How do you get started in real estate? What is that process? What can you do to scale and grow your own portfolio or take it to the next level? Do you already have a few single-family properties, but want to get involved in multifamily investing?
Today, Clint Coons of Anderson Business Advisors talks to Abel Pacheco, President and Principal of 5 Talents Capital, who loves investing in and owning multifamily properties in Texas.
Abel is a real estate entrepreneur with a proven track record of repositioning properties and delivering quality renovated housing products to market and consistent returns to investment partners. He has experience in acquiring distressed properties, handling renovations, raising private capital, and managing single and multifamily investment properties.
Highlights/Topics:
- 5 Talents Capital: Abel buys apartment buildings and allows people that don’t have much time available to invest in commercial multifamily real estate via syndications.
- Cash Flow Positive: Don’t overlook the amount of time that you have available for side hustles and to make more money.
- Education and Knowledge: Learn about wholesaling, seller financing, hard money loans, and finding motivated sellers for free from conferences, YouTube, and Google.
- Knowledge: After educating yourself on different ways to invest, it takes mental and tactical shifting to find properties.
- Networking: Unlock your mindset. You don’t have to do everything yourself. You don’t have to know everything. You just have to partner with people that are experts.
- Create Luck: It’s where planning meets opportunity. Then, when that opportunity is there and you plan for it, you better be ready to take action and be willing to move forward.
- In multifamily, net worth equates to the size of the loan amount, equity enough to buy the deal, general partners need their own money for a deal.You have to have experience.
- Where to Find Deals: Off- and on-market. In commercial real estate, almost all the deals actually trade through brokers.
Resources:
Rich Dad, Poor Dad by Robert Kiyosaki
The ABCs of Real Estate Investing
Full Episode Transcript:
Clint: What’s up, guys? Hey, it’s Clint Coons here. In this episode, what I wanted to do is bring on someone that I’ve known for many years. He’s a client. He’s a real estate investor.
I wanted to share with you his story because I see questions where people are wondering, how do I get started in real estate? What is that process like? I receive these questions from many of the people that come to my YouTube channel because they know I’m an avid real estate investor. But I also want you to hear from someone else who’s been in the trenches.
Abel Pacheco is that person. Where he started out, he’s built a portfolio now to over 1500 doors. There’s a process there. To have someone like him spend the time to come in here and tell you what you can do to grow your own portfolio or maybe take it to the next level, maybe you got a few single families right now and you want to get involved in multifamily investing, he’s the guy to do it. With that, Abel, thanks for coming on.
Abel: Hey. Thank you, Clint. Thanks for having me, man. I’m super excited. I’ve learned a ton from you. Over the years, really, your organization’s helped me a ton to scale and grow. Just to come around full circle and give something back, man, that’s awesome. Thanks for having me.
Clint: It’s great because I’m about to tell your story here in a minute. You started out in investing. Now you have 5 Talents Capital, 5 Talents Podcast. You’ve actually branched out. You’re doing more than just real estate investing.
From what I know and working with you over the last five years, your business, the real estate was that foundation. With that, why don’t you share with people your story? How it all started working for you? Then we’ll start talking about some details.
Abel: Sure. For those that don’t know me or are new to our world, we appreciate you listening. My name is Abel Pacheco. I’m the president and principal of 5 Talents Capital. What we do today is we buy apartment buildings and we allow busy professionals, people that don’t have a lot of time to do real estate, invest in commercial multifamily real estate via syndications.
We basically find deals, underwrite, analyze, put a ton of offers and a bunch of real estate. Then the moment we have a seller that’s agreeing to take our price, we go do that deal. We buy it and we basically put a group of investors together. A syndicate, a number of us all put our money together and we go buy something bigger than what we would have been able to buy on our own. That’s what I do today.
We also learn about 1500 doors. As Clint mentioned, we’re active investors, general partners, principals, syndicators, co-sponsors as well, although the terms are kind of synonymous. But we actively do that and we buy heavily in San Antonio, Texas, South Texas, a lot of properties here.
