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Real Estate Investing School Podcast
167. Ian Horowitz's $50 Million Real Estate Challenge
00:49:26
Welcome to the Real Estate Investing School Podcast. In this episode, host Joe Jensen welcomes guest Ian Horowitz, a seasoned real estate investor who began his journey in 2012. Ian discusses his diverse experience in the real estate industry,...
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- [00:00]
A
They are literally lending you your future net worth. You just got to do all the right things, pay them off, and continue to grow and go. I think it's the most powerful tool that real estate offers if utilized correctly.
- [00:17]
B
Welcome to the Real Estate Investing School podcast. I'm your host, Joe Jensen. Our guest today is Ian Horowitz. Now, since his first rental property purchased back in 2012, Ian has broadened his involvement in real estate with property flipping, assisting troubled homeowners stay in their homes, providing housing for subsidized tenants, and now working actively in the self storage industry. Currently, Ian and his team own and operate 700,000 square foot of self storage. He's excited that he has earned his retirement from firefighting to be fully engaged with his family and in the company he co founded with Daniel Matthew Equity Warehouse. Ian is a licensed private pilot and enjoys his free time in the skies. So welcome, Ian. That's quite the. The bio there. Pretty well rounded, it sounds like.
- [01:10]
A
Yeah. I don't know who had to write that a horrible bio, but, you know, dude, that's the hardest thing. Everyone's like, dude, send me your bio. And every time I read it, I'm like, God, I sound horrible, dude. And it's like, oh. I'm like, dude, stop reading. Like, I don't want to hear it anymore. And I always tell myself I'm going to clean it up better, but I like, all right, you got.
- [01:28]
B
You're a firefighter, you're a pilot, you're an investor. That's pretty cool stuff. I like it.
- [01:34]
A
Yeah? Yeah. I mean, dude, that's where it all started. You know, we were firemen for the city of Baltimore. And, dude, we worked in some of the worst neighborhoods in this country. And, you know, without that, we would not be sitting here today. So.
- [01:46]
B
So what, what, how's that work then? So how does someone go from a firefighter to. To this, you know, real estate investor, owning, you know, hundreds of thousands of square foot of storage and properties. And I mean, you've been doing this over a decade. You've done tons of deals. You know, how. How does that all start from, you know, putting out fires?
- [02:06]
A
Yeah, man. So we. All we ever wanted to do is be big city firemen. Me and my business partner, Dan, we both grew up outside Philadelphia. All we wanted to do is be big city firemen. Just one problem. To be a fireman for the city of Philadelphia, you had to live in the city. Yeah. To even take the test, all that other fun stuff. So we got hired down in Baltimore. We're like, this is it. We show up, it's 2007 for him, 2008 for me. By 2009, we're getting furloughed. They're messing with our pension system. Pension systems are going bankrupt all across this country. Shutting companies down, changing our schedule, all this crazy shit. Sorry, I don't mean to curse on your show, but it's. It was wild. And I was like, bro, like. And then on top of that, my wife's turning third, we're about to turn 30, my wife wants to have kids, Dan's wife wants to have kids. And I was like, dude, I gotta do something. You know, we were working two 10 hour days, two 14 hour nights, and four days off in the fire department. But then what you would do is before your night works, you would go work all day and you work your four days off. And I'm like, dude, this is not sustainable. Like, how can I make money while I'm asleep at work? Yeah, how can, if I like get killed on a fire? How can my wife, like have cash flow? How can my wife protect our family and be fine and I can leave a legacy or I get in, you know, like, it's not just a job that you can get killed, but like, you get severely hurt and never work again. So it was like, what do I do here?
- [03:33]
B
So which support wise is almost hard because like, if you died, I mean, not to get like morbid, but like, there's life insurance. You could leave someone with millions of dollars for fairly easy. But yeah, it's not disabled. This is, what if I can't work but I can't provide? Like, yeah, where's the insurance for that? You know?
- [03:50]
A
Yeah, well, now that was a scary one. Is like, dude, you could have like something fall on you. Like a buddy of mine at work that we grew up with, he fell off a ladder and broke his back and he's paralyzed. And luckily they found a desk job for him. But still, dude, like, he might not have been that lucky. And I was like, dude, there's got to be a way. There's gotta be a way. And I stumbled on Section 8 housing, subsidized housing. And I was like, I want to do this. This is what I want to do. Because I looked at it as, I can make money. Every second while I'm asleep at work, I can make money. Someone's always paying me as long as someone's in there. And at the time, I didn't have a lot of money. And that's really what thrusted Us into real estate was, look, we didn't. Dude, if you can't tell by how I look, if you're watching this, like, we're not some suits that predicted the absolute bottom in 2012 to say, this is when you start buying. We bought out of need. Just. We happened to buy at the absolute bottom and wrote a hell of a wave, and it allowed us to make a lot of mistakes but build our business at the same time.
- [04:52]
B
Yeah, hindsight, it was like, perfect timing. But at the moment, it wasn't like anybody knew. It was just like, the world's falling apart. Like, what the hell do we do?
