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.
(0:41) Hey, guys, welcome back. You're listening to the second part of last week's episode? Let's jump back in. Let me ask you like, and we can keep this high level right, because I know there's a lot to this question. But a lot of people listening this aren't going to be residential real estate investors of one kind or another? How would you recommend that they think about adding multifamily to their strategy, right, like like most people, I don't think would be able to, like drop everything today and like go 100% in. So what's a way that they can start that pivoting process or start adding multifamily to kind of balance out their portfolios? Yeah,
(1:22) I mean, I would just encourage them to do what we did Dan, which is raise a lot of private money brokers, commercial brokers that control the most of the deal flow in the commercial space, the multifamily space, the self storage space, they're controlled by commercial brokers, those commercial brokers will call on owners for 510 20 years, until that owner is finally ready to sell. So it's really tough to compete. Here's my first tip. It's really tough to compete from an acquisition perspective for you to stand up your own acquisitions team when the commercial brokers are already doing that. They're already calling on these owners for years and years and years developing relationships. So number one is make relationships with commercial brokers guys at Newmark guys at Marcus and Millichap Colliers International CBRE, Cushman and Wakefield, these big commercial brokers that are in almost every big town, they are going to control a lot of the deal flow. Secondly, those brokers, Dan Dan are going to want to know that you have what's called certainty of closing, certainty of closing comes from your ability to raise private money, a bank is going to find, let's say 70 to 80% of your purchase, the other 20 to 30% is going to have to come from you or your private investors. That's known as a syndication where you bring in a bunch of investors into that deal. And look when I when I made the big pivot, and we got into multifamily to brokers or started awarding us deals because they had a very high level of confidence that we could close that we could get the money. And so while you're doing your resi business, start focusing on raising way more private money than you could possibly use in your resi business and use those dollars to take down your first multifamily deal. That first multifamily deal will probably be between, let's say 25 and 100 units, somewhere between 2 million and probably 6 million bucks, somewhere in there, 2 million to 8 million. Let's call it a three, four $5 million deal, you'll need, here's the rule of thumb, Dan, you'll need about 30% of the purchase price in private capital. If you buy a $5 million building, you'll need about 1.5 million, you need about 1 million for the downstroke and another 10%, or another half a million for just your capital improvements or closing costs. Maybe paying yourself an acquisitions fee. So if you're successful with resi, keep doing it. But then over raise your capital so that you can then approach the commercial brokers and know that you can close know that you have that private money ready to buy that asset. That's what I would do. And that's exactly what I did do years and years ago.
(3:59) So let's talk about there's a perfect pivot because I wanted to ask you about racing. I happen to know about you from our previous conversation. I was basically his question I asked everybody I'm like, What's your advantage in life and you without any hesitation? We're like, I'm really, really good at risk. Right, which is, if I had to pick a business superpower would profit if you're pretty high on my list, you know, maybe flight and that being really good to raise. So and you can you could take this wherever you like, but what do investors get wrong? Or what mistakes do they make when they think about raising money? Because I think people are very confident go into that very overconfident, lot of people have the exact opposite reaction, they get very anxious about it, right? They like to think I can't possibly do that. So what are the mistakes that investors make when they think about where they approach the process of raising money?