That 1500 doors is about 15 multifamily properties. The smallest properties are 45–50 doors and the biggest are 268-unit properties. Somewhere in between there, the way we got started was definitely not like this. We were a single family investor.
To Cint’s point—now I’ve known him for a number of years—before I connected with him, I was one single family house at a time. Myself and my wife, we’re in tech. We worked a W-2 normal job. I was a sales guy for many of my years just on the phone.
From 2006 to 2016, we worked at a company here locally in San Antonio. It went from a couple of hundred employees, 600 I think when I started to about 6000. It was a $100 million company a year. I exited when it was about a $2 billion corporation.
When I was working at tech, my goal was to save as much money as I could, save every penny and every dollar, live below my means, save up $15,000 or $20,000, and buy another house. That was really my game plan. It took me about 10 years. We bought eight single family houses.
For those that don’t have any money, I’m with you. I was there. I think I bought my first house with an FHA loan, 3% down. I think we put $5000 on a Texas house. We lived in it.
We stayed in there and we went to the next one. Instead of selling the first one, we bought the second. We did another loan where we lived in it, put it 5% down, and then rented out the first one.
We proceeded to do deal number three and deal number four. It took me a long time to do that. Between my first house and my second house, it may have been like three or four years before I could save up enough money to go buy the second. But when that happened, we started getting cash flow.
It’s basically cash flow positive. The mortgage was $600 or $700 at that time. I was renting it out for $900 or $1000, so a few hundred dollars extra cash flow. I would make it there. I always had side hustles. So don’t overlook the amount of time that you have.
I was a single individual at first. When me and my wife were married, we had a lot of free time. There was no kids at the house. Monday through Friday afternoons, evenings, and weekends, I would find properties. I would look for deals. Then I would also make a lot of money on Craigslist. We must have hustled about 15–20 cars, somewhere in that 10–15 range.
We would look for a car, go buy it, then go sell it on Craigslist and make a few extra thousand. That’s what helped us buy our third or fourth house. It didn’t start with cars. We sold golf clubs, furniture, watches, and literally anything we could find on Craigslist that was worth some kind of value, call them, asked them to buy it, and then go sell it again for some more money.
That’s what we did for the first four or five years. I was making $50,00, I think, in tech when I first started or $60,000. I worked out my way from 2016 to 2019-ish.
When we left in 2016, Rackspace, I was just crossing this $200,000 a year barrier. But that W-2 wasn’t like that for six or seven of those years. I was making less than $100,000 for a good number of those years and finally broke through.
I finally made more. We had more money to invest. I invested in more real estate. But essentially, it was the grind of doing another deal, and another deal, and another deal before we got education. I’ll pause after the education part to give Clint maybe some time and take a breath.
We bought those houses. All that time, I thought I was doing it the right way. I was the individual in my group that my network, my circle that had eight houses. No one else had that many houses. People would ask me for insight in education.
I would tell them what I knew, but I wasn’t getting education from anywhere until I finally ponied up and got dragged to a real estate conference, a seminar, a free weekend real estate. My sister brought me with her. After that weekend, I was putting $20,000 down and buying real estate education.
From that moment, I was like, okay, I went from buying 8 houses in 10 years to we did 10 deals in 1 year, single family, applying that education before I entered into apartment investing or multifamily door. Anyway, let me pause here. That’s kind of how we got started in this in a quick summary, Clint.
Clint: It sounds like then, what you were doing initially is you would buy a house and you’re using the BRRRR method. After you’ve acquired that, you’d live in it and then you would move out, turn that into a rental, and you kept that rolling. I assume you’re finding the properties maybe on the MLS, initially.
After you educate yourself on different ways of investing—because that’s where we met, at an event years ago—you tapped into 10 properties in 1 year. I get the BRRRR method, but how are you going to find 10 properties in 1 year? What does that take, mental shifting, processes, and things like that to do that?
