Jason Yarusi – Yarusi Holdings – Real Estate Investing

On growing multifamily investments: “All we had to do was go in there and just basically run it better. Just put in a better process, lease it up, lease it up higher rates, and now we are meeting our goals.

Despite seemingly thousands of apartment buildings going up almost every where you look, the country still has a housing deficit.  This is great news for anyone looking to get into the multifamily real estate investing game.

Jason Yarusi of Yarusi holdings explains the ins and outs of his journey as a real estate investor and how he has learned to find some great properties.

Listen as Jason shares his real estate insights.  You’ll walk away with a few key tips that could make you a lot of money in your real estate investment strategy.

Don’t forget, your journey to business triumph is just a play button away. Tune in, get inspired, and let’s turn your business dreams into reality! #BusinessCoaching #Entrepreneurship #RealEstateInvesting

Enjoy!

Visit Jason at: https://www.yarusiholdings.com/

Authentic Business Adventures Podcast

Podcast Overview:

00:00 Entrepreneur opens restaurants, bar, brewery, construction company.
04:05 Real estate became a solution for busyness.
08:46 Transition from late nights to early mornings.
11:19 Flipping real estate requires efficient time management.
15:55 Invested in equipment for building structures efficiently.
19:02 Investing in growing markets, accelerating building value.
20:07 Forming management company, seeking investments, raising capital.
24:02 Poor operation running, surrounded by well-operating buildings.
26:50 Investment offers preferred return based on performance.
30:13 Manage smaller properties in-house, larger outsourced.
33:28 Obtaining up to 80% loan to value.
38:48 Need trusted allies for efficient plan implementation.
42:36 Property growth challenges due to infrastructure issues.
45:58 States handled pandemic differently, facing unique challenges.
47:11 Meeting housing demand, facing challenges of supply.
50:45 Market higher with forecasted rate cuts expected. Banks uncertain about loan pricing due to unexpected rise in rates. Fed anticipates breather and rate reduction.
54:29 Enjoyed podcasts on various topics, highly recommended.
56:29 Balanced partnership ensures focused, valuable business growth.
59:48 Authentic Business Adventures shares business success stories.

Podcast Transcription:

James [00:00:02]:
You have found Authentic Business Adventures, the business program that brings you the struggle stories and training for successes of business owners across the land. Downloadable audio episodes can be found on the podcast link found at draw in customers.com. We are locally underwritten by the Bank of Sun Prairie. My name is James. And today, we’re welcoming slash preparing to learn from Jason at Yarusi Holdings. So, Jason, how is it going today?

Jason [00:00:27]:
Hey. It’s going great. I’m excited to be here.

James [00:00:30]:
Yeah. Tell us, I guess, just to get started here, what is Yarusi Holdings?

Jason [00:00:34]:
Sure. Yarusi Holdings is a multifamily investment firm, down here just south of Nashville, Tennessee in a town called Murfreesboro. We’ve acquired a little over 3,000 apartment units, back since, 2016. So in In a ThruLine, we buy apartment communities. We do this through something mainly through something called syndication where we, raise investment spend capital so we can buy these apartment buildings and typically reposition them in the better places to live, which typically generates better revenue, Bigger bottom line, which usually, leads to outsized returns for our investors.

James [00:01:08]:
Alright. Super cool. That’s, I mean, cool. The real estate investment game is Always one that helps. I guess it’s, I don’t know. I got a lot of friends in it. I’m in it a tiny amount, nowhere near 3,000 doors. That’s a that’s a lot of doors.

Jason [00:01:23]:
Keep keeps us busy. Let’s say that. It keeps us busy. So we we’ve, and part of our I think we’ll talk through today is a lot of our growing pains. We’re not growing fast Enough and so doing a lot ourselves, right, which you I’m sure you’ve seen with other guests and, as we’ve continued to scale and bring on the right people to Fill the needs. We’ve continued to grow in a really good fashion.

James [00:01:42]:
Yeah. Is this something that you started?

Jason [00:01:45]:
I did. Yeah. Yeah. So I started this, so very, Nondirectional path to where we are today. Right? So, you know, I came out of college, moved to New York City, went from a finance degree in school into just Being a bartender. Right? So I was a bartender for a number of years, end up meeting my now wife, at one of the big bars we ran. Ran that bar when it was just The small little tiki hut and, scaled that revenue by 25 times that owner and really liked that model. So it blew up.

Jason [00:02:12]:
It was a crazy outdoor place in New York City, and then I Went from there and started, opening up, another restaurant, opened up another bar. I opened and sold a brewery. And then, lo and behold, over in New Jersey where I’m from, where I was Born and raised, hurricane Sandy happened, and that just estimated the East Coast. And, my dad, he just recently retired, but he had this very niche construction company. And that construction company lifted and moved houses. So take the physical house off off the foundation, move it, you know, for everything, for setbacks or, you know, for if you were live Close to a street, it would move it back, foundation issues, but one of the really big drivers was for flooding. Right? So people would lift their houses high to hopefully not flood again. Well, he would do just You could think of it, like, how how much do you hear that? Right? He would do, like, 10 or 12 projects a year.

Jason [00:02:58]:
Hurricane Sandy happens overnight. He goes from a couple calls a month to a 1000 calls a day. Right. And so my little brother who’s working for me in New York City, my my now wife, Pili, who was my girlfriend at the time, myself, you know, we picked up out of New York City City and went out to help dad Just run the family construction company. And that business went from, you know, doing those 10 or 12 projects a year to, you know, on the high level, we’re doing 300 of them a year. So it just was Crushing it. We did about 2,000 of them over the course of 5 or 6 years and, really fun. However, it was the the through line of what we did in our business Where we were constantly doing this very transactional and needy business from my standpoint.

Jason [00:03:39]:
Right? So, you know, the bar world. Right? If I’m not there serving a drink, I’m not getting tips. Right? So an outdoor bar, if it’s raining out, you know, there no money. Right? This niche business, for for lifting houses This was also very specialized. Right? It’s hard for us to detach ourselves because there was such risk in the business. You’re taking someone’s greatest possession, typically their house, And you’re putting a lot of risk. Right? A lot of risk just in terms of you and your employees, a high specialized field. So we constantly had to be there doing the work.

Jason [00:04:05]:
And so just like Construction world, if you’re not out there doing work, you’re not making money. So we kept doing these things where I had to be so actively involved. Well, you know, my my wife and myself, you know, she was pregnant with our first, You know, child, and we just kept saying, like, we gotta find a way to just get back the time. Right? Because if we had 25 hours in a day, you know, 8 days a week, we we would’ve used them. Right. We were just so busy. And we kept asking that question, like, what else could we do? And, you know, the word that kept popping up was real estate. However, you know, real estate is this very, you know, wide.

Jason [00:04:35]:
It is blue ocean. Right? You can do a 1,000,000 things in in real estate. You know, you could just buy and just be a landlord for a Single house. You could flip homes. You could do some wholesaling, Airbnb’s, tax liens. It just the list is is ever going. So we did the first thing that we saw is, like, the flipping show. So we said, okay.

Jason [00:04:51]:
Let’s start to do flips. And so we started to get in the flips. Peely, my wife, went out and got a real estate license, and we started doing that. And it was going fine. We’re doing good with it, but here we are. We have the construction business. I still have a, you know, a restaurant bar in New York City. And now here we are doing these flips, and we had no time, Time, and now we have less time.

Jason [00:05:09]:
Right? So we kept saying, man, like, we are going the wrong direction. Going the wrong direction. Right? And so we kept asking, like, what else is there? So we we moved. We started doing some wholesaling, and that was also transactional. And then we started doing some Airbnbs. And we constantly kept going to that pattern just saying, okay. This is Going and it’s like, you know, we’re making money. This is fine, but it’s not quite right.

Jason [00:05:28]:
And we came upon someone at a meeting. Right? So so Peely met someone at a at a RIA meeting who was doing of state rentals. And they were just doing single family homes, you know, like, a 1000 miles away, and we’re like, So we dove in. We brought a couple rentals. And instead of buying a house, I bought some duplexes and triplexes. And what that forced us to do is that it took us out of the equation of the activity. Right? I couldn’t run down to Home Depot. I couldn’t go there and Brand, I couldn’t do all these busy activities because I was a 1000 miles away.

