Episode 208: Gary Lipsky – Real Insights for the Business of Real Estate Investing
Release Date: December 10, 2024
Host: Patrick Franci
In the 208th episode of "The Everyday Millionaire", host Patrick Franci engages in a comprehensive conversation with Gary Lipsky, a distinguished real estate investor and multifamily syndication expert. Gary's impressive portfolio, which includes over 3,200 units valued at over $300 million, and his accolades, such as being recognized as the Best Real Estate Syndication Company by the American Apartment Owners Association in 2022 and the 25th fastest growing real estate company by Inc. Magazine, set the stage for an insightful discussion on wealth creation through real estate.
Gary's Journey into Real Estate Syndication
Gary’s entrepreneurial spirit ignited early in his life. Starting with ventures like a car detailing business in high school and a restaurant delivery service in college, Gary consistently sought active, hands-on opportunities rather than traditional employment. This drive led him to real estate during a challenging period in 2002, when he purchased his first home in Los Angeles despite financial constraints.
"I knew I was going to get $725 of rent from my business to help pay for that mortgage. I didn't realize at the time, but that was the groundwork for me to get to the next level."
— Gary Lipsky [05:49]
In 2019, leveraging multifamily syndication, Gary and his team acquired a 42-unit property for $1.65 million by pooling investor capital, marking a significant milestone in his real estate journey. This move not only provided economies of scale but also introduced a buffer against potential challenges inherent in larger projects.
Understanding Multifamily Syndication
Gary delves into the intricacies of multifamily syndication, clarifying its distinction from other investment vehicles like private REITs.
"Multifamily syndication is like crowdsourcing. You pool investor capital to buy large properties, typically 150 units or more, allowing for significant economies of scale."
— Gary Lipsky [03:04]
Unlike private REITs, which often involve higher fees and greater liquidity but offer lower returns, syndications provide investors with more direct investment opportunities, fewer fees, and the potential for higher returns through strategic property management and value addition.
Lessons in Raising Capital
Raising capital effectively is pivotal to Gary's success. Early in his career, Gary grappled with imposter syndrome, questioning his legitimacy to attract investor funds. Over time, he adopted a long-term, relationship-focused approach, emphasizing transparency and education over creating urgency or FOMO.
"You're only as good as your last deal. Play the long game."
— Gary Lipsky [16:08]
Gary underscores the importance of consistent, honest communication with investors, fostering trust that encourages long-term partnerships rather than short-term gains.
The Importance of Mentorship and Networking
Initially, Gary's single-minded focus hindered his ability to build a robust team or seek mentorship. Recognizing this flaw, he began participating in mentorship groups, which significantly enhanced his knowledge and network.
"My network is so strong now, I can go, at any point, reach out to a couple people, 'I need help,' and they can get me there."
— Gary Lipsky [12:20]
This shift not only refined his investment strategies but also reinforced the value of continuous learning and leveraging diverse skill sets within his team.
Gary's Book: "Invest Smart: Spotting Red Flags in Real Estate Syndications"
Gary authored "Invest Smart: Spotting Red Flags in Real Estate Syndications" to educate investors on identifying potential pitfalls in real estate deals. Drawing from experiences across over a hundred deals, the book offers practical guidance on due diligence and the importance of evaluating syndicators critically.
"We want to help other people make better, more informed decisions. Not chase IRR, and focus on the operator."
— Gary Lipsky [19:15]
The book serves as a valuable resource for both novice and seasoned investors, emphasizing the importance of investor education in fostering successful real estate ventures.
Investment Strategies and Market Focus
Gary strategically focuses on Class C and B properties in Tucson, Arizona, where he identifies consistent growth and manageable competition. By avoiding overheated markets like Phoenix, he capitalizes on undervalued opportunities with significant upside potential.
"We keep doing more and more deals in Tucson. We'd love to have a little bit more diversification, but why change something that's not broken?"
— Gary Lipsky [24:21]
Tucson's diverse economy, including sectors like healthcare, education, and technology, provides a stable foundation for real estate investments, aligning with Gary’s objective of minimizing risk while maximizing returns.
Tenant Relations and Community Building
A cornerstone of Gary's philosophy is treating tenants as clients rather than mere renters. By fostering long-term relationships and building a sense of community, Gary ensures high retention rates and enhances property value.
"Our residents stay longer at our properties than the national average by 23%. We provide a quality place and foster a sense of community."
— Gary Lipsky [45:22]
Initiatives like property newsletters offering financial advice and healthy recipes not only add value for tenants but also contribute to a positive living environment, translating into better returns for investors through reduced turnover and increased rent stability.
Navigating Economic Uncertainty
Despite global economic uncertainties, Gary remains optimistic about the U.S. real estate market, particularly in the multifamily sector. He highlights the enduring demand for housing and favorable interest rates as key drivers of sustained growth.
"Real estate is a great place to put your money. It's a long game. Don't chase the grand slams, do your due diligence and seek out advice."
— Gary Lipsky [50:56]
Gary advises investors to focus on fundamental market factors like supply and demand rather than being swayed by geopolitical events, maintaining a disciplined approach to investment even in volatile times.
Final Wisdom and Closing Thoughts
As the conversation winds down, Gary imparts essential advice to aspiring real estate investors:
-
Long-Term Perspective:
"Real estate is a long game. Don't chase the grand slams."
— Gary Lipsky [50:56] -
Due Diligence:
"Do your due diligence and seek out advice, which I didn't do when I was younger."
— Gary Lipsky [50:56] -
Building Reputation:
"It takes a lifetime to build a reputation and it takes 15 minutes to destroy it."
— Gary Lipsky [50:33] -
Embrace Mentorship:
"Don't be afraid to ask what you may think is a silly question. The only dumb question is the one that didn't get asked."
— Gary Lipsky [51:30]
Gary's insights underscore the importance of patience, continuous learning, and integrity in building a successful real estate investment career. His emphasis on ethical practices and value creation serves as a guiding principle for investors aiming to achieve lasting success.
Notable Quotes:
-
"Multifamily syndication is like crowdsourcing. You pool investor capital to buy large properties, typically 150 units or more, allowing for significant economies of scale."
— Gary Lipsky [03:04] -
"You're only as good as your last deal. Play the long game."
— Gary Lipsky [16:08] -
"Our residents stay longer at our properties than the national average by 23%. We provide a quality place and foster a sense of community."
— Gary Lipsky [45:22] -
"Real estate is a great place to put your money. It's a long game. Don't chase the grand slams, do your due diligence and seek out advice."
— Gary Lipsky [50:56] -
"It takes a lifetime to build a reputation and it takes 15 minutes to destroy it."
— Gary Lipsky [50:33]
Gary Lipsky's episode on "The Everyday Millionaire" provides a deep dive into the strategic, ethical, and relational aspects of real estate syndication. His experiences and teachings offer invaluable lessons for anyone looking to navigate the complexities of real estate investing successfully.