This video will show you how to make money by investing in multifamily properties with Gino Barbaro.
This is an awesome opportunity for people looking to build their own financial security.
Gino is an expert at finding great deals and turning them into profitable assets.
This could be the right time to get started!
Transcript:
Gino Barbaro 00:00
That’s why I created Jake and Gino like there’s gonna be a better way. You said something that really stood out to me. Analyze deals and find deals. Most investors out there, don’t even know what a deal is.
Chris Bounds 00:12
Welcome to the podcast. I’m here with Gino Barbaro. He’s a real estate investor, business owner, author, co founder of Jake and Gino, a multifamily real estate education company. He uses his proprietary framework of buy-write, manage write and finance write. And is used that to build a portfolio of over 1400 multifamily units. How are you doin’ Gino?
Gino Barbaro 00:36
Chris, you forgot father of six, which is very important. Homeschool kids, got an amazing wife, and family business. They go hand in hand. So, let’s let her rip today.
Chris Bounds 00:45
Yeah, no, I actually- I saw that your bio. I did not know that about you. You may have shared it in the past, but I did not know. And when I saw that, I was like, go ahead and do include that or not. But because that is important. I mean, a family, we’ve got a family too. I’m busy. They keep me really busy. I can only imagine what a family of six does for you.
Gino Barbaro 01:04
It’s great. It’s awesome.
Chris Bounds 01:06
All right, I’m just kicking it right off. When you think of where you’re at today, you’ve had a lot of success, you’ve got a huge community, 1400 family, multifamily units, or more than thousands of people are watching or listening to you whether it’s on a podcast forum, YouTube, or attending some of your live events. And then you’ve got a pretty good a community of students that you coach, like one on one in a group setting. So, when you reflect back, were like, where you came from, like the beginnings prior to real estate, like, what do you feel? Or how does that make you feel? What do you think about?
Gino Barbaro 01:46
You know, the first word that comes to mind, from starting the journey is responsibility. I want everyone to write that word down. Because without responsibility, you can’t take a journey. In 2008, read the book, T. Harv Eker, “Secrets of the Millionaire Mind”. I realized that at the great recession, we can either blame the economy, blame, you know, Frank Dodd Act, blame whatever is going on. Or we can take a look at ourselves and say, “How do I grow?” You know, your income can grow only to the extent that you grow. And I was stuck. I had one restaurant, amazing food.
But what was happening in a way, a lot of competition, a lot of things are changing the economy. All of a sudden you have GrubHub, you have these other services, you have different eateries coming online. Panera is going hot, it’s just different food types. And I was stuck there. And I said, “What is my next step?” I done a couple of real estate deals that did not work out for me. And they didn’t work out because I wasn’t educated. I ultimately took responsibility and hey, partnerships were bad. The market was bad. But it was my responsibility that those deals didn’t work. So that word, everybody, if you’re not ultimately responsible for your actions today, going forward, you’re not going to quote unquote, “Succeed”. Another book that I would recommend everybody just finish reading it. Dr. Hardy and Dan Sullivan wrote, “The Gap and The Gain”.
I want everyone to take a look at where they are in life. We’re always trying to achieve or trying to aspire, trying to hit that goal, which is what we should be wanting to do. But don’t forget to look back and see the amazing amount of gains that we’ve already accomplished on that first deal with Jake and I did. If I look back from 2009, meeting Jake to 2013, you know, those four years I had a relationship with Jake, before we bought our first deal. It took us 18 months to find that first deal. If I did not look back and say, “Wow, I can’t believe we got that first deal”. All of those actions that I needed to take, to underwrite a deal, to talk to brokers, to actually partner up with Jake.
To put in the LOI, always measure your gains and measure your growth by looking back and what you’ve accomplished. And that will fuel you to go forward because we all need that vision to go forward. But looking back, it’s been an amazing journey. And I’m just me scratching the surface and my goals have changed. I’m not one here who wants to acquire more units. I’m here to acquire really good deals. That’s what my goal is myself. The Jake and Gino community is closed almost 35,000 units which only started four or five years ago. The first couple years students weren’t closing deals, but it’s that momentum looking back and doing those daily habits and putting those daily grinds and making sure that you’re working towards your personal vision and knowing why you’re doing it.
For me the big “Why” of getting to multifamily was I had a W two job. I didn’t want to get on that rat race. How many of you guys out there by a show of hands I wish I could see people’s hands go up or stuck in that rat race. I was. I was working Sunday I’d get paid even though I was self employed. I was stuck in that rat race. I wanted to find quote unquote some type of “Passive Income”. I didn’t want to fix and flip homes. I didn’t want to buy single family because I needed something that was scalable that I could do part time until I knew in my gut that I could say, “Okay restaurant. Okay brother here are the keys. I’m gonna do real estate full time.” And for me multifamily was that vehicle. So that was the, the starting point for me, Chris.
