In this episode, I talk with Randy Langenderfer.
Randy is a former Chief Compliance and Audit Officer and now full time real estate investor.
He started off with a duplex and has since invested in over 4,000 units.
We will discuss how he was able to invest in so many units with a full time job and his first real estate investment house hacking a duplex.
We will also tackle about private money lending and multifamily investing.
Whether you’re a seasoned real estate investor or just starting out, this episode is packed with valuable insights that you won’t want to miss.
Don’t forget to like, share, and subscribe to our channel for more inspiring stories and informative content.
Transcript:
Randy Langenderfer 00:00
Somebody told me he wants to if you do five deals, there’s gonna be one home run, there’s gonna be three right down the middle of the fairway and probably one of them that’s lagging or not where you wanted it to be, and it’s true in multifamily to you and not everybody can hit a home run all the time. If you’re in the business long enough, you’re gonna have a fire or some kind of violence on the property and bad things happen. It’s how you manage out of them and how you operate out of them.
Chris Bounds 00:21
In this episode, I talk with Randy Lingard defer. Randy is a former chief compliance and audit officer and now a full time real estate investor. He started off with a duplex and has sent invest in over 4000 units. We discuss how he was able to invest in so many units with a full time job, his first real estate investment house hacking a duplex private money lending and multifamily investing. I hope you enjoy now onto the show. How are you doing, Randy?
Randy Langenderfer 00:48
I’m doing good. Chris, thanks for the invite.
Chris Bounds 00:51
Thanks for having thanks for coming on. So just gonna jump right in, you’ve invested in quite a number of units, you know, upwards to or over? 4000? Right. That’s right.
Randy Langenderfer 01:06
Yeah, that’s last count was around there.
Chris Bounds 01:08
Okay, so it has that primarily been on the GP side or LP side? Or both? Or hedge? How did you get get that number?
Randy Langenderfer 01:17
So I’ll give the essence we have a bit of time, I’ll give the long answer. So my journey started about 10 years ago, when I really was trying to develop a passive income stream I had been I’ve been in corporate America. For a long time, I just recently stepped aside to do full time real estate. And prior to that I was I started out looking for another income stream, I was working for a private equity firm, I was doing pretty well. But I just realized that wasn’t going to last forever.
And so I had when I started out doing single family flips. I was a hard money lender, with my brother in law, came to Houston for business, learn to multifamily, didn’t want to do active investing to start with. So I started passively investing. And I tried to connect with general partners that were willing to spend some time with me and kind of teach me the ropes along the way. And so yeah, I invested in many as a limited partner until 2018. Did my first GP.
Fast forward to today, I’m about 1100 doors in as a general partner and I don’t know, several 1000 I really stopped counting quite honestly, because I just liked the asset class. And I’ll always invest in both. As long as I have money and can invest in other people’s deals that I like so dual dual stream, it’s just helping returns.
Chris Bounds 02:50
Yeah, I love it. And so that’s multifamily. You actually didn’t get started with multifamily from owners in your very first investment property was actually your very first primary residence. Right? You went the house hacking route, which is a bit unusual. Tell me about that.
Randy Langenderfer 03:07
Long time ago? Yes. So always had an inkling for real estate. You know, as a young man getting started, I didn’t have two nickels to rub together. And my wife and I con my wife, I say Kandra I convinced her how we could financially gain by it. So we bought a duplex as a short answer. We bought a duplex. And we lived in half and rented out half the other side of it to a variety of people. And you know, that’s when I realized that I did not want to do property management.
Chris Bounds 03:43
Especially when you’re that close
Randy Langenderfer 03:46
and there’s no hiding. There’s no hide and they lived right above us. And so but but we grew out of that as our family grew we had our first child we stayed there for about another year you know that that was challenges of trying to keep the little one quiet for the tenant up upstairs because it was an old house and there wasn’t an ounce of installation in anywhere. And then second child was born and we just grew out of it quickly so but I can maintain it after we had the second child we bought a house and I maintained it and how second got my fever, answered a little bit in the real estate side and then got busy with life and raising a family and climbing the corporate ladder as they say and came back to it later in life.
Chris Bounds 04:29
Nice nice I did a little different. My first primary residence which I bought single families as an investment properties prior to that, but my first primary residence. I just got roommates. So still single got roommates and they I forget the economics. I think we just did it. A third, a third a third. I think it was very fairly even but it was a good deal.
Randy Langenderfer 04:53
You were ahead of your time you were running rooms before it was before it was popular or a thing then
Chris Bounds 04:58
yeah, and yeah, and They took care of all the lawn we split the utility it was it was it was a good gig while while it lasted. But then people started. They started getting getting married off. And eventually I did too. So it’s all good what what made you decide to get into hard or private money lending.
