Multi-Family Deal Lab Episode 001

Speaker 1: Welcome to the multifamily deal lab podcast, where we dissect a deal before your eyes and ears. So you can discover the strategies and tactics that got each deal to the finish line strategies and tactics that you can put in your own toolbox to get you to the closing table from sourcing the deal, raising due diligence to the property takeover. Multifamily deal lab shows how you too can get the deal done. And now here’s your host. David Lindahl. Welcome to the deal lab. This is Dave Lindahl. My special guest today is the one and only Graciela. How have you been

Speaker 2: Oh, we’ve been hanging in here, Dave, the crazy world up there. We’ve been I’m in San Antonio, Texas

Speaker 1: San Antonio. It was just on the news this morning. 115 degrees. Is that what it is down there Yeah.

Speaker 2: Yeah. We’re in a heat wave here. So we’re staying in no matter what you know.

Speaker 1: So first of all, thanks for coming on to, the deal lab. And I want to, grassy Ellis started with a sway back in 2006, she went through a big learning annex event and learning annex is where Trump used to speak. Tony Robbins used to speak. I used to speak, they had these big stages of 10, 20, 30,000 people. And then we all had back rooms with anywhere from that fit from 200 to 900 people. So at that particular event, they gave me a room that fit 900. And I think about 150 were in my room cross. The yellow is going to actually want to get to watch somebody else, but they were falling out a big line out front. So she looked in my room and saw the FTCs and thought, well, I’ll just go in there. And now the rest is history. Right Exactly. So then I guess I said a few things that made sense. Did her first deal tell the story about the, flying down to Texas for your first deal That’s gotta be like one of the best investor stories

Speaker 2: You told us in that seminar, you had to go to Texas. I was thinking, Oh my goodness. We found yeah. The Bay area. And you told us exactly where to find deals. We went in the newspaper at that time at San Jose mercury news. And they, had an investor that owned property. He was in California owned property and in Texas and he was selling like about four or five, apartment complexes. And we, had him send us all the information we did exactly what you told us on that little sheet did along numbers and the numbers worked. And so we made an offer without seeing it. And I remember you told us, Oh, we were just reading the script. Really That’s your book. It was perfect. And that, that moment there was no turning back. You know, we decided we had no choice, but to go forward and make this happen. And so at that time we, went ahead and moved the offer and I got on a plane. I told them broker exactly what you said. you need to meet me there, pick me up and take me out, see all these properties. And then he said, Alrighty. And he did. And

Speaker 1: Yeah. So you’re flying there and you and you land and then what happens

Speaker 2: Well at that time, I couldn’t get off the plane. I was really, really sick to my stomach. I was thinking to myself, what am I doing here I mean, come on multifamily as this, like, you don’t even know Texas. You don’t know nothing about the family, but I had my middle school

Speaker 1: At the time. I’m sorry. I don’t mean to interrupt you. But at the time you were in elementary school teacher and your husband had been laid off from his, from his full time job.

Speaker 2: Well, he hadn’t yet. He, in 2008, he got laid off. But, what made us our decision is my mom and dad remember they were on social security and that broke my heart. And that’s why we made the decision to go into multifamily. And we were just doing real estate, in fact, single family. And we just wanted, and when I heard you, I was thinking, my God, it just made sense. You know, instead of having five roofs, you have one roof with five units, you know, and it totally made sense for us. So we, we got, I got there and I was really sick to my stomach. I was so sick all the way there, thinking what are we doing Or what am I doing And I wanted to go back and couldn’t get off the plane. The stewardess said, you need to get off the plane.

Speaker 2: I said, I can’t move. I’m going to throw up. I couldn’t get sick. And she said, okay. So they helped me get off the plane. And I went straight to the bathroom and I was in there for about an hour and getting sick. And when I came out, all the lights were off in the, in the airport. My God, I’m going to get locked in here, like a Tom Hanks in the movie. So when I went down the escalator, that was just my luggage, just going around by itself. And there was one gentleman down there and it was the broker and he said, he must be going to SEL. And I said, yes, he goes, I thought you missed the plane. I said, no, I just, I got sick. And he said, Oh. And he said something that really was in line with what you say all the time.

Speaker 2: And he said, it’s a miracle that you’re here. And I said, why And he said, 99% of people that are trying to do real estate, never do what they say they’re going to do. And he said, the fact that you’re even here, the fact that you’re a woman, the fact that you’re at that time, I was young. And the fact that you’re Hispanic, that he just pointed all those things up. Those odds are against you and it’s American. And I said, well, I’m here. So let’s go, let’s do what we’re doing. He took me around to see the properties and I’m using your little underwriting sheet. And he said, yeah. And he said, what are you doing Then He said, I’m trying to see if the numbers work and see if this is the right price. And I, of course, I’m saying exactly what you have in your book.