Chris Bounds 04:59
I love it. And so, on responsibility, the book that came to my mind was “Extreme Ownership” by Jocko Willink, and to sounds like you’ve read that too. And just having that humility to realize that there are things outside your control. I mean, you just can’t control them. I mean, it just is what it is. But the things that are within your control, take ownership of it. And then as you’re going, having that ability to reflect back, like, even if you’re not where you’re at today, just know that you can reflect back and look at look at where you are now, based on the decisions you made before and how your progress like- I early on, you know, I never really dreamed that I’d be doing podcasts, don’t you know, podcast was a thing back then. And, you know, really, I think I in a lot of other people don’t get frustrated with, “Hey, why am I not here because this person’s there, this person, there’s 500 units” We look at, like, like for us, you know, we flipped 200 houses, most people never flipped one. Or if you flipped five houses, again, most people will never even make that first offer, like just having the humility and perspective of where you’re at. And be able…
Gino Barbaro 06:09
This is why Chris, this is why they need to read that book “The Gap and The Gain” because you’re describing exactly what the gap is. The gap is, Chris has done 200 homes, I haven’t done one. You can’t compare yourself to others, all of a sudden you’re in the gap. The gain is, well, I just started and I’ve already got a deal on the contract. I’m already looking at walking deals, and I’m going to get a deal. That’s the game. So, we are all the time, I would say all has been many times we find ourselves in the gap. And to give you a quick example from the book.
You have a child, you give that child six spoons. He’s happy with the six spoons, you take one away, the child has a temper tantrum, he’s in the gap. But he has five spoons. He didn’t have any before. Now he is five. He’s looking for that sixth one. Practice gratitude every day. Be happy that you have five spoons and that’s how we are as adults. Don’t worry what Chris has done. Don’t worry about Geno’s resume. It’s taken time for us to get there. And if you can worry about what you’re doing and focusing on your goals and your aspirations and surrounding yourself with people who will aspire to you. That’s what the community is all about.
That we’ve created. We have like minded individuals in there, we’re creating multifamily entrepreneurs, you need that accountability. You need that network, especially in real estate. Chris is not flipping 200 homes a year by himself. He’s talking to Gino right now he has other people, other team members doing that. That’s the important thing. But you don’t just show up and start flipping 200 homes. There’s a process that takes place there is a humility, there’s a service, there’s a lot of hard work, there’s no four hour workweeks in the beginning. I still don’t have four hour workweek. So I don’t know where that idea comes in. Because if you love what you’re doing, you’re not gonna work four hours a week, you’re gonna work 40 hours a week minimum, if not more, but it does take time and read that book because it’s a such a powerful book.
Because when you show gratitude for what you have, it opens up the possibilities, all of a sudden, you have that positive mindset, you don’t have those energy blocks, you have no uplifting, you know, attitude, and they can and you know, you can do anything attitude behaviors, a belief driven, if you can believe it, all of a sudden things start happening in your life.
Chris Bounds 08:05
And just to enjoy the process. Because I mean, if you truly hate it, you just you really shouldn’t be doing it, there’s better things to do. And that includes real estate, like maybe if you hate it, I mean, just passively invest so you can do something that you really like, enjoying that process. Because ultimately, like you said earlier, you’re only- you’re gonna grow as much as your personal development and your education allows you to, um, so that moment, he finally decided like real estate’s it.
Actually, those can afford multifamily, is it. So, because you mentioned you had you already decided real estate but had maybe some road bumps there, but multifamily, multifamily is the vehicle that’s gonna get you from A to where you really wanna be B. What happens that got you to that moment? Was it circumstance? Was it just an evolution of things or a combination of things?
Gino Barbaro 09:04
A little bit of everything. My first deal in real estate was a mobile home park deal. I would have stayed with home parks if that deal had succeeded. But I didn’t have the education. I didn’t have the skill set. And I partnered with somebody to deal with sour. The next deal. I invested in a strip mall, mixed use building and at the beginning of the Great Recession. So you can imagine how that went for a few years the pain of the commercial leases and all investing in New York in a market that I didn’t know. So in 2008 I said to myself, I own a four Plex. I love dealing with tenants, residents. I love that model of being able to provide a basic human need. Clothe, food, clothing and apartments. It’s a basic human need.
Chris Bounds 09:42
It is never going away.
Gino Barbaro 09:43
It’s huge demand right now. I was talking to my mom 20 minutes ago she lives up in New York she’s like, “Can you believe all these apartments? They’re building. They’re going crazy”. I said, “Mom, you know nothing about demographics and you know nothing about how much supply there is not on the market they need to continue to build because we are in an affordable housing shortage. They haven’t built enough single family homes and people are renting the demographic show that the millennials and the baby boomers tend to rent. Millennials are having kids later. And Baby Boomers are downsizing and renting is so affordable”. And so here the keys back after a year, you have all your amenities. You have a gym, you have a clubhouse, you have a dog park washing, you have car washing a pool, why would you buy a house, if you’re 30 years old, and you’re living, I mean, sane. So you can see the shift towards that. But for me, I just saw it as a way to provide a great service and to scale up and to do a part time.
And to get that economies of scale. Our first deal was in a 25 unit deal. So I was still working at the restaurant, Jake was doing his pharmaceutical sales or a second deal three months after that was a 36 unit. So we have 60 units within the first four months of our first deal. I can see the writing on the wall and say, “Wow! One more big deal”. And Jake, I’m ready to go off to the races and you are too so that was the idea behind multifamily. And really to drill it down for everybody out there who has a single family home portfolio. I’m not hating on it. My only issue is single family homes to scale is very difficult once you get into the 20, 25, 30 single family homes because they’re all different, hot water heaters in a different area. Grass cutting is different, you have three bedrooms and one two bedrooms and and over different flooring, different cabinets. When you’re buying a 25 unit apartment complex, all 25 units of the same, the maintenance man knows where all the hot water heaters are.