- [05:01]
A
Well, think about it. It's like, Covid, I don't know what your experience was. Like, I was like, dude, first off, this is the biggest sham in the world. Second off, like, I don't have. I don't have trauma from 2008 the same way in 2012, I didn't have trauma from the global financial crisis. Covid, everyone was like, dude, this is it. Like, the end of the world's coming finally. I'm like, well, cool, if this is the end of the world, I'm going to go out and buy everything. Right? And it was the same thing. Like, we didn't carry that trauma of like, oh, I can't do deals in 2012. Because we didn't know it. We didn't know any better. It was like, we'll wholesale some houses, we'll buy some houses. We'll. We'll put it. It'll work out, whatever. Like, I can't even get financed anyway because my credit score sucks so bad. So this is how I have to do it. And not having that trauma and running with blinders on, I think actually helped us and allowed us to get to where we are today.
- [05:52]
B
So you. You came across this. You were like, so how did you first hear about, though? You're like, I wanted you. You knew that real. You saw the real estate could help you make money in your sleep. How did you first really, like, when did it click? I guess. And then for. From when did it click to when did you pull the trigger and get your first deal? And how.
- [06:12]
A
Yeah, so one day I was at work. I was working on a medic unit, and one of the dudes, you know, the thing was to go out and party. We called them our swing nights. You know, going from day work to night work, and everyone would go out and party. And my one buddy was like, hey, I'm going to this event. It's about real estate. Why don't you come. I said, all right. So I go, and it turns out there's this guy and he's going to come and talk about all these Section 8 rentals that he owns, hundreds of them. And I was like, holy shit, this is it. And he gets there and it turned out being one of those like, energy selling, Ponzi scheme, multi level marketing things. And I was like, this is dumb. So I said to the dude, I said, hey, you want to go grab a beer down at the bar? Turns out my man enjoyed drinking a lot. I could party with the boys. And we hit it off. And I said, dude, I want to do this. So he said, dude, you really want to do this? Just call me. So I waited and I had read this book. It was called the Section 8 Bible. And I read that and I was like, holy. Like everything that's in this book is what this guy's talking about. And I was like, dude, this is like the real life book. Oh my God. So I called him up a few weeks later and I was like, yo, bro, like, I really want to do this. He's like, cool, let me go show you around. So we, I went around and looked. I was like, I get it. Construction, all that fun stuff. I'm in. Calls me about a week later. He says, yo, I got this house. I didn't know what wholesaling was at the time. He's like, I got this house for 25 grand. Why don't you buy it? I think you get 1200 rent. I was like, yeah, whatever, dude. So here I am. I got a credit score of like under six. It was like 570 or something. Saying like that I got $15,000 to my name. I got all kinds of debt. Like, don't ask why I had 15,000 in the bank when I have all this debt, whatever. And I said, screw it, let's go. Because if I lose it, who cares? I'm just going to work this 30 year career anyway. Like, I'd rather try it out. And I put the money in. I got a hard money loan at like 16 and 6. Like, I did everything wrong, but I wound up being into this house for maybe like 50, 60 grand. I don't know, our accounting wasn't on point then. And I did it. And I got 12 $50 rent. And even with my hard money loan, I still cash flowed like 500 bucks a month. And I was like, holy shit, dude. That's like as much as a paycheck. It's more than overtime. I need to do this Again. And almost immediately, without even knowing how I was going to refinance, I saved every dollar I was making, working all kinds of side work, and I bought house number two in that same time frame, I was taking every dollar I was making and paying off all my debt and everything else. I found a lender that was willing to finance me. My very first one, I got 3.25% loan, and off I went. Dude, that was it. Like that. Those two deals right there pushed me up to go. And it clicked because it was, it made so much sense. It was like, I don't need hundreds of thousands of dollars. I need enough money to get into a down payment to renovate the house and go from it. And very quickly I figured out, borrow hard money, private money, get your people to your friends and family to invest with you, refinance with the bank, get all the money back and go and do it again, and do it again and do it again. Because you compare this to stocks. I needed hundreds and thousands, if not millions of dollars in the stock market to produce dividends. Whereas over here, they were lending me hundreds of thousands of millions of dollars to get these same exact dividends. It was a no brainer that it really did click for me.
- [09:30]
B
Oh, man, I love that. Yeah, it's inspirational like, and it's cool to see how far you took it. So you took that and you started run with it. Now, were you buying initially with Daniel, your partner now, or did you have partners at the beginning? Or was it just kind of that mentor guy showing you the ropes?
- [09:49]
A
Yeah. So the first 10 houses I did, I did on my own. I did that in two years. He was selling turnkey rentals. So I would go out and find people and just sell them, and I'd make five grand here, three grand there, and just grind it out. And then Dan came to me, actually. He was, we grew up together. He did an electric job for me. We got robbed at this house. He's like, this is stupid. And he got jammed up in the 2008 crisis because he had bought a house, couldn't refinance, wound up with some bad debt, and he started wholesaling. And he had wholesaled me a few houses. And he came to me one day, he said, look, I got these four houses. Two of them have are turnkey rentals. One of them we want to wholesale and one of them I want to flip. And I said, sure. So I, I sell the two turnkey rentals, we make like 50 grand on that. We wholesale. The other house make like 25 grand on that. And then we flipped the last house and we made like another 40 or 50 on that. And that was our first six figure payday. And we were like, holy shit. I said, dude, can you find more deals like that? He's like, yep, found another deal like that six months later. I said, dude, is this rinse? Like, we can do this again? He's like, just find the money. And after 2014, we formalized DNI development, which is the parent company to Equity Warehouse. And that was it, dude. We, we laid in and we started flip, fixing and flipping houses. We were doing 30 to 40 houses a year, just grinding them out, like learning the ropes, grinding them out, grinding them out. And we did that for four to five straight years, flipping houses and building a big rental portfolio for us. And like I said, we were refining our skill set. Hiring employees, learning how to talk to lenders, learning how to raise capital from capital investors, what to do, what not to do. And that, that those pivotal years there while still working for the fire department is really what launched our. Was like our launch pad to where we are today.