Abel: Let’s write down those. I think those two things are great points: (1) mental, and (2) maybe tactical, for somebody that wants to employ some of this immediately. What I was doing was going through agency loans. I was buying off the MLS. I was searching like a dog from the real estate listings, going to open houses and all that stuff, and trying to find a good deal.
That was barely scratching the surface because I wasn’t heavy in a lot of rehab. If you talk to my wife, she’ll tell you I don’t know how to do plumbing, I don’t know how to fix floors. I just don’t do that very well. Not well anyways. We would find houses that were already ready to rent. We would do that and make a little bit of cash flow. The education point for me, there were these terms.
If you’re listening now, you can write down wholesaling. You can write down seller finance. You can write down hard money loans. You can write down motivated sellers. These are terms that you can go search on your own. They’re free. There are tons of YouTube education on how to do it.
I started looking for motivated sellers that were willing to sell their house at a discount. I would lock those deals up under contract. Tactically, I had a contract, I would agree to a price, get them to sign the rights to sell it and I would be the buyer at a certain price. If I liked that deal, then I would go do that deal.
I would use a hard money lender, which I’d never used before. I thought the hard money lender, just by definition, I thought he was going to rough me up if I didn’t pay him or something like that. Hard money, I was like, oh, man, that sounds aggressive. But I realized, oh, there are people that will lend the price of the value of the house, the appraisal value plus the rehab cost, and do like 90% of everything that’s needed, as opposed to what I was doing. It was easier to qualify for more of those loans.
They wanted a little bit of experience, which I had some up into that point, but they wanted rehab experience, construction experience. I just put a partner, me and a partner, that had already construction experience.
We did a deal together and that’s how we punched our card with many multiple times of construction experience. Then we used my W-2 liquidity, and my credit score, and that kind of thing to get a loan. We did a bunch of houses in one year.
It was because I paid for education, that I even found those terms. There’s a $20,000 education right there. Go google those terms and find all these terms on YouTube. You’ll figure out a lot of the information on how to do it if you’ve never heard those.
I invested for 10 years without knowing you could do that. That’s how we did 10 deals. We did some seller finance. The other way where we got into a couple of properties with little to no money down, it was creative financing. We learned that.
They were willing to trade a deal to us, take over the payments, and pay them a higher price. Then we wrapped it up under a contract. We put together a note. I guess Clint knows more than I do and how to do it. I just talked to the pros. I’m like, how do I do this? They put it together for us.
We wrapped it and then this deal, we ended up selling it at a higher value than what we “bought” it for. We had it under contract. It was like, oh, this is unlocked, these potential different ways to buy houses where I needed less money, how to say yes more. That’s tactically what we did.
Another thing that we did was, for anybody that really wants to get cooking, we put an ad on Craigslist because I love Craigslist. I was like, hey, I’m willing to buy your windshield space if you’re a taker.
We had white vinyl signs or stickers put on the back of somebody’s windshield that says, I buy houses with a phone number that came to my phone, not theirs. I told him if we do any deals, I’ll pay them $1000 for riding around with a sticker. I didn’t pay him to put the sticker on. I paid for the sticker, they did that.
We had about 400 cars rolling around with our site and our number. We did that for those 10 transactions. That’s how we found so many. My best, we found a deal for $20,000. They were ready to sell a bad, ugly house. We put $30,000–$40,000 into it and we sold it for like $130,000. It was the very first deal I found off of that to kind of paid for my year in advance.
Actually, to get my first piece of paper contract was one of the hardest things ever, mentally. Ultimately, I realized how hard it was to kind of say, I’m going to go do this, and I’m going to pay this price for this particular house, and put it in writing, I was just fearful. I was scared. I was nervous.
There’s the mindset thing. I realized, oh, other people do this like 50 times, 100 times in the year. What’s the first one? Big deal. If something doesn’t happen and I don’t close, no big deal. You haven’t put anything down. That was a big part of it. That’s a little bit of how I got started.
Clint: Okay. What you just said about that, there are two points in there that I think is really important for the people that are watching this right now. Number one, you said that you teamed up with someone who knows more than you. That’s really important when you get started. You don’t have to know it all. There are a lot of people out there that have the knowledge and they’re willing to help someone like yourself.