The maintenance man knows what kind of sinks you’re putting in. It’s a much more scalable and controllable model we’re selling time, if you can turn a unit in five days as opposed to waiting 25 or 30 days, so much more efficient, and then multifamily it doesn’t lend itself to being able to build a business you’re being you’re looking at it when you first start out as diamond mentality, I’m gonna do this, and I’m gonna do that. But when you start getting 60, 75 units, you can say to yourself, “Well, here’s the light at the end of the tunnel. I can start hiring people. I can get a full time property manager or a full time maintenance tech. “And you, you have a couple of deals a 25 unit, a 15 unit and a third unit you can combine those together and all of a sudden, you’ve got full time help so for me, it was more of out of a necessity I fell into it. I enjoyed it. But unlike how do I- I couldn’t see myself flipping two or three homes a year while I have a full time job, especially starting out swinging a hammer, you know, that whole construction idea of that I’m I couldn’t do that. But I could see myself being a landlord and you know, having 25 tenants under one roof.
Chris Bounds 12:22
Yeah. We, um, I mean, it was an evolution, I’ve been watching certain folks that I respected in masterminds and just folks that I’ve networked with, move off into other aspects. I think every single one of them started a single family. But they moved up into mobile home parks, self storage units, and then multifamily. And I would just stay in touch with him. And have conversations, helping how are things going, observing while I’m doing my thing. And, like for us, it got to a point to like, like you mentioned, scalability. So, we had stopped flipping just because it’s a job. And there’s nothing wrong with flipping, it’s a good way to make money, but it is a lot of work. And at the end of the day, you’re selling an asset, that you bought it below value, and you’re leaving a lot of future intrinsic value. You’re removing it from the equation because you don’t want it anymore.
So we’re just like, and then the combination of things like you’re talking about with that low inventory. If we’re gonna work really hard to get a deal. It’s gonna have more than one door. So, that’s how we moved into that. Now, you got your second deal within four months of your first deal. I tell folks all the time, like the first deal is always the hardest. And you’ve got to get in the game like you got in the game, start out making offers, analyzing deals, ad nauseum. And you got to do that for six months, eventually, you’re gonna spot a good deal. But then it comes down to you actually have to play the game. You gotta buy something. Do you think, that because it took you 18 months to get that first deal. But four months to get a second? Do you think that’s because of that extra field time that you had? Game time that you had closing on that first deal? Is that probably what allowed you to now escalate the time and close that other one for four months?
Gino Barbaro 14:16
A couple of thoughts come to mind. Mark Twain’s quote, “It ain’t what you don’t know that will get you in trouble. It’s what you know for sure. That just ain’t so”. And what do I mean by that? Everyone listening to this as like multifamily is a pie in the sky. I could never own an apartment complex. Well, you can become a limited partner for as little as 50,000 bucks in a deal and you own multifamily. So, right there off the bat, crush that limiting belief or you could learn how to creatively finance a deal or first deal with seller finance, we needed $80,000 Total closing costs on a $600,000 asset to get a 25 unit property. I’m sure a lot of the listeners out there know and can get $1,000.
And if it’s not their money, they’ll go out and borrow from somebody else as well. So, the idea was we didn’t know what we were doing. We didn’t know the multiple ways to get into multifamily. We didn’t know how to speak to brokers, we didn’t know how to analyze deals properly. We didn’t know how to do Property Tours, we didn’t know how to put offers in. And that’s why I created Jake and Gino. Like, there’s gonna be a better way. You said something that really stood out to me. Analyze deals and find deals, most investors out there, don’t even know what a deal is, or don’t even know how to analyze a deal. Or more importantly, how many of you out there have actually created a criteria for buy right for yourself? What kind of deals are you looking for? Are you looking for newer assets? Older assets? How many units? How much capital do you have? What is your net worth? Do you have investors out there? How long are you gonna hold the asset for? What is your exit strategy? All of these questions play into the type of deal you’re looking at.
So if you’re coming to me, I’m looking for deal flow. Well, what type of deal are you looking for? Anything that makes money cash wall. Let’s get a little more granular than that. If you don’t know that it’s gonna take you six years to find a deal. You need to know what works for you. Because a deal that works for Gino and one that works for Chris may not work for John or for Mary get granular on what you’re trying to do some markets, you’re gonna really crush it with capital appreciation in the future, but they may not cash wall for the first 18 months or 24 months. If you’re a person who’s older. And these retirement income you may have to invest in a market that is gonna provide a little more cash flow, but a little less capital appreciation.
So, figure out what you’re trying to do. And ultimately, imagine a conveyor belt. We’ve talked about the conveyor belt theory that Jake and Gino. What your goal is to get a deal on that conveyor belt. It’s comprised of cash flow, and capital appreciation. As you get more assets stacked on the conveyor belt, you’re creating a multifamily business, so you can replicate this, those deals start to matriculate all of a sudden that equity comes into play two or three years down the road and you either sell the asset, you refinance the asset, or you continue to hold it and that cash wall continues to snowball. That’s what a multi
Chris Bounds 16:59
That’s a lot of act.
Gino Barbaro 17:00
Yeah. A lot of investors don’t understand. That’s the biggest mistake I think that I made initially on. These I didn’t look at every deal as what my exit strategy was going to be I thought I’m going to buy and hold forever. Well, you know what you’re buying and holding forever. Some of these assets become functionally obsolescent when you’re the high of the market right now. Maybe it’s time to take some of that equity off and repurpose it from the conveyor belt and put into a different asset. Maybe a newer property right now. So, have that exit strategy cleared out. Know what your buyer criteria is real quick. Ours we want assets 80s and newer, hopefully brick. We love 100 units plus, but we’re looking for any deal sizes.