- [11:42]
B
So you're doing all that while you were still working your. Your job with the fire department?
- [11:46]
A
Oh, yeah, dude, we were. So like I said, they switched our schedule in 2014. We went from days and nights to working 24 hours on, 24 hours off, 24 hours on and five days off. Now, to give you context, like Dan and I worked, if you ever watched the Wire, that is where we worked when all the riots happened in Baltimore. Like that CBS that was on fire, that was all over national news, is six blocks from my firehouse. Like, we were in the heart of it. So we would literally go to work for 24 hours, get up the next day, go look at all of our properties, circle the Beltway, go home, say hi to our families for like all of two minutes, then jump on the phone and be like, all right, bookkeeping time, deal, finding time. We'd be up till 11, 12 o' clock at night, boom, do it the next day, get up, go back to work, and off we went. But I would say with that schedule, it's a little different than someone who has a true 9 to 5. We had a lot more autonomy to do what we needed to do. And again, it was just a great, a great, like, leverage to take us to the next level. Because think about it, if you we didn't, we could reinvest every dollar back into our business. We didn't have to push in and say, oh, my God, we Got to pay ourselves. But as we started wanting to pay ourselves and starting to look at exiting, which took almost eight years into our investing careers, then we said, okay, well how do we pay ourselves? How do we make this more consistent? How do we build true cash flow to consistently pay ourselves so we can leave our jobs? And again, all this was just in an effort to build a true company, not just a hobby. A lot of real estate investors are hobbyists because it's so easy to get into. To get to that next level, you really need to treat it like a business. Yeah.
- [13:31]
B
And that's what it sounds like you guys did. You really made it into a business. And it sounds like. So let's fast forward into today. What is your portfolio and your day to day business look like? Now? Obviously we, you talked about doing a lot of self storage. Now what kind of brought that pivot on? Like kind of fast forward us a little bit.
- [13:49]
A
Yeah. So we grind it out for several years, we start dabbling into commercial assets and today we mostly concentrate on self storage and multi family. Because what happened was people started asking us, hey, how do I get involved? How do I get involved? But dude, when you're looking at houses with like 500amonth cash flow, there's nothing to split. Like, there's not a lot to split. Like, it just doesn't make sense. And honestly, we didn't need that much capital to do what we were doing. And we said, well, how do we get our friends and family involved? And as the market started to price us out because we were so used to these insane deals we were getting, we started looking for other opportunities. And we said, well, how do we diversify from Baltimore Because Baltimore is a rough market. How do we diversify asset classes and create more? And you know what it was? It was just a lot of long nights on this thing. I'm signing up for everybody's deals. How's this guy presenting his deals? How's this guy doing his deals? What's this offering memorandum look like? Just looking at everyone's deals, working around the clock, looking at them and learning it and learning the game. And as we did that, then it really just came down to if you treat this like a business, it doesn't matter what you're buying. It's really just a metric and function of debt and equity and what asset you're buying and how you think you can get it to kick out money. And once we started to figure out that, it got easier and easier raising capital and you know, self storage really provided us A platform to buy out estate, buy commercial real estate, raise capital from our friends and family and really grow our business to a new level.
- [15:28]
B
So you start buying out of state with the short term or with the storage, the self storage. How do you run that business though? Because, you know, so it's not like just a property where you just have a tenant, you know, send you rent on some software. It's like you've got gates and you've got, you know, locks and chain. It's a business too. It's not just real estate. So how do you run and operate that remotely and what was the learning curve like for that compared to being just landlording stuff?
- [15:56]
A
Yeah, well, the biggest, the biggest difference is you don't have people. Well, you're not supposed to have people living in your units, number one. Number two, you, you know, there's the keypad to the gate, there's online rentals. You're really running an E Com business that has real estate. So we're running a business, but the underlying assets, real estate. So we understand real estate from replacement cost improvements and really it just comes down to management efficiencies and truly running a business here. And that was the power of self storage. We could remote manage everything from here in our office down in Maryland with the staff that we had. We could hire call center agents, we have boots on the ground that handle all the day to day. And self storage provided us that ability to build and scale based on how simple the business is. Now there's nuances to operating in different jurisdictions all across this country. There's nuances to markets operating all across this country. But in the end, we are literally renting a metal box. That is it. Come store your shit, man. That is it.
- [17:08]
B
So that's great, man. You mentioned in the bio that you, you assisted troubled homeowners to stay in their homes. Maybe you could explain what that means and how that was, how that benefited you and how you're able to help them.