Randy Langenderfer 05:16
So that was looking at another income stream. And I had like many people, I had no idea what that what that man or how it looked like. And I had a brother in law, who was an exec for a big regional bank. We were living in Cleveland, Ohio at the time, and his brother in law was a big executive just gotten displaced. And he got the wild idea to go to Armando mon to Lagos, house flipping school in California, spent I think it was a week or two weeks out there paid big money for the course, came back to Ohio and invited me to join him and I said, You’re crazy.
Chris Bounds 05:52
There was that, of course was on like, flipping or wholesaling or
Randy Langenderfer 05:57
flipping. If you know Armando month, Legos when he’s late night infomercial, guys, yeah, does does house flipping, and he sells a whole course. And so we got connected with a group out of South Florida. Where they did, they identified the property, they put together a budget, we reviewed and analyzed the comps and committed they’re not committed. And then we would lend them the money to buy the house and make the renovations and we would just take a percentage profit on the back end, you know, X amount of percentage points.
And that was good for several years and satisfied my my real estate itch. But when I moved to Houston, it just became a new city. And I became overwhelmed with how big Houston is, and the different sub markets and trying to get acquainted with different submarkets and different groups and how conservative people were stylistically or not. And it just became very time consuming, very time consuming to get any momentum at all. And about the same time. I attended one of the big conferences here in Houston called lifestyles, yep.
Where they preach single family and multifamily. And they do a weekend course. And I went to it and they teach single family on Saturdays and multifamily on Sundays and after I set to that weekend course Chris it was kind of a no brainer for me to start doing multifamily economies of scale and non recourse lending and the concept of syndication. And so it was there was then that I just kind of never looked back and started going after it.
Chris Bounds 07:43
Yeah, I know. I know a lot of the Oh geez. And I say oh, geez of like, my generation that kind of came through the real estate investing, grinder, post 2008. A lot of them really credit the lifestyles, education at least that we can bootcamp not necessarily me some someone into like their mastermind and went through all that. And, you know, I’ve heard good things about it too. But just that weekend boot camp of the the educational impact versus the cost. I don’t know what it cost now. I think it was like 500 bucks back in the day, maybe 300 bucks. Was very profound.
And a lot of them went to do some really good things. I don’t know why I never I never did that. I’ve gone to their annual stuff and always always go to their annual stuff because I get a love Dells, market updates, but on their expos, Aaron who’s down? Yeah, they I think they do one in Houston and one at another location. But yeah, that’s pretty interesting. So now you’re saying that, hey, you’re doing some hard money, but you’re not necessarily wanting to scale that and you’re, and this is when you discover multifamily.
Randy Langenderfer 08:53
That’s exactly I started had some success with hard money. And I just, I didn’t I am pretty handy with a hammer and pliers and a screwdriver and all that stuff, but I just never wanted to spend my I had done that on the house hack my nights, weekends, etc. You know, being the being the maintenance guy as well as the landlord and etc, etc. And I just did not want to do that. So that’s what drew me to away from I should say the house hack and single families is you know, I was talking to an investor yesterday who’s got eight single family homes, and he owns a large percentage of those homes and he’s got a good cash flow. And I said, comparatively, I said you own a lot. And a few. I own a little and a lot of doors. So they’re both they’re both fine. Yeah, those strategies work. It’s just what do you want to do? And maybe I’m just lazy. I didn’t want to work that hard.
Chris Bounds 09:54
I mean, looking back, do you think it was necessary for you to To start out with single family in any capacity before moving into multifamily or is it with the right education? Of course? Is it perfectly fine going straight into multifamily if that’s what you want to do?
Randy Langenderfer 10:16
Yeah, and I think I think I was very typical. At the time, I think most people started out not having the concept of multifamily or even big multifamily, and thinking that way above them, and that that’s out of their reach.
Chris Bounds 10:30
So real estate, investing in your mind at the time was single family house, you flipper, you’ve got it as a rental, like buying older, yeah,
Randy Langenderfer 10:38
buy and hold or flip. And that’s my paradigm for lack of a better word. And I think I think a lot of people like that, maybe even those that are educated until you you know, and then you just realize it’s so much work. And there’s much less work and economies of scale to you know, to scale a single family business to 100 units is a lot, a lot of work, you gotta develop all the back end maintenance, leasing, etc, proficiencies and landlord, I mean, there are the laws of that state in which you operate in. And so it’s just very overhead intensive, and, and you don’t,
Chris Bounds 11:16
you don’t really get a lot of immediate reward for that, like it’s in, it is a very good investment strategy because of wealth building, and then also wealth preservation to tax. But as far as cash flow, yeah, you really need own 50 to 100 plus, and then also have a rock solid management team to keep you out of the new courthouse migraine mode.