Speaker 2: And he said, well, what do they say And I said, no, you know, it’s not the right. And he said, well, what is the right price And I told him the price. And then he said, okay. And then I said, plus you have to give me $25,000 to repair allowance. And he goes, what And I go, well, we went, you saw the repairs needed. And, either you can do them or you can give me the 25,000 at closing. And he said, okay. And that was it. That was our first property is 16 units. Unfortunately, I still have it. And I say, unfortunately, I still have it because it was our cashflow. I think after one year I almost cried because I couldn’t believe we were making almost as much as I was as a school teacher was one little property. And I thought, Oh my goodness. Now I bought it for 225,000. Of course I had, I didn’t have to put any money down. Cause he gave me the 25 closing and we, fixed it up, that it always kept giving us cashflow. It’s now worth $1 million, that little property. And it’s giving us a good cashflow from six to 7,000 a month.

Speaker 1: Oh, that’s really good from a small property like that.

Speaker 2: Yeah. I only took the equity out once, but just a little bit just to help buy another property, but not too much. The mortgage is hardly anything. So

Speaker 1: Back to the execution of that first deal. Cause that’s what we do every day deals. tell everybody how many you bought after

Speaker 2: We bought 20 apartment complex

Speaker 1: 20 Well, the total number of units

Speaker 2: Probably close to 3000,

Speaker 1: So 3000 doors. So it was started with somebody who was sick to her stomach, not wanting to get off the plane, gets the first deal, done a 16 unit. And then, now we are at 14 years later and you’ve done 20 deals, 3000 units. And you’re still active. Yes. How’s it changed your life

Speaker 2: Tremendously. unbelievable. I was able to take care of my parents and that was my goal.

Speaker 1: Did you set your mom up with a six family One time

Speaker 2: I set her up with a single family, so she has a single family and it’s bringing her close to $900 a month of income that she is just so happy and blessed, you know, doing very well right now with that money. I mean, I don’t know where they would have been. You know, unfortunately my father passed away two years ago, but I got to take care of them. I was able to pay his health care. He lived very, very comfortable and we got to travel. He was almost 90 years old. So he lived a very good life. And I’m not saying thank you because if it wasn’t, I didn’t meet you over. I didn’t go to that program. I don’t, I don’t know what I would have been where my parents would have been met this time. So thank you so much.

Speaker 1: Oh, it’s my pleasure. You know, it’s the, that’s the rewards that we get, you know, from people that actually, cause we know it works. It’s a proven system, you know, and the people that actually go out and use it and put it into place and then we see the lives that it changes. It’s very rewarding in itself. I was just talking to somebody yesterday and his best friend had, he was a young guy in his early thirties and his best friend had just been killed in a plane crash. And he was at the funeral and we were talking that night and he said, you know, it’s just so it happens. So suddenly, you know, and, and he said, I started doing a reflection of my life and you know what I wanted, what I wanted to be known for. And he said, you know, at your funeral, Dave, he says, what do you want people to be saying about you I want people to say that fricking guy changed my life.

Speaker 2: Yes. And man did Dave. I can’t express to everyone. That’s listening. How much support we got from your team Yeah. Sorry mentioned it was, they were there every step of the way. the coaching was phenomenal. In fact, he kicked me out. My coach kicked me out. He said, I don’t it too much. You can’t be in the program anymore. I got too many students and you know what you’re doing In fact, he was asking me to help him with some of his students. And I was like, okay, I got it. I got it. But, he was just phenomenal. And and then Jeanie, I, you know, used to tell people, Jeannie was one of my best friend. And then I found out she’s everybody’s best friend.

Speaker 1: Here’s another one. Exactly. But let’s go into that deal and talk about the different hurdles, because obviously it was something that you were so afraid to do and people have, you know, fear at different levels. And a lot of people have fear at high levels and that’s why they don’t get started. You had this extreme fear. You actually didn’t want to get off the plane. So do you think it was because you got on that plane that you, you know, then you were forced to get off and then you actually get out of that bathroom when everything we thought was closed and then he was down there that broker. So you were forced to talk to him. So you think he was successful in that aspect Well, number one, you’re successful because you get on the plane, but then you actually put yourself in a situation where you were forced to perform, even then though you could have seen that property and then went back home.