(4:52) Yeah, I can tell you right now the biggest mistake is find the deal and the money will follow. That's not true at all. Okay, find the money. And then you'll get deal flow that nobody else knows about. Okay, so I get a lot of off market deals from brokers essentially pocket listings nobody else ever hears about, because I've raised the money first funding equals freedom. So the biggest mistake is, hey, I'm gonna go talk to brokers, I'm gonna go look at a lot of deals, I'm going to talk to owners, I'm going to make a lot of offers. I'm going to make an LOI, I'm going to get an under purchase agreement, then I'm going to raise the capital. By that point, you're already too late, you have to have some of the capital already warmed up to your deal. Okay, I have a friend of mine that just won a contract on a $9 million building, he had $450,000 of hard, earnest money and lost it all, because he didn't have all the funding to close. He came up on his contract, closed date, he couldn't close he filed for an extension asked for an extension he got he got one because it was part of the psi, right. Second contract, he went to the into the extension, it came to the end of the first extension, he requested a second extension, it was in the contract. So he was awarded, the second extension, got to the end of the second extension still didn't have the money. And it was a great deal. So it's not find the deal, and the money will follow. So what I started doing was I started talking to investors, I started having one on one conversations, one on one zoom calls one on one lunches, and basically said, Hey, these are the types of assets that I'm buying these apartment buildings, they pay a preferred return. There's equity, my target, this is really high level, but my target return for investors is between 20 to 25% annualized return. And I would walk them through it this is you know, I'm shortening up a 45 minute or an hour pitch down to like three seconds here. But at the end, I would say, I'm not assuming that you're interested in this at all. But if you ever come across somebody that would be interested in this type of asset with this type of collateral, getting maybe a six, eight 10% preferred return plus equity, cash flow in perpetuity equity in perpetuity. If you know anybody that would be interested in this, just keep me in mind, it's kind of the top of mind reference. And they would all at the end, they would all say the same thing, which was, well, what about me? Okay, so it's like the gut reaction is, well, I'm interested, do I read out loud right here? You don't? I mean, it's funny,
(7:30) I'm right in front of you. What about me, right? So I've took this approach of I knew, I knew in my soul in my, in my heart, my brain, I knew everyone would be interested. I knew that this was something that would help all of them achieve their retirement goals. So I knew I had to go out and educate as many people as possible about real estate and about apartment buildings. I used to do it on residential before that in my private equity fund before that. But I felt absolute passion for teaching people that they could do better with their retirement money, their savings and their investments by investing in these types of real estate deals, hard money loans, private money loans, real estate syndications, that's better than the stock market. And I knew that, Dan, because I used to be a financial advisor. Okay. Every financial advisor says the same thing, diversify, and wait. And hopefully, you'll get an eight to nine to 10% return. Well, there's so many other strategies out there to have a more consistent, predictable return. So I became passionate for educating people. But I also never took an aggressive sales approach. I always took the approach of Dan, if I was pitching you, I would, I would talk about your goals, I would talk about your objectives, I would use things like the SEC, Dan requires that we have a prior existing relationship before I make you an offer. So if it's okay with you, I need to get to know who you are, I need to get to know what your investment goals are. I need to know what your risk tolerance is. So that's the approach I would take with investors, I would ask the questions, they would do all the talking. Well, the more people talk, the more they like the conversation, the more they like me, even though they're doing all the talking. Right. So I took a very educational and inquisitive approach with investors. And then at the end that I would say, Well, you know, this is kind of what I do, we buy these buildings, let's say I buy this building for 6 million, I'm gonna put $800,000 into it. By the time we're done, it's gonna be worth $10 million. We'll be all in for seven, it's gonna be worth 10. We're going to refi it, we're going to pay back all the principal to all the investors. And then the investors are going to get this equity in perpetuity, this cash flow in perpetuity. Hey, if you know anybody who's interested in learning more about this or interested in investing in these types of assets, just hey, but you keep me as a top of mind reference, we refer them to me, and then they would be like, Wow, what about me? And because I took that approach, then they will also were like, Hey, Josh is not desperate for money. Yeah, Josh is taking this in If in a game, this long term approach, Josh's not desperate for money, he doesn't need money today. So now they're even more attracted to me because they know, I didn't show up begging them to fund my next deal. Yeah. Okay to think it. So that mindset of education infinite game, you know being inquisitive, asking questions, those are all parts of being a very successful capital raiser
(10:23) I love that reminds me of something my friend Nick said once where it's like when you are marketing or selling to sophisticated people, right? So these are not people like just off the street. These are successful people, right? all successful people have the experience of everyone they run into basically all day every day is asking them for blood. So the one of the things that you do to differentiate yourself is just don't right is like just say, How can I help you? Right? It was strikes me that the conversation that you used to raise capital, basically the same conversation you were having as a financial advisor, right? It's centered around their goals, their needs, rather than your goals, Gordie? So does that does that sound right?
