You're listening to the REI marketing nerds podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of AdWords nerds, a high tech digital agency focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett
(0:39) All right. Hello, everyone, and welcome to this week's episode of the REI marketing nerds podcast. As always, this is Daniel Barrett here from AdWords nerds.com. And look, you know where to go if you need more online leads and deals for your real estate investing business. It's AdWords nerds.com. Now this week, I've got Josh Cantwell on the show. If you don't know Josh, he is an incredibly savvy real estate investor. He is someone who is not only world class at raising money, which is something that every investor obviously needs to do. He's also made a lot of noise teaching real estate investors to bring multifamily real estate investing into their business portfolio. Josh is one of these people that is so good at expressing what he does and teaching what he does. It is really a treat to listen to him, which is probably why you may have heard him on his own podcast, the accelerated real estate investor podcast, you can go over and check that out at accelerated investor podcast.com. So there's a million things to get to we had a really fun time chatting and I'm excited for you to listen to this interview with Josh Cantwell. All right, what's up everybody. This is Daniel Barrett and I am here with Josh Cantwell from Freeland. ventures.com. Josh, thank you so much for being here. Man. I'm really looking forward to talking with you. Yeah. I'm glad to be here. Dan, I enjoyed getting some time with you on our pre call kind of preparing for this and look forward to sharing for sure.
(2:09) Yeah, so I am. We were actually just talking before I hit the record. We're talking a little bit about what Freeland Ventures is all about. And I want you to give people an overview if they're not familiar with you and what you do, what makes Freeland ventures unique, because I think among companies that are in that multifamily space, you guys have, you breathe a lot of unique advantages to that niche. So I would love you to kind of walk people through how your business is structured and what you guys are doing today. Sure. So we're focused 100% on B, class, C, suburban, multifamily, large apartment complexes anywhere from, you know, 25 to 40 units on the small end, the biggest deal ever did was 730 units. Most of the stuff we bought is in the 200 unit range. And we what makes us different is that we are we do everything in house except the property management, meaning we do all of our own acquisitions, all of our own underwriting all of our own due diligence, we raise all of our own capital, we own the construction company that does all the value add improvements. We are this is all we do. So we're very involved in reviewing the financials. I have a CFO that oversees all the property managers financials, my partner, Tyler oversees all of our property management and property managers and my partner Glen oversees all of our CapEx. So we have really four guys in our leadership, myself, Glen, Tyler, and Roberto, each with a different and a unique swim lane. And that that really is what we've hung our hat on is each of us is going to be really good at one thing or two things. And that's allowed us to scale big time. And we've chosen D class, suburban multifamily, even C class suburban multifamily, because when COVID hit, everybody realized they wanted to be in the suburbs, they wanted more space. But also, we have a pretty significant housing affordability problem in this country, that's not going to go away. There is not solutions on the table. There's no government solutions, no political solutions. And there's really no capitalistic solutions. There's no builders out there with the cost of debt going up, that are increasing the number of builds that they do. And so with the affordability being so hard right now, people are flocking to B class suburban apartments. And so that strategy has worked really well for us for the past six or seven years. So that's what we do. That's our focus.