- [17:24]
A
Yeah, I know. Like, so there for a little bit, like we were doing single family, we always kind of knew that that wasn't like the long term goal. And defaulted debt had come up for a little bit and we had bought a tranche of properties, tranche of notes that we went in and we renovated the notes, right? They were defaulted mortgages. And we went to the homeowners and said, look, I don't want your house in Florida or Massachusetts or wherever it is or Colorado. I'd love to just, I have this note. Let's work something out and renegotiate the terms. And we're the bank, right? And I know there's guys out there pitching slow flips and all this other stuff, and owner finance deals. It's the same exact thing. Just we were buying already defaulted notes that people needed to. They just needed some assistance. And this was all post global financial crisis. And we learned how to deal with people. We learned creative financing, we learned how the inner workings of banks work. And it was a good learning lesson. I think looking back at it now, if we would be in the position we are in today, I probably would have went deeper in that. But at that time, there was a lot of defaulted mortgages. There was foreclosures are all over the place. There was defaulted notes were a dime a dozen. And, you know, there was a lot of crap out there. But what we know today is it's a paper game, it's a lawyer game. We have a much better network to operate in that game that I think we could be exponentially more successful on those notes had we known what we known today. And look, there'll be a time and place. I look at it as like, everything's a tool in your toolbox. So we can wholesale, we can single family, we can Airbnb be. We can buy defaulted mortgages, we can do commercial real estate. And it's really just applying everything you learn with everything that you try into what you're doing. Right. So a great example. We know that banks don't want the debt. And if someone came to us with a defaulted note on a storage or a multifamily property, I'd say, well, let's go talk to the bank. Let's do a workout. Or let's figure out how we can assume your mortgage and bring it back into good standing. Those are the learning lessons that you take away from everything that you try, learn and do and continue to grow.
- [19:44]
B
And go, man, I love it. It's. Where would you suggest? So for, you know, maybe a newer listener who hasn't done quite as much like, you guys are pretty established. Like I said, you've done so many things, you feel like you can kind of pivot to any direction that makes sense. What if someone's a little newer and this all sounds like a little intimidating, where would you suggest they start out at?
- [20:07]
A
Dude, you got to find out what's comfortable for you. I would say most people can handle single family real estate if not everyone could handle it. And I would say go out and take a disperse analy test and find out who you are find out what makes you tick and what makes you go. Because if you're certain personality types, day to day operations might not be good. You might be a better wholesaler or a deal finder. And you need. I need a Dan. Dan runs the day today. Like, if it was up to me, I'd pay my bills. But it's going to take you a minute, right? But I will go find deals, I'll go push this company further. Whereas Dan's like, all right, let's take a deep breath. And I'm like, well, no, we need a plan for tomorrow, right? And that's always what I'm working on. And he's always working on the day to day. So I would say take a dispersonality test, learn who you are and learn your nuances and go out and figure out what you're willing to risk. I'm not saying you can't go do commercial real estate. You know, we have a online group, CRE Syndicate, where we talk to people about getting into commercial real estate. And I think people can do it. You just got to understand what you're risking. And to me, risking $15,000 at the time on a piece of single family real estate was a no brainer. If you had told me back then to go buy a commercial real estate, I need to come up with 500 grand, there's no way I could have done that at that point in my career. You really need to figure out your risk tolerances and your personality type to take that next step.
- [21:40]
B
I think that's great advice. And that's one thing I love about real estate, is it is so customizable. Any of my listeners have heard me say that a million times and it's like, yeah, figure out where your strength is. You were in a city where there was homes that were affordable like that and you could fix it up if that's not your situation, you know, someone else, it's so easy to make excuses. Someone else could sit there in some different market, like, oh, well, that's cool for Ian, but that wouldn't work for me. It's like, well, what would work for you? You know, lean into what would work for you based on, like you said, your personality, the current market conditions, your local market, and, and roll with that because there's always a way to make it work because that's how it works. If it didn't work, then we wouldn't be doing it, you know, and everybody's doing it in every city in the country. And to some extent, you Know.
- [22:23]
A
Yeah.
- [22:24]
B
So partnerships, though. So you've been doing this with a partner. How. What's your thoughts on that?
- [22:31]
A
And.
- [22:31]
B
And the good, the bad, and the ugly of building it that way? You mentioned some of the good already just have. You have different strengths, which is cool.
- [22:38]
A
Yeah, I would say that's 98% of the good. You know, the fact that we are same age. Look, we grew up together, which is, like, odd for people to get in business that are friends. But, like, we had the same common goal. We knew that we wanted to start families. We knew we didn't want our lives to have to send, you know, to continue to work and send the kids to daycare. Like, we knew we didn't want to do any of that. So having a common goal has been really important. I mean, we've had capital partners where the common goal wasn't the same and it caused a lot of stress. Oh, just leave the money in the bank account. We're like, yo, bro, we're busting our ass. But, like, we need to get some distributions here. So know that you have similar common goals. The. The bad is like, every once in a while, dude, like, some people might say, hey, I want a $100 million portfolio, which we're close to getting to. But then sometimes it's like, you can tell that the other person's retracting a little bit or they're not into it, or they might be into something that you're not. Like, I'm not into Airbnbs. And Dan was like, yo, I want to try these out. And I was like, it's not really my jam. Like, this is dumb, but whatever. Like, let's do it. Like, it's a give and take, dude. It's just straight up marriage. And, you know, it's tough, but the number one thing you can do to continue a good partnership is to communicate. And literally, like, right now, I'm up in Philly, he's down in Baltimore. So for the last year or so, we've been working apart, but every night, I'd say about 8:30, after our kids go to bed, we'll talk for an hour or two. What deals we got going on, what does everything look like? Literally every night of the week, we are pretty much communicating and we meet up every single day. But when we were. When we were working together out of the same office, every day before I left or he left, hey, man, I'll catch you later. What do we got? Open ended.