Speaker 1: But then you started going through the different materials and the systems and you started getting confidence, correct Because this is what we do with our students all the time. It’s once they start using it and putting in the place, they start thinking content and they start to realize, it’s like, wow, I really can do this. And it’s like, wow, I really do have a good understanding of what I’m doing. And then when they start seeing that respect from the broke or, you know, the other people that they’re dealing with, then that confidence gets even deeper. So, so now you’ve got, so now you’ve got the confidence you get through there and you actually made the offer. So your confidence was high. So after you made that offer and started doing the deal due diligence process, what was the big surprise You know, there’s always a big surprise in due diligence. What was the big deal

Speaker 2: The big surprise was how old the property was. And that was for me the big surprise. Cause I was, I mean, I’m not from Texas and it was all brick and they had, the waters. What of is the swamp coolers on the roof I was like, Oh my goodness. But a few years into it, we got those off. And we put window units, which are very efficient because we have these really nice window units that, also do heat and air and that was more cost effective. And they just are more, we’re more efficient than the water coolers because the water coolers kept breaking down, kept, getting leaks. And so that was the biggest surprise. Cause I hadn’t seen a watercolor since I was a kid. Cause we used to have one in our house. We used to live on a ranch and we had one in our house that was the only ACI I ever knew.

Speaker 2: And I was thinking, I’m like, God, they still have these things. You know So that was the biggest surprise and you know, getting learning, also, the difference between gas, you know, they had a gas furnaces in the unit as well. We put the carbon monoxide on every unit to make sure that, you know, everyone was safe. And so that was something else that was a surprise. They had those old wall ones. I don’t know if people are familiar with the tall wall furnaces. So that was a surprise. But other than that, I liked the fact that it was all brick. So I knew that here in Texas brick is very important, but that was

Speaker 1: So during due diligence, you got surprises in terms of, you know, how things were built and how efficient they were in the different systems. Was there anything that was wrong with the property that beforehand, that surprised you or more importantly after you do, did you do diligence closed on the property What popped up Because something always pops up, you know, within that first year of ownership, I like, Holy crap. I didn’t think this is going to happen. Right,

Speaker 2: Right, right. let me try to think back that long ago, I had a lot of people that live there that were on social security and they were only paying like three 50 a month or, and I was, Oh, it was about five 50 to six 50. Right. And so that was a challenge because I didn’t want them to be homeless and I knew that their leases were up. So that was really a big challenge. And I did ask about housing, but they were not housing. They, weren’t also secure so

Speaker 1: Interesting that you say that because, during the due diligence process doing the, the lease audit, you know, sometimes what we’ll do is going, and we’ll take a look at their employment and see how they’re employed by how long they’ve been employed there when they fill out the application. I’m sure. After that, did you add that onto your lease audit task list Okay.

Speaker 2: Yes, of course. Yeah. Definitely. Cause you know, I didn’t see anybody. I did ask how many were section eight housing and they told them, I think with, they didn’t have any, so that was good. But they had a lot of social security. They had lived there for years, like, you know, 13 years. So I mean their units were just a mess. You know,

Speaker 1: I can understand your mindset because your mom was also security, right Yeah. You got into apartments and now you can go back to school, social security people and you know, the renter hire and you know that as a business owner, you got to get those rents higher, but are you going to evict your mom That’s what you’re thinking. Right. Am I fix my mom Exactly. Raise the rent so they can’t pay it. You know, that’s like an eviction. So what did you end up doing How did you, how did you resolve that problem side of your mind

Speaker 2: I went down to the social security and I talked to the caseworkers and I told them, you know, this is the situation. And first I was really concerned of the living conditions. What do you guys do You know, the, somebody needs to go out there and help them, you know And, and then I told them that this is what we’re going to be raising the rants. And so you need to make the modifications for them to be able to stay. And they did. I can not believe it. They did. And I told them, and I need to see they have, I’m going to give you one month to help somebody help them, plane, their unit, and then cause they were all elderly, you know And

Speaker 1: Are you saying that the previous owner, you told the previous owner that it needed to make modifications prior to closing No,

Speaker 2: No, no. It was after we closed that, I went to the social security and told them these are the new brand and we need somebody to go and help these people clean their units or we’re going to do a non-renewal and they did. I just can’t. And then there was about five of them. And then those 16 units, that’s a big number and I just pretty much trying to advocate for them, you know that. So they did and we raised the rants only a hundred dollars to four 50 instead of three 50. But then, you know, with the years we kept raising them 25 50, you know, during the year until we got now, we’re renting them for about 900 to 1,900 to a thousand, a unit. That’s the beauty of emerging markets. It is. And that’s the key word. That’s what has made us successful.

