgs Interested in Real Estate Investing

• When he was working for the corporate world “the man,” he got lazy
• He was earning very good money
• He was kicking around doing some multifamily
• But he wasn’t real motivated because he had money coming in
• …until a new CEO comes into the company and sees you as expendable
• He changed his mindset
• He decided to “build a legacy that would outlast me”
• When you have a goal, a higher purpose, when you change your mindset around your purpose, you’re do longer living for the day, month or year… you’re living for a decade at a time!
• He wants his son’s kids to know his name!
• If you don’t reposition yourself, you can miss out on the best time of your life!
• We’re running out of time
• We’ve got to make the changes now to see things through to the end so we can be financially stable in the future
• People today are stuck between limited thinking and limited people
• You’ve got to take massive action
• The great thing about real estate investing is that you don’t have to do it by yourself
  • You can get into deals with other experienced people who know what they are doing
• Take action
• Get a mentor
• Partner with someone who knows what they are doing
• Real estate investing is the only thing that can do all this!

Current Business

• Wants to grow to $1 billion in next 4 years
• Looking also at possibly doing a large development deal – “Changing the Cleveland skyline”

Rap-It-Up

• Favorite real estate book:  Multifamily Millions by David Lindahl
• Favorite business book: Pitch Anything by Oren Klaff, Ten-X Rule by Grant Cardone and Emotional Intelligence by Brandon Goleman
• Most valuable web site for success (other than your own): DailyStoic.com
• Favorite app: YouTube and GeniusScan
• Favorite quote: “Without integrity you have nothing.”
• 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?  Rebuild my network and learn how to raise capital. Investing in sales training, attending events, meeting people and taking massive action, again, in front of potential partners.  Focus on the ability to sell.

How to Reach Agostino

• Website: BulletProofCashflow.com
• Email: Info@bulletproofcashflow.com

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