Randy Langenderfer 11:42
And, you know, as a business guy, as a corporate guy, trying to do risk mitigation stuff of which I specialize a lot in my corporate life, it just, it just becomes a no brainer, personally, because you get economies of scale and multifamily, you get the concept of non recourse loans. So every one of those single family homes is a recourse loan to the buyer, or to the landlord, meaning you know, the bank can come after you, if you were to default, in a multifamily, the non recourse loans, you can lose your investment, but the bank can’t come after you for your personal assets.
That was huge to me having been in the corporate world and having not rich but had a few assets that I really didn’t want to gamble on losing. So it’s economies of scale, non recourse debt, and then, and then most importantly, being able to hire a property management company. So we become, as you know, the asset managers where you’re overseeing the property manager who does the day to day leasing activities, maintenance activities, and deals with all the tenant issues.
And thank goodness, they do what they do. Because as I started out with, I didn’t want to do that. So those are the three big drivers that and then you look at, you know, the tax advantage, the cashflow advantage and the appreciation Vantage and it suits my personality. It may not suit everybody’s but I think people should challenge themselves to get educated because I think you mentioned that and that’s really the big thing is to educate yourself and understand the differences and make your own investment strategy.
Chris Bounds 13:23
Yeah, I mean, really depends on what you want, what your education basis is, I mean, you shouldn’t invest in anything that you’re not educated about. And you couldn’t do both. But my realization on that came from buying these rentals and we’re doing a lot of flips too, but buying these rentals and realizing like, hey, from a wealth building standpoint, like these things are great, like I wish I did not flip I wish I held more and flipped last. So from that aspect, they were great from a management operations and even the asset management it was a bit of a challenge and cashflow was like by the time you factor in vacancy repairs capex and all stuff it’s not really there and then it really hit me when I joined eXp and like revenue sharing this it’s not real estate income it’s you know through my brokerage completely different but within like 18 months like I tripled my what my rental income just a rev share and then our first large multifamily and then I was like, Okay, I get it now. I get it now, economies of scale now. It basically gives you the ability to afford a higher caliber team really in in all aspects, not just property management team to oversee an asset and its performance far better than what you could personally.
Randy Langenderfer 14:49
Yeah. And I really think, you know, looking backwards, it’s probably a disadvantage of my education. Because if I had been more of an entrepreneur, I knew you’re an entrepreneur in mind. said I would have recognized that much early but my, I guess, my education and taught me to be risk adverse into excetera, etc. And I’m a I’m an MBA and a CPA. So you know, my weaknesses over analyzing things.
Chris Bounds 15:15
Yeah, well maybe go into that a little bit. So your education and background, you got a lot of background in finance and accounting and, and both education and your corporate background. So how did that play in to explain a little bit how that played into your investing career?
Randy Langenderfer 15:32
Yeah, so as I mentioned, I’m a I’m an undergraduate accounting information systems, MBA in finance, CPA, etc, etc, that means nothing for real estate other than I took a bunch of tests in life. But having worked in the corporate world for a long time and been a finance person at heart, you know, finance people I always say are risk adverse to begin with, they say no four out of five times, as compared to the marketing mindset that says, Yes, six out of five times. And I’m not picking on my marketing friends, but I am a little bit. So I’m risk adverse to begin with, and I’m analytical nature. So my, you know, my wife gives me a hard times, he goes, you know, just just go spend some time in your spreadsheets and enjoy yourself. And there’s some truth to that, that I am the analytical type that likes to understand that, but I think that’s truly a detriment.
And starting out, because, you know, I always say, there’s the, you may have heard the illustration of Ready, aim, fire. So I’m ready, aim, aim, aim, aim, and then fire until I got through it once or twice. And I think I’m much more comfortable with the risk profile now and the variables that I need to understand to make an investment decisions. But you know, you get your engineers, your IT technical types, your finance, accounting types, and I’m not disrespecting any of them. But they all tend to be very analytical in nature. And that’s what their education has taught them. And so they want to fully understand every risk before they invest in it. But I think, you know, it’s back to the 9020 rule, or 8020 rule, whatever you want to call it, that if you understand 80% of it, you’re probably good enough to go. Just don’t spend your last $50,000 on an investment, make sure it’s disposable income.