Of course, they’re going to be in for part of the profit. You do the heavy lifting, but then when it comes time to getting the loans, you’re bringing in their expertise that many of those lenders require. In that scenario, how do you find those people?
Abel: The biggest factor of success that I’ve had, for me, is networking. What I did then kind of unlock this mindset for me that said, oh, you don’t have to do everything yourself. You don’t have to know everything. You just have to partner with people that are experts.
The networking part, I had heard this term for years, your network is your net worth. I thought I understood it, but I really realize I didn’t because I wasn’t leveraging the way that I do today. You’re shaking hands, getting over a little fear of saying hello. That’s the first one.
For whatever reason, there are a lot of people that have this fear about talking to somebody because they’ve done something, they’ve done these great things. You just got to get over it. You got to get over yourself and humble yourself a little bit, even if you think you’re a pro, which I thought I was a pro in my network.
I did eight houses. No one had done that. Just to go to somebody in a room that says, I’ve done 50 houses or I bought an apartment complex, to humble yourself and just say, you know what, I don’t know everything. I’d love to learn more. Can I take you to lunch?
I don’t like the term pick your brain anymore. I think everyone says that. It’s just that I’d love to learn a little bit more. What you did was fascinating. It was inspiring. I’m motivated. I want to go do it. Tell your truth. Tell me your motivation.
For me, I have a four-year-old and a two-year-old. At the time, my wife was pregnant. I’m trying to get this thing on. I see you’re doing it. I’d love to learn how you did it. Any advice, any insight, if they say no to that, okay, well, ask the next person. Ask the next person doing the things that you want to do yourself.
In truth, that little bit of spark to say, okay, we did 10 houses, well, I met somebody else through our networking, our education, conferences, meetups, and all the places that I would try to go to. I met another person that was doing apartment complexes and I said, wow, you bought a $20 million building. I wouldn’t even fathom. It’s going to be 20 more years before and they go, no, no, you don’t need $20 million. You just need a partner with a team that can qualify and then we put the deals together.
I’m literally invested as a general partner principal in $100+ million worth of real estate. Had I not partnered with somebody, I would not have been able to do any of those. Our first deal was 124 units, so $7 million.
There’s a little mystical part of it here. It’s, I don’t know how to buy this deal. The networking part was, I met someone else that was doing it. I knew them. I liked them enough. I trusted them. I asked them how they did it. They showed me how.
Just a few people to sign on the loan just like a cosigner, almost if you would, for a car. Cosigner for an apartment complex and this is how we put the deals together. That networking part of it was shaking hands, meeting people, going out of my way to say, I don’t know how to do this. Humble yourself and just continue a relationship.
How can you serve another person? Provide them value. Give them some insight or nuggets, anything you can do to help somebody else. A lot of times, people want to help you as well, especially successful people.
For whatever reason, it’s like, man, I’ve already achieved it. You’re going to go apply this? Let me help you and give you some of that knowledge. It’s amazing.
Clint: Yeah, and it’s about building and processes as well. You said those connections. When you were talking about buying the property with a hard money loan, buying residential real estate with hard money, people would think that’s just stupid. Why would you ever agree to pay someone 10%, three or five points depending to get into that deal?
As you’ve done, I did it. My first real estate that I got involved with, I was using hard money lenders. I was paying that. They were loaning 100% of the rehab value because they knew that the person that I was using to do the rehab, did quality work and that the value was going to be there after the work was done.
I would come in, get my properties. I’d be into it for maybe $1500 and then I would go to it. I already had a community lender set up that I had created a bank account with and created a relationship with. I explained to them what I was doing. I said, what are the terms under which you will loan me money?
They told me, listen, you got to have 30% equity in the property. As long as it appraises, you have 30% equity. We will give you 70% to take out the hard money lender. That’s what I started doing, just like what you were doing.