That’s what the smaller deals in this market right now. We’re really crushing it. We’re looking for median incomes for at least least 50,000 bucks for me to come around the property. We love two beds, two beds, one and a half baths, townhomes, preferably, we like washer dryer hookups in the mark in these units, because that’s a really big amenity. What else are we looking for? I mean, it as far as cap rates, you have to go through what the England cap rate is of a market. So, Knoxville there, four to five caps, if that’s what you’re looking for in these types of properties.
Get granular on what kind of cash on cash returns and debt coverage ratios you need to have. And the reason why I say this is, it’s all about focus. And pick a market and learn the market. When you’re focused on that asset. I send that deal criteria, I speak to a broker, that broker knows what I’m looking for, he’s not gonna send me a deal in the area, he’s not gonna send me a brand new build, he’s not gonna waste my time, he’s gonna send me what I’m looking for. And I am gonna look professional, they’re not going to ask me for my proof of funds, because they know I’m a player.
And it’s all about focus. When that deal comes, all of a sudden, you just know it, we just we just signing on a deal today. 40 units, two beds, all five build, amazing price, mom and pop. It’s just checks every box that we’re looking for. And when that popped up, my partner got in the car, drove out there, knew what he was looking for, didn’t have to underwrite the deal. We know exactly what the numbers are. Once you get really comfortable, you know that the numbers make absolute sense. So you don’t have to waste time doing this. So focus on it. But learn that by right criteria, start creating one specifically for yourself.
Chris Bounds 19:07
You stress something that I tell householders all the time, and it’s the concept of return on equity. So, house flippers or wholesalers or even real estate agents work in commission, like it’s all good ways to make money but you miss out on the equity but you also miss out on the multiplier effect that we can have. So, keeping it simple from a single family standpoint, that I’ve got this whole presentation where if I would have flipped the house, we would have made 10 grand. Pretty disappointing flip because this is needed a lot of work. We’re gonna make at the time I recorded that video $100,000 over five years.
Gino Barbaro 19:41
Uhmm hmm.
Chris Bounds 19:42
That was assuming appreciation doesn’t go crazy like it has been. Well actually just double check the comps and we’ve had like an extra. We’ve only owned this house for a little over a year now. And the comps have gone up like an extra 30 grand above and beyond what already, you know, you projected out so we’ll probably end up in there hungry in point by the by the end of year four, same thing with multifamily. So, now maybe you’re three, maybe we wait two or five, we pull that out, and then you go and replace that not with either you sell it, or you refinance and you take the equity. And the multiplier effect is you don’t go use it to buy one property. You buy two, yes.
And over a 10 year period, if you want to keep it super, super simple, you can buy a huge multifamily. And that’s great, as bad as what we’re doing. It’s what you’re doing. But if you want to keep it super simple, just use the same strategy on single family, you can buy one year for 10 years, boom! You got a multimillion dollar assets under management, but you can pay them off, done. If you wanna be a little bit more aggressive. Started on your five, start selling or refinancing maybe one of the weakest sell the weakest one the biggest pain or refinance the one that appreciated it much. Take that money, buy two more. Now instead of in 10 years, you’ve got 15, 20.
Gino Barbaro 21:00
It’s funny, Chris, you’re talking on a linear approach, which is what most people do. But by year five, after you bought five homes, you’re not buying a home a year anymore, because you’ve got enough experience. You’ve got enough people in your network that you’re buying three and four and five homes and you’re adding other assets. I would tell everyone to write these two quotes down, they just came to my mind, “Transactions, pay the bills, equity makes you rich”. Reality. And number two, “It’s not what you make. It’s what you keep”. Multifamily with cost segregation, will drop your taxes precipitously if you’re doing it.
Chris Bounds 21:34
Greatest wealth preservation tool ever.
Gino Barbaro 21:37
Absolutely. And look at all of the wealthy, you have to mirror what the wealthy do. The wealthy look at the tax code, and they follow the tax code. It’s not hidden, you can go out there and you can see what the tax code is. They utilize a tax code responsibility once again, why are all these rich people rich? Why they wealthy? Why am I not doing well, they’re following the tax code. I wasn’t following the tax code to the law. I wasn’t following what the government was allowing me for me to do. So that is one of the greatest benefits of what’s driving this, this trend towards multifamily those cost segregation benefits, and the ability for you to have a dividend or cash flow at the end of every month on top of that, on top of an asset that’s appreciating you having the principal being paid down by your residents, you have an inflation hedge.
There’s just so many amazing benefits to it. But it’s really ultimately not what you make, it’s what you keep, if you’re flipping a home, you’ve gonna pay what ordinary income because it’s in a business at the end of the year. So, you’re paying a much higher tax rate, whereas someone who’s investing and putting that money into a deal, they’re gonna pay a much lower tax, or they’re gonna keep much more of the money that they make.
Chris Bounds 22:41
Absolutely, absolutely. So, how can investors find their first deal? Like so in this market? Yes. Which it’s a hot market. If it’s priced, right. Even if it’s priced aggressively, it’s gonna go quickly. How can investors looking to get in let’s large multifamily is a different game. But let’s maybe think of the smaller multifamily that’s most people are probably gonna get into the 10, 20, 30, maybe even 50 unit type of properties first.