Chris Bounds 17:28
I think that’s where teams come into play. So stand alone, someone who’s heavy analytical like you are and, yeah, so they tend to move slower, maybe risk or miss opportunities, which that has opportunity risk, right opportunity cost risk. Versus someone who’s on the complete opposite spectrum, who’s Go Go, go go make some huge mess, maybe wins at the end, probably got a lot of bumps and bruises on them. But when you combine those two into a team like that, balance each other out. That’s where a rock solid, like CFO and an operator, especially if you have an operator, CFO and a visionary, all three combined like that’s that’s what you see in some of the most successful businesses and team and how you how you help companies grow from zero to 500. And a couple years?
Randy Langenderfer 18:22
Well, you hit it on the head, you hit it on the head. And I think as there’s your audiences out there listening, you know, when I talk to people about building teams, you don’t want to find people that are just like you. So I don’t want to attract other analyticals. Although that’s probably the place where it starts and I can build a conversation with other analyticals easier than I can a marketing type. But some of my best partners have you said have been on the marketing types where they’re the visionaries, and I’m the analytical type. And if you throw in a third person with an operating history there, I think you hit it on the head, you’re dynamite. And those What’s your audiences should be looking for somebody to complement your own skills wherever you are.
Chris Bounds 19:05
And I’m a weird breed, because I’m both. I’m definitely very much a visionary. I can operate. But I’m also analytical, and it’s weird. I’ve got this and I pulled myself all the time. I can get bogged down in details. But then and complete other situations. I don’t care about the details. Give me the bullet proofs. The bullet points, give me the highlights. Like once you start going into details, like I’m tuned out, like but I’ll nerd out on weird things like something Oh, come on, tick tock or whatever. And then like, boom, the next thing I’m learning about is, I don’t know, black holes and quantum physics and whatnot. And I’ll spend like the next 45 minutes learning about new things I can even pronounce so. I don’t know. It’s
Randy Langenderfer 19:52
it’s we don’t know. I think we agree. No, you’re not weird. You’re called a generalist. And have you ever taken any personality? To test, you know, Myers Briggs or others, if you should, you know, people should do that for themselves, they can do them online, easy today, but I was just gonna say the, I think in my own area, I’m very analytical, and very detailed on the first investment when I go with a new group or a new market, you know, but I also conversely have, on the limited partnership, I don’t do this with other people’s money, but in my own money, if a guy that I’ve known and I’ve done four or five deals with calls me, I don’t even look at it anymore.
I’ve got spendable cash, it just goes in there. Because I know, I know, like and trust the group or the person. And, you know, that’s where I think everybody wants to get to where you really trust them. And the guy, I’m thinking to, to particular, that haven’t done me wrong, and in 10 years and return, very handsome returns to me. And so I’m not nerding out on those at all. But conversely, I’m looking at a new group in Phoenix right now and a deal and I’m turning over every rock that I can, including getting on a plane and going there and driving the comps and talking to the property management company and etc, etc.
Chris Bounds 21:10
Yep. So what are the top things that you look for in operators before investing with them?
Randy Langenderfer 21:16
Yeah, you know, and I had this conversation with an investor I was talking to yesterday, he was just getting started. And he asked me, you know, what’s the first thing you should be looking for? And you and I know that, you know, it’s the horse in the jockey illustration. And in a horse race, which is more important the horse of the jockey and multifamily, it’s who’s more important the, the operator or the or the asset, the market in which they’re in? And they asked, and the answer is always the same. It’s the operator, or the general partners, who are they? Who are they? And the know, like and trust them? What’s their success record or track record? You know, I know very few people that don’t have a blemish someplace along the way or war story to tell. I know very few that come out with it right away and tell investors some of that history.
So the first thing for me is the is the general partnership group where how do I know them? You know, where are they trained at? Are they come to they come from lifestyles are Jake and Gino or mark Kenny or read some rock any of the big groups? That’s not bad, but I personally want to see that they have some multifamily training. And each of those groups has different plus and minus. So it’s the group to where they came from, because that tells you something about their underwriting style, and the templates they use. And so I’ve had the advantage of seeing many of those different templates and how they work. So I have familiarity with them comfort with them. And then I started digging, digging into the underwriting assumptions.
So what’s the what’s the reversion cap rate, what’s the growth income exception? income growth, income and expense assumptions for growth. reversion cap rate, I said, I think one of the most often overlooked ones is understand the relationship between the general partner and the on site property management company. Have they worked together before? Is this the first time they’re in this market? Does the property management company have experience in the asset type you’re looking for? I mean, perhaps, perhaps they have a class, a focus, and you’re looking at a Class C property. And again, you need to understand the relationship between the general partners and this particular property management company, because they’re the ones that are on site day to day, and they’re the ones that are going to make this make this an average investment or a great investment.