(4:36) Yeah, I love the connection you just made to like the macro trend, because I think that's really interesting. I want to touch a little bit on your your business model, because I find it really interesting, right, so first thing is probably a relatively quick question, but you have this really fascinating vertical integration, right where you're handling so much of that deal structure yourselves. Why not the property management piece Right. That's the one piece you guys left out. Was that a deliberate choice? Was it just something you were interested in? Why not kind of add that to the mix, property management's very transactional, right? It's just it's daily interaction. It's daily transactions with residents paying their rent, and, you know, inputting maintenance tickets. And so you don't really make money on doing the property management. It's a lot of, let's say unrewarding work, that just has to be done on on, you know, decent sized apartment complexes, what is rewarding and where you can move the needle is being kind of outside the business and slightly above the business and looking down upon the property manager, and trying to find places to optimize because the property manager is more in the dirt, they're in the woods, to be outside of the dirt or outside of the woods and look down upon what they're doing. And look at the property and a more high level way, we can suggest things what we want them to do. Here's an example. I own these two buildings, they're side by side, it's 170 units, Valley Park and valley Plaza. All right next to them is another apartment complex called Brook view, while Brook view is what I would consider truly see class, like the owners not doing anything to fix it up, the rents are low, the building looks a little bit like it's got deferred maintenance, our two buildings are firmly B class and we manage them really tight. The driveways are sealed and striped, there's no trash, we have a high low level resident, and we have a more expensive, more expensive run. And we have a much higher valuation than they do. But they're side by side. So property managers running the business. And like there's people actually walking from the brookview apartment complexes through our complex to get to some of the retail that's across the street. And then some of these, some of these idiots and brookview are driving their car through the grass to cut through onto our property to get to the retail. The property manager said oh my god, these people are driving through they're walking through. I'm like, well have we thought about a fence and we thought about some chainlink? Have we thought about putting up you know, any kind of tree stumps or you know, things like this? So do being there every day leasing units out? I don't want to do that. But I do want to solve the larger problem. So that's why we're not. And secondly, Dan, I think it's a very good question in that I don't think it's, it's, it's fair, or even possible for one company to do the property management and the heavy capital improvements. We know that if we do the heavy capital improvements, and we put together a really nice unit with a really good common space, LED lighting, LVP floors, white shaker cabinets, upgraded amenities, and we do that, we know that those units are going to rent out, right. So we'd rather attack the larger problem, which is putting together a better product, and we feel like that will then lease itself out, we'll create and get a better resident that, you know, there's no problems with trash or crime or anything like that. Because we have better buildings and better units. So we feel like we can move the lever more by doing the capital improvements, and let somebody else do the transactional property management.
(8:28) Okay. Yeah, that makes a lot of sense. And I think your your larger point you made at the beginning, right of saying, you know, this is not this, it's obviously a critical part of the process, right? You have to have it, but it's also not where there's a lot of optimization to be had, right? Like the, the best version of it is not that much better than, you know, the version just below it necessarily in terms of the impact on the bottom line. So I really like that way of thinking about it. My other question about your business model is, how in the world and this is where this is the part of the podcast where Dan asks a selfish question, okay. How in the world have you put together such a killer leadership? Shows? This is the part that I struggle with the most you have, like you're talking about your team is like you literally I wrote down the Avengers question mark, because it sounds like the Avengers where it's like, the big strong guy, and that guy's the, you know, the guy that flies and this guy's the guy that shoot lasers. So you, it's like you have all these people that are really great at these skill sets, right lead with the swimlanes that you're talking about with that? Did you all come together? In the beginning? Was it something where you had to build the team over time? And how do you think about that? Because I think a lot of investors struggle to build successful partnerships, right? Like that's, that's a real pain point for a lot of people, or even not even that high level, just hiring good people to work on their teams. Right. So So tell us a little bit about what the process was like for bringing that team together. And then if you could talk a little bit more Think about how you think about team building and leadership and that kind of stuff. I would love to hear your thoughts.