For people who are investing in real estate, it’s understanding that there are ways. You don’t have to have a ton of money. You don’t have to have money to do this. But if you find someone with experience, there are ways to get into it. You just have to build that group that can work with you.
You said that when you were building that out and you find these people through networking from going to different conferences, because you see conferences all over the place are virtual now, which you’re going to virtual, then you’re going to in-person, correct?
Abel: It’s before Covid. We were doing a lot of traveling. We were taking advantage of everything local that we could in San Antonio. Tactically, go to meetup.com and search for single family, multifamily, whatever kind of investing you’re interested in or whatever group, you can find some people that meet up at a certain time. So there’s a tactical nugget for meetup.com. That’s really good.
And then there are Facebook groups. They’re virtual. I was not heavily into them then. I am a little bit more now. I’d asked, again, my network too, like, hey, which events are you going to? When I was at the event, I would ask which events are you headed to and which one do you think is most valuable?
You have to be willing to invest in yourself, time, and resources to get this right and then be ready to implement. One of the things my wife tells me, she’s like, man, we did it right, because she was pregnant with our little one. I was worried about traveling that year. This is our first one and she goes, well, it’s better to go now while I’m pregnant because when the kids are here, you’re going to do less travel and I know it.
For a year, while I was working a W-2 Monday through Friday, I would take off early Friday or leave on Thursday and fly to the event on Friday, be there Saturday and Sunday, come back and be at work. We went to 10–12 different cities over a year to a bunch of different conferences. That is a big investment—time, effort, energy, and resources—but it just unlocked this new avenue of investing for us. It was amazing. Commercial real estate absolutely changed it out for us because we learned and because we went.
Clint: We always talk about our successes. What would you say was your biggest failure along the way or maybe there’s more than one? And then how did you overcome it?
Abel: I would say for the 10 years, this is kind of funny because I think back on, what was it that held me back? What was it? And I was worried about the cost. I didn’t think I could qualify. I didn’t think I was good enough. I didn’t think I was like the “wealthy.” They made certain moves and I can’t make those.
I came from a family or my parents are in their 70s and they’re still working today. I’m like, man, this is where we came from. This is our family and I don’t know if I could break out of that.
I read this book, Rich Dad, Poor Dad. I’m sure a lot of your listeners have read it. I read that in 2006-ish, whatever. A couple of years later, I read another book that was called The ABCs of Real Estate Investing. It was a Rich Dad, Poor Dad advisors book by Ken McElroy. He talks about buying apartment complexes.
While I bought this book and I was like, The ABCs of Real Estate Investing, I thought they were going to show me how to buy my first single family house. Ken McElroy ends up talking about buying apartment buildings.
In fact, he’s explaining what I’m doing today in 2022. From then till 2018—10 years—I had this limiting belief about myself that I was actually good enough or I could do that, so that’s why I played small. My biggest mistake over there was just a belief in myself that I could go do that.
Anybody that’s listening, if you have a little bit of motivation, you have a little bit of spark, you have a little bit of mindset to go after it and go do it, go do it. You absolutely can make it happen.
Clint: What you hit on is the mindset that it’s available and you can do it, but you have to break through that. So many people hold themselves back. They find reasons not to do something. They’re always looking for excuses to say no rather than say yes.
When an opportunity comes along and it’s presented to them, they ask, well, how much is that going to cost? Their mind automatically goes to preservation. We’ve got to figure this out rather than saying, what is that going to do for me? That’s where I see a lot of investors and even business owners that I’ve run into. It’s making that switch to looking at opportunities and then seizing those opportunities.
I’ve talked about this before. You wonder, well, how do you create luck? It’s where planning meets opportunity. Then when that opportunity is there and you plan for it, you better be ready to take action and be willing to move forward. That’s where it is with real estate.
My father was an avid real estate investor. To this day, he talks about all the deals he messed up on or he could have had, should have had done this. The reason why is that he couldn’t say yes right away when the opportunity was presented. That’s a problem.