Chris Bounds 23:44
conversate. Yeah, they’re, they’re the boots on the ground. And that’s a really good observation to do you have what what are the pros and cons when you see that it’s a vertically integrated property management, meaning the operator, it’s their company, versus using third party,
Randy Langenderfer 24:05
the operator and that vertical integration, right? You know, they have, they have their own property management company, they have their own construction company that are making unit turns and renovations. I really think that is a strategic advantage in this day and age and the last couple of years, as the markets become tighter, I think those companies that are vertically integrated have an advantage because they can control their cost. There’s a disadvantage, though, that they’re making money on multiple pieces of the business on the asset, I mean, on the property management side and the construction side, etc, etc. And
Chris Bounds 24:43
they are transparent if you ever have concern about transparency risk.
Randy Langenderfer 24:53
The ones I know of and have invested in I’m not because because that they have disclosed And they’ve talked about it in a very transparent manner. And I think you just have to ask the question, if you’re an investor, how are you being compensated, Mr. Bean partner, general partner,
Chris Bounds 25:11
which if they’re doing a syndication, or fun that may disclose that anyway. But that doesn’t mean that they, they will or that it’s gonna be that clear,
Randy Langenderfer 25:23
and may be buried right on page 55. And font too. And that should be a red flag to a potential investor. But I think I really, at least, and I don’t think I don’t think that vertically integration works until you get around the 1000 doors in a specific region. So other ones, as you see people trying to vertically integrate, and they’re in three different states and different sub markets.
Chris Bounds 25:45
But that one is served as an operational anchor. Yeah, because
Randy Langenderfer 25:53
I got overhead, they got to cover. Yeah. And they’re sending people from Texas to Louisiana, or Ohio or wherever in
Chris Bounds 25:59
time. I mean, really, because all property management, it’s, it’s a complicated business anyway. But it is a business and a new business, a baby. Yeah, new business is like an infant. It requires a lot of attention. Or like in like an infant, you know, its health really deteriorates, if you don’t take good care of it.
Randy Langenderfer 26:19
That’s a good illustration.
Chris Bounds 26:21
So yeah, that’s a good observation on the property management and that relation to the GP, because you’re right, if they do have concentration of units in a in a market, then it absolutely makes sense. They have to vertically integrate other otherwise they start losing efficiency.
Randy Langenderfer 26:40
But I really liked the I liked the third party stuff. And maybe it’s because I haven’t gotten to that 1000 doors in a specific sub market yet. But I think there’s strong advantages to third party property management, one of the guys I invest with most, has about 10,000 doors, and he does nothing but third party property management. And you know, the argument there is, is you can leverage them to do things that operationally you don’t have to do or want to do, and apply pressure to them to make changes quickly.
And they become so dependent upon you anyhow, because in that situation, they’re huge. We bought, you know, for instance, we bought last year, a 60 unit brand class a building here in Houston. And not many people want to manage six unit, but we got affiliated with a large property management company. And in that case, it’s been wonderful because, and that’s so when we have in this market right now. And in that example, it’s been wonderful because they bring the leverage, and they bring the economies of scale that I could never have as a sole operator of a property management firm.
In the Houston market, they have every contact imaginable from, you know, tax consultants to Window repairs and everything in between. And so there’s a real advantage there and I don’t, personally, I going back to my first experience, I don’t ever want that headache. Property Management is a very ugly business.
Chris Bounds 28:09
Yeah, no matter Yeah, going back to the, you know, owning single families like I had to do with a fence repair recently and getting quotes Now thankfully, with fencing, I still have good contacts. But we’ve also had to deal with plumbing over the last few months too. And with pumpman This is an all these reasons are reasons why I’m slowly divesting of single family. But plumbers I don’t know what it is about plumbers like it’s my experience with plumbers, it’s I’ve had a hard time keeping keeping good plumbers on in my rolodex. So just a challenge, but with a rock solid product management company. Like you don’t have that I mean, commercial is different. So plumbers, electricians, all these trades, when when they get in with these property management companies, they they tend to stay at least the good ones because they know what that’s
Randy Langenderfer 29:06
worth. And they get the volume as the plumber near illustration gets the volume of work that they’re looking for and, and the constant continuity of ongoing work through the asset or to the property managers, many different properties for work, you know, and nobody can afford to have a single plumber on staff at a multifamily. Just because there isn’t enough work. So that’s the that’s the advantages of a third party. You’re absolutely right. Yeah, no, I
Chris Bounds 29:30
would say one other one too, is insight. And like, if you have 1000 units, and you’re managing all of your 1000 units, but that’s your basically your exposure. Maybe you got a couple of third party clients versus someone else who they have 10,000 plus units. They’re seeing and hearing things that you’re not and they’re seen in hearing it before you or they can react faster if they’re good. So there’s there’s a certain certainty advantage that you could have worked with third party
Randy Langenderfer 30:03
we have another example for your listening audience is one that you know, is ever increasing in the multifamily world is his social media presence and advertising online and getting the lead funnel or your property. And so he’s bigger firms have a social management social platform that helps you with all that versus as a sole proprietor trying to do asset or property management, I’d have to do all that. And that’s just not something I want to do, Chris.