(11:06) Actually, right. That's why I learned it. That's why I said, in my story, this evolution, the idea of me learning about successful financial planning was that I have all these solutions, but I don't know if any of them as a solution for you. So let's do a fact finding appointment first. Now, the Securities and Exchange Commission, when we do this private placement in this offering, the SEC requires that we have this prior existing relationship with the investor first, before we pitch them an investment, that's a 506 B, Federal Securities exemption 506 B. So I use that to my advantage. And I tell the tell this possible investor, this potential investor, hey, even if I pitched you hard today, I couldn't take your money. So there's no pressure here. I can't, I can't take your money. I have to have this relationship, we have to develop this relationship first. So if it's okay with you, I'm just gonna ask you a bunch of questions and really get to know each other. They love that approach. Yeah, right. While other people are like, Hey, I made this offer, I found this 100 units $10 million. Oh, crap, I gotta close in the next 60 days. Now I gotta go hustle and talk to everybody. Everybody can sense now that you're desperate that you need the money. So for me, it's the opposite. I warm all these people up, I put them on the back burner, then I keep them warm through marketing content, podcasts, YouTube videos, email broadcast, you know, social media posts, all that they stay warm, so they get this content for me. But then when I have a deal, now, I'll go and set up a webinar. And it will bring in let's say, 100 people, but I've only got room for maybe 2025. Yeah, now, Dan, I've used this scarcity, to my advantage. I've got all these investors warmed up. But I'm sorry, guys, I've only got room for 20 of you. So now they're jumping through the computer, right to invest in my deal. So I've got all the leverage on my side, because I spent all the time to warm them up first, get to know them first. Now they want to do business with me. They're gonna want to do business with you. But they can't do business until you find a deal. Now when you go find the deal. It's easy to raise the money.
(13:03) I mean, it strikes me that you are I love this idea of you are you are doing the work beforehand before you need it. Right. And that gets rid of this sense of desperation that you're talking about what people often bring to this process. I want to I want to ask about we're coming up on time. I don't want to keep you super late, although there's like a million things I already want to ask about. But this but I want to ask about your pot. You've got a podcast, I believe it's an accelerated investor. Podcast.com Is that true? Correct? Yep. Accelerated investor. podcast.com. That's right. So talk to me about it. Because I think this would be really helpful for people listening to this, you know, we talk to investors of all shapes, shapes and colors, right. So wholesalers and flippers and multifamily and syndicators and everything right, everybody deals with this marketing question of how best to market themselves and their business and them in the advisory capacity and all this stuff. And I think it will be clear to most people, right, even though you haven't, you really haven't done any like, quote unquote, marketing or selling on this podcast, I think people can dealt by the way that you approach those issues, you are truly a world class marketer. So I want to ask you about the role the podcast plays in your life and your business. Like, why do the podcast and what do you what do you see it as providing either to you or your audience or your business that is is unique or special? Right? Like what what makes it something that you want to spend your time doing?
(14:32) So the long short answer is I totally did my podcast for selfish reasons. I did it to meet other people that I did it to learn things I wanted to learn. I did it to interview people that I wanted to connect with an learn from or possibly JV with. I never podcasts was never like a way to build my email marketing list so I could sell them stuff like, but that's one thing that you can do with a podcast right now. But I started it for very selfish reasons. And then I realized that it was a great way for me to have a voice write for me to tell my audience what I liked what I wanted for them to, for me to convey my personality, through interviews and solo casts, solo casts, I think are critical. I think interviews are great. But your audience wants to hear from you, I think. So if you're going to host the podcast, you have to do solo casts. Also, I think it's a one for one, one interview and one solo cast. So we push out to a week, one interview on one solo cast. But that, to me provides so many benefits. First of all, my podcasts when I record them, they go off to a professional production company, that professional production company edits it adds in like some mini clips or mini commercials, if you will. But they also helped me write the copy around each episode that produce it and then syndicate it. So it goes out to all the different podcast platforms and all the different video platforms. They helped me write blog posts around it. So but the benefit here is I get to record the podcast, the voice, my personality, my message. And then it becomes all these other assets, email marketing, social posts, Facebook posts, Instagram posts, podcasts, videos, and audio clips comes all those things because I record one time. So one of the things that I've said in many talks is that very successful entrepreneurs that have eight and nine figure businesses, they've scaled, what I call the one to many concept, they record one piece of content. And it gets out to many, many, many, many people. That's a must do for any successful entrepreneur. Okay, it's a must do. So the podcast really