Gino Barbaro 23:19
Our last three deals, we closed on a 25 unit back in December, we have a 21 unit contract on the contract right now. And we’re putting this 40 unit on there. And there’s a recurring theme, these 100 units plus there’s so much money out there, there’s so much private equity that is better bidding up these prices. And I’m not saying they’re gonna work in three years. But I don’t want to buy a deal that is stabilized with bridge debt, just because rents are so low, because that’s like catching a falling knife that is sooner or later going to turn real bad and real ugly. I don’t want to create that kind of risk. And no deal is better than a bad deal.
Chris Bounds 23:50
I want to clarify so bridge debt, meaning short term finance.
Gino Barbaro 23:54
Short term financing. So yes, so you can get short term financing for these big deals, 24 months or 36 months, it’s non recourse. Interest rates higher, right? But the problem with that is costs are higher. And what happens if you’re, you know, you’re getting in now and 24 months from now, interest rates have re risen, which they almost will, without a doubt have to and you’re refining into a higher debt, higher interest rate, very, very risky. And then you’ve got to complete all of the work. So, for me that’s not the model. These smaller deals is 30 to 40 units. You have mom and pop investors that are like, “I’m in the single family home space. I’m only buying duplexes and quads so 30 units, I can’t afford that, I can’t do that”. And then you have private equity saying, “Well, that’s a waste of my time. I’m not going to 30 or 40 units. So that’s where we’ve been playing. It’s really direct.
The seller has been working on these smaller deals, believe it or not. Other things you need to do, go out to conferences, right? Go out to Jake and Gino events, go to other people’s events that are out there, go to your multifamily meetups. In the market itself, when you’re in a market, in our market of Knoxville we know all the brokers, we’ve take them out to lunch we understand who plays in what space we have a couple of brokers there who have larger deals and brokers have smaller deals. Understand and create relationships with all of them. And then constantly trying to get on all of their lists. They’re offering memorandums and when you do see a deal, you need to create report on these brokers.
They don’t wanna go out for a cup of coffee, they want to go out and show Chris a deal, get on the phone and get Property Tours, even if the deal is horrible, because you never know, back in 2018, we’re in Louisville, looking at our first deal. We’re trying to syndicate our first deal. These brokers showed us three or four properties. At the end of the day, they said to Jake, “Jake, you want to see one more?” Jake would be like great, they knew what we wanted the mom and pop that last deal at 5pm was off market, showed us a deal never came on market.
Jake’s Saturday that he saw a nice orange tractor going this guy cuts his own grass. He wants this price. Bam! That’s what happens create relationships with brokers and getting online for any of you out there, who are wholesalers or who are in the single family space and do a lot of direct to seller, continue doing that. Because there’s a big opportunity, I think, in this market for that.
Chris Bounds 25:56
Yet. It’s very interesting on how close knit, I mean, real estate in general, it’s a very social industry. But there’s not a lot of people in the multifamily space in comparison to single family.
Gino Barbaro 26:11
Yes.
Chris Bounds 26:11
And it’s funny, I’ll talk with someone. And or I’ll mention, I’ll drop a name in a conversation with someone who’s like, “Yeah, I know them. They did this deal with this investor and this”, or, “Hey, watch out for this guy”, or “No, he definitely need to call this broker right here”. Anyone that’s doing any type of business and 25 to 50 units like it goes through him. It’s that cohesion, or that networking within multifamily have seen is very strong. Everyone seems to know each other.
Gino Barbaro 26:42
Chris, that’s a great point, our 85 units that we closed last year in April, well, the 25 unit actually asked the 85 unit, how is it doing business with these guys? He said, “Fantastic”. The 21 unit came from the 25 units. So it’s very, it’s very, I don’t wanna say the word incestuous. But it you know, word gets around, you do what you say. And you say what you do. And you, you know, follow through on your commitments, and you will have a long game in this space. It’s like you said, it’s not huge. And people do get around, they do know who the players are in the space
Chris Bounds 27:14
100%. So what concerns do you have? But to preface you had mentioned, you talked about bridge dead, interest rates, right on the wall, I mean, it’s going to be going up. But to what degree we don’t know. But you talked about bridge, I may have been on your podcast where I heard that, I don’t know if it was you, or it could have been different podcasts. But the buyer was a little frustrated, he didn’t get a deal. And we went back and like, you know, hey, what type of financing was, you know, the person who got the deal? Like what kind of financing that were they using? And they were using Bridge, which allowed them to get a much greater loan to value than what he was using with conventional. And of course, allowed him to justify a higher price, too. But what concerns do you have about the uncertain economic climate ahead? And how are you preparing to navigate it? What are you telling your coaching students on how they can prepare just everything’s mitigating risk? So, well, what are you doing to mitigate that that uncertainty?
Gino Barbaro 28:24
Well, you need to look at the debt markets, because debt is a circulatory engine of the economy, and you’re looking at Debt. Debt tends to pull back. They tend to less in deal out debt lesson. We just got quoted a deal for 54% loan to value agency wanted on this deal. How do you make a deal work like that? I mean, that’s what they’re doing. They’re lending less money, they’re taking less risk. So what ends up happening is, one or two things, people come in with all that cash, they have less cash on cash day one, I mean, 18 months, or whatever. And you can see how that affects that affects expectations of investors. So are investors expectations gonna drop they have been dropping, they will continue to drop, but at some point prices need to adjust. The sellers right now have this unrealistic expectation of pricing, they’ve had it for the last two or three years, the brokers, they just gonna follow the sellers are gonna try to get them the highest price, which is their job. At some point when rates start to rise, whether cap rates rise or lower, you’re just gonna have to pay less for the property because debt is gonna just be a huge component of it.