Chris Bounds 30:37
So what’s your advice to people who are considering making their very first passive multifamily investment?
Randy Langenderfer 30:45
Well, I think it’s, I think it’s the first one and the one I’d say that I’m still doing I know you are, too, which is just education. You know, the, the big one is, for me is understanding as an investor, understanding what you’re getting into. When I am at work, and I put money in a 401 K, I call that speculation, because I just throw money at a large cap fund or a blend fund or international fund, I have no idea who the property managers I’m, if I’m good, I may look at the Morningstar report and see what that fund is rated. But nine times out of 10. I don’t have heard of, you know, I’ll just use like Fidelity, slow price. I like that when I’ve been in it for years. I don’t know what it’s doing.
But it’s done well over the years. I just put money in it every month. Well, that’s speculation to me. But I encourage especially in the multifamily, these are large investments. Generally, it’s starting at a $50,000 investment unless you’re really wealthy. That’s a lot of money in anybody’s checkbook. So educate yourself, hang out at meetup, meetups, podcasts, go to the one of the national events, understand the process a little bit, so that you’re familiar with it. And then make an investment? Because only then do you understand the risk, and the returns and the rewards. And that’s what I think an investor should do. At least that’s what I try to do and and coach the students that I’m working with on to do so you understand multifamily, you have to understand it all.
You certainly have to know like and trust that sponsor, you have to understand the sub market, and what’s the business plan, so that you can hold that general partner accountable. And you know, I still go to conferences, I’m sure you do Christians, I’m still learning. Yep, I’m still learning and 10 years in, and hopefully never stopped.
Chris Bounds 32:37
Yeah, and talking with other folks too, because it’s such a small community, in whenever negative vibes start to appear that It then travels fast. So when you hear that, hey, so and so or so this happened, or this happened, whatever, it’s, it’s hard to hear that noise. If if you’re completely 100% passive, meaning you’re not going to these conferences, you’re not gonna go into the networking event, you’re not talking with other operators and other multi limited partners, you’re in talking with vendors. So you kind of have to get a little bit wet, especially in the beginning. But I’d like to have a close to ear to the ground with folks that are really young, because that helps me stay in touch with the trade winds. Yeah, and you’ll I mean,
Randy Langenderfer 33:32
I’m not known by everybody and neither are you. But there’s probably some people that do know us and have Yes, five people you know, in one of those networking save you heard of Randy ever heard of Randy lavender for Chris bounds. Probably find somebody noticed and give you a thumbs up or a thumbs down. And to that point of it’s a small world, and we’re all trying to protect our reputations by providing good returns to our investors and keeping those positive testimonies alive. So
Chris Bounds 33:57
yeah, but to take it one step further. There’s also a lot of folks, now I’m speaking one of the operators, that, well, intentions are definitely there, but things happen. And sometimes even the most well, intended operator can make short term decisions that negatively affect their their investors. So that’s that, definitely the minority. But there’s a lot of money at stake, that the minority could be a $20 million pool of investors. So knowing that might prevent you and some of them could have a really loud an impressive Social Branding because everyone’s an expert on social media. So knowing that can can help you navigate or at least tread a little bit lighter. When it happens conversation. And I’ll say this to, you don’t have to believe all the negative, like, that’s not all true either. It’s just take with caution and proceed.
Randy Langenderfer 35:08
I’m not as good as some say I am. And I’m not as bad as others say I am, as I always used to say, in the corporate world. So yeah. And you know, if somebody told me once to if you do five deals, there’s going to be one home run, there’s going to be three right down the middle of the fairway, and probably one of them that’s lagging or not where you wanted it to be, and, and it’s true in multifamily to you and not everybody can hit a home run all the time, if you’re in the business long enough, you’re gonna have a fire or some kind of violence on the property and bad things happen. It’s how you manage out of them and how you operate out of them.