- [24:29]
B
Cool.
- [24:30]
A
And that's it. And we always had that communication to know what we had to do and that we were on the same page.
- [24:39]
B
That's cool, man. I like that. I want to. We have some questions. We usually kind of save for the end, but I kind of want to dive in them a little deeper than just like a speed round. So we have to really dig into them. So I think I might kind of go with some of those. What if you were to start your real estate journey all over again, but you know, everything you know now, but, you know, you're. Bet you're starting back over today in 2024, what would be your first, second, and maybe third move?
- [25:12]
A
My first? Shit. Yeah. My first move would probably be if I had to start all over, had no cash at hand, I would 100% go and wholesale something and. Or put together a deal that gives us some sort of acquisition fee and generates cash immediately. That would be the number one thing I would do. Number two is I would surround myself with the current team that I have today. We would not be where we are. We have some awesome operators inside of our company, and that's what's really helping us grow and go. And then the third thing I would do is I would go back out and build out our network. I mean, our network's powerful. A lot of what we do, we're not huge social media guys. We do do all that for credibility. But going out, shaking hands, talking to people, putting deals together, that's where it happens. I mean, we do a lot of our stuff through brokers. We do a lot of our capital investors through friends and family. Getting out there shaking hands and grinding it out, That's. That's the power of the network. But the first thing you would have to do is generate income. Second thing is get all the tasks off your plate. The third thing is really grind that network and grow and go.
- [26:23]
B
So let's dive into that a little bit. So you talked about kind of, you know, wholesale or some sort of acquisition fee. You know, get some capital. And you talked about your team. What does your team look like, Ian? Like, how many people is it built of? And like, what are their roles? Because it seems like that's a kind of a priceless part of your business.
- [26:42]
A
Yeah. So there's 15 of us, not including me and Dan. I'll tell you what. Our number one hire, our first hire ever, was Ryan Tucker, and he's a converted contractor that we said, hey, why don't you come on board with us and give you some more stability? And he has dominated the position. I refuse to call him our coo, but he runs our operation on a daily basis. He's in tune. He's in deals, meetings, he gets equity in deals. He is 100% one of us and he understands what we're looking for. He has the same personality type. Again, I think it goes a lot back to the goals. Similar age kids, similar age person, similar backstory. And he's been able to hire the right people for us, bring the right people through the front door, help us grow the team. And the way we look at our team really is, if you notice, I don't call them employees and I don't even like the word team. But there are co workers, they're one of us, and everyone's an entrepreneur. I love that statement. When I first heard that from what's his name, Patrick, bet David or whatever, when he was talking about entrepreneurs, like, oh my God, that's exactly what we like. Because we hate being micromanaged and letting. I don't care if you're a maintenance guy, boots on the ground, a call center agent, or you're number one in charge. It's your time. You figure it out. You do what you need to do. I might not agree with you how you get to the end product. And I might say, hey, man, like, maybe we could do this to speed it up. But in the end, if we get to the same end goal, I don't really care what it took to get there, as long as you have a process that you can explain to someone else that then becomes repeatable and move on. So yeah, they do. They are integral. I don't know how big your team is, man, but like I'm telling you right now, with the fir, when we hired Ryan, I literally said, I don't know how the f we did everything we did because then like, it was like, oh, it was like a little break. I'm like, well, wait, I gotta do taxes, property management, investor report, all these other things. Like, I never, I didn't even realize how we got it all done until Ryan came on board and relieved us and allowed us to get to that next level.
- [28:55]
B
That's super cool. Any other key positions that. That have been important with your team.
- [29:02]
A
For us since we self manage is pro. Is property management. Having Raquel in the office handling all the day to day tenant stuff, dude, it stresses us the f out and like, nobody's going to manage it the way you are. But dude, some days you're just like, I want to choke you out, tenant. Like straight up. Like everybody says, real estate's passive it's not. It's a full contact sport, dude. Like, only passive is the box that you check on your taxes. And I don't care if you have a property manager in place. You got to hold that person accountable. For us, it works better when we manage in house because there's a. There's a problem, we want to go fix it immediately. And having Raquel and being able to communicate with tenants, being able to put them in their places, you know, she knows the games that they all want to play and can talk to them, whether it's the most sophisticated tenant or it's our most hood tenant, she does not care. She will communicate with anyone in between. And being that relay between us and the tenants again, it just relieves the pressure. I mean, think about it. You got a nagging person in your ear all day, and you're trying to do deals and you're like, I can't do this. Raquel, you're the perfect personality type. You handle this, you put them in your place, you handle evictions, and it becomes a very business. It becomes much more business transaction. Right. Because before it was, oh, man, I gotta evict Ms. So and so or I gotta. I gotta go see this person. I don't feel like talking to em. Where's, like, I don't know, man. I'm from the office. The office said to do X, Y and Z. I don't know what to tell you. We're not in charge anymore, you know, and it makes it much more of a business decision than it does a personal relationship decision. Yeah.
- [30:37]
B
And one thing I think of, you know, you talk about, like, obviously there's the time and energy and bandwidth if you're not dealing with all those things and you can focus on building your portfolio and growing and partners and stuff like that. But also, I feel like motivation wise, if. If every time you acquire a new asset, if you're managing all yourself, there's almost this like, oh, gosh, I'm putting more burden on me. And it almost can, like, mentally stop you from progressing. But if you know that you can just like, hey, hand it off to Ryan and Raquel and all the, you know, you have the team to take care of it, then there's nothing. There's no resistance internally to just growing because you're not actually adding more burden to yourself. When, if you're doing it all yourself, it's hard.