Jason [00:05:56]:
And what it pushed and forced my hand to do was to force me into the position here Where I had to put people in place to make this a successful adventure. Right? So so we’d get out there to the contractors to renovate the unit, we’d get the property managers to manage it. Right? So we get all the different piece of the puzzle to make it work. And lo and behold, it started working. Right? So we said, woah. This is really interesting. However, you know, with a couple duplexes and triplexes, it just wasn’t gonna move the needle a lot. And we it just looked like, We’ll say chaos to have, like, 50 or 60 duplexes, you know, all around the country.

Jason [00:06:30]:
It just seemed like the disco nightmare. So I kept just asking that question, like, But what else is there? And I came upon someone who was buying apartment buildings. And that was that that, like, moment because It just equated constantly back to the restaurant business. Like, you could have a 12 seat restaurant or or a 100 seat restaurant. Right? Same process. However, dinner was the same. Right? So dinner’s for most of the world is, you know, 5 to 7 or 5 to 8. So if you have a 12 c restaurant or a 100 c restaurant, you’re gonna do so so many turns with a 12 c restaurant.

Jason [00:06:59]:
So your economies of scale got limited. So when I looked at the apartment building, and I can understand that I could treat that more to to a scale of a business. Try and hire a full staff with it, have a full time leasing person, full time maintenance person, and do things that could drive the business forward in a much greater capacity Just with small levers, I was like, ah, that’s that’s it. So in 2015, 2016, we sold off All the little properties we had really started moving away from the flipping and moved all into just educating ourself and just understanding the model of buying apartment buildings. And in 2017, we brought a 94 unit apartment building, and that was in Louisville, Kentucky. And that was the first of about 30 or transactions that we’ve done to date.

James [00:07:40]:
Wow. So tell me, you got you’re going through the whole process and you have a bar and restaurant. Having a bar restaurant on its own has gotta be a huge headache. So how did you how did you juggle your time, especially having a kid, I guess in the middle of that, that’s gotta be So

Jason [00:08:00]:
when we moved out of New Jersey or moved out of New York City, I had we had a partner. Right. And so he ended up he was doing a lot of the operational side of it. Right? So and a lot of what I do today is more like the asset management side, and so you could equate that to restaurant. Right? So So in terms of plans, processing, marketing, and path forward, and then he would be the implementer in in the day to day for the business. And so he held on the path With the day to day with the business here, and then I was able to do that from New Jersey and New York City. Now, again, like, you know, it it still takes time. Right.

Jason [00:08:29]:
It still takes time, but luckily, we had the partner who was doing the day to day there. Because I had I was still running some of the other bars and restaurants in there, that I wasn’t the owner of while he was running the one that we were the owner of.

James [00:08:41]:
Dang. Alright. Yeah. So are you still in the bar and restaurant business as well?

Jason [00:08:46]:
No. You know, the having little kids, it it it changed a lot. Right? And so I I went from, you know, My wife and I, when we were first, you know, dating, we we would go to work at, like, 10 a night. You know? Like, you know, it was just a different world. Right? And so your day would be that, you know, you’d work Tuesday to Sunday, you’d have Mondays off, and you you you would get home 3, 4, or 5 in the morning. Right? And so the evolution, a lot of which Changed my focus is that I had to really just revamp the way I saw things and just how I focused and just how I set my day. Right? So From getting up and going up and staying up all hours in the night to getting up massively early now. I’ve had to completely transition my life just because, you know, goals have changed, the the mile marks are Change and just where I want to go to be able to spend time with the grown family has really changed as we’ve continued to go forward.

James [00:09:36]:
Yeah. I can totally relate to that. It’s the business I had before, the call answering service that I have now. When we had a kid, It’s one of those things where you think, like, oh, before going to networking events or doing business stuff at night was like, yeah. No problem. Whatever. But when you have a kid, you’re like, no. That kid’s only gonna be a kid once.

Jason [00:09:57]:
Yep.

James [00:09:58]:
So and you don’t want them to be a jerk, so you better spend some time with that kid. Plus, what’s the point of having a kid if you’re not gonna spend some time with it?

Jason [00:10:05]:
A 100% right. Plus, like, you know, it’s it’s like they’re gonna get up when they get up in the morning. It’s not like, hey. Listen. I I was out late. Could you mind just sleeping in for another hour and a half? You know?

James [00:10:14]:
Like, it’s Yeah. You know?

Jason [00:10:16]:
It’s just 6 in the morning. They’re hungry. They’re ready to go. You know? They’re ready for life. They’re ready to go explore. Right? So, you know, and that’s why, you know, the the whole part of starting a family was just to to grow into that. Right? So a lot of the decisions we’ve been making just to find our time back, it’s just been dedicated of just we want to see our future. Right? And it hasn’t hasn’t been a straight line.

Jason [00:10:34]:
Right? You know, I I just every every step forward is a is a step forward sometimes in the wrong direction, but at least it’s a step forward, Right. And a learning lesson. So we’ve continued to evolve as we’ve continued to continue to make steps.

James [00:10:45]:
Yeah. Just keep it moving. I mean, that’s what progress is all about. Yeah.

Jason [00:10:48]:
That’s

James [00:10:48]:
fair. Tell me, when you were doing the flipping thing, were you actually swinging hammers and getting in there, doing all that?

Jason [00:10:55]:
Yes and no. So Some of this, yes. I mean, we come from 5 generation construction. Right? And so so we come you know, my dad knows. He’s a he’s a little wizard out there for what what he did. So We we would in a lot of capacity. We would also be out there, you know, run to the run to the supply houses, run to all the parts. You know? So just busy in the activity of just Continue to push in the job forward and picking up the gaps because flips are great.

Jason [00:11:19]:
Right? But if you’re not doing a tremendous amount of them, you have a a dialed on full Staff, right, of electricians, the plumbers, and stuff like that. You’re also at the will of their schedule. So a lot of the stuff with it. You know? It’s start it’s stop and start. Right? And so you have to constantly Push forward the project and a lot of the money. People don’t realize that there’s that like, oh, you know, I got to the end of the project, and I made, you know, $50,000 on the sale, but Are you counting all the, time? Right? Are you counting, you know, all the utility costs, the holding costs, all the excess costs? Right? Because that’s where you lose your time. Right? So with flipping, it it it’s a fun business, but my Friends who are most successful with it, they do one pattern and it’s time. A time efficiency is it.

Jason [00:11:53]:
Right? As quick as you can get from a to b is where you make your money. It’s not, hey. Let me do this project and whatever time it takes because that’s the dollars that are basically going out the window for each and every day that go by that you’re letting the project sit there.

James [00:12:06]:
Gotcha. Because taxes never stop.

Jason [00:12:08]:
Everything. Yeah. You you like taxes, insurance. Right? So all your utility payments, all your holding costs. Right? Just all of your time mean, and push your money becomes less valuable as it just sits out there, right, because you can’t roll your money forward.

James [00:12:20]:
Fair. I wanna just ask you a really quick question about the house lifting in things. It’s not necessarily crazy relevant, but it’s just crazy curious from a business standpoint. Lifting a house is not like you just go out there and muscle it. You need equipment, cranes and jacks and things to lift a I don’t know what a house weighs, but I’m sure it’s not light.

Jason [00:12:39]:
Yeah. It could we it it could be Tons and tons and tons. So we you know, like, anywhere 50 tons, we’ve listed 500 ton, right, in a big big complex before. So it really is anything in between. Right? And what we do is that so imagine you have a typical house. It’s got it’s got a foundation, you know, you know, made kademan of cinder block or made of some other Concrete block, that’s your foundation. Right? Then you have some wood frame house on top. What we will do is we will actually insert steel beams through the foundation, And we will set up a temporary foundation through this steel structure that will be underneath the wood frame.

Jason [00:13:15]:
Underneath that steel frame inside the the Crawl space, the basement, or inside the foundation will set up basically jingle blocks. And typically, you’ll have, let’s just say, 4 at the minimum, right, for balance, and it’ll be 4 patterns of jingle block, Jingle blocks that will be there to set the balance for the steel james. Within each of those jingle jingle blocks setups here will be a jack. And that jack typically will carry anywhere between 15 to 30 tons for each jack right there. That jack will have a hose, and that hose ties Back to a manifest. And so there’ll be 1 manifest. And let’s say at the at the easiest part, the manifestor’s 4 jacks. Well, on that manifest, you can basically set gauges to dictate To where the weight is in the house.