Chris Bounds 35:45
100%, that last part is 100%. Because it doesn’t mean investors may not be upset, because they probably will be. But yeah, it’s how you deal with it, that’s going to save your reputation. Or worst case, maybe lawsuits, and there have been flips where we’ve lost money on our investors got paid 100%. And we’re very transparent with them. There have been flips where, hey, we had a six month loan. For some reason the market took a little bit longer. We call them like, hey, look, you know, what do you want to do? Do you want to refinance, you want to extend? You know, how would you like to do that? So as long as you’re transparent, most of them, I think nearly all of our investors are private lenders. In those cases, we’re fine extending because they knew they knew my reputation, there are a couple that they just needed their money for other reasons. So we refer them out and all was good. But there’s that constant communication.
Randy Langenderfer 36:39
It’s the constant communications, a lot of people go radio silence in bad times. Yeah, that’s the worst. And that’s the worst as a as a limited partner. I mean, I remember one example, that comes to mind just that things weren’t performing as well. And the person, the general partner was getting kind of beat up by myself and other limited partners, and went radio silence for about six months. And you know, it ended up having an average return after three or four years, but have never invested again, and that’s just a red flag that potential investors can ask others, hey, how does this group communicate? What’s their track record? Beyond what just the GP is telling back to what you said that the word of mouth references are huge in this industry?
Chris Bounds 37:25
Yeah. Because we’re really when when you get in that situation, as a, as an operator, as a general partner, like your steward, you’ve got fiduciary, and the end of the day, if Mistakes happen, whether it’s your fault, or it’s just the market, like you just got a cowboy out and take the punches. And just keep, keep doing what you can and in order to get the returns back for your investors. But moving on. So you’ve this kind of last question, then we’ll move on to the closing. You’re not full time. You’re a full time investor now. So I think that’s a that’s a recent development, right?
Randy Langenderfer 38:02
Yeah. So we’re recording this the first week in April. And I just stepped aside at the end of March for my full time employment here in the Houston Medical Center where I was administrative type and had a long and I would say prosperous corporate career that I didn’t want to change. But I have recently made that full time transition. And, you know, I don’t I don’t have to do deals, but I want to do deals. And I’ve just, I’ve just got the bug Chris. I’m, I’m, I’m excited.
Chris Bounds 38:33
So no, no, just a sailing off into the sunset and Mexican beaches. You’re, you’re you’re enjoying this. You’re having fun.
Randy Langenderfer 38:40
You know, my Yes. Is the shorter Yes, yes. And yes. And, you know, as long as somebody said, Why do you do this, and I think I ever heard of John Maxwell, I coined his phrase, he is a motivational speaker. And he says, Well, let’s see, say, a high energy, low IQ. So as long as I have the high energy, I’m gonna continue to do this, you know, and it’s just my father said a long time ago, if you if you find something you enjoy, enjoy doing, you never have to work a day in your life. And I don’t consider this work. my corporate job was worked toward the tail end. But I don’t consider this work and, you know, chasing down deals, I’m getting off we get and we get off the phone here. I’m running up to a property and and doing an on site tour, and
Chris Bounds 39:24
it’s not work. So yeah. Something good to highlight there as you were able to accumulate and invest in over 4000 units with a full time job. Probably wasn’t easy. You know, I’m sure that took quite a bit of time at times in your off hours, but you were absolutely able to do that that is possible. And then now you’ve been able to step aside. And I mean, you’ve made the choice to really keep pursuing the real estate ventures and investments.
Randy Langenderfer 39:52
Yeah, thanks for summarizing that. That’s great. I probably should have led with that. But you’re absolutely right. This is something that people can do full time at especially as a limited partner, if you’re looking to just diversify your portfolio out of stocks and bonds as the you know, the traditional investment guy is going to sell you if you want real estate without any of the headaches that US general partners experience, you’re purely along, you know, the illustration of the pilot, the general partner is the pilot up in front of the plane who’s worried about the passenger safety and air traffic control and weather and all those variables, versus the passenger in the back of the plane or the limited partner, who’s just sipping their favorite beverage and enjoy the ride, read the book. And so you know, if you’re not the type that wants to be active, this is a great industry for you to find a general partner, you know, like and trust, come alongside of and make a very handsome return,
Chris Bounds 40:52
like a very handsome. And then that probably goes into, you know, we’re talking early on like single family versus multifamily. Could you be an operator with a full time job and multifamily? Maybe, but be ridiculously difficult? Could you be an operator, single family? With a full time job? Absolutely. It’s, it’s easier. And that’s how most people start. That’s how you got started? Could you be a limited partner or passive investor? And neither one of those with a full time job? Absolutely. That’s very easy. So you just got to figure out what do you want to do? Yeah. And I think
Randy Langenderfer 41:33
it’s the the only thing I’d clarify, and I think you’d agree is it’s difficult to grow that single family operations business as a full time employee.