(10:05) So let me take the second part first. So the way I think about the business period is I have an infinite game infinite mindset. As far as time goes, I'm not. I used to flip houses. And I was very much worried about how much money we were going to make today, how much money we're going to make right now, how much money we're going to make in the next quarter. And that's all I cared about was very short term is very transactional. When I got into multifamily. I started thinking about do I want to own this asset forever. I stopped thinking about flipping altogether. And I started thinking about the infinite game. Early on in my career. This mindset really started because I ran into this. This owner, his name was Turk. Turk was an immigrant. He was about 9085 to 90 years old. I was looking at one of his apartment buildings to buy. He pulled up in this beautiful Cadillac. He got out he got right into this kick ass like $20,000 golf cart. And then his property manager slash assistant drove him around the complex. Yeah. And I like, I want to be liked, like, six, seven years ago. And then I found out turkette, Nan earned 50 units all paid off. And I'm like, I, you know, I have like, $100 million portfolio all paid off. Like, I want to be like that guy. Yeah. And I realized I looked, first of all notice his age. He didn't do this overnight, but he did it in his lifetime. Yeah. So I'm like, okay, turned out the girl that picked him up on the golf cart was his granddaughter that worked in the business. So I'm like, well, she's going to, she's going to benefit from him having this long term mindset. So I started looking at my staff, my employees in the same way said, first of all, I'm not going to hire somebody and expect them to change the world. In the first 30 days, the first 60 days, even the first six months, about 10 years ago, I started telling myself, I'm going to evaluate new employees after one year, I'm going to hire them, I'm going to be slow to hire. I'm going to make sure that we hold them accountable. But I really don't think they can have a massive impact on your business, any business until they really have been there a year. Then they know the software that you're using. They know the other people on the team. They know other people's personalities. They know how they can play in the culture. They know what their role is. They know how they can move the needle, they can take accountability. I think part of the problem is as owners and CEOs and leaders, we just have a very short term in like immediate expectation of new new people. So Roberto, my CFO has been with me 15 years, Roberto, actually, I found him 13 years ago from a temp agency. He had moved from New Jersey, New York to Cleveland was brand new to the area, looking for something new and finance and accounting. And just he threw his hat in with a temp agency. We needed financial help, we brought him in, and we've nurtured him 15 years. And he's now become our CFO, and he's involved in everything we do I own 35 Different LLCs. And he knows a lot about my personal finances as well. Yeah, there's been many times Roberto when I butted heads got into fights, but we've always come back to is he the right fit long term? And the answer was always yes. Secondly, my business partner Glen and I went to college together. He was in a fortune 500 world he was in fiber and telecom and had been moved all over the country have been moved like 15 times. Finally, he called me up one day and said, Hey, bro, I'm actually getting a divorce. I'm moving back to Cleveland. And he and I had stayed in touch. We've been very close friends, but never did any business together. And once this divorce was final, I'm like, okay, like I knew he was a guy that had a lot of corporate fortune 500 experience that could help me put together the swimlanes put together, the standard operating procedures put together the stuff that I was not great at. And so we became a great fit. Then the third part of it was Tyler, I used to own and run a private equity fund, we had about $40 million under management. We're doing a lot of private lending and hard money lending out of the fund. And Tyler we hired him away from Quicken Loans to become our Vice President of of basically acquisition where he was basically acquiring customers. While when we decided to wind that down and move into apartments. I knew that Tyler had a lot of experience with his own property management with his own portfolio, managing loans with managing customers. I knew he would be really good at acquiring buildings and overseeing property managers, right because he had already done it for his own portfolio. So each one of these Avengers these superheroes came together. One because as a CEO Oh, I have to be very aware of what swimlanes I need. And I have to be very aware, as I'm networking, as I'm talking with people, as I'm evaluating in house talent versus out of house talent, I've constantly got to be looking for those exact things that I need. And so when Glenn said, Hey, I'm getting divorced and moving back, I knew what he had already been up to and what he was really good at. So I knew he'd be a fit. So we started a business together right away. Roberto is already good at finance. And accounting never had an experience with multifamily. He's just grown up in the business with us as we move from resi to multifamily. And finally, Tyler, he's a little younger than me, he's like in his early 30s, he's younger, he's hot, he's willing to hustle, he's willing to look for deals. And that property management experience was big. So now I can tell you, Dan, leading up to that I've also had numerous other partnerships, that did not work. And I also knew what I didn't want in partners, right? Now you need people who are highly organized, people who are thinking six months to two years to five years out, and people that are willing to document everything we tell our people, Dan, last point I'll make on this is we tell our staff, if it's not in the software, or if it's not written down in Google Docs, we use Google Docs for a lot. And we use software systems. If it's not in the software, it didn't freaking happen. Yeah. And so our team has been the culture has been built around, don't text me, or email me a conversation or a decision or a problem. It's got to go into software so everybody can see it. So it's date stamped, it's time stamped, you can upload all the documents that support that problem. So we can solve it together. We can collaborate on it. I hate email. But one of the things my company thrives on is we do not email each other everything goes into software. Yeah. And so not only is that me paying attention to what we need, but it's identifying, you know, what swim lanes, do we have to have to scale? And then third, I think it's having a long term, infinite mindset. And fourth, it's in, in the in the micro, it's about if it's not in the software, it didn't happen. Yeah, those are the things that have allowed us to be really effective.