Jason [00:13:56]:
Because if you just have a perfect square house, although it’s perfectly square, it doesn’t weigh the same. Maybe on one side of the house, there’s all the kitchen And a bathroom on the other side. It’s an open room. Right? And on the other side, there’s 1 bathroom. Right? So they’re all gonna have different weights. You might have 20 ton in one corner, 5 ton in another corner, 10 ton, And 15 ton. Right? So you can use this manifest to be be able to dictate the pressure pressure of how much PSI is gonna go to each of those jacks and keep everything level. Correct.

Jason [00:14:22]:
And we’ll be able to lift the house up, and you can go up in, certain patterns to to a certain amount, but typically, we’ll go up about 12 to 14 inches each time. And and after we go 12 to 14 inches, we’ll reshore it, basically add blocks underneath the jack, and then reset the jack and go up again. And we’ll continue that until we get up to the elevation we need there, and we’ll basically pattern it off the the masons and the next crew will come in and build a foundation up, Leaving us a little bit of room, typically, you know, 6 to 8 inches here. We’ll come down and lower the house onto the new foundation once basically the framers Just put sales in, release our materials, and then move on to the next job and keep pattern rolling from there.

James [00:15:02]:
So tell me the curiosity that I have is your dad’s doing this, a few of them. And then all of a sudden, he’s doing hundreds of them. The capital outlay for all these james and the adding of the employees and training them and stuff like this to lift the house. You don’t mess that up. So how did he scale that fast and then still get a return or did he get a return and just throwing out all that capital? Because I don’t know what jack started to jack a house, but it can’t be just $5 at on Amazon or something like that.

Jason [00:15:32]:
Where we won out is that a lot of the outlay was on employees. So we had employees and trucks. Right? Because I we my dad had steel for days. Because you’re gonna imagine each time you lift the house, that steel doesn’t come back to you for a moment. Right. So it’s still so we had steel for days out there. So we rarely had to invest to buy more steel. The one part is when these Jenga blocks, the same thing, they would stay there is that, No.

Jason [00:15:55]:
They also it’s just wood. Right? It’s treated wood that over time is going to to rot out or just not be sufficient. Right? So we had a good portion get started, and we were able to reinvest from that part right There. So the the big pieces that we constantly had to go on here was was manpower, some new trucks, and we had to buy it’s called a Jackie machine, but we had to buy one more to what we had on board right there to continue the process there to be able to run out 2 crews. Right? So we’re able to do this with 2 crews. So we actually it it was. And then you have other things that continue to tick up as you grew grew in revenue. Right? Insurances, you could that you could imagine insurance is not cheap when you’re lifted a house.

Jason [00:16:31]:
Right? So the insurances and as more Things happen with storm work and everything. The insurances went up and continue to elevate from there, but a lot of this was in capital outlay, trucks, and continue to resource materials. But the the The cool thing about Steel and Block is that each time the house came down, you could just reuse that. Right? So you continue to reuse that. You you so that was reusable equipment there. Right. And so as you continue to push forward, you can continue to use that, but it just came out to how much you would have for how many houses you could use. Because if you had, say, 15 to 20 houses worth of equipment right there.

Jason [00:17:03]:
And imagine each house is different. Right? And so there’s gonna be different patterns of how much block you need and and different patterns of steel sizes that you need for each house. So luckily, my dad just, for years, had just been compiling steel. Right? So he had so much steel out there, so we’re able to Pretty far down the road before I’d constantly reinvestigate more. But it it made it interesting because many people who were trying to jump into that Had that very high hurdle when it first started out of capital outlay just to get in. Right? Because they they were starting from 0, and maybe we were starting at 60. Right? But they were starting at 0. So we at least had that head start.

Jason [00:17:38]:
We’re able to go out there and do jobs day 1 and continue to really scale with the business as the storm work happens.

James [00:17:44]:
That’s cool. I like that. So shifting gears back to investing in apartments and stuff like that, get a 94 unit apartment. With that one. Did you have investors as well, or was that just you?

Jason [00:17:55]:
Okay. Yeah. Yeah. So we had investors. We we had done something early on is that, you know, we we had Seeing some people, and they they end up becoming, like, mentors to us just asking them how they did it. And one of the things they said, like, listen. It it’s not like You you hear a lot. Like, if you find a deal, the money will come, but that’s the wrong way to think about it because it’s just a it’s a huge learning hurdle.

Jason [00:18:15]:
Right? Because Mhmm. Most invest in Stocks and bonds. They they’re used to that or they see a flipping show. But when you talk to someone about buying an apartment building, they’ve never heard about it. Right? They’ve never thought of this, never thought about this as their, like, investment Criteria. Right? So as this came upon as something we wanted to do, we had the thought that we would go out to our network and just Talk to them about what we’re doing, why we’re excited about it. Like, hey. Listen.

Jason [00:18:38]:
We are going to buy apartment buildings. Now our our friends and family, right, they knew us and they knew that, you know, we’d showed up and done what we’ve said we’ve Done in some other business fashions. Right? So, like, okay. Like, why? Like, hey. Listen. With apartment buildings, you have this opportunity where you can you can benefit from getting cash flow. Right? So people pay their rent, Pays expenses, pays your mortgage, and then, you know, remaining part can be cash flow that we can use to distribute out to investors. Then you have the appreciation.

Jason [00:19:02]:
You know, we’re gonna invest in these markets because we feel like these markets Gonna grow over time and have more value. Plus, when we do renovations to the building, right, it becomes more valuable. So we’re gonna force forward the appreciation of building. Next, there’s the depreciation benefits and and tax benefits, and we use something called cost segregation where we accelerate the depreciation forward Into 5 15 year buckets. So instead of having depreciation happen over 27a half years, you know, you may have the lion’s share of your losses in the 1st couple years there. So if if people can take advantage of depreciation losses, it’s also a way for them to offset some of the other gains that they may have through some of their other investments. So it helps them from a tax perspective. And And we have the silent killer debt pay down that happens with this.

Jason [00:19:44]:
So there’s so many wins that you could win with these apartment buildings. So we would teach people this and just show them like, hey. For this Building that we’re gonna find, we made a 1 pager of, like, an avatar of the building we’re gonna find. He said, we’re gonna look for this. 75 to a 150 units is the type of building we’re gonna look for. It’s gonna be built anywhere between 1980 and 2005. It’s gonna be in the south side of Louisville. Right? We’re gonna look for this.

Jason [00:20:07]:
We’re gonna have a management company that’s gonna manage it, we anticipate that we’re gonna look for buildings that have this type of return. And so we would give this education to our friends and family and say, listen. Like, If this is something that you wanna talk more about, you know, let me know. And through this process, we’re able to get on board. Now we weren’t taking capital, but We were able to get commitments that if we find this type of investment here, we would have any like, a little over $1,000,000 of of capital that would be interested. So we found that 94 build, unit, we need to raise about 750. Maybe it was $800,000, and we’re able to do that in, like, a day because we had done this prework To say, like, hey. Like, listen.

Jason [00:20:44]:
Like, when we find this, like, would you be interested? And then we gauge, like, how much? Like, 25 or 50,000. So when we had the investment, we had those investors that were ready to jump, and it made that process a lot easier. And then instead of finding the building first and then bringing it to them. Because With what we do, there’s a lot of paperwork. You know, we’re we’re offering a security right. So it’s an exemption, but we’re offering a security right. The the paperwork that they sign into can be A 150 pages. So if you try to find this apartment building, right, and then go to our investors and say, hey.

Jason [00:21:17]:
Listen. I got this great investment for you. I’ve never told you about it, but Are you ready to invest? Right? It’s so much for the take on. Right? And the confused mind says no. And then on the back of it, when we were doing it before having the investment, I mean, was no pressure on us. We were just like, hey. Listen. But if I have this investment, I have to close in 45 days.