Chris Bounds 41:42
It is. I do simplify it with folks that this if it’s just wealth building, if you buy one a year, for 10 years, and that’s all you did, you’re a multimillionaire, you just you have well over a million dollars, depending on your market area, you’ve probably two or $3 million in assets, you just gotta let your tenants pay him down, you’re not gonna be able to retire. The passive income is not going to be anything super substantial, or really anything you can count on. But from a wealth building standpoint, it’ll get you there, you work, a job gets 401 K IRA and all that. And then real estate on the side, you’ll be okay. But if you want to do something, and really be able to push yourself retire, it’s gonna take a different game plan, you’re gonna have to scale up the single family more challenging. But if you go the multifamily route, which you did, it’s a lot easier to get 4000 units I I can’t even comprehend what 4000 Much less 1000 or 500 single family units, but due to my life.
Randy Langenderfer 42:45
Oh, my Yes. Well, the worst part about a limited partner 4000 doors is just k one time Just kidding. All the K ones per my taxes. That’s the biggest headache headache I have as Yeah, as a limited partner. And that’s very manageable. So yeah.
Chris Bounds 43:00
Okay, so let’s move on to the closing is these four questions to the same to every guest? Start off with if you could give advice to your 20 year old self? What would that be?
Randy Langenderfer 43:12
While you didn’t prep me with these, Chris? It’s okay. What would I tell the 20 year old? Randy, I think the advice I would be is to think outside of traditional, go to college, get a good degree, get a good job, climb the corporate ladder as fast as you can, and hope to retire many years later with a livable wage. And that’s not bad. I’m not disparaging that. That’s what I did. That’s what my father did. But I think in this economy, I have adult children. And I always encourage them to develop a side gig of something. It’s not real estate, it’s something else. Be some be entrepreneurial, somehow. So and if you want to be entrepreneur, I think you should take a solid look at commercial real estate.
Chris Bounds 44:00
But what book or books have greatly influenced your life?
Randy Langenderfer 44:05
There’s been several, I guess, I would say from the personal side, I’m a person of faith. And so I always say, the Bible is my favorite book of all time, and one that I spend a lot of time in and try to guide my life after. On the on the professional side. The hands off investor by Brian Brian
Chris Bounds 44:27
Feinberg. Yeah,
Randy Langenderfer 44:29
I’m just reaching up to give it Brian Burke, I think I don’t know if that’s the most inspirational side but for your audience and the limited partners. That is a very good book goes into a lot of detail for you to get your head around. If you understand that book, you’re going to be a great investor.
Chris Bounds 44:45
It’s funny, you mentioned the Bible on the personal side. I would I would say that could be considered a Bible from a limited partner side for multifamily. It really lays everything out. I’ve read it several times. And it’s a good basis on how to approach your, your investment. It’s a good Crash Course. Like the last five years, wouldn’t you belief behavior or habit has most improved your life.
Randy Langenderfer 45:21
I have been working very diligently on addressing consciously my limiting beliefs. So we all have limiting beliefs. I did not think that I could accumulate 1000 doors as a GP or 4000 as an LP. I did not think that anybody would ever invest with me. I did not think that I had the savvy to do this and many more, that I have continually worked around and just said that it is doable. And to address those kinds of headaches has been, I think, the biggest rationale for my growth to say, whatever you have to lose, try it.
Chris Bounds 45:59
We can have an entire episode on just that. I love that. Yes.
Randy Langenderfer 46:04
The limiting beliefs that that we all possess, whether you’re, you know, Rod Cleef or somebody who’s a big Megastar in this industry or the little person down below. Yep. How can people reach out to you? Chris, I just really want to thank you for being on the show. Again. It’s been a been a lot of fun and great to get to see you again. The easiest way to contact me is get on my my webpage, which is invest I am BST. Hyphen AR K invest hyphen ar k.com There’s a contact us page there. love to chat with any of your listening audience. But anything more specifically about about real estate a little bit
Chris Bounds 46:47
more. Appreciate you coming on the show and I look forward to connecting with you again soon. Thanks for tuning in. If you got any value out of this at all, please like comment, subscribe, follow. I’d love to hear from you. And for more real estate related content, market observations, upcoming events, you can go to invested x.com And subscribe to our weekly newsletter. I promise you won’t regret it. Thanks again.