You started out, then you got these single family properties, and then you made this switch into multifamily. That’s a huge leap to go from single family to multifamily. Did you do it with your own money or did you actually just go out there and syndicate right away?
Abel: The way we moved to it was the same principles that we took in a single family, which is to partner with somebody who had more experience and had more knowledge. The demystifying part that I talked about was just the line of sight to debt and equity. The moment you have line of sight to debt and equity, then you have the ability to go do that bigger deal.
In multifamily, it’s really a matter of net worth equating to the size of the loan amount, equity enough to buy the deal, the general partners need to have a percentage invested of their own money into the deal, and then you have to have somebody with experience, somebody’s done it before. It ends up being a bigger team than just maybe me and my single family house was me and a contractor.
Five of us are all putting our resources together, net worth, liquidity, ability to raise capital, and then our knowledge on actually finding the right deal, and going to implement and execute it. That’s what we did.
We leveraged each other and our experiences, our knowledge, our resources, our network, to go say, how to bring together 30 or 40 investors in one group, and all marched down the fields in unison, and have a touchdown at the end, and buy the $10 million building? That’s what we do and that’s how we’ve done it in the past 14–15 times now in the last several years.
It was a big mindset. The same mindset shift to say, I don’t know if I can do the hard money loan, was the same mindset shift for me to say, I don’t know if I could sign on a $7 million loan. It was crazy for me the first time. Then the second one was $9 million, and the next one was $10 million, and the biggest one was like $26 million.
It starts to be okay after you’ve done it a number of times. Then you realize, oh, there are a lot of people that do this because the lenders give that money, non-recourse debt, a lot of times because these assets are so valuable.
They generate income, they provide a good stable cash flow, they’re good at scale, and they give us all the tax benefits that we want as investors, and secure the asset over there for the banks and the lender. It’s the same thing. Different, but the same. That’s what we did and that’s how we’re doing it today.
Clint: That’s a mistake that I think a lot of people make. They think that multifamily is different from single family. It’s just real estate with more zeros. That’s all it is. You’re going to go through the same process. But in reality, when you’re going through the multifamily process and you’re borrowing money, you don’t have to give a personal guarantee many times.
The term you use of people understand this, non-recourse means that if you had to walk away or something happened on the property and the bank comes in and forecloses, if they sell it for less than what is owed, you’re not liable for the difference.
This is important to know when it comes to putting these deals together. You don’t have a lot of risk. What you said, which I hope people understand here with that, is that when you’re doing these deals, you got to have the right financing in place and you got to have someone who is experienced to begin with. That’s the key to get these types of loans and putting the deals together.
Abel: Absolutely. I think you summarized it. You summarized it absolutely well. Experience, partnering, leveraging. The banks love the non-recourse debt and less risk.
Clint: Where do you find the deals? That’s what everyone wants to know.
Abel: Hey, where do you find them? The 15 deals we’ve done, there’s probably been about half of them that are “off market” and half of them that are on market. In commercial real estate, what happens is almost everything, it feels like 90% of all the deals actually trade through brokers.
When I was a single family investor, I wanted to say, oh, I’m going to find the deal myself, I’m going to go straight to the owner. We still do that. We still have some calls that are going out and letters that go out to apartment owners. We’ve closed probably three of them that have been direct to seller.
Those, though, are really the needle in the haystack. If you want a repeatable business, you actually work with the brokers and the brokers will turn them as off market. Even though they go through the brokerage, the seller calls JLL, calls […], the big guys, CBRE or whatever, and they’ll say, I want to sell my apartment complex. The broker then goes, okay.
They do the OM. They do the data. They make it all pretty nice and package, big firm. They’ll send it out to their list of off market investors. Somebody like myself would say, hey, I buy deals and they’ll send it to, I don’t know, depends on every deal, 10, 20, 100. Who knows?
It goes through this off market, which really on market-ish in our relative terms. But before they distribute on their website, someone gets a first look. That first look is we want to be in that first look. In this space, it’s really hard to break in because if you’ve never done a deal, they don’t want to send you that off market property. They don’t want to send you that first look.