Jason [00:21:35]:
Now it puts pressure on me because I need a commitment. Right? And now I need to Ask them and hey. Hey. Can you invest now? Right? Because now and it puts pressure on them, and it doesn’t allow them to fully understand it and make sure it works for them. So we’re able to do it, and we continue to pattern this way to just talk with investor and be like, listen. Here’s the opportunity that presents it. Right? Here’s what we do. Here’s our model.

Jason [00:21:55]:
You know, here’s frequently asked questions. We’re happy to go through any questions they have as well, and just dive into it. And then if it’s something that can be a benefit for them, Great. Then as we have investments come forward, they can look at them and see if this meets their investment goals. And sometimes it does today, and sometimes it may in a year or 2 years or 5

James [00:22:14]:
Alright. Tell me, when you see, an apartment building or, I guess, a small neighborhood that’s for sale with that many doors in it, Why is whoever owns that getting rid of that? Because if it’s producing, you think they would keep it. Right?

Jason [00:22:31]:
Yes and no. So there’s a lot of things that could come up front. It could be that, you know, we brought everything from where, you know, Parents have passed it down to the kid, and they don’t want it. Right? Or, you know, there’s a partnership dispute. Right? And and the partners no longer are in agreement on on just how it goes forward. Or Just like they do with us. You know? It’s a syndication. Like, they have a syndication model like we do where there’s an end cap to the investment.

Jason [00:22:55]:
Right? So there’s 5 to 7 year window for which we have to sell as part of our agreement to investors. Right? So they may be coming up under a window there. Oh. Yeah. So there there’s also a window that could be a part. Plus, like, anything, like, you know, a house or anything is that you invest in day 1. In 4 or 5 years, there needs to be an additional investment. What this does is even if we go in and renovate a 100% of the building today, in 4 or 5 years, right, just like anything, a house or anything else, There will be additional improvements that can be made at that time.

Jason [00:23:23]:
So it allows a new investor to come in there and recapitalize and potentially make new investment that now fits that model. So for instance, the, the 94 unit, you know, we ended up selling that, building to to new investors in month 32. Because when we brought that building originally, we were able to do what’s called, like, a classic renovation. So we all we did was just go in there and do paint and carpet, just make it nicer. Right? Because they were not operating it well. This was an instance that the owner had passed away. He was in his nineties, and he gave it to, who will say, kids, but it was it was 5 kids who were in their sixties, and they were all living The state, they didn’t want this thing. They’re like, what are we doing with this thing? So they had a really bad management, in there.

Jason [00:24:02]:
They had a really poor operation running, But all the buildings that were surrounding it just were were operating in a find phenomenal fashion. Right? They were almost a 100% occupied, all renting at higher rental rates. So for us, all we had to do was go in there and just basically just run it better. Just put in a better process, lease it up, lease it up higher rates, and now we are meeting our hurdles. What happened Two and a half years down the road was that new investors were coming in and buying apartment buildings around there, and they started doing very premium upgrades. So they started doing premium upgrades that when I brought it, wouldn’t have fit that. Because if I came in and tried to put in, you know, like, granite countertops and all this stuff, I would have gotten the same rental rates that I did without doing it because the market didn’t return. Correct.

Jason [00:24:45]:
And so the market turned, so it allowed me to go and sell to an investor to wanna come in there and do that same model.

James [00:24:51]:
Got it. So you can pull your cash, work for the next investment. Okay. Yeah. Interesting. So tell me, from an investor standpoint, especially dealing with family. Has that been challenging?

Jason [00:25:04]:
You know, we do monthly reporting. And what I found is that if you constantly give guidance and give reporting because just like there’s a 100 people living in the building. Of course, it’s not gonna go perfect every day. Right. You’re always gonna have things that will come up and change in just a day to day. Right? So we have our perfect plan, and then we have day 1 as we call it. And what we do is we have our plan, And then we have our pivot to what needs to be done to get back to the plan. So each month, on 15th, we give a report out to all investors for all investments.

Jason [00:25:31]:
We say, Hey. Here’s here’s where occupancy is. You know? Here’s where collections is. Here here’s where we are with the plan. Here’s what’s going great. Here’s what’s not going perfect to plan, and here’s what we’re doing To mediate to get back to that plan for the things that aren’t going right. And doing that for for the time that we’ve done this now Has gotten to a point where investors, we don’t get a ton of feedback from investors. We basically give them the details.

Jason [00:25:54]:
You know? And so we’ll get, you know, 1 or 2 questions on there, but, no, It hasn’t been trying because we we’ve kept commune communication going. Because communication is always that funny thing is that, you know, if you have no communication, It’s it it produces 2 sides. Most people, will say, oh, something bad might be going on. But even if you’re saying, oh, I don’t know what that is. I just had a

James [00:26:13]:
I don’t know.

Jason [00:26:14]:
I don’t see here. Even if we even if we don’t have even if things are going perfect, if we’re not communicating, then investors just think something’s off. Right? So We’ve just constantly communicated throughout on the investments and allows them to understand because they are you know, they’re investing a ton of money. I think our average investment is, like, $73,000 from the investor. Right. And so when you look at that, it’s a big investment. Right? And for them to put that much capital, we wanna make sure they’re in the know of what’s actually happening there with their investment.

James [00:26:41]:
So with investments like that, are you promising a return or sharing an expected return?

Jason [00:26:48]:
It’s exciting.

James [00:26:49]:
Yeah. What their

Jason [00:26:50]:
what their Yeah. There’s no no guarantees in anything, and we can’t guarantee in return. What we offer our typical investment structures like this is that if someone invests, let’s just say $100,000 for easy easy math there, we offer them a preferred return. And what that means is that it’s not a guarantee, but of of the returns that come out from the investment, the first returns go back to them. So let’s say each year, They’re gonna get a preferred preferential rate of 8%. Meaning that if they invest $100,000, each year of the first returns, they’re gonna get $8,000. Now if we surpass that, say, we say we can do 20000 hours, then they’ll get the 8,000, and then that next 12,000 will be split between them and us. However, if we don’t meet it, say we can only do 6,000, we’ll say that 6,000 will go to them.

Jason [00:27:37]:
And then the following year, we need to again Go and hit that 8% mark. However, we now need to hit the 8% and then make up and and catch up on the returns that we didn’t meet. So it would be the additional two And so 8,000 plus 2,000 in the next year to continue to meet the mark before it’d be a split to us. So it keeps us in a good Symbiotic relationship where where they are investing a lot of capital. We invest too, but it puts them in a position that they’re getting preferential treatment for the lion’s share of the capital coming in.

James [00:28:07]:
Alright. And when they invest, let’s just say they’re throwing 100,000 at it. You sell that property. Are you then taking their money and reinvesting into something else? Or are you saying, hey. Here’s your $100 back. If you wanna keep playing, send it back our way. How does

Jason [00:28:23]:
that work? The 2nd part is that we so we have to close it out. And so with the closeout here, we’ll we’ll give them any of their the re their their return of capital. So they’ll get The preferred return, if there’s any catch up, they’ll get a split of the profit and their return. So the the return of capital of the 100 k. If we have another project on that part, They can make the choice. If they if they wanna roll it, they’re welcome to. However, it will go back to them with the question that they’re welcome to reinvest with us or or use as as they Deemed deemed fit.

James [00:28:51]:
Gotcha. That is cool. That is interesting. I love it. So tell me about management company. Do you have your own, or are you hiring out? Because this seems to be the one of the major headaches

Jason [00:29:03]:
Yeah.

James [00:29:04]:
Between the people that I know that are in real estate investing with apartments. Management companies, some are good, some are not. Yeah.

Jason [00:29:12]:
Yeah. A lot of area we need We actually it’s it’s both. It is. So the the answer is we have both. Is that We manage a select amount of properties in house, and then we have property management companies. Right now, we’re in 7 states. And so we have property management companies in the in the states, In in a lot of the surrounding states that manage, the larger properties. We found that on a larger property, we can find much more professional, better suited management companies.

Jason [00:29:37]:
So, you know, 75 to 150 units, you know, like that, we could find a very good company. Where we are missing the mark is a lot of the properties. We have something that’s 30 units, 36 units, you know, 20 units. It’s very hard to get good management for those type of properties. So we battled that for a while To to just find a management company, and then we opened up our own. So we have another division here that does in house management, And we manage, you know, an office building. We, manage a storage, storage facility. We manage a 20 unit, a, 12 unit, a 36 unit, 32 unit.