started out for selfish reasons. And then I realized, wow, like, this really is the voice of my company. This is the voice of what we do. And it's allowed us to find deals. Last year, I did a JV on a deal. That was a 552 unit in Houston, Texas, it was $100 million deal. The guy that I partnered with and the group of people that we put together, some of them were already friends of mine. But the one of the main sponsors did not know me other than my podcast, he reached out to me through Facebook through messenger. And within two weeks, I we brought in a group to co sponsor that deal. It's $100 million asset. Wow. And I owned about 10% of it. Okay, so that came from the podcasts. That was one benefit. Another benefit is the voice. Another benefit is its content for social for other places. Another benefit is we get a lot of passive investors that are interested in learning about our offers, because they hear the podcast and they're like, Wow, this guy really we'd like his voice. We'd like his style. We like what he has to say. And so I used to write a lot of copy. Now I just talk podcasts, and I have other copywriters helped me write the copy so that it goes out like Tony Robbins. He just does these amazing trainings. Right? Yeah, he does. His is big arena trainings. Tony Robbins has to sit down and write copy. He's got copywriters that are really good at that. Gary Vaynerchuk. And Elon Musk and Mark Cuban and all the sharks on Shark Tank, they don't write anything. But they have a brand manager, they have a copywriter that helps them right, they just get on camera and talk. So to me, that became that became the No, that wasn't my initial intention. That's what it became for me. And I think it's critically important, then, if you have a specific audience that you want to talk to, like it could be military, you know, people that are military veterans that want to invest in multifamily. That's a very niche group, the more niche, the better. Right, talk to a smaller audience and go deep with a smaller group, a small tribe that totally looks at you as their leader. That's the best way if you want to monetize the podcast, that's the best way to do it.
(18:51) I think you are, you're hitting on so many core things that I really want to emphasize. And I like my braids, like running all over the place. But I think this idea of showing up and expressing something about who you are, and having that represent your brand. That's the lesson I think any investor can take away from, right. It's like it's it's good, to be unique, and to be yourself and to show up and serve your community before you need to ask them for something. Because that does so much more to pull people to you than you could possibly do. Otherwise, Josh, there's like one example that like if if you're not a Starlink customer of Elon Musk, or you don't buy a Tesla or flying his rockets, have you ever done business with anything that Elon Musk owns? The answer is no. Right? I don't own a Tesla. I've never flown his rockets. I don't use his internet. I don't use the solar panels. But I follow Elon Musk because he has a voice you know what he stands for? You know what he's up to? And so the podcast is essentially your your kind of leadership platform Here's his more video and he's on the like big news channels. He's probably getting news requests for interviews every day all the time. But that has the podcast if you don't, if you're not Elon Musk, you have to have a place to start. I think the podcast is a perfect way to do it.
(20:13) So for people who want to know more about you, I mean, obviously, you are so active. So we've mentioned Freeland ventures.com You can go there, check out a whole bunch of stuff that you guys are up to we've mentioned accelerated investor podcast.com. So accelerated investor podcast.com. Where else do you want people to look you up? Are those the best places? Do you do social media? Like where do you want people to find out more about you and what you're up to? Yeah, absolutely. Those are the two best places for sure. Subscribe to my podcast, just like us subscribe to dance. That would be great. Because you'll you'll hear direct from me. I'm all over social media, Facebook, several Facebook groups that we own Instagram, LinkedIn, I'm on all those as well. But Freeland Ventures is really the core. You got there's links there to everything we do. There's links to our YouTube channels, links to our podcasts, there's links to our portfolio, passive investing our buying criteria, everything is sitting on our main website, Freeland ventures.com. So I would just visit that, poke around and take it from there. Well, Josh Cantwell. I just want to say this has been, I don't know it's been a pretty awesome frickin interview. I'm like, super excited about it. I got a ton out of it. I know everybody else did, too. Thank you so much for coming on the show. Man. This was a real blast. I really appreciate it.
(21:29) Absolutely. Dan, thanks so much for having me on. Man. My my my surgeon told me back when I had my surgery said actually it was the oncologist talking about the surgeon. He said, Josh, your surgeon was daring. So I tell people go out and be daring, Be daring. That's all the fun. All the excitement in life is on the other side of being daring and trying something new. So thanks a lot for having me on Dan. I appreciate it. That is it. That's it for this week's episode of the REI marketing nerds podcast. As always, you can go over to AdWords nerds.com and click on podcast to see all of our show notes and past episodes as always, it really means a lot to me that you are listening and hey, if you could leave us a review. Wherever you downloaded this podcast really means a lot helps other people find the show and I read every single one. I hope you're having an awesome week. I'll talk to you soon.
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