They just want surety of close to make sure they can absolutely close the deal. They don’t send them to newbies or, this is my first time. What we did was, again back to this network thing, we partnered with other people that had a great track record and been doing a lot of deals in our market, in our area. We leveraged and we played the we game.
We are buying a deal. We are looking for a property, me and my partners. They’re like, who’s your partner? Okay, I know those guys. I’ve sold them, and bought, and sold a couple deals. Yeah, well, let’s work together. Now as a team, we get some of those off market looks, which is what we want to do for the commercial real estate broker.
Any brokers listening, call me. I’m right in San Antonio and South Texas. But then also, there are on market deals. Half of our deals have been on the market. From their website, go in. There are financials. There are T12, rent rolls. You sign an NDA, look at their website, and go do the analysis.
The analysis is what a lot of people don’t do a lot of. People will say all the time, there are no good deals in my market. Oh, you’re in Texas? Well, then you’ve got a great market. It’s so easy to find deals. I’m over here in XYZ market and it’s so competitive or whatever it is.
Sometimes we underwrite and analyze 50, 60, 70, 100 deals. We underwrite them all the way through, walk half of them, put offers on a third of them, get rejected on 29 of them until the one says yes. That is not an easy thing, but it is repeatable and it’s systematic. We just go and underwrite a ton of deals on or off market, broker and not broker, direct to seller or whatever, and just go look at a bunch of them and then make offers.
That’s the work part, the tactical action that a lot of people don’t want to take, which is why some people when they close deals are like, oh, yeah, I understand it’s hard to find a deal, but you just kind of keep pushing through until you find your deal because you’re eventually going to find one. It’s a numbers game. Then when you do, you’ve got all the resources lined up to go take it down. Unfortunately, there’s no magic bullet in that, but that’s how we’re doing deals today.
Clint: You just can’t be afraid of rejection. If you can’t handle rejection, then you’re not going to be able to buy real estate. You’re going to get a lot of nos, they’re not going to accept your offer. If you get a lot of yeses, you’re making the wrong offers.
In finding deals too, one of the things that I discovered is that when we went into a certain market, we were working with the local, we found this used appliance store. A lot of investors that own properties, they’ll go to the used appliance store when the refrigerator goes out or the stove.
We started talking to that individual and say, well, who are the players in the market? Can you introduce me to some of them? We started making connections that way. Then we started working with a property manager.
The property manager, because he really knows who’s in the market, we let the property manager know, hey, if there are individual investors in this market that you know of, that you manage their property, typically they’re out of state many times, we’re interested in buying if they want to sell.
We had deal flow that started coming in from the used appliance store, from local investors who are looking to retire and sell their portfolios—as you say, at off market—and from our property manager. That really helped as well.
Finding places like that, you don’t think about it. When you’re driving down the street, you see that used appliance store, but that can be a goldmine for you, an opportunity to get those off market deals.
Abel: You triggered one of the reminders here. Some of our team members are members of the National Apartment Association. There are other apartment association groups. They end up meeting once a month and hanging out. It’s a lot of property owners that were building relationships for the long term.
I kind of forget about the work that my team does because it’s not just me, but them. They spend a lot of time in there and that’s how they’ve done some of the property direct to seller, as well as the good old letter, hey, we’re going to buy X amount of doors this year. Want to see if we wanted to buy yours? Anyways, that’s awesome. Thanks, Clint.
Clint: With your business now, you market up. You’re not coming up with all the cash for the down. You’ve actually started syndicating, which means you’re raising money from people that you have a relationship with, but you’ve met over the years. That’s why networking is so important.
In order for someone that is looking at that, that’s watching this right now, and they’ve been through the single families, they’ve got their portfolio now, and they want to take that next level, what are some of the key takeaways that they should know of to do that?
Abel: The two biggest areas of impact that are going to drive the most success in what we do today, is finding the next deal and finding investors to go buy the deal. That’s the 80/20. How do I go underwrite a bunch of deals that can lead me to one great investment? And how do I make sure I have enough money to go do that deal when I find it?