- [31:17]
A
Yeah, well, it's that. But then you know what else it is? And like, this is just like an offshoot of all this. Like, I agree with you a thousand percent there, but I get challenged a lot. Everyone's like, dude, you don't need anymore. And you're right, we don't need anymore. But now it's. We get to pour into Ryan and Andrew and Raquel and John and everybody else on the team, like, all the way down, through. And it's more than just us now. It's like, hey, guys, we want to buy another deal. Are you guys interested? And it's a. It's a. It's almost like a family conversation. And we get to pour into Ryan, we get to pour into all these guys and we help them grow because now it's more than just building something for us. Hey, Ryan, where do you need help? Cool. We need to add another project manager. So we bring on Andrew. We need another maintenance guy. So we. We brought on Bill. Like, we could start building the silos now. He gets to be a business owner inside of our business, and he has full autonomy to do what he does. And his background story, and I don't want to ruin his story, but he has a past. And now here he is, super successful, and he gets to grow and go and he gets to be a better person and gets to start a family. And to me, that's creating so much more impact than us just making a bunch of money and donating it or making a bunch of money and just hanging out with our families. There's a reason behind building this business and doing this right? Because the impact we create is not only for us. It's for our employees. It's for our co investors, our co lenders, our vendors, our tenants, and everybody through the whole chain. We get to create impact with by doing the deals and doing more deals and doing them better and better every time.
- [32:51]
B
100%. You know, it's funny because TV and movies have kind of criminalized the wealthy. They've kind of like, put them in this negative lie like, oh, the evil landlords or the evil billionaires, the evil rich people. And in my experience, it's. It's much more the opposite. You get these rare person who's a dirtbag and they made money in a bad way or whatever. But most people I've interacted with, like, say the more wealth that comes along, the greater impact that comes along. And those around that get benefited from it, they get blessed by it, they grow from it, and it's just a very positive thing for everybody around that.
- [33:32]
A
And.
- [33:32]
B
Yeah, so it's cool to hear you describing that. Exactly. For you and your team. It's. It's not what you see on tv. You know, it's usually a good thing for everybody.
- [33:44]
A
Well, you couldn't. I think most, quote unquote, wealthy people are grateful because they had to do it with somebody else. They understand the value of the people that are working equally as hard as you. Their motivation might not be money, right? Like, example, Ryan's motivation might not be money. It might be free time and autonomy to spend time with his kids as long as he's doing the work right. Or Raquel, it might be, well, I just want a place to go to work 9 to 5, Monday through Friday, because it makes me feel purposeful and recognizing what makes them tick and makes them better people ultimately relates back to their families and so on and so forth. Dude, I'd sit around the firehouse kitchen table and listen to guys, I hate this effing job. This, that, and the other thing. My wife's going to get half my pension. I'm like, dude, just quit. Who cares? Like, whatever, just quit. But it was a job that you didn't quit. And I think when we quit and recognized that and knowing what, we didn't want to have employees work in, and we wanted them to work in a positive environment. That's the big difference. That's the real why. And I think you're right. Too many people criminalize building a big business, but you should go. You should want to build a big business. You should want to create something that can never stop and impacts so many people that the thing lives and breathes on its own. So I. That's just how I view it. I don't know if it's right, but that's what we're going to try to do every single day. And it's been fun along the ride.
- [35:12]
B
No, I love it. You know, I've heard it said that wealth is a magnifying glass, you know, and it's like if you're a dirt bag, you know, it's going to have more opportunities to be a dirt bag. But if you're someone like you, you create more opportunities to make your life better and everyone around you better because it's just expanding the good that you are, you know? So I love that, man. That's cool. Let's talk a little bit about network. You'd mentioned you'd get the active income you had, build out a team, and then you said you'd start networking. What does that mean? Who are you networking with? What kind of network are you building? And how are you contacting these People and like, what's kind of the goal there?
- [35:51]
A
Yeah, for me it's okay. Well, if we had to start over, dude, you need deal flow and you're going to need capital, you're going to need vendors, right? And for me, the first thing thing would be just where we operate. I love the broker network. I love calling them, I love building relationships. We're not. The problem with starting and stopping with off market deals is you always got to build the rapport. You're always trying to sell your like, you're always like, oh, I am so and so. And if you're starting and stopping that conversation over and over again, I just did 20, like, we're going to close almost $25 million worth of deals with this one broker. Just because I called him. I built a rapport. We had lunch and he's like, yo, dude, I got all these deals and I can't figure out how to make them work. Why don't you start making offers and figure it out? Now I have another saying for another time in a different bar of how I view them. But look, brokers, right? They have what we want, the deals, they want to get paid. I want the damn deal. So they're just the middleman. And if you view them as that and build, build them as, view them as a tool to get what you want, then so be it. And brokers for deal flow. And then other than that, dude, I'd be out telling all my friends, like, if I really had to do this from like starting over, like, look, dude, I lost it all. But I can tell you what I learned is X, Y and Z. And this is how we're going to do it different and we're going to grow and go and show them exactly the way we are and transparent and show people that we're willing to do the work. Do. People are willing to support guys that are doing work and girls that are doing work. Go out there and tell them what the F you're doing. Yeah, like, dude, I'm gonna go out there, grind it out and get my hands dirty. I'm buying this real estate here. This is what it's gonna do. And guess what? If it doesn't perform and they get all their money back, they're still gonna support you because you're showing them what you're doing. Being transparent. As soon as you start to lie and play the games and all that other shit, that's when you lose the money. Yo, straight up, dude, we bought a bad deal. I don't know, we just had a 47 unit apartment building in Baltimore in a very good section. It was in bankruptcy all through Covid. We wound up buying it. We thought we were getting a good deal. Turns out we have this horrible tenant. He burns the building to the ground. We get all of our money back and we break that even, and we return all the money to the capital investors. And they're like, dude, what? Come on, man. I thought we were going to fight for more money. And I said, dude, this just isn't the deal. I'm giving you your money back. That's it. We're done. Like, we're calling it even. I'll find you another deal to get into. And Everybody's like, made 8% for a year. Whatever. Next deal. Let's go find it. Go find the next one. I don't. Dude, I've had conversations. They don't want their money back. They want the money working and having the opportunity to make those big pops. Yeah.