Speaker 2: I’m serious, Dave, if it wasn’t for that emerging market, I don’t know where I would have been because what happens is even when a property, for any reason, it’s, you can’t get it stabilized or really challenging if you are in an emerging market, the equity is just amazing. And, that is so important. It keeps you out of trouble, the emerging market. Oh yes it does. And you know, we’re very fortunate that we learned a lot enough from your program, not to make too many mistakes, but we have encountered our own challenges, but that emerging market has really given us the tools or whatever the Americans that we needed

Speaker 1: Out and buying in emerging markets is really good because you know, your first, your biggest mistakes are going to be in your first deals, you know And hopefully you go to the training and your mistakes. Aren’t big mistakes like mine were, but they’re smaller mistakes, but they’re still going to happen. You typically, within your first three to five deals, you know, the majority of that, and if you’re buying an emerging market, you know, that emerging market itself, the appreciation that you get in that market is the remedy. The rents rise, the Asian rises, your equity rises. And before you know it, you know, there’s the field that looked like an attorney who a dog actually turned that whole mind. And then, you know, the smarter investor learns from their mistakes, you know, and they continue to become a better investor, but it’s the people that are buying in emerging markets, not realizing there are emerging markets.

Speaker 1: And then now all of a sudden they get this, they think they have the minus touch where they think everything, they touch turns to gold and they get into a cell phase two and they don’t realize they’re there. You know, where the whole thing has gotten turned around, you know, where the next year or two, and they’re stuck with a whole bunch of properties. And before you know it, their minus touch has gone. And, and so are their properties. The bank takes the majority. So you went from that property, a 16 unit to what, what was your next property

Speaker 2: It was 108 units in the same market.

Speaker 1: Was it with the same broker Did the broker bringing the next deal

Speaker 2: No, we were following your program on how to find deals. And at that time we looked at LoopNet and this property just sort of came up and it said, seller finance. And that was the key at that time. Because again, I’m a school teacher, right Who’s going to give me a million dollars, right. And or what lender’s going to give me a million dollars to buy a property. So this broker was from California. The owners were from California. And so we did the numbers and the numbers worked. And because of you, we were able to raise the money. It was a $2.2 million. He wanted a million dollars down.

Speaker 1: How much was the much was the raise. It was a million dollar race,

Speaker 2: A million dollar raise. And of course that was for our acquisition fee as well. And do other constants though. So what was amazing is that because you had me on stage a couple times, you know, a lot of people came and asked me, you know, questions and I, to this day, I have students calling and I always try to help them as much as I can. I’ll bend over backwards for them. And, you know, I feel very honored, but at that time I went try to raise money at some of your events. And it was amazing that all these investors,

Speaker 1: You find like a lot of students do, they find that the, you find that the live events, that they’re actually people in the room with some deep pockets and they were looking to learn how to invest as well. But looking to invest in other people’s deals, the power of being on a stage. So you came on to my stage. I love this story about the fact that you, you know, you just couldn’t, you, you wouldn’t get off the airplane, you know, and that’s why I brought you up because so many people have so much fare. And I, and I like them to look at you and say, my God, if she couldn’t even get out of the airplane, you know, she had that much fear. You know, if you can do it, I can do it by being up there though, you get exposed, you know, people get a sense that they know you, they get your story and then they approach you afterwards.

Speaker 1: And you were smart to say, Hey, you know, I gotta, I gotta, I’m getting, creating a list of investors. And if you know what I’m doing, I want to know what I’m doing in the future. Then, you know, come on my list. And then, you know what you’re doing in the future, you know, they felt the accredited investor forum, but for anybody else, you know, the opportunity to get on a stage and just speak about anything that has to do with real estate, because that’s what you’re looking for and tell people what to do. You want to take advantage of it when you, can you look a real estate investment group, your meetup groups. I know there’s a lot of family offices out there. at one point I was paying $15,000 for 15 minutes. So I could get up and talk about emerging markets just for 15 minutes, because I knew that the end of that, 15 minutes to 400 people in that room, I was now known.