Jason [00:30:13]:
What else do they have in a docket? Right? And so and one of the property there oh, in a at a, 29 unit. Right. And so we manage those properties in house, and that puts us in a part is that we were doing so much managing the manager on the smaller assets. We’re like, man, we could just do this ourself. So we actually do do less work to manage ourself because we’re just more efficient with the process on that part because we can basically pull in the economies for that type of project. But the bigger properties, like, even here in town, like, I have a property where we manage right here in town. It’s a smaller property, but then we have a lot of larger properties. And those larger properties, we have a fantastic management company, and they manage all the larger properties here in our surrounding town here for that type of property while we deal with the smaller ones.

James [00:30:55]:
Alright. Very cool. So when you sell a property that has management company and it’s got good history and all that jazz, When you sell that, does a management company typically stay with the new owners?

Jason [00:31:08]:
It it’s an opportunity for the owner to make that choice. Most of the time, If you’re coming onto a property, you you wanna change in narrative. And so whatever that would be just with with new ownership. Right? Like, new ownership. And you see that a lot like restaurants. New ownership, right, on that same part. So very few times do we keep the management company. Now there there’s there’s Times when it changes.

Jason [00:31:30]:
Right? If it’s a management company we already work with, right, then we’ll keep the management company. However, in many times, we’ll transition a management company Just for a new change in direction. So it could be a lot of things that the tenant base needs to, you know, a reup. Right? They they may have bad bad practices, and we need to come in here and just, You know, new sheriff in town just setting new practices. It could be that we like to have already have an existing management company we work well with. We know their process. So It 9 out of 10 times, it will be a new management company.

James [00:31:59]:
Alright. Interesting. I suppose it was clean slate. All good.

Jason [00:32:01]:
Right.

James [00:32:02]:
Tell me about financing. You’re getting investors. Are you getting investors that you can make cash offers on things? Are you getting investors that you can knock out a big chunk of the debt, but you’re actually using banks or other financing means

Jason [00:32:15]:
to to get all those loans done. Banks, for the majority. So, typically, our biggest investor will be a bank. Right. So the bank will come on and do a 65% or 70% of the of the value of of the project. Right? And why we do this is that investors, know, our investors set, you know, typically that the the expectation return is gonna be much higher. Right? Where the bank the bank could be 6 or 8%. It’s gonna be the loan with interest james, Where the investor, you know, maybe it’s 15%.

Jason [00:32:40]:
So if we were to try and to find something where we brought it all cash and get a 15% return on a 100% of money allocated, That would be it it it would be very difficult to come to that. So we’re able to yeah. We’ll be able to reduce our cost of capital by going in there and putting some kind of bank debt on the Property and then bringing the rest from the investors. Because then you’re getting, say, 65% of it is at 6% or 7%. And then the other 35 or 40% of it can be at the expected return that could be 15%. So your overall cost of capital brings it down for the project and blends out for you to find better projects that can meet that return rate.

James [00:33:17]:
Got it. So when you are finding property, is that typical 30, 70 ish? Or I guess commercial property, I always think of 20, 80, but I don’t know. Maybe departments are different.

Jason [00:33:28]:
It may you could get up to 80% loan to value. You could still get it today. It’s a little harder, Especially in a market, a lot of people aren’t especially where interest rates are in just the state of the market. Typically, 70%, seventy 5% is is kind of that part where you’ll find most of your loans, sometimes 65%. We just did a 65% loan last week. And Although it’s 65% on the bank, you’re typically still raising about another 40% or or more of capital because you have everything that you’re closing cost, your Instruction budget and all that other stuff on top. So if you have $10,000,000 loan, maybe it’ll be a 6 and a half, $1,000,000, loan, right, on a $10,000,000 project, then you might raise another 4a half. And that 4a half is gonna make up, you know, all the closing cost, the fees, and then everything with the construction budget reserves.

James [00:34:15]:
Gotcha. So, yeah, I suppose cash flow makes the business flow kinda thing.

Jason [00:34:19]:
So you

James [00:34:19]:
need that gotcha. That makes sense. Tell me if I’m an investor, and I wanna get into the rental real estate game. I’m probably not gonna go out and buy a 100 unit place, maybe, but it’s probably not likely. What would you recommend for someone that was just getting started in it as far as things to avoid or pitfalls? Or

Jason [00:34:40]:
Do you

James [00:34:40]:
go up on your own? Do you get investors?

Jason [00:34:43]:
It I’ve seen it all sides. I’ve seen people buy small buildings and large buildings. And to me, like, It’s where your mental state is at and where your background is. Right? Because if you’re coming and you just come from something that maybe I don’t know. You’re you’re you’re working at a place that you don’t have the financial background of going in there. Maybe the small one makes more sense, but some people come from a big financial background and will go to a larger property because just like I said with the restaurant, You get more kind of just scale. Right? If you have a 10 unit or a 20 unit, you can’t hire a full staff from that. So it’s gonna be a lot more needy where if you get up to, you know, Say a 100 in your property, you can hire that full time staff.

Jason [00:35:16]:
So let’s just say your background’s gonna dictate a lot and your mind’s gonna dictate a lot where you start. However, Where I find as a good path here is that you have to be very specific with what you want. And where I see most falter is that, You know, with real estate, there’s so many shiny objects and and but there’s also everything sounds good under the sun. Right? So I’m I’m here in in, you know, just in Murfreesboro, which is south of Nashville. In Tennessee. Right? I said we’re in 7 states, but I’m really in 7 cities. Right? In Tennessee, I don’t invest in Knoxville. I don’t invest in Memphis.

Jason [00:35:50]:
I don’t invest in Chattanooga. I don’t invest in car all I invest is in and around South Nashville. I’m very specific with what I want, so I know exactly how that market operates. I also have all the resources in this market from Brokers to insurance acres to contractors. Right? So I have all the pieces of the puzzle there, and it’s also very easy for my investors to understand what what market I’m in. And I can very, very much be on track with the trends of this market. What that allows me and affords me is to be very detailed about Investments that come on and also be first to know on a lot of opportunities that are available. What I find is many times for investors when they start out, you know, Maybe today, they’re looking at a deal in Nashville, and it’s a 100 unit.

Jason [00:36:33]:
Then tomorrow, they’re in Idaho, and they’re looking at a new construction deal they’re gonna build. Then the next day, they’re in Baltimore, and it’s a 40 unit that’s, built in 1920. Then the next day, they’re into a 12 unit in Florida. And just like anything, these projects are all different. They all operate different. It’s all different markets. You don’t know what side of street you’re on. You don’t know if you’re in the good school zones.

Jason [00:36:52]:
You don’t have any team anywhere. So you just don’t know what you don’t know. And the more specific you can get to here to just say, okay. And the the pushback I get is, well, doesn’t that eliminate Well, the the true answer is no because you have no idea what an opportunity looks like in all these different markets. But when you stay here, Say, I don’t get a 100 deals to look at, but maybe I get 10. Well, I can pick out the one that works. And I’d rather look at 10 deals and get 1 than look at a 150. And by the time I figure out the one that does work, It’s too late because someone got it 3 months ago because they knew exactly where they were because they were very specific with what they wanted.

James [00:37:28]:
You raise an interesting point. It’s a whole location, location, location thing. You gotta know how big of a deal that location is that you’re looking at. So

Jason [00:37:37]:
Right.

James [00:37:38]:
It reminds me of knowing doing day trading with stocks that you don’t look at 500 stocks. You look at Yeah. Yeah.

Jason [00:37:44]:
The people that win, like, it might even be, you know, 1 sector or one type Stock or just 1 stock in general or 2 stocks in general, and they’re very specific with that. Right? But they know the ins and outs of it. Right? Mhmm. And that’s just like the same thing in the market because even In any market, like, you know, I I grew up in New Jersey. And be like, well, do you invest in your I’m like, no. But if I did, like, you know, I couldn’t invest in South Jersey because I grew up in North Jersey. Right? So so go anywhere. Like, right now, if you’re sitting here, like, hey.