(17:08) I think I want to point out, right, and I think that's such a cool philosophy. And I think it makes a lot of sense, right. But I want to point out that like, in many ways, like what you what most people will say is, like you said, hire slow, but also fire fast, right? So the idea is like, Hey, if you someone comes in, and they're not doing well, in that first month, get about and get someone else in, right. But what you're saying is like, what kind of training? Have you given them? Yeah, that's the caveat, right? So I, as a small business owner, you know, we've got a large portfolio, but I really only have like 12 people on my full time payroll. And then I've got contractors, subcontractors, property managers that are all your 1099. But I would say people say hire slow and fire fast. Yes, but only if you provided them significant amount of training, and then they failed. The problem with small business owners and entrepreneurs is that they bring somebody in and they think that person is just going to solve problems with little or no training, because as a small business owner, you don't have time to train them. You're too freaking busy as a CEO. You don't have any training systems, you're not a fortune 500 company. So you don't you haven't trained them. That's the immature mistake that I used to make. Yeah, I bring somebody in, I thought they were Superman. I'm like, I just by hiring them, it's gonna solve all my problems. And that never happened. And then I looked back, I'm like, Oh, my God, my training sucks. I'm awful at it. And I wonder why they're failing. So instead of I realized, now what I'm what I'm good at, and what I'm not good at as my training still sucks. But I take a long term, to give them more bandwidth more more rope, to give them more time and space to learn everything we're going to learn, but maybe over six to 12 months instead of 30 to 90 days. That's the difference. Because I know what I'm good at what I'm not. Yeah,
(19:02) I love that. And there's a really good reminder for me, so when it was also very bad training, and oftentimes not great at even explaining how exactly it is. I did. You know, I always joke that like all my SOPs, and with you know, like, step number 15 Is the if the above fails, just rely on your 10 years of experience, right? Like it's always like the last part of it, because I'm like, so Alright, so let's, let's go back and talk a little bit. We've talked about Freeland ventures, again, you can go check out everything that Josh is doing over at free land ventures.com And go check that out. Really cool. cybers got a bunch of stuff. We haven't even touched on a lot of stuff that you guys are doing over there. But I want to talk a little bit about your pathway into real estate, right. So how, how exactly did you get to where you are now you've had this sort of pathway. It's taken you through, you know, you mentioned sort of flipping wholesaling, right? You went in through this sort of online marketing space. So give people a little bit of your backstory, like how'd you get to where you guys are today? Sure.
(20:09) So super long, short, I got out of college and got right into financial advising. And I think that's important to recognize, Dan, because when I was a financial planner 20 to 2425 years old, I had my series six license Life and Health Series 666, I was writing financial plans for people that were three times my age, I got very comfortable talking to people about money, and about their goals and fact finding appointments and the stock market going up and down. But what I realized was that most of my successful clients did not have all their money in stock market, they actually owned real estate, they own portfolios, rental portfolios, they own apartment buildings, they own restaurants, they didn't run the restaurant, they actually owned the the physical structure and leased it to a restaurant. So I took notice, man, and I bought my first investment property when I was 24 years old. I bought a duplex that I moved into and a house hacked it, I lived in half, I rented out the other side of the duplex, I rented out one of the rooms on my side of the duplex to my buddy, and I lived there for 100 bucks a month, otherwise would have cost me 1000 bucks a month to live there for about a month. So but that's important, because I think if you're going to be in real estate and do anything at scale, right, you're gonna buy 100 rental units, 100 single family homes, or you're gonna buy a 200 unit apartment building, or you're gonna buy 4000 units like we have, you'd be very comfortable talking to investors about their money. So I got cultural debt very young. Then I got sick of financial planning, I got sick of the regulation and the late work, you know, during the week and weekends meeting with clients. And I'm like, Hey, I'm gonna start going to these, you know, weekend boot camps and things. And I did. And I realized this is back in 2004, that when I got home, we were very interested in foreclosure investing distressed assets. We were very interested in short sales and pre foreclosures. And I realized that Cleveland where I'm from already had a major foreclosure problem. There were like 10, publicly traded companies that had folded, collapsed, went bankrupt or had been merged between 2001 and 2005. And so lots of jobs were lost people left town, and there was a glut, there was an oversupply of houses, and a lot of people in foreclosure. So we decided we were just gonna get really good at doing pre foreclosures and short sales. By that Dan, we actually kind of got lucky because then when the crisis hit N oh eight, we were already three years ahead of the game, negotiating short sales, pre foreclosures. So we started doing these massive seminars, teaching people I was probably doing 10 to 15 seminars a year over one a month. And we would have rooms of 50 people to 500 people coming to learn about Pre Foreclosure investing, because that's where the market went and Oh, eight 910 Yeah, but what happened, Dan is we got really good at that we did on nearly 1000, pre foreclosure deals, wholesale deals, short sales, all flipping very transactional. But again, life gets in the way. And 2011 I got diagnosed with pancreatic cancer. 