So for me, I’m thinking, and I’ve been thinking for a while, the only thing that saved us over the last 18 months is the inflationary aspect of it with rate rents rising and what they’ve done with COVID. If COVID did not exist, they had not created this artificial bubble where you have so much demand, not enough supply in the economy. It’s gonna come to a point where I mean people aren’t working, they’re going to have to get back to work and when they get back to work, are they going to have a job? That’s the thing, you know, this economy is built upon jobs in a belt about the pan. We have had a lot of demand in a lot of weird sectors, I mean When did you ever remember in your lifetime? We’re in a recession in both sales, sales of six second homes, I mean, all these things that you would think that people would cut out self storage, they’re through the roof because there’s demand for them and people doing the work on their homes is just so upside down and so inverted.
So, if anybody’s out there telling you what they think is gonna happen, they’ve been wrong for the last two years. Where there was a forbearance tsunami, an eviction tsunami, renters not paying, there, I mean, like, no one wants to take culpability and they don’t want to because they don’t know what’s going to happen in the future. For me, it’s always sticking to my criteria of buying these really good deals. And Dr. Lindemann said in our podcast, Dr. Peter Lindemann, if you’re gonna buy real estate, look at it in terms of decades, you’re gonna have two really good years, two crappy years and six years, so, that’s why with the buyer criteria. This deal we’re buying, it’s oh, five builds. I don’t mind holding this for the next 10 years plus, because it’s not really gonna age out. Now, if I’m buying this 21 unit that we’re buying, it’s this 70s build, we’re gonna go in there, we’re gonna rehab everything and make everything as new. But we love the area as well.
So, we don’t mind holding this, we can see ourselves holdings for the next 10 years, or else our exit strategy would be three years, let’s rehab it, finish it up and flip it out and make a nice profit move on. But we’re looking to- we’re vertically integrated. So, we’re looking for deals that we can hold long term through property manage them, we asked manage them, we control the entire process of it. So for me, I’m worried about inflation. I’m worried about rents getting too high, where renters can’t afford them. That’s what I’m worried about. I’m worried about people not having that demand, where the economy is going to implode with there’s not enough products being sold. That’s my fear. And I’m okay. I mean, I just want everyone out there to worry about their personal debt. Get your personal debt load down. So, when you have those payments, you don’t have to go to work.
You have enough saved up here that you have that savings beside you. Not working paycheck to paycheck, that will liberate you that will give you options. The quality of real life is in, – I think coming upon the quality of the options you have. If you can say to yourself, “I’ve got rent covered for the next six months, I don’t have to go to work because of that, but I want to go to work because that’s a much more empowering life”. If you’re Realtors on here that have extra money in the bank, and they’re saving it, put it into a deal. Start investing that money and start creating wealth for yourself. That’s what I want people to see right now. And I’m just afraid that, you know, as this economy slows down, and people have to go back, or they’re forced back to work, there may not be jobs for them to go back to work. And I think one last thing is, as you see demographics, and people shifting from the blue states, to the red states, affordability of these blue states is getting to be unbearable, with taxes with regulation.
And unfortunately, they’re pushing up asset prices, where I live in Florida, and where we invest in Tennessee. And that’s going to continue because people are gonna continue to move, they’re gonna continue to look for opportunities. And that’s where the growth is, if you think about back in the 1850s. It was the reverse the migration from the South to the North, we’re seeing the verb the complete opposite now because of age, because people who are older, don’t like cold weather, they’re moving from the north, whether you’re from Illinois, New York, California, Washington, to the south, and you have to keep eye on them.
Chris Bounds 32:57
You have to bring all the money with you.
Gino Barbaro 32:58
All the money, all the jobs, all the opportunities, and it’s all coming down south. So be very careful where you’re slug the markets don’t look at cap rates. If a cap rate is low, don’t discount the market just because of a low cap rate. Low cap rate means there’s more growth in the market, there’s more opportunity. And that means that residents is less risk, that means a residents are probably going to pay their rent in the next five years. Don’t base things just on a lower high cap rate base. And based on what the potential of that market looks like in the future as well.
Chris Bounds 33:25
Yeah, it’s such a weird environment. You mentioned earlier about the low inventory. So we have 4 million homes roughly shy of where we need to be. It’s impossible for us to build that in any short amount of time. And by short, maybe even five years. I mean, we’re probably because we don’t have this, we don’t have the labor. We don’t have the financing for the construction companies. And there’s just I’m not I have known, there may be some pockets and sub markets that are a little different. But by and large, that’s been the low end inventory problem before COVID. And then when you take half of the market off for a large period of time, where they just decided that they’re not gonna sell then you have a list of man, which has created a tsunami of appreciation, good for landlords, not really good for buyers. That hasn’t been good. But how’s that gonna play out? And all this pumping of money and inflation and then like, there are a lot of jobs but a lot of job openings, but not enough workers and it’s so, so weird.
Gino Barbaro 34:33
Chris, but I would say
Chris Bounds 34:34
It’s not going anywhere.
Gino Barbaro 34:35
Yeah, what I would say to everybody is you really need to adopt that long term mindset. Don’t think about today or tomorrow think about investing in these assets for the long term. That’s how multifamily investors
Chris Bounds 34:44
You gotta be able to pay for it too though.