Jason [00:38:08]:
I wanna be an investor. Like, tell me what it’s like 30 miles from you. You can’t. Right? And if you kinda know 30 miles away from me, like, Okay. Well, tell me what side of town is best. Where’s the school zone? Where do people wanna live? Right? Like, what are all the path to progress? Like, what direction is going? You can’t. Right? So the more you can hone in on that, it it doesn’t slow you the opportunity. It gets you to the right opportunities quicker.

James [00:38:30]:
Gotcha. That makes sense. And I suppose once you have that area figured out, when you see a deal come to you, you can tell pretty quickly whether it’s worthwhile to look at more. You’re like, hey. I don’t know. Like, it’s in this area or that’s the schools or whatever. I know that’s gonna that road’s under construction. Whatever.

Jason [00:38:48]:
Because it takes so much time to unravel the all these different areas. And and you don’t have, like, trusted allies. Like, you just don’t have a team. So, like, if your biggest driver is that I can have the perfect plan, but, like, we spoke about management companies do the day to day work That is on the ground with it. Right? So if I don’t have that partner in all these parts, well, like, how do I know that even in my plan could be implemented? Right? So I have at every point, I have such a hurdle to There. So if I was starting out, I’d be very specific because worst case is that you spend all this time and you find out this area is not for you. Well, at least you know all the things you need. So the next time you go to another area, you know how to do it quickly.

Jason [00:39:22]:
Where I see it difficult for a lot of people is they try to learn this and try do it in 10 markets, and at the same time, they’re trying Figure out how to talk to brokers, underwrite deals, find the right team, look for locations. Right? And they’re doing that in 10 different spots. And, you know, just like we were trying to get our time back, like, Time’s clean. Like, no one has all that time to be able to do it in all those different markets.

James [00:39:43]:
Right. Tell me a story about your wife getting a real estate license and why that was important versus just using a broker or something like that?

Jason [00:39:51]:
Yeah. Honestly, it it it to us, it was just a logical step. You know, many times we just took the step And and she let it go because it ended up serving no purpose to us because, like, half the time, she would sell them, and the other half of time, we would just have, like, one of our friends go sell them. It was just at the moment, that was what we thought we needed to do. Just like getting in the flipping. Like, people say, like, what you do today in apartment buildings? Like, if you go back, would you do all the flipping? Yeah. We would do it all again because it led us to understand the questions to get the answer. Right? Because that we thought that was the answer.

Jason [00:40:20]:
Right? Get get the, you know, the get a get a real estate license. That’s gonna be the ticket. Right? But you don’t know we don’t know. And for us, each time we do something, it either gives us a path. We say, okay. This path is somewhere. Let’s keep taking Steps or just completely wrong. Okay? Well, at least we know not to do that again.

Jason [00:40:36]:
Right? And that that’s usually where our successes lied is that it’s not that I don’t know the answer. I just don’t know the question. And when I can find out the question, then I get the answer. And most of it has to be go do something. Okay. Now I understand. I need this question to get here, And then that unravels the answer. So we thought the logical thing was that she would go get a real estate license and would just be part of the process.

Jason [00:40:59]:
And We found it was just it was one of these additional steps and layers that we ultimately didn’t need at the end, but it just was one of the lessons that we learned.

James [00:41:07]:
Okay. I I guess I see a lot of people, friends, and other investors and stuff like that that have their license, and I didn’t know I have no idea how big of a deal it is to get one. And I don’t know I mean, maybe there’s enough that you get when during a transaction that you would normally give away. I don’t I guess I wondered if there was some benefits.

Jason [00:41:25]:
It is? It’s a it’s a whole other business that you have to run to. Right? And so so, you know, there there’s there’s buyer’s agents. There’s sellers agents. Right? And Many times you’ll see that it’ll become such a busy business that most of the agents aren’t investors themself. Right? It does help, but I guess if you could, you know, just it’s that You you could potentially sell your properties, but if your goal is to get properties and just continue to move the process, then that’s gonna take away from you to continue to buy properties and and Push properties because you’re so busy selling the properties.

James [00:41:55]:
Alright. Fair. Totally fair. Tell me, what have been some of the challenges that have come up with this whole getting investors and

Jason [00:42:01]:
Yep.

James [00:42:02]:
Lots of doors and all that kind of stuff that you didn’t necessarily anticipate.

Jason [00:42:05]:
You know, we grew, we we were able to buy you know, we probably 4, 500 units before we end up bringing team on. Right? And so my wife and I were wearing all these hats. And so we we were the linchpin to why we weren’t Scaling in an efficient manner because we were just doing all the hats. Right? So if I’m doing 1 piece, I can’t do another. If she’s doing one thing, we can’t do another. So if she’s talking to investors and I’m underwriting, no one’s Looking for deals. If we’re, you know, out there working with the property management team, then, you know, no one’s, working on underwriting. Right? So we were the limitation of where we wanted to go.

Jason [00:42:36]:
So that that’s on our growth Hard from the property side is that, you know, it really does come down to good team. Like, you know, one of the properties, you know, we did all the due diligence, did all the inspections, and we’re 2 months in, and They had a lift station because the, the the the the sewer in the street was built and and raised up years later. So we had a lift station for the sewer, and it ended up going out 2 months in. And we completely inspected everything passed. There was an electrical surge. They hit that off. So that took the water down to the building. Right? So so so we had a building with no water, and they were oh, it’s gonna take maybe 3 weeks to to repair it.

Jason [00:43:08]:
Like, well, that’s not gonna work. You know, people without 3 weeks. So we’re able to have just because of Having a great property management that had connections there, we’re able to get it back on in 24 hours. So being able to circumvent things like that, so we had that. We had another one where, you know, there another electrical surge. I guess this is the norm, right, where it took out power to 6 of the units. We’re able to have the right team get that back on. Right? We had, you know, just random things.

Jason [00:43:31]:
Like, people pass away from just natural causes being old. Right? And just not knowing, you know, I’m in New Jersey. Right? There’s a plan that How that’s handled in New Jersey. But, like, what if you’re in Georgia or you’re in Kentucky. Right? Like, how does it happen there? And every state is a different process. Right? You you have notify NESA Ken. Well, what if there what if there is no NESA Ken? Right? Like, how is it treated? Like, some you would go through a process like a like an eviction process, like, for that. You know? Like, so There were standards how it is.

Jason [00:43:55]:
So just understanding how to, you know, know where to go when something came up because that’s you know, you don’t underwrite for someone to pass away. It’s not like part of your business plan. Okay. So when this happens right? But when that happens, you have to say, okay. That has happened. Who do I speak to to make sure we have the right route go forward to get to the next step for the project.

James [00:44:14]:
Yeah. You always hear of some of the less than great tenants. I had a friend who had a guy, A boyfriend of the tenants commit suicide

Jason [00:44:23]:
Wow.

James [00:44:23]:
In one of her units. So she got to learn really fast at 3 in the morning how to deal with that.

Jason [00:44:30]:
That’s horrible. Yeah.

James [00:44:31]:
Yeah. I mean, other people that have had buddies that have had where people just left, and they left all their crap.

Jason [00:44:38]:
Mhmm.

James [00:44:38]:
Not I mean, stuff not worth saving, but they decided he would be a good guy to take care of all that trash.

Jason [00:44:44]:
Yep. Sounds right.

James [00:44:45]:
They lived in. So it’s all these horror stories. I was like, I don’t wanna get into that. But on the flip side, you look at the overall 100 doors, 200 doors, whatever, the average is probably profitable and not so headache like.

Jason [00:45:00]:
Yeah. I mean, it’s a good point. Like, you think about it. If you have a 2 unit, right, you’re either 100% occupied, occupied or 0% occupied. Right? And so so the you’re you’re kind of scale a little. And if you have 1 problem tenant, right, you have 1 problem. So 50% of your of your project is a problem. Right.

Jason [00:45:14]:
But if you go to that 100 unit building, you know, and you and you put it in with the right tenants from that part, let’s say you have 3 or 4 vacancies and, like, 1 problem tenant. Well, now You still have, you know, 95 paying tenants. Right? So your problems become more spread out in a lot, less serving to the project. Right. So so on that front, you still have 95% of your revenue coming in that that mainly in the right ends as long as you brought in the correct manner as covering very efficiently your expenses and your mortgage.