35 years old, two kids wife is eight months pregnant with our third Wow. And I was diagnosed with pancreatic cancer, which had at that time, just a 6% survival rate. 6% Wow. And I thought, holy crap, like I learned all about real estate, the Rich Dad Poor Dad and multiple streams of income, Robert Allen, and all these weekend seminars and Dalta roofs and all these things I want to but I didn't really own a portfolio. I was just very transactional and flipping wholesaling, rehabs, things like that. And now all of a sudden, I got ripped away from work for nine months. Well, if you're recovering from major pancreatic cancer surgery, you have a newborn at home, I had a newborn now at home and three little kids and my wife had an emergency C section. So she had a surgery of her own. Yeah. And now with no money coming in, like, this is a major, major problem. Oh my god, this sounds like the most anxiety inducing. Yeah, like combination of things you could possibly imagine. But now imagine
(24:11) not now fast forward to today. And it's a different problem. But with interest rates skyrocketing, and mortgage applications falling, and prices starting to stagnate and not as many buyers, a lot of people that were just rehab flipping rehab flipping rehab flipping or wholesaling, and trying to find somebody that was just willing to pay more. They were basically paying 95 cents on the dollar for a wholesale deal and wholesaling it to somebody else for 100 cents on the dollar, or even 105 cents on the dollar. because prices are going up because there's no supply because of COVID like that wasn't a business that was not a business that was basically taking advantage of the market. That's being an entrepreneur, I get it. You're making money based on what's going on in that vacuum that time, that moment in real estate but that's is not a long term infinite mind. That's not a long term infinite investing, which is what we do. And so the lesson that a lot of people are learning today about the troubles with flipping trouble with being transactional, I learned that lesson in 2011, because of cancer, yeah. Okay. And so what we decided to do long short is, I knew coming out of that surgery, that recruiting capital and doing more Commercial Investments was the key. But I had no experience in commercial real estate, I had a lot of experience in raazi. So what we decided to do was start this private equity fund, recruit capital into a fund using a PPM, and we were lending it out, and that those loans created passive income, okay, but a lot of those loans were a year or two long or even six months. And that became, even though it was a little longer term, and it was creating passive income. Every time a loan paid off. I was like, crap, I've got to go make a new loan. Yeah.
(25:55) Gotta replace him now, a little bit, right. So finally, in 2016 17, we were already underwriting and funding as a lender as a debt lender, we were already funding apartment buildings. And then I started investing in buying them started investing equity and other people's apartment buildings. And then we got to the point where we shut the fun down in order to just be the GP in all of our own apartment deals. And we've been doing that now for many, many years. And so it's definitely been an evolution. Dan, I think it's all about paying attention. And like Joseph McClendon, right, who's the partner of, of Tony Robbins, said, There's no such thing as winners and losers, right? There's only winners and learners. And so I've learned I, there's many points in my life and my career, Dan, where I could have thought, like, I'm freaking loser, I had cancer, I didn't make any money for nine months, then I made a bunch of loans and COVID Hit there's all these circumstances where I could have been a loser. But I learned I paid attention. And a constantly kept making pivots. And ultimately, I fell into this business of multifamily and large apartment buildings where I feel like it's an infinite business. I can own these buildings forever, I can be like Turk, right? I could be the Turk of my own family, my own generation, which is exactly what we've done. So I would just encourage all of your listeners, look, if you're having success in resi, you're doing really well, you should still be looking at creating long term passive income through apartments. If you're struggling and you're flipping and that business is drying up, pivot to multifamily and apartment buildings as soon as possible. I've learned those lessons already. And that's what I would submit to them that they should start doing now.
(27:27) Yeah, I think that's it's such a powerful message. And I think even someone like me, right? It was like, I work with investors. But I am not yet actually invested in real estate, right? Like, I'm focused on being really great at what I do. But this idea of there are certain businesses that are inherently transactional, right? Even if you are the best in the world, right? They are constantly needing to be replenished or replaced. I think contrasting this with this idea of like the sort of infinite game model that you mentioned, where it's like, this is a thin asset you're gonna own forever. I think that's really, really powerful mental models.
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