- [38:39]
B
And it's funny because if that had been the stock market, that would have been a great win. Hey, we made our money, you know, like, in real estate. Like, I don't want. I got my money back. Dang. It's like. And there's. Obviously there's bigger losses, but a lot of the time when things don't work out, they're still. They're still solid. Yeah, but like you said, man, people respect vision and they respect hunger. And then they see that in someone that has a vision and has the hunger and the work ethic to make it come to reality. People want to ride those coattails because they don't want to do it themselves. One, maybe they don't have the time, but maybe they just don't have the passion and the. The hunger and that vision. So they're just like, dude, if. If Ian's got it, I'll. I'll just jump on that train and let you in. The guide is wherever we're going because, I don't know, I'm too busy doing whatever to. To figure that out. And when people see someone passionate and going, they. They want to go along for the ride.
- [39:31]
A
Yeah. What we're doing right now inside of our platform, and I'm not trying to pitch. It's not my. That's not my game at all.
- [39:38]
B
No, sir.
- [39:38]
A
What you're doing. So I don't know if you know my buddy Stratton Brown. He's out in Fresno, one of Lame's boys. He's doing this million dollar wholesale challenge. I'm like, watching him. I'M watching. I'm like, dude, streaming, selling. It's so cool right now. And just the other week, I was like, screw it, dude. I said, I'm challenging myself to go buy $50 million of stabilized value real estate between now and the end of the year, which, by the way, in commercial real estate, as a monumental task.
- [40:05]
B
Yeah.
- [40:06]
A
And I was like, dude, I got like, no lead flow because I've been sitting on my ass, like, sitting around. I forget what you're even gonna say, But I'm like, dude, like, I just want to show people it's possible. Like, you just gotta get off your ass and do it. Too many people are just like, oh, well, the deal will come around. And I'm like, no, dude, this is the deal. But by showing people what it takes to acquire these deals, we just clicked off a million bucks. So we're down to 49 million. I just. I'm acquiring a. A million dollars, a $700,000 facility that's going to be worth a million bucks. Clipped off a million. We're down to 49 million. But with that being said, everybody in there was like, oh, dude, you need money for that deal because you case studied it. You showed it to us. You showed us how you underwrote it. You showed us the exit. And just by showing people transparently what you're willing to do. Dude, everybody's willing to support what you believe in, because you got to remember, you're the expert. I can't tell you. People ask me all the time, well, how do you raise capital? I know I'm all over the place, but I just get so passionate. How do you raise capital? It's. You just show them you are the expert. You got to tell them your job is to underwrite it. Your job is to put the deal together, show them how they're going to make their money and how their money is safe with you. And most people invest and not even understand the deal. And I'm not saying that to flee some. I'm saying that because that's the reality of what's happening, and you need to teach people what you're doing. So with all of that being said, yeah, dude, you got to show people what you're doing.
- [41:34]
B
I love it, man. That's great. I want to move on. Next question. What are some books or a specific book that's been pivotal to you that you would recommend for people to check out?
- [41:46]
A
It's actually a fiction book if you're struggling. Right? Dude, I could tell you rich dad, poor dad, I could Tell you all the standard ones to go out and read, but I was listening to Russell Brunson and he was doing this challenge to read Atlas Shrugged. And I never read it before. And I listened to this book, and it's fictional, but this book was insanely pivotal to me because it talks about producers, it talks about people that are just leeching off society and what happens if that's what comes to the forefront and there's not people like us that are producing. I'm listening to this during the 2020 election run, and I'm like, holy. This book's written in the 40s and this is so relevant today. I guess I was supposed to read it in high school, but, like, high school wasn't really my thing. Dude, this book is so pitiful. And it's like you're sitting there debating, should I go start a business? Should I go invest in real estate? Should I produce for my family? If this book doesn't motivate you and get you off your ass. And yes, it's a 45 hour listen. It's like God knows how many pages, and it's a thousand pages in small print. Yeah, it is such a good book. Got decent storylines in it. But the underlying message of becoming a producer and controlling your own destiny is amazing. The fact that this was written in.
- [43:09]
B
The 40s, dude, I appreciate that reference. I don't think we've had that one yet. So that's a good recommendation. So Atlas Shrugged by Ayn Rand. That, that's. That's a powerful one.
