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SHOW NOTES FOR EPISODE 369: COMMUNITY TRANSFORMATION THROUGH MULTIFAMILY OWNERSHIP
In 2008, Gary and Heidi Young were getting ready to retire — and then the recession hit. With four mortgages and no jobs, the recession took them by surprise and they struggled to recover and get through that difficult period. In 2016, they discovered multifamily investing and, within 3 years had acquired nearly 600 units. Today, their quest is much bigger than just acquiring more units. They are seeking to positively impact the lives of the tenants living in each of their apartment communities.
What You Will Learn
- Why single family rental homes do not work well for people ready to retire
- Little known source for locating small multifamily properties
- The value of partnering with other investors or family
- How a good mentorship program can significantly reduce portfolio growth cycle
- Getting an education through self-management
- Adding value by taking a personal interest in your tenants
- Where you can find the funds to get started
- How real estate investing can be great marriage therapy!
About Our Guest
Gary & Heidi Young
Gary is a physician specializing in Radiation Oncology. Heidi has an MBA in marketing and worked in the soft drink industry. Before moving to Texas in 2008, they partnered to create and operate a multi-million-dollar medical facility in California which was debt free in 3 years. They transitioned to multifamily investing in 2016, purchasing their first multifamily acquisition in Irving, Texas. The following year in November 2017 they syndicated the purchase of a second property (77 units), again in Irving, Texas. In November 2018 with a general partner team they closed on 310 units, located in Dallas near the Love Field Airport. Most recently, they acquired another 200 units as solo sponsors, again in Irving. Gary and Heidi enjoy giving back. Their vision is to be a catalyst in improving the lives of people within apartment communities by partnering with non-profit organizations.
More About Gary & Heidi
- In 2008, they were getting ready to retire
- Gary wanted to retire because they had a cancer center that was all paid for but they didn’t control the real estate
- The hospital took over the property
- They decided to move to Texas and do something else
- It didn’t work out because they didn’t get the capital they needed out of their business
- They also had three homes in California and one in Texas
- So, with four homes and no jobs, it became one of the most trying and challenging times of their lives
- It took years to recover
- In 2015, they started doing single family home investments
- But it seemed like it was going to take a long time before they could get to where they wanted to be
- Gary went to a medical conference and say next to a guy who was doing real estate
- The guy shared with Gary about a mentor program he was in that was based in Texas
Mentorship
- They both decided to go to a two-day real estate investing seminar
- On the second day, the presenters talked about multifamily investing
- That’s when the light bulb went on
- They saw how you could take a property that you value differently than single family residences (SFRs), increase your cash flow then sell it and do so much better than you could with SFRs
- They signed up with the mentorship program
- Two months later, they were under contract for an 11-unit property
- Found the property on Realtor.com
- They partnered with family as well to purchase
- Gary was working full-time at the time and was too busy to do much with the project
- It took Gary a year to get a license to practice in Texas
- Heidi, was home with three kids but took the reins of the 11-unit apartment
- She loved to learn something knew
- She learned about:
- Plumbing
- Electrical
- Working with contractors
- Dealing with and managing tenants
- Eviction court
- She also learned to speak Spanish
- Landlord software
- The mentorship group helped them to do this and meet others with more experience
- When they sold the property, two years later, they doubled their money
- They learned a lot from that experience
Syndication
- They moved into a different mentoring group
- It took awhile to get to know everyone at the new group and to grow trust and relationships
- Heidi spoke to the owner of a 77-unit that was not on the market and establish a strong rapport
- When it hit the market, the owner gave first preference to Gary and Heidi if they could meet his price
- They partnered with others in their new mentoring group to syndicate the purchase
- They learned a lot
Complimentary Skill Sets
- They found that each other’s gifts and talents complimented each other in this process
- Gary is very good with the numbers, spreadsheets and the analytical side of the business
- Heidi is very good with relationships and assessing a person’s character and situations
- Working on real estate together has actually been very good for their marriage
- They both have learned to value each other’s differences and opinions
- They both work with brokers together
- They no longer self-manage but are still very involved with their property management company
Their Vision
- They are trying to get people to stop using the term “doors” and, instead, emphasize the term multifamily because “You’re not responsible for the doors but for the families behind those doors.”
- That has been their focus
- There is a value-add component, not just on the asset but for the people who live there
- They tend to buy properties that appeal to lower income tenants
- Most are lower education
- They want to provide an opportunity for the tenants to “become who they were created to become.”
- They want to inspire he children – the next generation – and show them that they can become succeed
- They also partner with others who can help their tenants
- Children’s Hunger Fund CEO has relationship with Lego and they were able to donate Christmas gifts for the children
- They were also able to provide food boxes for families and host special parties
- Local area churches are also partnering with Gary and Heidi to help tenant families
Biggest Mistake
- Investing in properties with no cash flow
Biggest Success
- Applying their Vision to their plans for each new community
- 200-unit community called Village at the Crossroads is where their Vision really came together
- Everything about the deal felt like a God-driven deal
- Even when they were wondering about all the other competition bidding for the deal (four rounds of best and final), they kept on asking “how do we end up underwriting this?”
- A Bible verse that spoke to them – “I will give you hidden treasures, riches stored in secret places, so that you may know that I am the Lord, the God of Israel, who summons you by name. – Isaiah 45:3
- When everyone said they had over-paid for the property, that was proven wrong when the bank appraisal came in at $1.7 million over the sales price
- Some of the events they have held include:
- “Meet the Management” event where they served free tacos, etc
- Kids X-Games
- Back to School Safety and Awareness – Brought in black belt instructors who taught self-defense
- Back to School – Gave out 140 back backs filled with school supplies – paid for by local church groups and non-profits
Advice for Old Dawgs Looking at Real Estate Investing for Their Retirement
- The main challenge is having the funds to invest
- You need to first look at all your assets and where you can pull funds out (IRA, SDIRA, 401Ks, etc)
- You can pull funds from your existing accounts and invest within the accounts, tax free
- If you own a home, you can get a HELOC and borrow against your home equity
- Heidi was able to work full-time at real estate while Gary continued working his full-time medical job
- Get educated:
- They started with the Sumrock Group, out of Texas, to begin their education
- They attended a 2-3 day seminar for $97 to learn how to get started
- Start with multifamily
- You don’t have to star with single family homes
- Gary & Heidi jumped right into multifamily and didn’t waste time “ramping up”
Current Business Goals
- Their “Why” has been changing since they started investing in real estate
- In the beginning, they started because Gary wanted to retire before he burned out
- He was a doctor because he wanted to help people
- When he got into real estate investing he found out he could also help people in a profound way
- Heidi wanted the passive income to do more short-term mission work
- They both found a mission field in what they are doing in multifamily communities
- Having “English as a Second Language” classes at their apartment complexes, for example
- They just want to do more to help their tenants in the years ahead
Rap-It-Up
- Favorite real estate book: “The Complete Guide to Buying and Selling Apartment Buildings” by Steve Berges
- Favorite business book: “Tax-Free Wealth” by Tom Whellwright
- Most valuable web site for success (other than your own): Old Capital Lending
- Favorite app: Audible
- Favorite quote: “Whatever you do, work heartily to the Lord and not to man” – Colossians 3:23
- 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? Invest the $1,000 in mentorship.
How You Can Reach Gary & Heidi
- Website: ECCEVentures.com
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