James [00:45:40]:
Mhmm. I like that. That is cool. So where do you see the market going? I guess well, let me back up before I ask that question. Tell me about pandemic because that probably changes the game a little bit with, people, I don’t know, not paying their rent or or government paying their rent. I don’t know exactly What happened? You know? All the states

Jason [00:45:58]:
that we different. Right? And each state was different of how they handled it. You know, we had a couple states at that time, and They they were all different. Right? And some just was like business usual, but people just kept paying. And some, you know, it would be that they were laid off from their job, and so they would Have a true reason, and they would be able to get assistance. And then some would just take advantage of it. You know, like, oh, well, it just won’t work and just get assistance and be in no rush to it. Right? So you face challenges in each and every market.

Jason [00:46:22]:
Where we found is that some states offered assistance for, like, too long. They just kept offering assistance. And so, like, tenants would just like, yeah. I’m just not gonna pay rent because I know assistance coming. Right? And so we saw that in a couple markets. And so it was his own challenge. Right? And I think There was a lot of noise that, you know, buildings would go, like and be, like, 50% occupied and, like, and no one to pay rent, but a lot of people just came through and pay rent. Because when you think of the overall picture, You know, we we need we’re at a housing shortage.

Jason [00:46:50]:
We’ve been at a housing shortage forever. Right? We’re not gonna meet the housing need in this decade. We haven’t met it since 2000 on a year, right, of what’s needed to be built. So we’re already true? Yeah. It’s true. We actually well, let me let me go 2 parts. We, They got burned so bad in 2007, so they they stopped building to what’s needed. So each and every year, we’ve been less than less supply out Then demand is warranted.

Jason [00:47:11]:
Right? This year was the 1st year that we’ve actually matched the demand needed with the supply put out, and it’s because of where the low interest rates were, and a lot of people put building out But we need 16 a half 1000000 homes from 2020 to 2030, and we’re on pace to do about 11,000,000. Holy cow. So and when you think about the homes coming on, everybody’s building new. So your apartment buildings, no one’s building an old apartment building. But most of what we need is we need workforce housing apartment buildings Because that’s the majority of the country. Right? Not everybody’s going to live in a class a brand new apartment building. They they want the workforce housing, so we’re constantly on a deficit of that type of building. And so this last year, we met the need, but what’s happened now with the high interest rates still supplied, supplies constrains just with materials, still hard to get labor, and the cost to build, We’re now gonna revert back where, again, we won’t meet demand.

Jason [00:47:58]:
So so from that point, it’s this constant strain where we need housing, and we’re not gonna have enough housing. Now It’s market to market. Right? It’s not a perfect average on every market. Some markets overbuild, but a lot of these markets, it’s it’s many things. Even if we wanted to And even if we could, then you have the regulatory constraint. You think about many markets, they have different permitting factions. They have different zoning requirements, and they just can’t meet it. Right.

Jason [00:48:22]:
In my town, we need housing, like, it’s, you know, like, desperately. But the sewers, they never they never anticipated this much growth. So the Sewers are actually at capacity, so they’ve started to limit the amount of density you could get in per acre. And they’ve made people, instead of just putting in a standard sewer system, they have to do a step system. All these other things that limit projects getting out of the gate.

James [00:48:43]:
Interesting. Because that stuff way a 100 years ago what a 150 years ago.

Jason [00:48:48]:
Correct. Yeah. Yeah. I mean, people put a plan out, you know, on the roadways, and that that’s the hardest thing to change. So you think about, you know, some markets, like look at, like, a San Antonio verse, like, in Austin. Right. San Antonio prepared for, like, this growth so they don’t have this big, big mess of just chaos. Right? Because they have roadways where, like, Austin, just constant chaos of just, like, and everything else.

Jason [00:49:06]:
You just don’t they grew at such a scale, and they don’t have the roadways to support it.

James [00:49:10]:
Yeah. Yeah. I was just in Austin a few years ago, and I saw the interstate was backed up at midnight.

Jason [00:49:15]:
Yeah. Yeah. That’s fun.

James [00:49:17]:
That’s pretty bad.

Jason [00:49:18]:
Yeah. That’s fun. Yep.

James [00:49:20]:
It was just a day, like a Tuesday or something like that. It wasn’t any special, like

Jason [00:49:24]:
Yep.

James [00:49:25]:
I don’t know. Whatever. It was very interesting. Cool town, but, yeah, interesting. Way underprepared for that. Tell me, you have done this for a few years now. You’ve seen some ups and downs. I hear from banks that interest rates are crazy high and people are walking away.

James [00:49:42]:
And I hear from other people, even myself included, where I’m like, interest rates are higher than they were, but my first house is was a higher interest rate than what interest rates are now. So what are you hearing, I guess, from investors and stuff like that as far as the talk of where interest rates are at today versus where they versus where they think they should be.

Jason [00:50:01]:
Well, it’s both sides of it. Right? The interest rates are nowhere as high as when our parents are buying houses and all this stuff. Right? They but they are much Much higher than they’ve been in the last few years. So what that does is when when rates revert, it typically, brings down values on apartment Right? So so or or just overall real estate. So we’ve seen some roll off of just evaluations right there. So But the other side of it is because we’ve talked about supply, demand and demand constraint right there is that rents have stayed high. Right? Because people have nowhere to live, so rents stay high. So so Sellers are having a hard time selling their prices or buildings at discounts because, like, well, why? It’s occupied and still creating a lot of revenue where buyers are like, but but it’s just higher interest So we’re seeing this, this bid ask spread that still exists between buyers and sellers.

Jason [00:50:45]:
However, the market is higher with rates, But just at the last meeting that they’re forecasting 3 rate cuts coming into this year. So I think that will take some of the pressure off in the market, but there is A lot of banks that have been sitting on the sideline because they just didn’t know where to price loans. Right? They’re just like, you see banks failing. Right? You see all these other points where Banks had put out a ton of loans right now. Right? And then they didn’t expect this historic rise in james, you know, and they have all these rates rise up at such a dramatic fashion. They didn’t anticipate. Right? And so for that, they just didn’t know what to do. Now when you see this leveling off, right, we started seeing the treasuries have come down dramatically over the last 30 days just because The Fed is anticipated that we will see some, breather for the time being and then some reduction come to rates.

James [00:51:28]:
Gotcha. But

Jason [00:51:28]:
we’ll we’ll get back to 3 percentage james. I don’t know. That that’s a that’s a total total order. Right?

James [00:51:34]:
That is a very tall order. Yeah.

Jason [00:51:36]:
You know, but the prime rate, you know, prime rate historically has been about a 5 a half percent. Right? And right now, it’s 8 a half. So maybe we’ll get back to about 5a half. So we’ll call that maybe that will be our kademan or norm, but that probably by 2025 is where we’ll really kinda see that.

James [00:51:51]:
Alright. Do you see your business going into constructing any new places rather than or in addition to buying places?

Jason [00:52:00]:
90% is exactly what we’ve talked about today, apartment buildings. The other 10%, I have, self storage facilities. I have office buildings. I have a, you know, a motel, and we have development. All but all of those are here in our backyard. So anything that’s not to the norm is around us that we’re doing. But the majority of the line share of the business, the apartment buildings, and the 10% of the business is the ancillary other pieces of opportunistic plays.

James [00:52:25]:
Okay. Tell me let’s just dabble in those really quick. We don’t have a ton of time, but I wanna touch on them. The self storage business, I imagine that’s going well. People have junk. Yeah.

Jason [00:52:35]:
Yeah. You see self storage, and that’s why it’s been one of the usually, multi Family on a rolling 10 year average has outperformed almost every other real estate class except for self storage. And the reason being is that when people downsize, they need a place to store stuff. And then when they continue to, have good times, they just buy too much stuff and they need somewhere to store it. So it kinda fits the need on all sides.

James [00:52:57]:
And Right.

Jason [00:52:58]:
Where we’ve seen the growth here, you know, we’re in an area that’s just east east of Nashville, and there’s an Amazon facility right by this place. There’s 2 housing developments that are going around it. Another housing developments just off in that part. So it’s it’s something that you need storage at such a massive capacity. It’s not something that towns want a lot of. They prefer not to have storage, and that’s why you see these storage facilities get built and look fantastic because they they’re trying to meet something that’s not the expectation of just There’s old, you know, old buildings that are just garages.