- [43:21]
A
When I heard him talk about it, I was like, I don't know, man. But I was like, you can only read so many, like, practical books because you got to go out and apply the skills or the podcast that you listen to. And it was just like, oh, I'm just gonna listen into it for easy listening. And when I listen to it, man, I'm. I'm telling you, go out, check it out. It's worth a listen and worth the read.
- [43:40]
B
I love it. All right, question number three, Ian. What's one of the most expensive or interesting air quote mistakes you've made in real estate investing?
- [43:50]
A
True, Most interesting mistakes. I would say that. Well, it wasn't. We. We lost some money. It wasn't like, costly per se, but I remember I was talking earlier about partnerships and having common goals. So we went out, we raised a million bucks as we started to fix and flip houses, started going to all these conferences, and, you know, everybody, everybody's a salesman. Well, I connected with this guy that Was close to us, and he was a securities attorney. And I was like, man, like, this guy's got it figured out. He's buying apartment buildings, all this other fun stuff. And I was like, dude, you're really smart. He's like, well, dude, why don't I raise all the money for you guys? We'll set the deal up like this and all this crazy. And I was like, all right. And we didn't know any better. We just said yes. So the good news is we got this insanely good learning lesson about how to securitize, how to set up ppms and all this other good stuff. But we. We also learned is not having the same common goals, causes, rubs over. Leveraging properties is not good. Jamming just because you think the investment is right. And bringing a capital investor in and putting them into a bad position, it made us feel really uncomfortable and pushed our moral compass. Even though I understand where he was coming from, he was coming from the sophisticated Wall Street. Who cares? A deal's a deal, and if it works, it work. If it works on paper, then it's got to work in real life. And we're like, in real life, this shit doesn't work, buddy. This is not cool. And your buddy's putting in millions of dollars. And we're really, really, really uncomfortable with this. So that was a learning lesson that, you know, we should have made. Well, we didn't lose, like, direct money. We were supposed to make well over 6, 7 figures on it. We wound up not making a dime, doing a ton of work for two or three years, and only making a few bucks. And it just. It was an interesting learning lesson, and we learned that bigger is not always better, and that if it's on paper doesn't mean it always works. Um, so it. That was a real interesting one.
- [45:51]
B
Mm, I like that. I appreciate you sharing that. So to kind of end it off, then, what's one word or a short phrase you would use to encapsulate why you love real estate investing? Specifically.
- [46:08]
A
One word or phrase. I'll give you my favorite phrase. I've used it all the time. The banks are dumb enough to lend us the money. That's it. Like, it is that simple. Like, think about it, dude. Like, it is the best business in the world. You cannot go. I can't go out and buy. Just use that million dollar deal I just talked about. I cannot borrow a million dollars to go buy a million dollars of Tesla. Even though it was probably a really smart move. I can't borrow that from Anyone to go do it. Whereas I can go to the bank and say, hey, lend me 700 grand and I'll come up with the other 300 grand and my co investors will help me do this deal to get there. And then this deal is worth 2 million bucks at a later date. They are literally lending you your future net worth. You just got to do all the right things, pay them off and continue to grow and go. And I think it's the most powerful tool that real estate offers if utilized correctly. I understand Dave Ramsey fans out there. My business partner is on a personal level, we live completely debt free.
- [47:10]
B
Yeah.
- [47:10]
A
But on a business sense, utilizing debt as a tool is the most powerful thing you can do to give yourself exponential growth.
- [47:21]
B
Man, you're preaching the choir. I think that like so that is one of the most powerful things about real estate investing. Specifically that you don't really see in other ways. And it, it likes, it's so powerful and there's so much money out there, whether it's from private money or, you know, hard money or these institutionalized, you know, lenders, the banks like, so you can just go get money, I mean even on these, on a primary house hacks that if you just want to start real small, it's like you can go get 95, 100, 105% of the loan covered for you from these lenders, you know, and it's amazing thing to be able to leverage that much money to control these assets and then you own the asset. So yeah, I'm all about that. I love that you pointed that out. I love how you described it.
- [48:10]
A
Yep. Just remember when you're looking at them, they're dumb enough to lend to you. You just got to get it across the finish line.
- [48:15]
B
So that's right, dude. Well, I love it. Well, what if people want to reach out to you or be a part of what you're doing or follow your story? What's the best way for them to do that?
- [48:23]
A
Yeah, we're@equitywarehouse.com you want to check out case studies on how our friends and family co invest and co lend with us. You can find us there. If not, you want to check out the stuff we're doing on social. It's all at Equity Warehouse. You'll find us on all the platforms. I communicate the most on Instagram. And if you want to watch me try to dominate this 50 million dollar challenge, I got 49 million dollars to go. You can check out cre-sy Syndicate.com where I'm showing everybody how I'M underwriting deals and trying to get to the next level. Depending when this airs, hopefully I got some more under my belt. If not, I might still be at 49 million. So we'll see what happens and see if I can't get this done by December 31st.
- [49:06]
B
I love it. Ian, thank you so much for your time. Appreciate you being here, sharing your story and your knowledge with us.
- [49:13]
A
Oh, yeah, brother. I appreciate it.
- [49:15]
B
This is Joe Jensen signing off for the Real Estate Investing School podcast, reminding you to swing the bat.