Gino Barbaro 34:46
Yes.
Chris Bounds 34:46
Like, so back to the bridge thing like your bridge, you know, you got your 36 month bridge, bridge long and they need you to finance out and event happens. I don’t think 2008 gonna happen anytime soon could it’s possible but hey, that happens. You can’t refinance out. What is your alternative? Like having those, some of those worst case scenarios, knowing where you’re gonna get that money and how you’re gonna find or be able to refinance. So, mitigating those type of risks will help you navigate. But yeah, otherwise, long term. If you hold any property, even the biggest dud, it probably would be eventually. But yes, it’d be a pain in the butt. But eventually, worst case scenario, you pay it off and then you sell it. May not have been the best deal, but time tends to heal bad real estate investments. But if you buy right, then you don’t have to worry about those problems.
Gino Barbaro 35:47
Yup, exactly.
Chris Bounds 35:49
Okay, so, last question before we close this up. What is your next big thing that you’re working towards your your B hag big, hairy, audacious goal?
Gino Barbaro 35:59
I’ve written a few down because I don’t have just one. I mean, when you send me this, I was thinking and I have my vivid, vivid vision here. So, I just want to hold this up for everybody. Read the book by Cameron Harold, “Vivid Vision” because when Chris talks about a B hag, you know Jim Collins, “Good to Great” owns that slogan. It’s not just that one big hairy audacious goal for Jake and Gino, we want to have an NPS score of 85 or greater because we want to become the white glove service of multifamily real estate education. That is what we wanna do. But how do we do that? And for me, it’s you know, students have closed over 35,000 units.
By the end of the year, I’d like to make that 50,000. So, if you do 50,000 units, a $50,000 outdoor average, that’s two and a half billion dollars of multifamily real estate that the community will pull down. We have mm five our flagship event we had mm for last year in October, it had 800 850. This year in November, we’d like to have 1200 attendees, I think that is a good big, hairy audacious goal. We’ve never eclipsed 1000. I’d like to donate and have donated a million meals by the year 2030, the Second Harvest Food Bank, right now as it stands in 2022, we are at 259,000 meals. So these are the different objectives that when you write down your vivid vision, you’ll be able to chunk those down. I love to be able, by the end of this year to have 20,000 downloads a month on the podcast, we’ve got 120,000 right now. And these are things that when you look back four years ago, we had zero meals donated, we’re charging 60,000 for years, it’s putting the plan on paper and actually trying to get people to help you do this. I wish I could take all the credit for this.
I can’t. I’ve got an amazing team, you start with one goal, one directive, have one person hired then the team starts growing. It’s for us all up people systems and culture. But those are some of the things that I left in. Obviously, we have another objective that me and my wife are doing. We have a children’s book. So this to me is a passion project. I’ve written one children’s book me my wife. It’s called the cannolis exploded between kids between seven and 12 years old. Parents start the conversation. This book is all about responsibility. And it’s great. It’s written for young young kids colorful we’re coming out with a second book, and responsible Rhino pity party pig, or creative Caterpillar. You can be one of those three in life or you can be all three and just having your kids understand that responsibility when you do lose a job what happens or your bakery blows up because pity party pig forgot to shut off the gas. What do you do? That pity party pig goes out and spends money and he blows money on credit cards responsible Rhino sucks it up and creative Caterpillar wants to become an entrepreneur and you go through that journey that lens. And that’s how you start conversations.
And ultimately for me, I love talking money. I love talking finance, you know people financial intelligence, we can change the world for the better. If you understand finances, and you’re not a slave to debt, and you can take control your finances, you have those options, and life becomes clearer. And money is only a tool to be used. I’d written Hardy’s book. It’s amazing. You know, if you have a problem, and money can solve it, you don’t have a problem. That’s what it comes down to. And I just realized this a few weeks ago, and I never thought of it that way. There’s money here, problem, solved. So if more of us can share and then have that abundance mindset and look at money as a problem solver and that is something to hoard and to compete over. What an amazing life and it starts with teaching our young kids.
Chris Bounds 39:12
Yeah, I love that I want to pick up some of those for for my kids.
Gino Barbaro 39:15
Hit me up. Gino, Jake and Gino come. Love to send a couple to you.
Chris Bounds 39:19
Love it. Love it. Appreciate it. All right, closing out we ask four questions. So, the first question is, if you could give advice to your 20 year old self, what would it be?
Gino Barbaro 39:32
I love where I am right now. So I don’t want to mess it up. So, I wouldn’t tell him anything.
Chris Bounds 39:35
There is that dichotomy like that paradox.
Gino Barbaro 39:39
For me, if I’m advising a 20 year old, find out what you love. Spend more money than you make. Get rid of your instant gratification.
Chris Bounds 39:51
Spenders spend more money than you make.
Gino Barbaro 39:52
No, I mean, earned more and spend less than you make. You want to have your income sorry, you want income more than less than more than expenses. I mean, that’s, that’s the bottom line, let’s not even talk passive income, while you’re in your 20s. Don’t go for the money, go for the value, go for the experience, because by the time you hit your 30, you’re gonna have an amazing skill set that people are gonna want to pay you for. And always have that investor mindset always look to be paid making earned income, and trying to turn that into some type of passive income. That’s what the goal is. But when you’re younger, just try to grow whatever skills you love, whatever, whatever passion you have tried to grow those skills,
Chris Bounds 40:27
Love it. Love it. What book or books, which maybe is your own, but maybe not, have greatly influenced your life?