James [00:53:26]:
Gotcha. Alright. And then office, you mentioned you had some office properties. That’s, That’s been a moving target the past few years.

Jason [00:53:35]:
Yeah. Downtown office that’s not, that is driven by larger Companies has been really tough. What we found that we’ve won is we we’ve come into service businesses. So all of our offices come in. You know, we have an engineering company, construction company, pest company, doctor office. What’s the other one? Chiropractor. Right. So it’s things that are service businesses, and that’s done well for us.

James [00:53:57]:
Gotcha. So you’re talking smaller, I suppose, sub

Jason [00:54:00]:
Yeah. More like it’s it’s it’s mainly flex office of where it is here. So a lot of these have office In some some warehouse capacity in a small fashion, that meets their business needs.

James [00:54:10]:
Gotcha. Gotcha. Very cool. Well, Jason, I appreciate your time. I don’t know if you have anything inspirational book, inspirational podcast besides this one, I guess, that you listen to or wanna share that’s kinda helped you through.

Jason [00:54:25]:
Yeah.

James [00:54:25]:
I mean, you’re almost talking just shy of a decade of doing this.

Jason [00:54:29]:
Yeah. It’s been fun. You know? I mean, there’s there’s a ton out there that that I like, you know, you know, man, what would be good good for the audience is that, you know, I actually, It it what is it? It’s it used to be called something different, but, BYOB is, so which is one about all business works Right there. How I Made My 1st Million is an interesting one right there. The Guy Raz podcast is another good one right there. Of course, the podcast on Stoicism, I like a lot right there. Live 100 is is a podcast I do out there, so we have those from there. But in that front, the those I’m jump blanking on the one that’s, The first one I said there, but that’s one I listened to a lot.

Jason [00:55:10]:
But they just changed the name, and now it’s it’s throwing me for a loop of what it is.

James [00:55:13]:
Alright. What is the live 101? You said that’s yours?

Jason [00:55:15]:
That’s mine. Yeah. We we’ve run a a multifamily live podcast for a number of years and live 100. And live 100 is that a lot on peak performance Because a lot of the changes that we made in our life was that we had to make choices to make change, and that was the usually, the pinnacle piece is that we had to break bad habits It’s to build future momentum so we can magnify success, and that’s a lot with Live 100 was built upon right there. But we’ve had our multifamily live podcast Almost since we’ve started this, but we started live 100 about, 5 months ago now, and it’s Nice. Been doing tremendous. Yeah. It’s been a lot of fun.

Jason [00:55:49]:
Cool. Thank you.

James [00:55:50]:
I forgot to ask you, your spouse. When you got into this, the real estate game business and all that kind of stuff, was she in that as well, or did you have to talk her into joining you? Or or maybe she talked you into joining her.

Jason [00:56:04]:
Yeah. That so we met working together. Right. So we met as bartender before we had to learn to be a couple. Right? So we’ve always been exploring opportunities in that. So we got into real estate gather. And then when we moved into apartment communities, I I’m fast to act, and she’s quick to go and take it and need a moment to understand it. Right? So she took a couple days just to understand it, and then we talked a lot about we talk about restaurants and stuff part, and it made a 100% sense.

Jason [00:56:29]:
When she’s got that and she’s able to take it in, let it sink in, we we were all forward to go with department investing. Right? And so Alright. A lot of our points now is that She’ll say if I have a plan, she’ll say, do we need to do that? And then I’ll say, you know, you’re right. No. We don’t. But in that fact, if we do, I I will go, you know what? This is why this will add value to our business. And so it’s a good push pull of what we’ve had in our relationship is that I’m constantly going forward, And she’s constantly making sure, like, does this fit we wanna do here? So instead of having 50 things open right now, do we need to do these other 45, we can we just do the 5 we’re doing. So she gives me good reflection points to make sure that the core piece of the, the avenue forward is meeting our objectives and meeting our mission.

James [00:57:12]:
Man, what a great question. Do we have to do this? Yeah.

Jason [00:57:16]:
It is a good question.

James [00:57:18]:
I love it. I gotta ask myself that more than once a day.

Jason [00:57:21]:
Yeah. It is it is a very good question. It’s it’s helped us stay the course Because most of life is that you gotta take action. Right? You gotta continue to move forward, but you don’t need to move all the mounts. Right. You you just need to move the right mountain. And sometimes we’re stuck trying to move all the mountains when you’re not moving anything because you’re Just trying to do everything at once. Right? And so you’re still stuck exactly where your feet are because you’re trying to carry all the plates.

Jason [00:57:49]:
Right? And there’s there’s there’s not like A perfect balancer is there’s there’s basically there’s the season. Right? So the season of what we’re doing. Right? And then at times, like, It will change. Right? Like, there’s things in our life that, of course, are gonna be priority. Right? So our kids are gonna sick. Our energy are gonna go there. If, you know, if, You know, if something happens, then it’s like someone, you know, family member gets sick. We’ll have to do that.

Jason [00:58:10]:
Right? But if if there’s something here that many times we’re balancing a lot of things, but Get back to restaurant day. If you have 20 plates and they’re all stuffed to your balance right now, you could probably drop about 17 of them, and you really won’t even know a difference. But we’re just carrying them because it’s what we’ve always done. Right? And when you drop those 17, you’re like, oh, yeah. I really didn’t need those. But 3, right, oh, I gotta pick my kids up school. You know? Like, make sure they’re fed. Right? You know? I gotta I gotta take care of myself and my health.

Jason [00:58:34]:
Right? And, like, things like that. Right? There there’ll be things that you have to do Because you need to do it. But there’ll be other stuff you’re just doing. You don’t even know why you’re doing it. And when you drop it off, you you’re, like, well, yeah. I didn’t really even need it. In a couple years from now, you won’t even remember why you were doing it. You were just doing it because that’s what you’re doing.

James [00:58:52]:
Yeah. It reminds me of taking a vacation, and you come back and you think, I didn’t need to do that. I didn’t like, the world kept spinning while you were gone.

Jason [00:59:02]:
Right.

James [00:59:02]:
Even though you feel like you’re the one that’s just beat them to decide to make you go.

Jason [00:59:06]:
Pushing the ball, yep, pushing the ball down the field. Yep.

James [00:59:09]:
Yeah. Interesting. Well, Jason, I appreciate your time. This has been a blast. I certainly learned a lot, and I’m certain the listeners did as well.

Jason [00:59:16]:
Perfect. Well, thank you so much for having me. It’s been great.

James [00:59:18]:
Yeah. Where can people find you?

Jason [00:59:21]:
Sure. You know, so holdings.com. That that’s our website. You can talk all about everything we talked about here today. Also, we have live 100. You can find the live 100 podcast Pretty much in all all the podcast players out there. So those 2 spots would give you a good platform to be able to find us.

James [00:59:35]:
Awesome. So we’ve got Yarusi holdings.com and then live 100. One hundred the numbers, not spelled

Jason [00:59:41]:
out. So live, l I v e, and then 100 the numbers.

James [00:59:44]:
Awesome. I appreciate it. Well, thank you, Jason.

Jason [00:59:47]:
Thank you.

James [00:59:48]:
This has been Authentic Business Adventures, the business program that brings you the struggle stories and triumphant successes of business owners across the land. We are locally underwritten by the Bank of Sun Prairie. If you’re listening or watching this on the web, you know what to do. Give the big old thumbs up, subscribe, and, of course, Share it with your entrepreneurial friends, especially those that may be interested in investing in real estate, which, let’s be honest, if they’re not, they should be. Right? My name is James Kademan, and Authentic Business Adventures is brought to you by Calls on Call, offering call answering and receptionist services for service businesses across the country on the web at callsoncallcom as well as the bold business book, book for the entrepreneur in all of us, available wherever fine books sold. We’d like to thank you, our wonderful listeners, as well as our guest, James, at Yarusi Holdings. Jason, can you tell us that website one more time?

Jason [01:00:38]:
Sure. Yeah. It’s yarusiholdings.com.

James [01:00:43]:
Awesome. I love it. Past episodes can be found morning, noon, and night. Podcast link on the draw in customers.com. Thank you for listening. We will see you next week. I want you to stay awesome. And if you do nothing else, enjoy your business.

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