Finding new investors and finding new deals is a lot of the same group that we’re looking for, like networking into the right areas, shaking hands, building really good, strong relationships with investors.
A lot of times, what happens is you have somebody that has some net worth, that has some liquidity, that has the means to go do this, but they don’t want to do any of the work. They don’t want to go underwrite a hundred deals and walk 60–70 properties. They’ll leverage somebody like me that’s willing to go do that work. If that’s you, you’re willing to go do that work, then you may be a deal finder.
On the flip side, some people are not real estate folks. They like to talk, they like to socialize, and they like to shake hands. You may end up networking a lot for raising capital. Those are the two biggest areas that I see.
There are a lot of things in between. If you’re a good project manager, if you can handle a Gantt chart, and you can handle contractors, and you can do construction management, and you like asset management, there are a lot of in-between stuff that’s very valuable that’s needed. But in the end, can you find a deal or find some investors to get there?
When we raise capital today, you got to get some education also to do it the right way. You are following the SEC (Securities and Exchange Commission). We use exemptions called Regulation D 506(b) or 506(c) exemptions. Just learning about that stuff, it’ll teach you about accredited and non accredited investors, and how to properly qualify somebody that can even come into the deal the right way, the legal way. Once you do that, you’re really just shaking a lot of hands, and trying to meet the next person, and talk to people.
It’s the biggest one. I talk to a lot of people. It’s hard for me not to be excited about real estate investing. When I go somewhere, it just oozes out of me, oh, I’m a real estate investor, you should do the best thing since sliced bread. I tried to let someone else ask me, what do you do first before I mentioned anything about what I do. That’s a disclaimer there for me.
I’m like, what do you do? How do you do it? I’m trying to hold it back. But as soon as they say, what do you do? Oh, man, I’m a real estate investor and it’s what I do.
People ask a lot of questions the moment you start telling them that. You just end up in a conversation. Then funny as it seems, a lot of this, we are all over social. We are all over the internet. We are all over.
We have a podcast, 5 Talents Podcast. We drive a lot of education. We have 200 shows that we’ve done, specifically around commercial multifamily investing. When you give and give and give and give education, knowledge—probably Clint knows this—the law of reciprocity.
He gives and gives and gives and gives and goes all those Saturday events or six hours of his time and pushing out education for free. A lot comes back to you. I would say, whatever you learn, put it back out there.
The Internet scales well. The Internet, video, blogs, posts, whatever. You’ll have people that naturally gravitate back to you that say, hey, I was interested in what you were talking about. How do I learn more? Those are a lot of our investors today from the Internet, frankly.
Clint: Wow. We’ve run out of time here and you mentioned that you have a podcast. If somebody wants to go to your podcasts or your website, how would they reach it?
Abel: Go to www.5talents.capital. It has links to our podcast. On our show, we’re going to get Clint out there too, which we just recorded an amazing show. Then if you’re on Apple, or FM radio, or Slack, or Google Play, all the places where the podcasts are, it’s the 5 Talents Podcast. Build wealth like the 1%. We’re excited. We’d love to have you come learn and get into our world as well.
Clint: Great. And I’ll put that in the show links. Abel, hey, thanks for coming on. I know that there are a lot of nuggets in here that people are going to be able to take away. You’re talking about the cars. I’m like, wow, I’ve never heard that one before. That’s pretty cool.
I appreciate you taking the time. I know you’re in the middle of a move. Your wife’s probably really upset with you because you’re like, oh, I got to go and hang out with Clint, and I can’t help you pack. Been there, done that.
Abel: Yeah. Thank you very much. I’m humbled. I’m appreciative that I get to hang out with you for a little while. You’ve given me and my family a bunch of opportunities. Whether you know it or not, you’ve helped a bunch. I want to say thank you.
Anybody following Clint, you need to get into his community. You need to get into his system. Learn all the things he can. Join up. He’s the man, so thank you very much.
Clint: Thanks, Abel. Take care.
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