Gino Barbaro 40:36
No shameless plugs here. I think the book that I’ve read in the last year, year and a half, and this is applicable to all real estate, investors, especially single family, home people, and especially realtors, it’s Stephen Covey’s, “Seven Habits of Highly Successful People”. I mean, come on, I read the book 15 years ago, I didn’t understand it that well didn’t really resonate with me don’t know why. Read last year, I’m like, where you’ve been my whole life. Let me start with the end in mind. That’s what we all should start doing. Your job is not to start by creating transactions and then ending up your life by having those transactions and starting the transactions and turning those transactions into wealth into equity. I think that’s one of the things. Also you’re talking about. Use your time wisely. Those four quadrants that he talks about, well, things that are not urgent, but important. Those are the things we should be doing. And we’re not doing, you know, the relationships, the networking, the property tours, the underwriting of deals, that is such a crucial book sharpening the saw continuing that personal development. I love the book, and I think everyone should read the book.
Chris Bounds 41:34
Yeah, I should probably reread it again. I remember one of the big take aways is, “Seek first to understand instead rather than be understood”.
Gino Barbaro 41:40
Yes, than to be understood. Yes, excellent.
Chris Bounds 41:44
Now, the last five years, what new belief, behavior or habit has most improved your life?
Gino Barbaro 41:51
I went to life coaching school back in 2016, and become a certified life coach. And for me, I didn’t want to become a coach. I just wanted it for personal development. So for anybody out there who stuck with their why, who stuck without having the skill to be able to listen to others, who wants to learn how to ask better questions, who wants to have better connections, and better relationships, look up life coaching, it’s an amazing skill, it will help you in every aspect of your life, it will give you clarity. And we don’t have that clarity, when you don’t have the clarity, you don’t lack the motivation, you lack the clarity. And once you have that clarity, how that focus, you can, you know, connect with that motivation. So everybody out there look into life coaching, and looking to it not only just become a life coach, but for that personal development aspect of it.
Chris Bounds 42:37
Yeah. I would imagine, too. I felt this way too, since we started the invest agents community and doing coaching calls and stuff like that. You learned so much by doing that, like, even though you may have more experience than a lot of the folks it doesn’t mean you’re necessarily the smartest, but it’s that hive effect of learning from everyone. And there’s always these unique situations. It’s very, very, very rewarding.
Gino Barbaro 43:02
Chris, let me ask you a question. Do you find it that when you help somebody out the impact that you’ve created for the person, you feel a lot better about your day and about where you’re going?
Chris Bounds 43:12
100% I mean, there’s an agent on the team, he has far surpassed anything that I’ve ever done. Now, and if he’s listening, he’ll know who it is. Um, he was an Air Force Pilot, got cancer, they grounded him, he beat cancer, government won’t let him fly, thinking of next steps, got real estate license. Starting to learn investing. This is three years ago. So a year and a half into his career. He’s finally full time. Now he’s three years in. He has sold a combined total of $100 million in real estate.
Gino Barbaro 43:48
Wow!
Chris Bounds 43:49
I’ve sold 65 million. I’m kind of happy about that. I think that’s all right. 100 million dollars in three years. just insane. But bravo! Like couldn’t couldn’t be happier for me. And beyond that he’s got 300 Plus units that he’s uh, you know, partners to some degree and –
Gino Barbaro 44:05
That’s awesome.
Chris Bounds 44:06
Multifamily and RV park. So, love it. it’s cool to see that. I mean, I’m gonna do what I what I do, but happy to learn from folks that are better and yeah.
Gino Barbaro 44:21
Love that.
Chris Bounds 44:22
How can people- How can people reach out to you?
Gino Barbaro 44:26
Just go to JakeandGino.com. We have our podcasts there. I have a show called the multifamily zone which is gonna be transitioned to the Julian Gino show. So for those of you out there that want not just talk about cap rates and cash on cash returns, they want to have that relationship with their spouse better. They want to have the relationship with their kids better, communication, that’s what my wife and I talked about on the phone on the podcast. We’ve actually had Dr. Chapman talks about the five love languages. We have all his authors on there, and it’s an amazing way to connect with your spouse and if you’re struggling with, “Why does my spouse want to work with me or I want to pull her into my business”. Well, we have a lot of shows based on that. It’s really important, it’s important to have your spouse on the same page as you maybe they don’t have to work with you. But you want to know how to get them involved and how to get them inspired and how to have them part of that journey. Because let me tell you something, it is awesome to be able to work with your spouse if you can figure that out. And you can learn how to work together, man it is, it’s a lot of fun.
Chris Bounds 45:19
Love it, love it. Thank you, Gino. It’s been a true pleasure if I don’t connect with you sooner at least maybe connecting with you and you’re gonna do it in Orlando again?
Gino Barbaro 45:28
And in five. I will see you at mmm five in November Chris for sure.
Chris Bounds 45:31
Is it gonna be in Orlando again?
Gino Barbaro 45:33
It’s gonna be in Orlando. Yes. The Gaylord same place because they’ve got a really big ballroom. They got a great facilities there. So we love it there.
Chris Bounds 45:39
Yeah, we absolutely loved it. It was amazing. So um, can’t wait. Can’t wait. Thank you so much.
Gino Barbaro 45:45
Thanks, Chris. Appreciate you having me on.
Chris Bounds 45:47
Take care.