Speaker 1: I didn’t have to go out and try to network with everybody, which I hate to do. Anyways. I was, I was now a known commodity and people would come up to me for the remainder of the day. And that’s what the power of the stage does. So anytime you get the opportunity to go up there, if you’re at a meetup group or a real estate investment, and they have some of them call it a swap, or, you know, you talk about what you have, anytime you have the opportunity to get up there, get up there and do things and also create your own opportunities as well. Because didn’t you do a, raising private money event in San Diego and raised a bunch of money on your first one. Did you do an event hotel Is that you Am I thinking about somebody else Did you do an event at a hotel Raise a bunch of money

Speaker 2: That in San Jose, California, I did that in, we’re doing luncheons.

Speaker 1: And by the way, if anybody wants to ask a question, hit your M raise your hand button, and then, Jermaine’s on. And, and he will, he’ll kitchen you in the queue and we’ll go start taking questions. Okay. Yeah. So talk about that. So early on, I know that, you know, you need to, you, all of a sudden they started working, you know, deals started coming in. It was like, Holy crap, where am I going to get the money to fund these deals Okay. So you started doing one.

Speaker 2: Well, we started, networking, just like you said, going to different events, especially yours, not missing yours. Of course, we had so much more to learn and we did, and we started, networking and building invite creating these luncheons. We provide lunch for them and it was phenomenal. We just did. All we did is present versus a single family with multifamily. That’s what we were doing, presenting the difference between investing in multifamily. Cause you know, we were doing syndication. So we had to be very careful about the information we were putting out there. And so that’s what it was. And this, they asked us about any of our offers or deals that we had going on at that time. Then we would give them the information. Of course, we had our sheets already, you know, their credibility sheet there. We were very prepared and we were very successful in every luncheon.

Speaker 2: We’d get at least one or two at least, you know, up to five people. And we’re talking about from a hundred to 500,000. So typically how many people would attend these lunches we had from about 13 to 25, believe it or not. And our max was 25. We just went through our investor list that we created from, going to the event. We definitely, every time we got a business card, we put them on our potential investor list. And a lot of it too was the word of mouth because a lot of these people would invite somebody out. And of course they had to reregister. We had them pre-registered. So our max was 25, but we called everyone. We invited them in the email and called everyone and tried to reserve a seat for them. And if they were going to bring a guest to let us know, we were sort of sneaky.

Speaker 2: We tried to reserve at least, you know, 10 people over, just in case, depending on the size of our room and the maximum we can put in there. And so that was it. And it was no charge, but it did, require for them to be there in the morning. And then afterwards they we’d feed them lunch. And that gives us the opportunity to network at that time after lunch. So that’s how we got those people. We just went to every event we can think of in the Bay area. And so that was very successful by going to the different events and getting the business cards and then calling, introducing having a more of a one on one talk and we learned a little trick. And I don’t know if you were the one that told us that, you know, on our cards, what we would do is we would put a, B and C and amen that they were looking to invest and be meant that they had somebody they knew that was looking to invest and see was that they were looking for a properties or investors. So C was, they were looking for investors themselves. And so we would put the letters on the, and that’s how

Speaker 1: We created our list. We always reached out to everyone just because you never know the people that say they’re going to give you money won’t so you don’t know what 50% they’re going to be. So you gotta reach out to them. It all comes back like this we’re at the top of the hour and I’ve actually got to be in another meeting. So, I want to thank you Graziella for coming on. It’s always a pleasure to talk with you. We’ve got talk on the side as well. We haven’t done that in a little bit. say hello to everybody down there for me and to everybody out there, you got, you got homework, you got to get yourself into two networking situations right now with coronavirus it’s it’s virtual events, or, you know, maybe very small social events with the family members that you might know. And then the other thing is too, what’s your dog’s name And his name is tiny Tim.

Speaker 1: He was a ranch and they, when we planted them, they had to call them tiny Tim. So now he’s saved with tiny Tim. How’s your baby’s doing they’re doing good. Well, let me tell everybody the other two, homework. So the other two homework is you got to get yourself, put yourself two offers in. So, you know, we talked about how to get those offers in earlier during the call, but yeah, my kids are great. the twins are four now and my son is two amazingly fast. I know that’s good. I wish he said, you know, this Corona viruses keeping us all away, that our prayers are with everyone posted when it, when it breaks up and going off the bus and we’ll have, we’ll have a barbecue about definitely. Yeah. I love that you take care and everybody. Thank you. Thank you, Graciela. I’ll talk to you soon.

Speaker 3: You’ve been listening to the multifamily deal lab podcast, where the deals get done. If you’d like to learn more visit www.Davesfreebook.com and don’t forget to leave a five star rating and review and hit that subscribe button. So you don’t miss an episode. Thanks for listening.