In this video, the speakers will be discussing the importance of having a long-term mindset when it comes to building wealth through real estate investing, particularly in the multifamily sector.
We’ll explore the benefits of investing in multifamily properties over other types of real estate investments, as well as share valuable insights and lessons learned from our experience in this field.
If you’re ready to take your real estate investing game to the next level, this video is for you.
Transcript:
Gino Barbaro 00:00
mindsets about building wealth? Yeah, yeah, the people think of wealth is just, I guess generating money becoming rich becoming wealthy from from that perspective. I’d like to cultivate the mindset first between what a poor poor mindset is middle class mindset and a wealthy mindset. And for me, it is the poor mindset, you can be making $17 million a year, whatever it is, it’s that person that doesn’t think about the future, the person that doesn’t have the growth mindset, the person that doesn’t save and, and thinks about their legacy, the middle class mindset.
That’s where I was for years, it was all about saving for the future, but not really building wealth and just putting it into certain vehicles, whether it’s a 401k, or there’s a 529 plan. And let’s hope that works out, I have no control. To me, the wealthy mindset is more about legacy. It’s more about that long termism. We talked about what we call the 100 year mindset. All the decisions that Chris and Gino are going to make today are not only gonna affect us, they’re gonna affect our kids and our grandkids. So you make a decision, whether it’s a partnership, whether it’s an investment, whether it’s where you want to live for the next 20 years, it’s not going to only affect you, it’s going to affect the rest of your generations going forward.
And when you think like that, everything changes all your decisions changed. And when I got into multifamily real estate years ago, I was a solopreneur, I had one little restaurant. And within five years, I was able to scale up to 1500 units because I saw the power, I saw that long termism but being able to invest in these assets for the long term. And Chris has been difficult for the last couple of years, these deals haven’t been around for a fresh long term errs, we haven’t found value in deals and not being able to buy deals and passing deals up has been very hard and building wealth, it really comes down to you know, pretty, pretty boring thing.
It really comes down to having certain certain skills having certain disciplines that you need to do. And once I realized that, I started doing it for myself, and I saw that it’s not really taught in schools. Well, how do I teach my six children, I’ve got six kids age 23 to eight, they need to learn this stuff. And then I saw how much I enjoyed doing it. We just started the Jake and Gino education company and started pouring into that community as well.
Chris Bounds 02:06
Yeah, so a mentor of mine long time ago, told me like, always make long term decisions, with one exception. If you got a cash flow crunch, make short term decision, solve that problem, and then get back to long term. And as long as you can keep that balance, then you’re gonna do well. But like you said, it is boring like this, the rock star, like the rocket ship stories are more interesting. But those are that’s the rarity that I that’s not the most common. Usually it’s very boring. And there’s a lot of people that you’d walk by down the street. And you’d never know they’re multimillionaires just for doing something very, very simple for a long, long enough time.
Gino Barbaro 02:52
And in multifamily it allows you to do that we bought we bought our first deal, Mike, myself and Jake, back in 2013. When it’s very similar to what’s going on in this part of the market cycle, right market cycles, reverting back to them, rents were $350 for one bedrooms back then we still own that 225 unit asset. We still own it till today. And those rents are over $1,100 right now. So talk about creating wealth, in the span of a decade, we’ve been able to triple rents, valuations have gone up threefold tax benefits. I mean, that’s what that’s where it talks about really creating true wealth. And when you speak to a lot of intelligent investors and people who’ve been around whether it’s a SAM Zell, or it’s the same freshmen, their mistakes are real simple. They should have bought more. And they should have held on for a lot longer. So when you say your
Chris Bounds 03:37
strategy is a little different than a lot of a lot of investors out there and multifamily investors, so most indicators, they’re in and out in 357 years, maybe 10. You’re more of a buy and hold for super long term to maybe forever ish.
Gino Barbaro 03:53
Yes. And let me let me let everyone in on a little secret. You don’t make money in real estate when you buy. That’s a fallacy. You make money when you exit. Let me say that, again. You don’t make money when you buy. That’s great. You make a little cash flow. But where do you make most of the money, it’s when you refi the asset or you sell the asset. It’s the equity capture. That’s the problem. And I think a lot of syndicators.
When they have investors, they’re forced to sell, that’s where they make unless they’re putting money on the front end, they make money on the back end, Jake and I we like to syndicate, we’ve syndicated a couple of deals, but I like to buy these assets for longer term, if I’m looking at an asset and I’m gonna say to myself, I don’t really want to own this asset in the next 10 years, then I’ll pass on that asset because I’m thinking to myself, I want to buy an asset in a good market where there’s a path of progress, where there’s population growth and job growth and I want to buy an asset that if it’s old, and I need to really fix it up and put a ton of CapEx into it.
I can do that. At these prices of last couple of years you were forced to buy newer assets because the capital expenditure requirements were so great on the older assets. So for us, it’s just shifted in from buying these assets for shorter term and holding for longer term assets. Think what syndicators should really consider doing is, there’s nothing wrong with buying assets and selling, right? Because there’s sometimes you get into a market or things change, or all of a sudden you have this 10 unit, you’re like, I don’t want to be with these small deals anymore. Let me repurpose that money and put it into another deal. So that’s just really the business of real estate.
We call it the conveyor belt theory, put these assets on a conveyor belt, this imaginary belt that’s in front of you, let these assets start matriculating, then you’ll look back three years ago, I’m glad I got into it, I’ve got these assets. Now, what do I do? Now you have the opportunity to sell that deal and put that asset into another asset or refinance it and pull that equity out, like you said, and continue to invest it. So the strategy is, when you’re going into real estate, just understand what your exit strategy is, most in beginning investors, myself included, it’s not just buy and hold forever, you want to buy and hold the right assets forever, you know, and so I think we need to get clear on that as investors
Chris Bounds 05:49
and aligning the exit strategy with your long term goals and the long term goals of the investors that you’re partnering with, because the sell, even if you’re a long term, investor, ultimately, the problem or the success of that event occurs with what you do with the money. Yes. Like you, you live like a rock star. Cool, you’ll have fun, but ultimately, you squandered the wealth.
But if you reinvest it, which is why I’m from a single family standpoint, I came with the slow flip strategy, instead of flipping over six months, flip over a three to five year period. And then that way, when you’ve accumulated the equity, when you’ve accumulated some appreciation, get some cash flow along the way, sell it and then go out and buy not just one more, replace it, but two or three more, you got more cash. Just keep doing that. It’s very boring, but over a 10 year period, you’re a millionaire and you can keep your job doing this.
Gino Barbaro 06:42
Yes, great point. I love that.